Tyson Foods Inc. TSN, -0.99% Chief Executive Donnie King said beef prices aren’t rising because the packaged meats company just decided to raise prices, but because of “market forces” including strong demand, COVID-19-related labor shortages that constrained production and record inflation. “Tyson does not set the prices for either the cattle we buy or the beer our customers purchase,” King said, in prepared testimony to Congress ahead of a U.S. House Agriculture Committee meeting scheduled for Wednesday. He blamed “basic economics” for the price increases, which states that when demand is high and supply is low, prices will rise, “which is precisely what they did.” He noted that since March 2020, the cost of corn is up 127% and the cost of soybeans is up 90%, and both are used in livestock feed, which comprises 65% of the cost of chicken and about 30% of the cost of finished beef. In addition, transportation costs are climbing, as international shipping container rates have jumped 68% from a year ago and diesel fuel costs have climbed 104%. Tyson’s stock, which fell 0.9% in afternoon trading, has gained 7.5% year to date, while the S&P 500 SPX, -2.11% has lost 11.7%.
