Increased market share became Tyson Foods' goal, leading the company to ramp up production at its chicken plants and generally speed up the line. That strategy has changed. The company is cutting back, closing two plants earlier this year and announcing plans last month to shut four more. Demand for its product has leveled off, and wholesale prices have fallen—which is not to say all contributing factors were beyond the company's control. Rivals and industry analysts say Tyson helped the trends along by producing so much more chicken, the Wall Street Journal reports. "The industry sometimes overshoots," a consultant said.
Tyson miscalculated late last year when projecting chicken demand from grocery stores and the type of chicken that would be needed, CEO Donnie King said in February. Part of the reason for producing more chicken was because it was forced to buy so much from outside processors, even as prices were going up. Prices for boneless, skinless chicken breasts dropped to less than $1 by January, after being $3.60 a pound the previous June, according to USDA data. The wholesale price now is about $1.40. Tyson removed the president of its poultry operation in January. "You had a supercycle for chicken that played out in 2021 and 2022," an analyst said. "I get why they [Tyson] wanted to increase production after feeling like they missed out."
Plants in North Little Rock, Arkansas; Corydon, Indiana; and Dexter and Noel, Missouri, are scheduled to shut down in the first half of fiscal 2024, per USA Today; they employ roughly 3,000 people. Closings in Glen Allen, Virginia, and Van Buren, Arkansas, were announced in March, per NPR. Tyson executives say the trends are headed their way now; the grocery store segment has become profitable, for example. Forecasts say demand for chicken will rise again as the price of beef increases. But King told analysts last month that "market conditions in chicken are still challenged." (More Tyson Foods stories.)
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