By LYNN LOFTON
The current health concerns are accompanied by economic concerns as businesses remain closed and the stock market takes a beating. As the third largest poultry producer in the country and the only Fortune 1000 company headquartered in Mississippi, Sanderson Farms has been proactively reassuring customers, bankers and investors.
CEO Joe Sanderson and Vice President Mike Cockrell shared some of the steps the company is taking to deal with the COVID-19 crisis.
Regarding forward looking statements about the business, financial conditions, and prospects of the company, Cockrell said, “There are risks and uncertainties about the effect on our business of the COVID-19 pandemic including the potential for labor shortages and the inability of our contract producers to manage their flocks; supply chain disruptions for feed grains; changes in consumer orders due to shipping patterns; changes in poultry market prices; increases in wage expense; disruptions in logistics and the distribution chain for our products; liquidity challenges and an overall decline in global commercial activity; and a national and global economic recession among other unfavorable conditions.
“The conditions created by this pandemic and its effects on our business are fluid and rapidly evolving.”
Sanderson said, ”These are challenging and unprecedented times for all of us. I want to say
how especially proud I am of the dedicated work and the perseverance of our employees, our contract
producers, our customers, our vendors, the consumers who buy our products, and the communities in
the states in which we operate.”
He said the company developed and implemented steps using the Centers for Disease Control guidelines in consultation with local and state health authorities and experts in the fields of infectious disease and epidemiology. “All of our company health professionals have been trained to spot COVID-19 symptoms in our employees and we have reinforced and supplemented our personal hygiene, cleaning and sanitizing protocols in our facilities.”
The poultry industry has been designated by the Federal Government and the states in which Sanderson Farms operates as an essential business. “I think our employees understand that when they make the decision every day to get up and go to work, they are supporting not only themselves and
their families but also their neighbors, their state and the nation,”
Sanderson said. “Our retail grocery store customers were simply overwhelmed at the beginning of this crisis. Once states and local communities began issuing shelter-in-place orders and discouraging consumers from gathering in restaurants, those consumers began to stock up on food supplies and cook at home.”
While retail grocery demand remains strong, Sanderson explained that food service demand is poor. “According to the National Restaurant Association, in two weeks alone restaurants have lost over $25 billion in sales, which is a 50 percent decline in sales dollars since March 1; 44 percent of operators have temporarily closed their restaurants and 11 percent already anticipate permanently closing within 30 days.”
“Fortunately, we entered this crisis with a strong balance sheet,” Mike Cockrell said. “We are talking with our banks on a regular basis. We are confident that we have the liquidity we need to manage through this event. We’ve run models and assumptions for the balance of the quarter and for the balance of the year, but it is simply impossible in this current environment to estimate with any level of confidence what chicken markets might look like as we move to the next few months.”
Export markets are mixed. The value of the dollar and the price of oil are creating liquidity issues and making it difficult for some markets to buy the volumes they would like. “Dark meat prices are holding up better than white meat,” Cockrell said. “The volumes to Mexico, Kazakhstan, Angola and African countries are down. With current uncertainty, most export partners are buying hand to mouth. Leg quarter prices to Mexico, Cuba, and other markets are currently in the mid to high 20-cent range.”
Sanderson stressed that the company’s focus is to serve customers. “Some people in the hard-hit areas of our country went to empty grocery stores two weeks ago,” he said. “The inability to get food has heightened stress and anxiety already felt by consumers across the country. We’re going to do our best to continue to provide safe, high-quality chicken to our customers. We will do everything we can between now and the end of this crisis to help them survive and emerge stronger on the other side.”
Asked how he thinks chicken sales will hold up compared to pork and beef, Sanderson replied,
“The average consumer has about $85 a week to spend at the grocery store. I cannot see them buying a
12-pound tenderloin at $9 a pound. They’re going to buy a package of Sanderson Farms boneless
breasts for $3.99 a pound even if the beef is discounted.”
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