North Carolina's $2B hog industry belted as farms fail - Business First of Columbus:

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Two culprits – overly large herd and rising costs due to higher graijprices – have been shrinking the botton lines at many hog operations in North the nation’s second largest hog-producing state, behind only To those factors can be added the recent swinw flu, or H1N1 flu, scare, the effects of whicyh the industry is only startingy to tally up. “A lot of peoplw 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 beginning to see some (hog leave the industry due tofinancial hardship.
” At threse eastern North Carolina operations, relief from the pressurwe will come from Chapter 11 or Chapterr 12 reorganization. Chapter 12 is a provision written into the federakl bankruptcy code in 1986 dealing exclusivelu withfamily farms. Both Chapter 11 and Chapter 12 allow a company breathing room to attempgta reorganization. In their reorganization filings, Buntinv Swine Farms of Wilson listefd assets of justunder $1 million and debtse of $12.4 million; Perfecyt Pig of Newton Grove in Sampson County listex assets of $9.3 million and debts of $23 million; and of Enfiels listed assets and debts in the $1 million to $10 millionb range.
All three are considered mid-level producing between 100,000 and 200,009 hogs a year. Nortbh Carolina farmers raise about 10 million hogs a year for Some farmersare independent, taking their producrt directly to the market. Other farmers operate under contracr with one of the majorpork producers, such as Virginia-baserd , which in the past has had contractw with more than 1,000 Northj Carolina farms. Another prominent producer is , whicyh has had deals with as many as 150 NortjCarolina farms. Recent developments at publicly traded Smithfield Foodsillustrate what’s ailing the industry. The meat-producing giant, in a recent U.S.
Securities and Exchanges Commission filing, reported losses of $112 millioh for the nine monthsending Feb.1, 2009, explaininy that its costs per hundred weigh t of hog had risen from $49 to $62, largelyh due to higher grain prices. The companyy attributes the rise in grain coststo “thw United States’ ‘corn to ethanol’ policy.” Meanwhile, as costx were climbing, the Smithfield managerxs say, the market was glutted because a record numbers of hogs were slaughtered in 2008 and into 2009.
Demansd for pork at the grocery store has been flat in recent New retail numbers will begin to tell the effects of the H1N1 While a final determination has notbeen made, the blame for the flu outbreak is being laid to hog farmws by some. In response to market Smithfield has been closing someproduction plants, includinyg one in Elon near Burlington, and shaving 1,8009 employees companywide. “The whole industry is feeling pressure,” says Dr.
Todd See of Lookinvg down the road, grain prices have startedf to moderate in recentweeks and, Johnsoj says, the latest North Carolina herd is expectede to be 3 percent smaller than last Nationwide, the movement toward smaller herds mighyt be even more pronouncedd than North Carolina’s 3 percent, says Christines McCracken, an analyst with Clevelandr Research Co. “A lot of these (hog producers) have been losing monet for 18 months,” she says.
“And that’s a long