Tyson Foods Sees Higher Meat Prices

Tyson Foods products are seen on display in a grocery store, July 29, 2006 in a Danvers, Mass file photo. Tyson Foods Inc., the world's largest meat processor, on Monday reported a wider-than-expected loss in the fiscal fourth quarter, weighed by one-time charges and losses in the chicken and beef sectors. (AP Photo/Lisa Poole, File) (Lisa Poole - AP)

-- Tyson Foods Inc., the world's largest meat processor, warned Monday that rising corn prices could mean U.S. consumers will have to pay more for chicken, beef and pork next year as it ended its fiscal year with a third straight quarterly loss.

The Springdale, Ark.-based company forecast a return to profitability in the new fiscal year, which started Oct. 1, as it gets a grip on costs and focuses on more efficient operations. Its shares rose 4 percent.

"The best thing I can say about fiscal 2006 is, it's over," Richard L. Bond, president and chief executive officer, said in a statement.

Bond said the price of corn, which is used as animal feed, is going up because of demand from ethanol plants that are springing up to provide alternative fuel sources to oil.

Corn prices recently reached 10-year highs.

"I believe the American consumer is going to have to pay more for protein. We are at new levels on corn that are not likely going to be retrenching back to '06 levels," Bond said in a conference call with analysts.

Bond said meat producers, processors and retailers will have to pass the higher grain price on to consumers because they cannot absorb it in their profit margins.

Bond did not provide more details but suggested the higher consumer prices could come when meat demand typically increases during the spring and summer.

"Quite frankly the American consumer is making a choice here. This is either corn for feed or corn for fuel, that's what's causing this," Bond said.

Tyson is pursuing joint ventures in South America and China and creating a renewable energy division to generate new revenue sources, it said in a statement.

Tyson expects to set up two joint ventures in South America in early 2007, a poultry operation in Brazil and a beef operation in Argentina, and a poultry joint venture in China sometime in this fiscal year.

On renewable energy, Tyson said it has created a new business unit to find ways to make money from its byproducts by converting animal fats and possibly chicken litter into biofuels.