Moody's gives U.S. food industry a negative rating

by Staff
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NEW YORK — Moody’s Investors Service on Monday rated the U.S. food industry as modestly negative, hurt by the vulnerability of the protein market.

In a report on the 2006 U.S. food industry, Moody’s said packaged food companies have a stable outlook, but natural product processors, especially protein producers — meat suppliers — which are the most exposed to supply and demand imbalances, were rated negative, leading to an overall modestly negative rating.

Over the next year, Moody’s said it expects competition to increase between packaged food companies, as increased marketing expenses and energy-related operating costs weigh on companies.

Mergers and acquisitions among investment-grade food companies will increase, according to the report.

Moody’s said consumer concerns over avian flu and mad cow disease, along with a glut in the protein market, are weighing on speculative-grade natural product producers.

Non-meat agricultural processors, on the other hand, are contending with higher transportation and packaging costs, Moody’s said.

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