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Tyson foods sighted increased costs of grains and soybeans in their loss in profit, and warned consumers that prices on chicken will be raised “substantially“.

Tyson Foods Inc. reported Monday its quarterly profit fell 40% from a year ago, dragged down by wider losses in its beef business and surging grain and fuel costs.

Near record-level costs for corn and soybean meal is taking its toll, and Tyson said it plans to raise costs for its chicken and beef products that account for 78% of its total sales.

“We have no other choice but to raise prices substantially,” CEO Richard Bond said in a conference call. “We are raising prices because we can’t absorb these costs. Despite concerns about the economy, people have to eat, and they will continue to eat protein.”

(emphasis mine)

Producers have been able, until this point, to refrain from passing along higher costs to their customers. This announcement by Tyson, shows that those companies are reaching the limits of pricing flexibility, and consumers will begin to feel the heat in the form of higher prices.

There will be a few less undifferentiated slabs of white meat and a few less nuggets on our (collective) dinner plates in 2008.

Energy is the culprit. More expensive oil = More grains/soybeans diverted to biofuel production = Less available for feeding livestock = higher costs for producers and consumers.

(via CNN via BullnotBull)