Chief
03-12-2008, 07:25 AM
http://www.news-journal.com/news/content/news/stories/03122008_pilgrims_web.html
Wednesday, March 12, 2008
Pilgrim's Pride Corporation on Wednesday announced it will close a chicken processing complex and six of its 13 distribution centers in the United States.
None of the impacted facilities are in Texas.
Company officials said the action was in response to what they deemed a crisis facing the U.S. chicken industry from soaring feed-ingredient costs resulting from corn-based ethanol production.
"Our Company and industry are struggling to cope with unprecedented increases in feed-ingredient costs this year due largely to the U.S. government's ill-advised policy of providing generous federal subsidies to corn-based ethanol blenders," said Clint Rivers, president and chief executive officer.
"The cost burden is already enormous, and it's growing even larger," Rivers said. "Based on current commodity futures markets, our company's total costs for corn and soybean meal to feed our flocks in fiscal 2008 would be more than $1.3 billion higher than what they were two years ago."
These actions are part of a plan to curtail losses amid record-high costs for corn, soybean meal and other feed ingredients and an oversupply of chicken in the United States. The closings, which are expected to begin immediately and will be completed by June, will result in the elimination of approximately 1,100 jobs. Additionally, the company announced that it is in the process of reviewing other production facilities for potential mix changes, closure and/or consolidation in response to current negative industry fundamentals.
**SCHNIPP**
It's a big deal when producers like PP withdraw from segments of the market like this, and even bigger news as to why. This corn-based ethanol craze will eventually pass, but a lot of economic havoc will be inflicted along the way...
Wednesday, March 12, 2008
Pilgrim's Pride Corporation on Wednesday announced it will close a chicken processing complex and six of its 13 distribution centers in the United States.
None of the impacted facilities are in Texas.
Company officials said the action was in response to what they deemed a crisis facing the U.S. chicken industry from soaring feed-ingredient costs resulting from corn-based ethanol production.
"Our Company and industry are struggling to cope with unprecedented increases in feed-ingredient costs this year due largely to the U.S. government's ill-advised policy of providing generous federal subsidies to corn-based ethanol blenders," said Clint Rivers, president and chief executive officer.
"The cost burden is already enormous, and it's growing even larger," Rivers said. "Based on current commodity futures markets, our company's total costs for corn and soybean meal to feed our flocks in fiscal 2008 would be more than $1.3 billion higher than what they were two years ago."
These actions are part of a plan to curtail losses amid record-high costs for corn, soybean meal and other feed ingredients and an oversupply of chicken in the United States. The closings, which are expected to begin immediately and will be completed by June, will result in the elimination of approximately 1,100 jobs. Additionally, the company announced that it is in the process of reviewing other production facilities for potential mix changes, closure and/or consolidation in response to current negative industry fundamentals.
**SCHNIPP**
It's a big deal when producers like PP withdraw from segments of the market like this, and even bigger news as to why. This corn-based ethanol craze will eventually pass, but a lot of economic havoc will be inflicted along the way...