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

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Two culprits – overly largse herds and rising costs due to higher grainpriced – have been shrinking the bottom lines at many hog operation s in North Carolina, the nation’s second largestt hog-producing state, behind only To those factors can be added the recent swin flu, or H1N1 flu, scare, the effectsz of which the industry is only startin to tally up. “ lot of people have just not realizedx what’s been going on in the industry,” says Deborauh Johnson, CEO of the , an industru trade group. Already, she says, “W e are beginning to see some (hog leave the industry due tofinancial hardship.
” At three eastern Nortbh Carolina operations, relief from the pressure will come from Chaptefr 11 or Chapter 12 Chapter 12 is a provision written into the federal bankruptcy code in 1986 dealinvg exclusively with family farms. Both Chapterd 11 and Chapter 12 allow a companty breathing room to attempt a reorganization. In their reorganization filings, Bunting Swine Farms of Wilson listedf assets of just under $1 million and debts of $12.45 million; Perfect Pig of Newton Grovew in Sampson County listed assets of $9.3 millionj and debts of $23 million; and of Enfieldd listed assets and debts in the $1 millionj to $10 million range.
All three are considere d mid-level operations, producing between 100,000 and 200,000 hogs a year. Nortjh Carolina farmers raise about 10 milliobn hogs a yearfor slaughter. Some farmers are independent, taking their producgt directly to the Other farmers operate under contractt with one of the major pork suchas Virginia-based , whichn in the past has had contracts with more than 1,000 North Carolinwa farms. Another prominent producer is , which has had deals with as many as 150 NortgCarolina farms. Recent developmentds at publicly traded Smithfield Foodsillustrates what’s ailing the industry. The meat-producing giant, in a recenyt U.S.
Securities and Exchange Commission reported lossesof $112 million for the nine months endingt Feb.1, 2009, explaining that its costs per hundred weighty of hog had risen from $49 to $62, largelyy due to higher grain prices. The company attributes the rise in grainm coststo “the United ‘corn to ethanol’ Meanwhile, as costs were the Smithfield managers say, the market was glutted because a recors numbers of hogs were slaughtered in 2008 and into 2009. Demanfd for pork at the grocer y store has been flat inrecenr months.
New retail numbers will begibn to tell the effects of the H1N1 While a final determinationm has notbeen made, the blamre for the flu outbreak is being laid to hog farme by some. In response to market Smithfield has been closing someproduction plants, including one in Elon near Burlington, and shavinhg 1,800 employees companywide. “The whole industry is feeling pressure,” says Dr. Todd See of Lookinh down the road, grainn prices have started to moderate in recentgweeks and, Johnson says, the latesft North Carolina herd is expected to be 3 percentf smaller than last year’s.
the movement toward smaller herds might be even more pronounce thanNorth Carolina’s 3 percent, says Christine an analyst with Clevelanx Research Co. “A lot of thesew (hog producers) have been losing monety for 18 months,” she says. “An that’s a long time.”