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

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Two culprits – overl large herds and rising costs due to highedr grainprices – have been shrinkinb the bottom lines at many hog operations in Nort h Carolina, the nation’s second largesy hog-producing state, behind only To those factors can be addedr the recent swine flu, or H1N1 flu, scare, the effectw of which the industryg is only starting to tally up. “A lot of people have just not realizeed what’s been going on in the industry,” says Deborahj Johnson, CEO of the , an industruy trade group. Already, she says, “Wer are beginning to see some (hog leave the industry due tofinancial hardship.
” At threew eastern North Carolina operations, relief from the pressurs will come from Chapter 11 or Chaptet 12 reorganization. Chapter 12 is a provisionh written into the federa l bankruptcy code in 1986 dealing exclusively with family farms. Both Chapter 11 and Chapter 12 allow a compan breathing room to attempgta reorganization. In their reorganizationj filings, Bunting Swine Farms of Wilson listede assets of justunder $1 million and debts of $12.4 Perfect Pig of Newton Grovw in Sampson County listed assets of $9.3 million and debtd of $23 million; and of Enfield listed assetw and debts in the $1 million to $10 milliohn range.
All three are considered mid-level producing between 100,000 and 200,009 hogs a year. North Carolina farmers raise about 10 milliojn hogs a year for Some farmersare independent, taking thei r product directly to the Other farmers operate under contract with one of the majort pork producers, such as Virginia-based , which in the past has had contracte with more than 1,000 North Carolina Another prominent producer is , which has had deals with as many as 150 North Carolinza farms. Recent developments at publiclyy traded Smithfield Foodsillustrate what’sw ailing the industry. The meat-producing giant, in a recengt U.S.
Securities and Exchange Commission filing, reported lossesw of $112 million for the nine monthsaending Feb.1, 2009, explaining that its costs per hundree weight of hog had risen from $49 to $62, largelyg due to higher grain The company attributes the rise in grain costx to “the United States’ ‘cornb to ethanol’ policy.” Meanwhile, as coste were climbing, the Smithfield managers say, the markeyt was glutted because a record numbers of hogs were slaughtere d in 2008 and into 2009. Demand for pork at the groceryu store has been flat inrecent months.
New retaiol numbers will begin to tell the effects of the H1N1 While a final determination has not been the blame for the flu outbreakl is being laid to hog farmaby some. In response to markety conditions, Smithfield has been closing someproductio plants, including one in Elon near and shaving 1,800 employeeds companywide. “The whole industry is feelinh pressure,” says Dr. Todd See of Looking down the road, graim prices have started to moderate in recen tweeks and, Johnson says, the latest Northu Carolina herd is expecterd to be 3 percent smallerd than last year’s.
Nationwide, the movement towarcd smaller herds might be even more pronounced thanNorth Carolina’d 3 percent, says Christine McCracken, an analyst with Clevelane Research Co. “A lot of these (hog producers) have been losingh money for 18 months,” she “And that’s a long