Sunday, February 15, 2009

Chicken Price Slump , Leaves Farmers Wanting to Flee the Coop

The Wall Street Journal - CENTER RIDGE, Ark. -- Like many Americans, Darris and Sarah Dixon are struggling with mortgage payments and trying to avoid bankruptcy.

But the home the Dixons live in isn't the problem. The problem is their three chicken houses, on which they owe nearly $500,000.

"There's no way we'll make the chicken house payments," Mr. Dixon says from his farm abutting the Ozark Mountains.

A chicken housing crisis has cropped up in the U.S., and it's producing some of the same bleak results as the human one -- foreclosures, lawsuits and devastated homeowners.

In the wake of last year's bankruptcy filing by poultry giant Pilgrim's Pride Corp., hundreds of farmers suddenly find themselves unable to make mortgage payments on their pricey chicken coops.

To cut costs, Pilgrim's, the nation's second-largest chicken company, has terminated contracts with at least 300 farms in Arkansas, Florida and North Carolina. Under these contracts, farmers receive a set price per pound for raising chicks supplied by Pilgrim's until they are ready for slaughter. The company turns the birds into nuggets, wings and other food.

Pilgrim's still has contracts with more than 5,000 growers nationwide, and executives say they are trying to cut as few as possible. They say the reason the 300 farms weren't needed was that Pilgrim's stopped or reduced production at processing plants in those areas. "It's a very sad situation," says Don Jackson, the company's president and chief executive. But "the company is in bad shape." Last year Pilgrim's had a loss of nearly $1 billion.http://online.wsj.com/article/SB123440092979675383.html?mod=article-outset-box

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