Lykes Bros. Competition
Now Viewing Lykes Bros.'s competition in: Agriculture Livestock Production (primary)
Call Preparation Questions
Customers, Marketing, Pricing, Competition
How does the farm sell its product? - Livestock are often sold at local auction markets. Large operators or cooperatives may sell directly to meatpackers. Chickens are often grown on contract to processors.
How many large customers does the farm have? - Packer consolidation has reduced the number of buyers at local auctions.
What percentage of its production does the farm sell under contracts? - Contracts typically specify product quality and a formula for determining prices.
Does the farm belong to a cooperative? - Co-ops typically handle sales and are able to buy supplies in bulk at lower costs.
How does competition with industrial farms affect the operation? - Because of economies of scale, big farms depress prices.
Does the operation sell directly to consumers, bypassing processors? - Some small livestock producers are marketing and selling directly to consumers through local markets, bypassing processing firms.
Competitive Landscape
Demand for meat, poultry, and dairy products is driven by domestic food consumption trends. The profitability of individual farms depends on efficient operations. Large companies have advantages in vertically integrated operations and economies of scale. Small operations can compete effectively by supplying local markets, specializing in heritage breeds, or raising humanely treated or hormone-free animals. The industry is labor-intensive: average annual revenue per worker for all US livestock and poultry farmers is $100,000.
Business Challenges
CRITICAL ISSUES
Volatile Market Prices - Livestock market prices can fluctuate considerably monthly and yearly. Futures prices for hog bellies can vary 100 percent in 12 months; for cattle, 30 percent. Chicken prices are less volatile, but often vary 10 percent during the year; the costs of animal feed, principally corn, can vary 30 percent.
Risk of Catastrophic Animal Diseases - Despite advances in medicine, the risk of infection is always present, and disease can wipe out an entire herd. Animals that are undetected carriers of foot-and-mouth disease (FMD); bovine spongiform encephalopathy (BSE); or swine flu can enter the country in spite of border checks. A recurrence of BSE could halt all US meat exports and decimate the industry. Farms have increased biosecurity measures (hand sanitizers, sanitary foot baths) to limit the spread of disease.
Industries Where Lykes Bros. Competes
- Agriculture
- Animal Production(primary)
- Agricultural Support Activities & Products
- Construction
- Construction Materials
- Leisure
