Joe Sanderson is the third generation involved in what’s become one of America’s largest meat processors.

 

LAUREL, MISS. — In America, it’s common for big corporate executives to spend their lives moving from one company to another, leaving business success in their path, but never really settling down. Joe Sanderson, chairman and chief executive officer of Sanderson Farms in Laurel, Miss., has taken a different path. He’s spent virtually his entire life in his home state of Mississippi, growing what started out as a feed, seed and agricultural supply store into America’s third-biggest poultry company.

Family tradition

Mr. Sanderson is the third generation involved in what’s become one of America’s largest meat processors. The company was founded in 1947, when his grandfather, D.R. Sanderson, opened a farm-supply business that sold feed, seed, fertilizer and farm supplies. During the next few years, Mr. Sanderson’s uncle, Dewey Sanderson, and his father, Joe Frank Sanderson, added poultry processing to the growing business in Laurel. In the 1950s, the family built a small hatchery and a feed mill. They started growing and contracting live chickens and selling the chickens to processing plants in New Orleans, Jackson, Miss., and Mobile, Ala. In 1961, the company merged with the Miss Goldy’s Chicken company, from Hazlehurst, Miss., and bought out the merger partners over the next four years. Sanderson Farms continued to use the Miss Goldy brand name.

“Today, we have annual sales of $2.68 billion,” Mr. Sanderson said in describing the company that has been publicly traded since 1987. “We have plants in Mississippi, Louisiana, Texas, Georgia and North Carolina.”

The company currently is working out the details of opening another plant in North Carolina and is constructing a new poultry complex in Palestine, Texas.

“Our plants in those five states process more than 9.375 million birds a week,” Mr. Sanderson said. “We have more than 11,000 employees in our 10 plants — when the new Palestine plant opens, we’ll add another 1,000 — and we have more than 800 independent contract growers, as well as hatcheries and feed mills. Our market extends across the U.S.; we’re in virtually every state, as well as overseas.

“I’ve always worked in the poultry industry, and I worked my way up in the business. In summers, I helped my grandfather in the hatchery. I graduated from Millsaps College, a liberal arts college in Jackson, Miss., in 1969, but worked in the business all through college: worked in live production for two years, worked at the Laurel processing plant for two years and in sales for two years. In 1974, I became division manager at Laurel.”

In 1965, the company built the poultry complex in Laurel, which included the plant, the hatchery and the feed mill. Mr. Sanderson served under company president Odell Johnson for a long time. Mr. Sanderson became president of Sanderson Farms in 1989 and held the position until 2005, when he became chairman. He was succeeded as president and chief operating officer by a longtime, well-known executive in the poultry industry, Lampkin Butts.

“As president and chief operating officer, he’s responsible for the day-to-day operations of the company and he does a great job,” Mr. Sanderson said. “As chairman, I have overall responsibility for the company, financial responsibilities and conducting the business of the company board.”

Mr. Sanderson has very definite ideas about how to run a business, even one as big as Sanderson Farms.

“My business philosophy is this: We (the company) have a lot of constituents and I’m responsible to all of them,” he said. “They include our shareholders, our customers, our growers and my employees. It’s very important to always be honest with all of them, even if the news isn’t always good.

“It’s also very important to use our assets wisely, including maximizing value to our shareholders. We also must be very responsible stewards of our environment. And we must be, and are, very good citizens of all the communities where we live and work. My grandfather said taking care of our communities where we live and work is one of our greatest responsibilities. We don’t publicize our charitable work and donations a great deal, because we don’t like to pound our chests. But we do support many charities in all our communities.”

Market challenges

There always seems to be a surprise around the corner in the poultry industry, and Mr. Sanderson is well used to that by now. The latest development he’s dealing with in the poultry industry is the Russian ban on chicken imports from the United States and several other western countries.

Mr. Sanderson isn’t greatly surprised by the recent Russian decision to bar the imports of American poultry; this isn’t the first time the country has stopped importing chicken from the United States.

“Often their decision to do this is in retaliation for something someone else has done,” Mr. Sanderson said. “The biggest import ban to American poultry by the Russians I can remember was back in 2002, when George Bush barred Russian steel from coming into the U.S. So, they stopped American chicken imports then, in retaliation for our move.

“Twelve years ago, they prevented American leg quarters from coming in, and that was our biggest export market. Today, Russia is a much smaller market for us overall. And since we knew this was coming, we’ve been preparing for this ban for a few months. So, I don’t think this will have a huge impact on our company or the industry over the long term.”

And it also doesn’t mean dark chicken meat will find more of a home in the United States either, Mr. Sanderson said with a laugh.

