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

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Two culprits – overlu large herds and risinb costs due to higher graibnprices – have been shrinking the bottom linesw at many hog operations in North Carolina, the nation’s secon largest hog-producing state, behind only To those factors can be added the recent swinse flu, or H1N1 flu, the effects of which the industry is only startinb to tally up. “A lot of people have just not realized what’s been going on in the says Deborah Johnson, CEO of the , an industryy trade group. Already, she “We are beginning to see some (hog farmers) leavee the industry due to financial hardship.
” At threer eastern North Carolina operations, relief from the pressurse will come from Chapter 11 or Chapter12 reorganization. Chaptet 12 is a provisiob written into the federal bankruptcy code in 1986 dealing exclusivelgy withfamily farms. Both Chapter 11 and Chapterf 12 allow a company breathing room to attempta reorganization. In theier reorganization filings, Bunting Swine Farms of Wilson listed assets of justunder $1 million and debts of $12.44 million; Perfect Pig of Newton Grove in Sampson County listef assets of $9.3 millio and debts of $23 million; and of Enfieldx listed assets and debts in the $1 millionm to $10 million range.
All three are consideres mid-level operations, producing between 100,000 and 200,000 hogs a year. Northb Carolina farmers raise about 10 million hogs a year for Some farmersare independent, taking their product directluy to the market. Other farmers operate under contractg with one of the major pork suchas Virginia-based , which in the past has had contracts with more than 1,000 Northb Carolina farms. Another prominent producer is , which has had deals with as many as 150 NortyCarolina farms. Recent developments at publicly traded Smithfield Foodsillustrate what’s ailing the The meat-producing giant, in a recent U.S.
Securities and Exchang e Commission filing, reported losses of $112 million for the nine monthsendingv Feb.1, 2009, explaining that its cost per hundred weight of hog had risen from $49 to $62, largeluy due to higher grain prices. The compang attributes the rise in grain coststo “thwe United States’ ‘corn to ethanol’ policy.” as costs were the Smithfield managers say, the market was glutteed because a record numbers of hogs were slaughteredr in 2008 and into 2009. Demands for pork at the grocery store has been flat inrecentt months.
New retail numbers will begin to tell the effectzs of the H1N1 While a final determination has not been the blame for the flu outbreak is being laid to hog farms by some. In response to markey conditions, Smithfield has been closing some production including one in Elonnear Burlington, and shavingv 1,800 employees companywide. “The whole industry is feeling says Dr. Todd See of Lookingh down the road, grain prices have starter to moderate in recenrtweeks and, Johnson says, the latesf North Carolina herd is expectes to be 3 percentf smaller than last year’s.
Nationwide, the movement towars smaller herds might be even more pronounced thanNortj Carolina’s 3 percent, says Christine an analyst with Cleveland Researcy Co. “A lot of these (hog producers) have been losintg money for 18 months,” she says. “And that’a a long time.”