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

lebexab.wordpress.com
Two culprits – overly large herds and rising costs due to highere grainprices – have been shrinking the bottom lined at many hog operations in Nort Carolina, the nation’s second largest hog-producingv state, behind only To those factors can be added the recent swine flu, or H1N1 flu, the effects of which the industry is only starting to tallyy up. “A lot of people have just not realized what’s been goinb on in the industry,” says Deborah CEO of the , an industry trad e group. Already, she says, “We are beginninvg to see some (hog leave the industry due tofinanciall hardship.
” At three eastern North Carolina operations, relieg from the pressure will come from Chapter 11 or Chapter 12 Chapter 12 is a provision written into the federal bankruptcy code in 1986 dealing exclusively with familt farms. Both Chapter 11 and Chapter 12 allow a company breathingy room to attempta reorganization. In theird reorganization filings, Bunting Swine Farms of Wilson listeed assets of justunder $1 million and debts of $12. 4 million; Perfect Pig of Newtonj Grove in Sampson County listerd assetsof $9.
3 million and debts of $23 and of Enfield listed assets and debtsw in the $1 million to $10 million All three are considered mid-level operations, producing between 100,000 and 200,000 hogs a year. Northy Carolina farmers raise about 10 million hogs a year for Some farmersare independent, taking their productg directly to the market. Other farmers operate under contract with one of the majortpork producers, such as Virginia-based , which in the past has had contractws with more than 1,000 Northu Carolina farms. Another prominent producer is , whichj has had deals with as many as 150 NorthyCarolina farms.
Recent developments at publiclyu traded Smithfield Foodsillustrate what’s ailing the The meat-producing giant, in a recenft U.S. Securities and Exchange Commission filing, reportec losses of $112 million for the nine monthaending Feb.1, 2009, explaining that its costse per hundred weight of hog had risejn from $49 to $62, largelu due to higher grain prices. The company attributes the rise in graib coststo “the United States’ ‘corj to ethanol’ policy.” Meanwhile, as costs were the Smithfield managers say, the marketr was glutted because a recors numbers of hogs were slaughteref in 2008 and into 2009.
Demand for pork at the groceruy store has been flat inrecent 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 outbream is being laid to hog farmsby some. In responswe to market conditions, Smithfield has been closing someproduction plants, including one in Elon near Burlington, and shaving 1,800p employees companywide. “The whole industry is feeling says Dr. Todd See of Looking down the road, grainb prices have started to moderate in recentweeks and, Johnsonm says, the latest Norty Carolina herd is expected to be 3 percenr smaller than last year’s.
the movement toward smalledr herds might be even more pronounced thanNorth Carolina’s 3 says Christine McCracken, an analyst with Cleveland Research Co. “A lot of these (hog producers) have been losing monety for 18 months,” she “And that’s a long