“Dark meat is generally exported, so it will go overseas to other countries where there’s a market for that meat,” he said.

But a market for dark meat does exist in the United States.

“Drums and thighs, in grocery stores,” he added.

Mr. Sanderson doesn’t expect the export market to Russia to re-open anytime soon.

“Not until this political situation calms down,” he predicted.

What’s helping Sanderson Farms and the rest of the U.S. poultry industry is that the market has become much more highly diversified.

“We ship to many more markets than we used to,” he pointed out. “At one time, Russia was 50% to 60% of our overseas exports, but it is much smaller than that now.”

In fact, he noted, Mexico is now the largest overseas market. There is also a lot of poultry exported to South America, Asia and Africa.

“Those areas were not big markets at all years ago,” he said.

Other big markets include former Eastern Bloc countries, the Mideast, China and Taiwan.

Valued industry asset

Mr. Sanderson’s business approach stems from his heritage.

“My values come from my home, from my upbringing, the way I was raised,” he said. “My family raised me with a certain way of looking at things, how to carry out priorities that are important and how to solve problems in life. Those values don’t change; you don’t decide to do things differently because now you’re in business. You carry out your responsibilities in a consistent manner, based on what you were taught growing up.”

Mr. Sanderson has used those values not only to successfully operate his company, but he has also made great contributions to the poultry industry nationally, as well as to the continued economic growth of Mississippi.

Mr. Sanderson has been a past chairman and is a current director of three trade associations: the National Chicken Council, the Mississippi Poultry Association and the Mississippi Manufacturers Association.

But he’s still in the lead in the continued growth and success of Sanderson Farms. And there’s no doubt the company, minus occasional setbacks that are just part of life in the poultry- and meat-processing industry, is moving ahead. Today, four plants make tray-pack products for grocery stores, and five plants deliver broilers, tenders and wings to distributors. Dark meat tends to go to countries and areas that are gaining wealth, where residents have a greater ability to afford a protein diet.

While the chicken industry has grown greatly, in part due to a selling point that the birds make healthier meat for consumers, poultry also has had its ups and downs, Mr. Sanderson said. Back in 2007, the American industry was setting 220 million eggs a week. A 10% slump set in, but that slump is now being reversed. According to the U.S. Department of Agriculture, in mid-August hatcheries in the U.S. 19-state weekly program set 206 million eggs in incubators, up 2% from a year ago.

“There are two problems we’ve faced,” Mr. Sanderson said.

Grain prices have been historically high. Ethanol takes 40% of the American corn crop, and a major drought two of the last three years has hurt. In fact, there were four bankruptcies in 2011 in the industry; production was down the last two years, in 2012 and 2013. There were plants being shut down.

“But I’m always optimistic,” he said. “We opened a new plant three years ago. We’re building a new plant now. I think chicken is a healthier food choice and less expensive than other meats. We’re very good on deboning and tray packs. We’ve built the last six complexes in the chicken industry.”

Mr. Sanderson pointed to huge changes in the industry itself, as well as what he has seen during his 45-year involvement in the chicken industry.

“The product mix has changed greatly,” he said. “One of the biggest changes is the size of the bird, also the technology that’s involved in poultry and the consolidation in the marketplace where we sell. Other pluses for us: the evolution of fast-food that’s resulted in a great increase of opportunities for chicken, the great growth in casual dining, and the move from commodity to value-added chicken.”

Mr. Sanderson referred back to the size of the birds: “Years ago, we were growing 3 1/2-lb chickens. Now they’re 6 1/2 to 8 1/2 lbs.”

Vaccinations available today have made a difference, too.

“You don’t see some of the poultry diseases you used to see,” he added.

One major change affecting the poultry industry is the new inspection rule, but it probably won’t have a great effect on Sanderson Farms.

“Our line speeds are 70 birds a minute,” he said. “We have no high-speed lines. In fact, most companies and plants run higher line speeds than we do. A lot of the discussion and debate about the new poultry rule that the two sides were having, the industry and government versus the consumer activist groups, seems to center on the line speeds. And line-speed changes were left out of the final rule anyway.”

The total number of birds allowed to pass through a line remains capped at 140 per minute. Mr. Sanderson said his company keeps the line speeds low because “we feel it’s better for the workmanship of the products we’re creating, and for good yields from the birds in our plants. We basically do a much better job this way, so we’re not planning to change it.”

While one of the major selling points of the new plan has been to shift quality control from U.S.D.A. inspectors to plant employees, that also won’t affect Sanderson operations.

“We already have been doing our own Q.C. (quality control) anyway,” Mr. Sanderson said.