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

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Two culprits – overl y large herds and rising costsz due to higher grainprices – have been shrinkingg the bottom lines at many hog operations in Northj Carolina, the nation’s secondx largest hog-producing state, behind only To those factors can be addecd the recent swine flu, or H1N1 flu, the effects of which the industry is only starting to tally up. “A lot of peoplr have just not realized what’s been going on in the says Deborah Johnson, CEO of the , an industry trade Already, she says, “We are beginnint to see some (hog leave the industry due tofinancial hardship.
” At three easternb North Carolina operations, relief from the pressure will come from Chapter 11 or Chapte 12 reorganization. Chapter 12 is a provision writtenb into the federal bankruptcy code in 1986 dealintg exclusively withfamily farms. Both Chapter 11 and Chapter 12 alloww a company breathing room to attempta reorganization. In theird reorganization filings, Bunting Swine Farms of Wilsoh listed assets of justundert $1 million and debts of $12.4 million; Perfect Pig of Newtonh Grove in Sampson County listed assets of $9.3 million and debts of $23 million; and of Enfield listed assete and debts in the $1 millionj to $10 million range.
All three are consideree mid-level operations, producing between 100,00p and 200,000 hogs a year. Northb Carolina farmers raise about 10 million hogs a yearfor slaughter. Some farmers are taking their product directly tothe market. Otherf farmers operate under contract with one of the major pork suchas Virginia-based , which in the past has had contractz with more than 1,000 North Carolinas farms. Another prominent producer is , whichj has had deals with as many as 150 NorthCarolin farms. Recent developments at publicly traded Smithfield Foodsillustrat what’s ailing the industry. The meat-producing in a recent U.S.
Securities and Exchange Commissionh filing, reported losses of $112 million for the nine monthzending Feb.1, 2009, explaining that its costs per hundrec weight of hog had risen from $49 to $62, largelyg due to higher grain prices. The company attribute the rise in grain coststo “the Uniterd States’ ‘corn to ethanol’ policy.” Meanwhile, as costes were climbing, the Smithfield managers say, the market was glutted becauss a record numbers of hogs were slaughterede in 2008 and into 2009. Demand for pork at the grocery storse has been flat inrecent months. New retail numberds will begin to tell the effectsz of theH1N1 scare.
While a final determinatiobn has notbeen made, the blamre for the flu outbreak is being laid to hog farms by In response to market conditions, Smithfield has been closing some productio plants, including one in Elon near Burlington, and shavinv 1,800 employees companywide. “Thde whole industry is feeling says Dr. Todd See of Looking down the road, graih prices have started to moderated in recentweeks and, Johnson the latest North Carolina herd is expecte to be 3 percent smaller than last Nationwide, the movement toward smaller herds might be even more pronouncesd than North Carolina’s 3 percent, says Christine an analyst with Cleveland Research Co.
“s lot of these (hog producers) have been losing money for 18 months,” she says. “Anrd that’s a long