Tyson Foods Inc (NYSE: TSN), the largest chicken producer in the U.S., has been approved to export poultry to China. The company expects to begin taking orders early 2020. Following the announcement, shares were up more than 2% on Monday.
Approval occurred following the U.S.-China phase one trade deal. U.S. Trade Representative Robert Lighthizer has projected, regarding all poultry exports to China, that annual shipments could value $1 billion.
The decision came about in part as a result of Beijing lifting their ban on imports after African swine fever has resulted in the death of millions of pigs and, subsequently, the rise of meat prices in China. The ban against U.S. poultry and eggs, which will come to an end after being in effect for nearly 5 years, began after a U.S. outbreak of avian flu.
With the decrease in availability of pork, chicken has become a viable pork alternative in China, a country where meat-eating has continued to grow in popularity and where chicken has already been a popular meat of choice, next to pork. Some Chinese dishes even include chicken parts that are less common in the U.S., such as chicken feet.
At the end of the day, all indicators point to the high likelihood that chicken is going to sell very well in China--and pork too, all things considered. "There's an extreme amount of interest ... from multiple buyers in China," said Bernie Adcock, chief supply chain officer for poultry at Tyson Foods. "My gut is they're going to buy a lot of both."
While all of Tyson Foods' 36 processing plants have received regulatory approval, though, it's not likely that the chicken giant will ship poultry to China from all of those plants, according to Adcock.
Chad Martin, Tyson Foods group president of poultry, has said that demand will determine what specific chicken products are exported to China. However, the first shipments may include parts such as leg quarters, whole legs, chicken paws, and wingtips.
Tyson Foods stock is up over 68% this year.