Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from [Laura Farha Aslam – Stephens]
Laura Farha Aslam – Stephens
I'm trying to do a better job of understanding your turkey division and the moving parts. It did quite well compared to the challenges it faces. Was there anything in particular in the quarter that you could highlight in the turkey division that allowed it deliver pretty decent results in a tough environment.
Jeffrey Ettinger
I think the biggest impact probably related to the production cuts we put through last May that allowed us to be position going into the quarter with minimizing the amount of surplus meat we would have in the face of what we knew were going to be tough meat markets. It also allowed us to realistically feed fewer turkeys less grain at a very expensive price, and so we see that unit, our expectation has been by the second half of this year to start looking at positive comp and they seem to be well on their way toward achieving that.
Laura Farha Aslam – Stephens
In terms of your grain hedges, traditionally Hormel hedges its grain in the fall. Are you continuing your current grain hedging policies or have you changed them at all in the face of current volatility.
Jeffrey Ettinger
Really for the last two years we've maintained a policy that we're willing to take positions in the ranges of 25% to 75% coverage on the primary feed ingredients of corn and soy meal. They're not necessarily put on any more at one particular time and at any given time we look out at a time horizon of 18 to 24 months, but it varies as to how much ahead we are at any given period within that 24 month time frame.
Laura Farha Aslam – Stephens
When you look at the current economy as it stands, is this economic weakness favorable to you because you have some recession resistant products which is Spam or Chili or are tough economic times challenged because of the food service? If you had to weigh the two, which would you say is more a factor for Hormel?
Jeffrey Ettinger
In spite of the national economic brain trusts declaring that the recession started retroactively in the fall of 2007, we really didn't start seeing it in our business until the fall of 2008, so we're pretty early on still in measuring these effects. At this point I would really have to tell you it's mixed.
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