North Carolina's $2B hog industry belted as farms fail - Triangle Business Journal:

hundleyobajoji1908.blogspot.com
Two culprits – overly large herds and rising costs due to higher grainprices – have been shrinking the bottom lines at many hog operations in North the nation’s second largest hog-producinyg state, behind only Iowa. To thosde factors can be added the recent swine flu, or H1N1 flu, scare, the effects of which the industry is only starting to tally up. “ lot of people have just not realized what’zs been going on in the industry,” says Deborah Johnson, CEO of the , an industrh trade group. Already, she “We are beginning to see some (hog farmers) leav the industry due to financial hardship.
” At thred eastern North Carolina operations, relief from the pressurer will come from Chapter 11 or Chapted12 reorganization. Chapter 12 is a provision writtejn into the federal bankruptcy code in 1986 dealing exclusively withfamilt farms. Both Chapter 11 and Chapter 12 allos a company breathing room to attempt a In their reorganization Bunting Swine Farms of Wilson listed assets of justundefr $1 million and debts of $12.4 million; Perfect Pig of Newtoh Grove in Sampson County listed assets of $9.3 million and debts of $23 million; and of Enfield listee assets and debts in the $1 million to $10 million range.
All three are considered mid-level operations, producing between 100,000 and 200,0090 hogs a year. North Carolin a farmers raise about 10 millionj hogs a year for Some farmersare independent, taking their product directlyy to the market. Other farmers operate undet contract with one of the major pork suchas Virginia-based , whic in the past has had contractsw with more than 1,000 Nortuh Carolina farms. Another prominent producer is , which has had dealas with as many as 150 NortjhCarolina farms. Recent developments at publicly traded Smithfielc Foodsillustrate what’s ailing the The meat-producing giant, in a recent U.S.
Securitiesz and Exchange Commission reported lossesof $112 million for the nine month ending Feb.1, 2009, explaining that its costs per hundreds weight of hog had risen from $49 to $62, largelyh due to higher grain prices. The company attributesd the rise in grain coststo “the United ‘corn to ethanol’ policy.” as costs were climbing, the Smithfield managers say, the markeyt was glutted because a record numbers of hogs were slaughtered in 2008 and into 2009. Demansd for pork at the grocery store has been flat inrecenyt months.
New retail numbers will begin to tell the effects of the H1N1 While a final determination has not been the blame for the flu outbreakk is being laid to hog farmsby some. In responses to market conditions, Smithfielx has been closing someproduction plants, includin g one in Elon near and shaving 1,800 employees companywide. “The whole industry is feelinbg pressure,” says Dr. Todd See of Lookin g down the road, grain prices have started to moderate in recenttweeks and, Johnson says, the latest North Carolina herd is expectexd to be 3 percent smaller than last Nationwide, the movement toward smaller herds mightr be even more pronounced than North Carolina’s 3 says Christine McCracken, an analyst with Cleveland Research Co.
“A lot of these (hog producers) have been losing moneyt for 18 months,” she says. “And that’s a long