The relationships the company has with its farmers are ones it values and, although confronted with never-before-seen losses, the likes of which currently plague many other pork producers, Coharie officials are working to ensure those farmers are compensated.
“We’ve suffered unprecedented losses,” said Faircloth. “Sufficed to say, we are losing at or more than the industry average, which is at $26 a hog. We’re having a cash flow problem and have been unable to pay them for their corn because of these unprecedented losses.”
As many as 30 farmers in southeastern North Carolina say they haven’t been paid for corn delivered to Coharie Farms, a 30,000-sow operation and one of the major players in a statewide pork industry that ranks second-largest in the country.
One Bladen County farmer said he and his father are owed an estimated $200,000 for corn they took to a Coharie-run facility in the Bladenboro area.
On Monday, Faircloth attested there are farmers who have not been paid, and she has made it her goal to pay them.
“We truly value these relationships with these farmers,” said Faircloth. “I would ask them please to bear with us. We’ve been working on a plan and we’ll try to resolve this as quickly as possible. We are working just as hard as we can to come up with a plan to resolve this.”
Faircloth declined to give details on the plan, but said it was a diligent work in progress.
“We’ll certainly keep everyone (in the media) and connected with Coharie in the loop,” she said. “We’re just trying to do this in an orderly way.”
Nothing in the pork industry has come easily as of late.
Curtis Barwick, acting land and environmental manager for Coharie Farms and former president of the N.C. Pork Council, said the issue confronting Coharie, and the industry as a whole, is three-fold. Coharie and other pork producers have faced adverse market conditions and tremendous losses amidst a global recession, higher input costs and fallout from H1N1 misconceptions.
Economist say the U.S. pork industry is in the midst of the most severe economic crisis in its history. According to testimony by the National Pork Producers Council to the U.S. government just two weeks ago, U.S. pork producers have lost an average of $23 on each hog marketed over the past 24 months. That has increased even more since then, indicted by Faircloth’s $26 figure.
Since September 2007, the industry has lost more than $5.3 billion, or more than 66 percent, of its equity as of Oct. 14, 2009. Corn and soybean futures suggest losses will exceed $30 a head for pigs sold for the remainder of this year and will be nearly $40 a head in November.
Pork producers have faced a surge in input costs in the last two years due to higher corn prices, which has been driven by federal mandates to produce corn-based ethanol, adversely affecting cost for feed. Where corn prices were around $2.50 to $3.50 a bushel before then, that price now hovers around $8, Barwick said. Feed, he noted, accounts for roughly 60 percent of the cost of raising a hog.
Barwick also pointed to the global recession and the general downturn of the economy, with more favoring cheaper cuts of meat like hot dogs and bologna to pork chops and steak.
“It’s just been tough on everybody raising animals right now,” said Barwick, who noted that efficient hog production has worked against pork producers. The pork industry has become saturated, with more having to thin their herds considerably in an effort to turn a profit.
“There’s too much pork finding too few mouths,” said Faircloth.
H1N1 misconceptions, to include conclusions drawn from its more commonly used name, have not helped.
Amidst scares of H1N1, news of which broke in late April, the sale of U.S. fresh pork products was off between 17 to 20 percent within two weeks. Russia and China, the No. 2 and 5 export markets for the United States in 2008, respectively, were closed off to U.S. pork imports.
While it is getting better, Barwick said, testimony from U.S. pork officials indicates pork exports are down 50 percent to China and 39 percent to Russia through August.
If it is a large problem nationwide, it is magnified in North Carolina, a Mecca of pork production.
National average losses of nearly $23 a head mean about $828 million of equity lost in North Carolina over the past two years. With each dollar of lost income in hog production estimated to result in 80 cents lost elsewhere in the state’s economy, that spells an additional $662 million in losses. That is nearly $1.5 billion in North Carolina’s economy gone in the last 24 months — with more on the horizon.
“We wish we could sit here with rose-colored glasses, but it’s been tough times,” said Barwick. “It looks like 2010 might be better, but until we get these exports moving and get people to spend more money, it’s going to be a while.”
For Sampson County, which perennially flip-flops with Duplin as the state’s highest pork-producing county, a hit to the pork industry could be catastrophic.
“If the tax revenue from the livestock industry in Sampson County didn’t exist, imagine where we’d be,” Don Butler, president of the National Pork Producers Council, told The Independent in September. “We wouldn’t have the schools that we have, we wouldn’t have the government programs that we have, or the government facilities. That would be a catastrophic blow to the county if bad things happen in the pork industry.”
Faircloth agrees.
The business her father, former Sen. Lauch Faircloth, started as a feed mill operation in 1972 is now ranked as the 22nd largest pork producer in the country, according to an annual analysis conducted by Successful Farming magazine.
“It would be a devastating thing for Sampson County if the hog industry would go away,” she said.
Coharie, which sells its meat to the Virginia-based pork giant Smithfield, is a large part of that industry in Sampson.
“People know the impact that Smithfield has, it’s very big and visible,” said Faircloth. “Folks like Coharie, Prestage and other farmers also have a big impact in this county.”
That impact starts with its farmers, relationships that, for some, have been etched for decades.
“We pay our taxes here, we employ our people here, we have our growers here,” Faircloth remarked. “The vast majority of our company is Sampson County-based. We have a huge commitment to Sampson County. It’s frankly very painful to see that these relationships are strained right now.”
Chris Berendt can be reached at 910-592-8137, ext. 121, or by email at sicrime@myclintonnc.com.
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