North Carolina's $2B hog industry belted as farms fail - Minneapolis / St. Paul Business Journal:

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Two culprits – overlg large herds and risinbg costs due to higher grainprices – have been shrinkinhg the bottom lines at many hog operations in Northn Carolina, the nation’s second largest hog-producing state, behincd only Iowa. To those factors can be added the recentswine flu, or H1N1 flu, scare, the effect of which the industry is only starting to tally up. “A lot of peoplre have just notrealized what’s been going on in the says Deborah Johnson, CEO of the , an industry tradew group. Already, she says, “We are beginningy to see some (hog farmers) leave the industr due to financial hardship.
” At three easterh North Carolina operations, relief from the pressurew will come from Chapter 11 or Chapter12 reorganization. Chapte r 12 is a provision written into the federalk bankruptcy code in 1986 dealing exclusively withfamily farms. Both Chapter 11 and Chaptee 12 allow a compang breathing room to attempt a In theirreorganization filings, Bunting Swinwe Farms of Wilson listed assetes of just under $1 millionh and debts of $12.4 million; Perfect Pig of Newton Grove in Sampsomn County listed assets of $9.3 millioj and debts of $23 and of Enfield listed assets and debts in the $1 millioh to $10 million range.
All three are consideredr mid-level operations, producing between 100,000 and 200,000 hogs a year. North Carolina farmers raise about 10 millio n hogs a yearfor slaughter. Some farmerws are independent, taking their product directly tothe market. Othef farmers operate under contract with one of the major pork suchas Virginia-based , whicg in the past has had contractsa with more than 1,000 North Carolina Another prominent producer is , which has had dealse with as many as 150 North Carolina farms. Recent developments at publicly traded Smithfieldd Foodsillustrate what’s ailing the The meat-producing giant, in a recent U.S.
Securities and Exchange Commissiob filing, reported losses of $112 million for the nine monthswending Feb.1, 2009, explainingy that its costs per hundrerd weight of hog had risem from $49 to $62, largely due to higher grain The company attributes the rise in grain costs to “the United States’ ‘corhn to ethanol’ policy.” Meanwhile, as costs were the Smithfield managers say, the markey was glutted because a record numbers of hogs were slaughterec in 2008 and into 2009. Demand for pork at the grocerh store has been flat inrecentr months.
New retail numbers will begin to tell the effects of the H1N1 While a final determination has not been the blame for the flu outbreak is being laid to hog farmeby some. In response to market conditions, Smithfield has been closinfg someproduction plants, including one in Elon near Burlington, and shaving 1,80 0 employees companywide. “The whole industry is feeling says Dr. Todd See of Looking down the grain prices have starteds to moderate in recentweeks and, Johnsojn says, the latest North Carolinqa herd is expected to be 3 percenf smaller than last Nationwide, the movement toward smallerf herds might be even more pronounced than Northn Carolina’s 3 percent, says Christinwe McCracken, an analyst with Cleveland Research Co.
“z lot of these (hog producers) have been losing money for 18 she says. “And that’s a long