In the wake of the Chapter 11 bankruptcy filing by Coharie Hog Farm Inc. this month, North Carolina pork industry’s biggest casualty yet, many other hog farmers fear the impending loss, or significant reduction, in their contracts.
National pork officials said those fears are relevant, as hog-dependent North Carolina, including Sampson and surrounding counties, will continue to endure losses. Coharie joins a group of bankrupt producers that includes Bunting Swine of Edgecombe County, as well as Coastal Plains Pork and Perfect Pig, both also based in Sampson.
As part of its bankruptcy filing, the Clinton-based company submitted a plan to U.S. Bankruptcy Court that calls for an orderly liquidation of all the animals and assets of the company.
A 30,000-sow operation that employed 170 people and contracted with more than 100 local farms in the Sampson County area, 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, like numerous other pork producers, the company was forced to deal with a myriad of factors beyond its control — factors that saw Coharie lose $30 million over the last two years.
Despite those losses, Coharie officials have vowed to pay farmers what they owe. Top creditors are owed about $3 million.
Coharie encapsulates the heartache and loss taking place in the pork industry, both on a state and on a national level.
Don Butler, the president of the National Pork Producers Council (NPPC) and director of government relations and public affairs for Warsaw-based hog and poultry producer Murphy-Brown, said the U.S. pork industry has decreased, in number of sows nationally, about 5 percent.
Capital losses due to reduced hog production include the loss of capital invested in buildings, land improvements and equipment. Building and equipment dedicated to hog production were estimated to have a depriciated value of $500 million in 2007. Abandoning five percent of that capacity resulted in a loss of $25 million in capital and property tax base.
For Sampson County, Coharie Farms meant roughly $180,000 in annual tax revenue generated, “at least half a cent on the tax rate,” noted county tax collector Glenn Spell. “It definitely is significant.”
Coharie’s assessed taxable property value hovers around $22 million, with nearly all of it being in Sampson County. Some is inside the city of Clinton limits.
For Sampson County and others, the loss of tax dollars has been accompanied by loss of jobs, from hog farmers and producers to jobs in pork packing and processing. And, on top of reductions already made, leading economists say the industry still needs to lessen its overall sow herd by another 5 to 7 percent nationally.
Since September 2007, the U.S. pork industry has lost more than $5.4 billion, or more than 66 percent, of its equity as of the middle of last month. That has come as a result of outside factors, including a surge in input costs, a global recession and H1N1 scares that combine to see U.S. pork producers losing an average of more than $23 on each hog marketed over the past two years.
According to testimony given by the NPPC to the U.S. House Committee on Agriculture last month, the biggest reason pork producers have lost money in 22 of the past 24 months is that production costs have been higher. That has been fueled by federal mandates to increase production of corn-based ethanol, which has driven up corn demand and prices, making it more costly to feed hogs.
Butler said the loss of Coharie was a sad day, echoing the sentiments of many in the community. Many have, or will, feel the same pain due to the pork crisis.
“This is hardship of the highest order right here,” Butler said. “We’ve never seen anything like this. This is the most severe economic crisis in the history of the U.S. pork industry.”
But Butler and others remain optimistic that the state’s pork producers will weather hardships, albeit as a leaner industry.
“I’m confident that the North Carolina industry will survive this,” Butler said. “We will lose some people, but North Carolina is a national leader. It’s been at the forefront of innovation and industry change, and now in leadership positions. The rest of the country looks to North Carolina in many respects to see what’s going to come next, and I don’t see that changing.”
Deborah Johnson, chief executive officer of the North Carolina Pork Council, agrees.
“We’ve been fortunate to have a strong agriculture base here in North Carolina and a strong pork industry,” Johnson remarked. “When you think back at this industry and how it got started here and you think about the Lundy Packing Company, you think about how the industry grew here and see the leaders we’ve got in this industry and the development of it ... we’re not going away.”
Johnson said that regardless of what transpires, and the casualties that might occur along the way, the foundation of the national industry in North Carolina is strong — and it will transform and come out the other side of this crisis.
“It is a painful time and a lot of folks, through no fault of their own, are finding themselves having to make a lot of changes,” said Johnson. “But we have a resilient group of people.”
Good news
At the beginning of this month, Curtis Barwick, acting land and environmental manager for Coharie Farms and former president of the N.C. Pork Council, said Coharie and others have faced a global recession, higher input costs and fallout from H1N1 misconceptions.
The general downturn of the economy coupled with H1N1’s less flattering name circulated among the media, has seen more people favoring cheaper cuts of meat like hot dogs and bologna to pork chops and steak. Some have shyed away from pork altogether.
“It’s just been tough on everybody right raising animals right now,” Barwick said.
The U.S. government has stepped in to help, making the decision to purchase up to $50 million of pork products, which will be used for various federal food programs. The purchase, Butler and others said, should help struggling pork producers.
“The action by USDA to buy additional pork will benefit America’s pork producers, the U.S. economy and the people who rely on government food programs,” said Butler. “NPPC is extremely grateful to Secretary (Tom) Vilsack for recognizing the plight of our producers and for taking action to help them. The pork purchase is an important step that will help our industry bring pork supply and demand back into balance and allow producers to continue providing consumers worldwide with economical, nutritious pork products.”
The pork buy is the third supplemental purchase this year. In March, USDA agreed to buy $25 million of pork and, in early September, it bought an additional $30 million. Annually, the agency buys pork for federal food programs, including school lunch and breakfast programs. Last year, USDA purchased $62.6 million worth of pork.
“The support U.S. pork producers have received from Secretary Vilsack and many members of Congress has been tremendous and very much appreciated,” said NPPC CEO Neil Dierks. “And this latest purchase of pork should provide some relief to our industry and to rural America.”
Chris Berendt can be reached at 910-592-8137, ext. 121, or by email at sicrime@myclintonnc.com.
Post a Comment
