Coharie Hog Farm Inc. of Clinton filed for Chapter 11 bankruptcy Friday and submitted a plan to the U.S. Bankruptcy Court that calls for an orderly liquidation of all the animals and assets of the company. Some of Coharie’s 170 employees will be laid off.
Court documents show that the company’s largest debts total in excess of $3 million.
A 30,000-sow operation, Coharie served as a major player in a statewide pork industry that ranks second-largest in the country. An annual analysis conducted by Successful Farming magazine ranked the company as the 22nd largest pork producer in the country.
However, outside factors led Coharie on a downward spiral. A surge in input costs, a global recession and H1N1 scares have each factored into a problem that sees U.S. pork producers losing an average of $25 on each hog marketed over the past two years.
Coharie has lost $17 million this year, on top of more than $13 million lost last year.
As news of Coharie’s fate spread around Sampson County, many voiced their reactions to a circumstance they said was “sad” — with bad news not expected to end soon.
“The bankruptcy filing by Coharie Farms will have a significant negative impact to the local economy,” said Don Butler, president of the National Pork Producers Council. “Obviously, the most direct impacts will be felt by the company’s employees and their families. The people who grow animals on contract for the company will be affected. The city’s and county’s tax base will be negatively affected as will local merchants and suppliers. This event will have a big ripple effect in our community.”
Jarvis McLamb, chairman of the Sampson County Board of Commissioners, said Coharie’s bankruptcy will leave the county reeling. Others agreed.
“It is going to have a tremendous effect on the county,” said McLamb. “I know as big as they were, that’s going to be real bad.”
In recent years, Sampson County has seen its tax base expand as hog and turkey houses popped up throughout the county. The houses have also brought with them equipment, all of which has been taxable by the county. As the hog industry struggles, those houses are being left vacant.
Reduced production from Coharie means lost income, lost employment, lost capital investment, lost tax base and lost economic activity throughout the county.
“This is not just Coharie going bankrupt,” McLamb attested. “You have to figure, all those farmers, if they don’t have hogs to put in those buildings, I don’t know what we’re going to do. It’s going to have an adverse effect on the county. I just hope nobody else goes bankrupt. It’s a sad story, but that’s the way it is.”
North Carolina has the second largest pork industry in the country and, for decades, Coharie has figured heavily into that.
Butler is optimistic for the Clinton-based company, but remains pragmatic about the issue facing the entire pork industry.
“Hopefully, there will be opportunities for the Coharie contract growers to affiliate with and grow animals for other production companies,” said Butler. “The difficulties now being experienced by the good folks at Coharie are symptomatic of the extreme economic crisis facing the entire U.S pork industry. The U.S. pork industry has been losing money for more than two consecutive years, and our industry is contracting. The industry will eventually return to profitability, but a lot of hog producers will not survive this crisis.”
Since September 2007, the pork industry has lost more than $5.3 billion, or more than 66 percent, of its equity as of Oct. 14, 2009. Three other large pork producers in this state have also filed bankruptcy, largely falling victim to factors out of their hands.
“This crisis is driven largely by events beyond the control of producers,” said Butler. “It’s very sad to see this happening to so many good people.”
It was a reaction echoed by Clinton mayor Lew Starling, who voiced concern for Coharie and its 170 employees and contract farmers.
“We’re certainly very saddened to hear about it,” the mayor remarked. “I know all the parties involved. They’re good business people, wonderful corporate supporters and great friends.”
Starling said he hoped that everyone would be able to ultimately land on their feet, “particularly the famers.”
“I hope something can be done through the Bankruptcy Court for the benefit of all,” he said. “It is a very sad day. I’m just hopeful and praying that something positive can come out of the Bankruptcy Court.”
McLamb, a farmer himself, expressed the same sentiment.
“Maybe something will happen where Coharie can pull it out,” he said. “I hope so.”
For Sampson County, Coharie Farms means roughly $180,000 in tax revenue generated annually.
“That is at least half a cent on the tax rate,” said county tax collector Glenn Spell. “It definitely is significant.”
The Sampson County Tax Collector’s Office is listed as one of the 20 creditors holding the top unsecured claims against Coharie. The amount of the claim is $180,820.51.
Spell said that figure is the 2009 taxes due to the county, which is not yet past due. County taxes were billed in July and are not past due until Jan. 5, 2010. The $180,000 figure is “nearly identical” to what Coharie paid in 2008 taxes, Spell noted.
While Coharie’s assessed taxable property value hovers around $21 million in the county, it has approximately $800,000 in taxable property, personal and real, inside the city of Clinton.
“Most of (Coharie’s) assets are outside the city limits,” Starling noted. “I don’t see this as being a major tax issue inside the city limits.”
Coharie partner Anne Faircloth owns the majority of the company, with Nelson Waters also serving as a partner. Faircloth’s father, former Sen. Lauch Faircloth, was the face of Coharie Farms for many years, having started the company as a feed mill operation in 1972. Throughout the years, the company has grown from its feed mill operation to a company that has operations in 11 of the state’s counties.
Anne Faircloth called the decision to file bankruptcy “the most difficult decision I’ve ever had to make.” She credited the farmers and employees as being the backbone of Coharie.
Curtis Barwick, acting land and environmental manager for Coharie Farms and former N.C. Pork Council president, called Friday a “sad day.”
Ronnie Jackson, president of the Friends of Agriculture and owner of Clinton Truck & Tractor Co., said he was heavy-hearted to hear of Coharie’s struggles and subsequent bankruptcy.
“We’re very sorry to hear this happened,” said Jackson. “They’ve been dealt a set of circumstances that has been kind of like the perfect storm of things you wouldn’t want to happen. We’re really very, very sorry.”
Jackson said Coharie’s fate will reach many in Sampson County — and not just in agriculture.
“The hog and livestock industry in Sampson County, being rural and agriculture-based ... it’s tied to everything we do,” he said. “It’s not just Coharie that’s impacted. It’s my business, it’s grocery stores and insurance sales. We know we’re going to have some long-lasting effects of this in our area. It’s going to be a very noticeable impact, there’s no doubt about that.”
Chris Berendt can be reached at 910-592-8137, ext. 121, or by email at sicrime@myclintonnc.com.
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