The international outlook is grim: Russia and China, the chicken industry's two biggest foreign markets, are cutting back on their orders. And the national outlook is even worse. Consumers are cutting back on chicken purchases, and Pilgrim's Pride of Pittsburg, Texas, one of the country's largest chicken companies with $8.5 billion in sales last year, filed for Chapter 11 bankruptcy protection in December, at the same time that fuel prices were surging wildly, driving up the cost of chicken feed. The effect on chicken growers has been harsh and swift. According to the Los Angeles Times,
"Nationally, 800 to 900 chicken farmers have lost contracts since last fall, almost all of them in the South, said Gary McBryde, an economist with the Department of Agriculture. Chicken production is down 7% since April 2008, the National Chicken Council said."
Raising chickens on contract requires that the grower build expensive chicken houses, set to specific company standards In return for the estimated half of the capital that the farmers supply, they earn only 1% to 3% on their investments, versus more than 20% for integrators in boom times, according to the National Contract Poultry Growers Assn. When that contract is cancelled by the integrator, often with little notice, the house is useless. And with even the poultry federation predicting that the market for chickens won't recover until "at least next fall or winter," for many of those farmers, bankruptcy may be the only solution.
Posted: 4/17/09
