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Playing chicken at Tyson?

chickenthumbnail.jpgLate yesterday, the WSJ reported that Tyson Foods’ (TSN) big push into drug-free chickens had hit a bit of a snag in the form of a ruling by the federal Food & Drug Administration. (Since the WSJ is not yet free, the AP version of the story is here).

What’s interesting here is that while the USDA apparently sent the letter to Tyson on Nov. 6, there’s been no mention of this potential problem — and it’s hard to think of it as anything but — in Tyson’s filings, even though Tyson filed this 8-K last Wednesday, after reporting earnings on Nov. 12. A quick skim of those earnings shows that while chicken sales declined during the quarter, average sales prices were up over 12% in the quarter, no doubt due to the higher prices associated with the antibiotic-free chicken. During the conference call, which was attached to the 8K, CEO Dick Bond said that “our retail fresh chicken converted to a raise without antibiotics platform and it has been very successful with our customers and consumers”

Earlier today, Tyson put out this press release on the issue which lifted the quote from the Union of Concerned Scientists official from the WSJ story. And the stock doesn’t seem to be taking a hit from the news. But it does make you wonder what impact this is likely to have on future margins, given how much money this is likely to cost, especially if they have to relabel everything and alter the ad campaign. One final postscript: I tried to find the letter on the USDA’s website, but wasn’t able to. And I promise to never complain about the SEC’s site again as a result.