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

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Two culprits – overly large herds and rising costa due to higher grain prices – have been shrinking the bottom lines at many hog operations in North Carolina, the nation’sx second largest hog-producing state, behind only Iowa. To thoser factors can be added the recentswinre flu, or H1N1 flu, scare, the effect of which the industry is only startinb to tally up. “A lot of peoplee have just notrealized what’s been goingh on in the says Deborah Johnson, CEO of the , an industrg trade group. Already, she says, “We are beginning to see some (hog leave the industry due tofinancial hardship.
” At three easterb North Carolina operations, relief from the pressure will come from Chaptere 11 or Chapter 12 reorganization. Chaptert 12 is a provision written into the federal bankruptcy code in 1986 dealing exclusively withfamily farms. Both Chaptere 11 and Chapter 12 allow a companty breathing room to attempya reorganization. In their reorganization filings, Bunting Swinee Farms of Wilson listed assets of justundedr $1 million and debts of $12.4 million; Perfecgt Pig of Newton Grovwe in Sampson County listed assets of $9.3 milliob and debts of $23 million; and of Enfieldr listed assets and debts in the $1 millioj to $10 million range.
All three are considered mid-levekl operations, producing between 100,000 and 200,000 hogs a North Carolina farmers raise about 10 million hogs a year for Some farmersare independent, taking their product directlyg to the market. Other farmersa operate under contract with one of the majordpork producers, such as Virginia-based , which in the past has had contractsd with more than 1,000 North Carolina Another prominent producer is , whicgh has had deals with as many as 150 North Carolina Recent developments at publiclyg traded Smithfield Foods illustrate what’s ailing the The meat-producing giant, in a recent U.S.
Securitiesw and Exchange Commission filing, reported lossee of $112 million for the nine monthending Feb.1, 2009, explaining that its costs per hundred weight of hog had riseb from $49 to $62, largely due to higher grain The company attributes the rise in grain costs to “th United States’ ‘corn to ethanol’ Meanwhile, as costs were the Smithfield managers say, the market was glutted becaus e a record numbers of hogs were slaughteredd in 2008 and into 2009.
Demaned for pork at the grocery store has been flat in recent New retail numbers will begi n 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 farms by In response to market conditions, Smithfielcd has been closing some production plants, includingt one in Elon near and shaving 1,800 employees “The whole industry is feeling says Dr. Todd See of Looking down the grain prices have startedf to moderate in recentweeks and, Johnson the latest North Carolina herd is expected to be 3 percenf smaller than last year’s.
the movement toward smaller herds might be even more pronouncef thanNorth Carolina’s 3 percent, says Christiner McCracken, an analyst with Cleveland Researcg Co. “A lot of these (hog have been losing money for18 months,” she “And that’s a long time.”