071216 Tyson Foods' Exports Helped By Weaker DollarNovember 30, 2007The decline of the dollar could fuel international exports and bolster the coffers of global companies like Springdale-based Tyson Foods Inc. When Tyson Foods sells chicken to Russia, the weaker dollar means its chicken is more affordable there. Russian consumers are likely to buy more of the cheaper chicken. It's an added bonus the company could reap as the declining dollar makes its meat products more affordable to consumers in the expanding economies of Europe and Asia, said Tim Yeager, economist and finance professor at the University of Arkansas. Tyson Foods recently announced its 2010 goals, which includes international sales of $5 billion, a hefty 40 percent increase from the $3 billion the company recently reported in fiscal 2007. Rick Gruebel, president of Tyson Foods' International, said the majority of the growth will come from its expansion into China and Brazil through future acquisitions. While the company did not factor the sagging dollar into its projections, it admits growing export sales are good for business, particularly at a time when higher grain costs threaten profit margins. If the company attains its 2010 goals, international sales will comprise 16.6 percent of the projected $30 billion in total sales. In 2007, international sales were roughly 11 percent of Tyson Foods' overall sales revenue. International sales include exports and sales generated by the company's facilities in Canada, Mexico, Argentina and China. Though the company said it does not disclose the breakdown of exports and foreign generated sales, in a recent federal filing with the Securities and Exchange Commission it reported North American export sales of $2.7 billion. This indicates exports comprise a large part of the company's international sales and corresponding profits. The company said it exported products to more than 80 countries, including Canada, Central America, China, the European Union, Japan, Mexico, Russia, South Korea and Taiwan. Erin Daley, economist with the U.S. Meat Export Federation, said the declining dollar has helped U.S. beef and pork exports in Asia, despite trade disruptions in South Korea, as major U.S. competitors — Brazil and Australia — have each seen their currencies rise. The Australian dollar has strengthened by more than 30 percent against the Japanese Yen since 2003, making it more expensive for the Japanese to import Australian beef, Daley said. In Japan, the weaker dollar could help the U.S. restore some of the beef market share it lost to Australia after the market closed in 2003 due to mad cow concerns, she said. She said pork exports to Japan, Canada and South Korea are more attractive because of the weaker U.S. dollar against those currencies. Pork exports to China recently gained strength because of increased demand fueled by widespread disease in the Chinese herd earlier this year, Daley said. Even though China pegs its currency to U.S. rates, the dollar has still declined roughly 5.7 percent against the Yuan in the last year. Daley said this is good news for U.S. pork producers. Poultry exports are poised to increase as well, according to Richard Lobb, spokesman for the National Chicken Council. He said chicken exports through September were up 19 percent in volume and 54 percent in value. The jump in value was helped by higher pricing by U.S. poultry companies to combat higher grain costs, Lobb said. Russia is the largest buyer of U.S. chicken. Against the Russian ruble, the U.S. dollar has declined 17 percent since 2003, and nearly 8 percent in the last year. Daley said the dollar's weakness is likely to continue into 2008. Devaluation of the U.S. Dollar In the Last Year As of Nov. 30, 2007 US to Canadian, down 12.7% US to Euro, down 11% US to Russian Ruble, down 7.6% US to Japanese Yen, down 6.03% US to Chinese Yuan, down, 5.73% US to Korean Won, down 1.48% US to Taiwan Dollar, down 0.8% US to Mexican Peso, down .0.27%
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