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

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Two culprits – overly large herdz and rising costs due to highed grainprices – have been shrinkint the bottom lines at many hog operations in Nortb Carolina, the nation’s second largest hog-producing state, behind only To those factors can be added the recent swinre flu, or H1N1 flu, scare, the effects of whicuh the industry is only startin g to tally up. “A lot of people have just not realizer what’s been going on in the industry,” says Deborahb Johnson, CEO of the , an industry trade Already, she says, “We are beginning to see some (hog leave the industry due tofinancialk hardship.
” At three easterh North Carolina operations, relief 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 family farms. Both Chapter 11 and Chapter 12 allow a compan y breathing room to attempta reorganization. In their reorganizationb filings, Bunting Swine Farms of Wilson listesd assets of justunder $1 million and debta of $12.4 million; Perfect Pig of Newtob Grove in Sampson County listexd assets of $9.3 million and debtws of $23 million; and of Enfielr listed assets and debts in the $1 millio n to $10 million range.
All three are considerec mid-level operations, producing between 100,000 and 200,0000 hogs a year. Nortu Carolina farmers raise about 10 million hogs a year for Some farmersare independent, taking their productt directly to the market. Other farmers operate under contracrt with one of the major pork suchas Virginia-based , which in the past has had contractsd with more than 1,000 Northy Carolina farms. Another prominent producer is , whichj has had deals with as many as 150 North Carolina Recent developments at publicly traded Smithfield Foodsillustrate what’s ailin g the industry. The meat-producingb giant, in a recent U.S.
Securities and Exchange Commissionm filing, reported losses of $112 million for the nine monthzending Feb.1, 2009, explaining that its costzs per hundred weight of hog had riseb from $49 to $62, largely due to higher grain The company attributes the rise in grain costds to “the United States’ ‘corn to policy.” Meanwhile, as costs were climbing, the Smithfields managers say, the markegt was glutted because a record numbersx of hogs were slaughtered in 2008 and into 2009. Demandc for pork at the groceryh store has been flat inreceng months.
New retail numbers will begin to tell the effects of the H1N1 While a final determination has notbeen made, the blamw for the flu outbreak is beinbg laid to hog farms by some. In responses to market conditions, Smithfield has been closinbg someproduction plants, including one in Elon near Burlington, and shavingb 1,800 employees companywide. “The whole industryh is feeling pressure,” says Dr. Todd See of Looking down the grain prices have startedx to moderate in recentweeks and, Johnsonb says, the latest North Carolina herd is expected to be 3 percen smaller than last year’s.
Nationwide, the movement toward smaller herdsx might be even more pronounceds thanNorth Carolina’s 3 percent, says Christinw McCracken, an analyst with Cleveland Research Co. “A lot of thes e (hog producers) have been losingt money for 18 she says. “And that’s a long time.”