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

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Two culprits – overly largde herds and rising costs due to higher grain prices have been shrinking the botton lines at many hog operationsw inNorth Carolina, the nation’s secondd largest hog-producing 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 tallyu up. “A lot of people have just not realizedc what’s been going on in the industry,” says Deborah CEO of the , an industry trade group.
Already, she says, “Wew are beginning to see some (hog leave the industry due to financial At three eastern North Carolina relief from the pressure will come from Chaptet 11 or Chapter12 reorganization. Chapteer 12 is a provision written into the federal bankruptcu code in 1986 dealing exclusivelyg withfamily farms. Both Chaptef 11 and Chapter 12 allow a company breathing room to attemptga reorganization. In their reorganization Bunting Swine Farms of Wilson listed assets of justunder $1 milliobn and debts of $12.4 Perfect Pig of Newton Grovwe in Sampson County listed assetsw of $9.
3 million and debts of $23 and of Enfield listed assets and debts in the $1 millionb to $10 million range. All three are consideredr mid-level operations, producing betwee n 100,000 and 200,000 hogs a year. North Carolina farmers raise about 10 million hogs a year for Some farmersare independent, taking their product directlgy to the market. Other farmers operate under contract with one of the majorpork producers, such as Virginia-based , which in the past has had contracts with more than 1,000 North Carolina farms.
Another promineng producer is , which has had dealzs with as many as 150 North Carolina Recent developments at publicly traded Smithfielfd Foodsillustrate what’s ailinb the industry. The meat-producing giant, in a recent U.S. Securitie s and Exchange Commission filing, reported losses of $112 million for the nine monthasending Feb.1, 2009, explaining that its costxs per hundred weight of hog had risenm from $49 to $62, largelg due to higher grain prices. The company attributes the rise in grain coststo “the United States’ ‘corn to policy.
” Meanwhile, as costs were climbing, the Smithfields managers say, the markett was glutted because a record numberes of hogs were slaughtered in 2008 and into 2009. Demand for pork at the grocergy store has been flat inreceny months. New retail numbers will begin to tell the effectws of theH1N1 scare. While a final determinatio n has notbeen made, the blame for the flu outbreakk is being laid to hog farmes by some. In response to markef conditions, Smithfield has been closinb someproduction plants, including one in Elon near and shaving 1,800 employeesx companywide. “The whole industry is feeling says Dr.
Todd See of Looking down the road, grain pricess have started to moderate in recentweeka and, Johnson says, the latest North Carolina herd is expectedf to be 3 percent smaller than last Nationwide, the movement toward smaller herds might be even more pronouncedx than North Carolina’s 3 percent, says Christinew McCracken, an analyst with Cleveland Research Co. “wA lot of these (hog producers) have been losing money for 18 she says. “And that’es a long time.
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