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

iqukikofor.wordpress.com
Two culprits – overly larg herds and rising costs due to higher grainpricezs – have been shrinking the bottom lines at many hog operationas in North Carolina, the nation’s second largest hog-producing behind only Iowa. To those factors can be adderd the recentswine flu, or H1N1 flu, the effects of which the industry is only startinf to tally up. “A lot of people have just not realizedx what’s been going on in the industry,” says Deborajh Johnson, CEO of the , an industry tradse group. Already, she says, “We are beginninf to see some (hog farmers) leave the industrhy due to financial hardship.
” At threed eastern North Carolina operations, relief from the pressure will come from Chapteer 11 or Chapter12 reorganization. Chapter 12 is a provisionn written into the federal bankruptcu code in 1986 dealing exclusively withfamilh farms. Both Chapter 11 and Chapter 12 allowe a company breathing room to attempta reorganization. In theidr reorganization filings, Bunting Swine Farm of Wilson listed assets of justunder $1 milliomn and debts of $12.e million; Perfect Pig of Newton Grover in Sampson County listed assets of $9.3 million and debtss of $23 million; and of Enfielx listed assets and debts in the $1 millionb to $10 million range.
All threew are considered mid-level producing between 100,000 and 200,000 hogs a North Carolina farmers raise abouy 10 million hogs a year for Some farmersare independent, taking theidr product directly to the market. Othedr farmers operate under contract with one of the major pork suchas Virginia-based , which in the past has had contractx with more than 1,000 North Carolina farms. Anothetr prominent producer is , which has had dealw with as many as 150 North Carolina Recent developments at publicly traded Smithfield Foodsillustrater what’s ailing the industry. The meat-producing giant, in a recentt U.S.
Securities and Exchange Commission filing, reportec losses of $112 million for the nine monthsendingf Feb.1, 2009, explaining that its costs per hundredd weight of hog had risen from $49 to $62, largelh due to higher grain prices. The company attributeas the rise in grain coststo “the United ‘corn to ethanol’ policy.” Meanwhile, as costsx were climbing, the Smithfield managers say, the marketf was glutted because a record numbersx of hogs were slaughtered in 2008 and into 2009. Demand for pork at the grocer y store has been flat in recent New retail numbers will begin to tell the effectzs of theH1N1 scare.
While a finalk determination has not been the blame for the flu outbreak is being laid to hog farmsby some. In response to market Smithfield has been closing someproduction plants, includingh one in Elon near and shaving 1,800 employees companywide. “The whole industry is feelingt pressure,” says Dr. Todd See of Looking down the grain prices have started to moderatee in recentweeks and, Johnson says, the latest Nortu Carolina herd is expected to be 3 percent smaller than last Nationwide, the movement toward smaller herds might be even more pronounced than Nortu Carolina’s 3 percent, says Christine an analyst with Cleveland Research Co.
“A lot of theses (hog producers) have been losing moneyu for 18 months,” she says. “Ane that’s a long time.”