"Pink slime" fears eat into Tyson The "pink slime" controversy that has plagued the US beef industry took a bite out of Tyson Foods" second-quarter earnings. The biggest US meat processor by sales said on Monday that its beef sales volume fell 10.7 per cent year-on-year in the second quarter and that its beef business recorded a $1m operating loss. "The unwanted controversy over lean, finely textured beef temporarily destroyed demand for ground beef, and beef in general, virtually overnight," James Lochner, Tyson's chief operating officer, said on a conference call with analysts. The beef industry has been under pressure this year over a public outcry against an additive known as "lean, finely textured beef." The additive, known pejoratively as "pink slime," is often found in ground beef and is made from beef trimmings that are processed with ammonia to make them lean and free of bacteria. The beef industry was dealt another blow last month when US agriculture officials confirmed a new case of mad cow disease in California. The discovery sent cattle prices down sharply because of fears that global beef demand would wane. Tyson said on Monday that cattle prices had rebounded but that the company had experienced "extreme margin compression" in March and early April. Backlash against the so-called "pink slime" filling caused Beef Products Inc to suspend production in three of its plants. Mr Lochner said at a conference in March that the negative publicity was hitting ground beef demand and that BPI's move would create a shortfall in beef supply. "It's a very unfortunate thing because it was a very safe, very wholesome, very nutritious product that will now be not available to the consuming public," Mr Lochner said. In spite of pressure on its beef business, Tyson's net income rose 6.4 per cent year-on-year to $166m, or 44 cents a share. Sales rose 2.5 per cent to $8.2bn. High feed costs have been putting pressure on Tyson to raise prices, but the beef controversy has made this increasingly difficult. However, Tyson said that it expected a decline in industry production this year to make it easier for the company to raise chicken prices. Tyson made an operating profit of $145m in its chicken business and $115m from pork. The results were better than Wall Street analysts expected, and Tyson's shares rose 3.22 per cent to $18.62 in midday trading.