The third-biggest U.S. chicken producer plans to test robots at a “big bird” processing plant in Texas, a first for the industry if successful.
The push by Sanderson Farms Inc. for more automation comes at a cost of $5 million a plant and could replace as many as 75 workers per facility, Chief Executive Officer Joe Sanderson said. The company already uses robots at three plants tasked with removing bones from small and medium sized birds for white meat. It now aims to do the same with chickens nine pounds or bigger.
“We are going to see if we can get that equipment where it is efficient enough to work on the larger bird,” Sanderson said in an interview with Bloomberg. “It hasn’t been done in the industry yet. I’m certain it has been attempted.”
If it works, the company will broaden the use of robots, which already are used in plants dealing with dark meat. The trial run is set to start in July and comes as Sanderson faces a labor crunch just as chicken demand from restaurants and food-service outlets is taking off and fueling profit higher.
“All of our plants are very tight with labor,” Sanderson said. “We are able to process the birds and operate our feed mills and hatcheries, but we are definitely tight.”
Sanderson also is dealing with delays tied to surging prices for building materials and animal feed. The Laurel, Mississippi-based company has to put off building a new chicken-processing plant even though Americans’ appetite for poultry is on the rise.
With lumber prices tripling in the last 18 months, it’s too costly to build the over 400 chicken houses necessary to supply a new factory, according to the CEO.
“My heart tells me to build a plant right now. My head tells me to be patient, so I’m going to be patient,” Sanderson said on an earnings call with analysts. “This is not a good time to build.”
The comments underscore how high lumber costs are rippling through supply chains, likely contributing to higher chicken prices ahead. Tariffs on steel imports and the highest grain prices in eight years also threaten profits of the new plant.
Sanderson said the company could announce the location of a new plant in June or July after they finish vetting the site, and get clarity on the corn and soybean crops currently emerging in U.S. fields that could feed the chickens.
“We want to see what grain prices are going to be in 2021-22 and also want to see what the commodity prices are going to be for concrete, steel and lumber,” Sanderson said.
Tightness in labor markets is keeping a lid on American meat output, Sanderson said. He tied much of the problem to enhanced unemployment benefits that are keeping some people out of the workforce.
“We could hire a bunch of people if we could get them to come to work,” he said.
For now, high chicken prices are brunting the costs of elevated feed prices, with the company benefiting from a rebound in the food sector from the coronavirus pandemic. A flurry of new chicken sandwiches on the menu of fast-food restaurants also is boosting sales and profit.
Sanderson on Thursday reported earnings and sales ahead of analyst estimates. Shares though fell as much as 4.6%, the most since late January, amid higher animal feed costs.
Demand overall is so high that Sanderson says the company is short of chicken wings “every week.”
The CEO said he expects the trend to continue as more people travel and dine out. “We think it’s going to be a pretty good summer,” Sanderson said.