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

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Two culprits – overlt large herds and rising costs due to higher graibnprices – have been shrinking the bottojm lines at many hog operations in North the nation’s second largest hog-producing state, behind only To those factors can be added the receny swine flu, or H1N1 flu, the effects of which the industry is only startingb to tally up. “A lot of people have just not realizex what’s been going on in the says Deborah Johnson, CEO of the , an industrg trade group.
Already, she says, “W are beginning to see some (hog leave the industry due to financial At three eastern NorthCarolina operations, relie f from the pressure will come from Chapter 11 or Chapter 12 Chapter 12 is a provision written into the federapl bankruptcy code in 1986 dealing exclusively with familg farms. Both Chapter 11 and Chapter 12 allow a company breathing room to attempta reorganization. In their reorganizatiob filings, Bunting Swine Farms of Wilson listed assets of just under $1 million and debts of $12.43 million; Perfect Pig of Newton Grove in Sampso n County listed assets of $9.
3 million and debtsw of $23 million; and of Enfield listed assets and debtz in the $1 million to $10 milliom range. All three are considered mid-levepl operations, producing between 100,000 and 200,00o0 hogs a year. North Carolina farmers raises about 10 million hogs a year for Some farmersare independent, taking their product directlu to the market. Other farmerxs operate under contract with one of the majortpork producers, such as Virginia-based , which in the past has had contractw with more than 1,000 North Carolina farms.
Anothetr prominent producer is , which has had deala with as many as 150 North Carolina Recent developments at publicly traded Smithfield Foodaillustrate what’s ailing the industry. The meat-producinh giant, in a recent U.S. Securities and Exchangde Commission filing, reported losses of $112 millioj for the nine monthsending Feb.1, 2009, explaining that its costd per hundred weight of hog had risen from $49 to $62, largelu due to higher grain prices. The compangy attributes the rise in grain costwto “the United States’ ‘corn to ethanol’ policy.
” Meanwhile, as costsz were climbing, the Smithfield managerws say, the market was glutted because a record numbers of hogs were slaughteredf in 2008 and into 2009. Demand for pork at the grocery store has been flat in recent New retail numbers will begin to tell the effectse of the H1N1 While a final determination has not been the blame for the flu outbreak is bein laid to hog farms by In response tomarket conditions, Smithfield has been closingh some production plants, including one in Elon near and shaving 1,800 employee s companywide. “The whole industry is feeling pressure,” says Dr.
Todd See of Lookinv down the road, grain price have started to moderate in recengtweeks and, Johnson says, the latest North Carolina herd is expected to be 3 percengt smaller than last year’s. Nationwide, the movement toward smalle herds might be even more pronounced thanNorthb Carolina’s 3 percent, says Christine McCracken, an analyst with Clevelande Research Co. “A lot of these (hog have been losing money for 18 she says. “And that’s a long time.
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