Pilgrim’s Pride Corp. today announced plans to idle three of its 32 U.S. chicken processing plants by mid-May as part of its reorganization. The idling of these three underperforming plants is intended to improve the company’s product mix by reducing commodity production and to significantly reduce its costs in the midst of an industry-wide oversupply of chicken and weak consumer demand resulting from a national recession.
The plants that the company plans to idle within 60 to 75 days are located in Douglas, Ga.; El Dorado, Ark.; and Farmerville, La. These plants employ a total of approximately 3,000 people - or roughly 7 percent of the company’s total U.S. workforce. Pilgrim's Pride will provide transition programs to employees whose positions are eliminated to assist them in securing new employment, filing for unemployment and obtaining other applicable benefits. Approximately 430 independent contract growers who supply birds to these three plants also will be affected.
“The idling of these three plants is a painful reflection of the unprecedented challenges facing our company and our industry from an excess supply of chicken and weakening consumer demand resulting from a crippled economy,” said Don Jackson, president and chief executive officer. “Simply put, we are producing too much commodity chicken in what is a very weak market. The actions announced today will reduce our production of low-value, commodity meat that is a financial drain on the company without affecting any of our core business lines or customers.”
Pilgrim’s Pride expects to generate annualized net savings of approximately $110 million from idling these three plants and to incur one-time, pre-tax restructuring charges of approximately $35 million, before any potential asset impairment charges, primarily in the second quarter of fiscal 2009. In addition, the company announced it will be consolidating its protein salad production from Franconia, Pa. to its further-processing facility in Moorefield, W. Va.
“We recognize the pain and uncertainty that the idling of these plants will have on our employees and growers at these locations, as well as on the surrounding communities. It is a devastating situation, and we sincerely wish that such actions were not necessary,” Jackson said. “But the reality is that our country is arguably facing the most significant financial crisis since the Great Depression, with consumer spending on food dropping at its steepest rate in more than 60 years. We are taking decisive steps now to protect the greatest number of jobs and growers in order to restructure our business and ultimately emerge from Chapter 11 as a stronger, more efficient competitor.”
Source: Pilgrim’s Pride
Ag Committee chairman wants USDA to take food inspection from FDAU.S. Representative Collin Peterson (D-Minn.) is calling for the U.S. Department of Agriculture to take over food-processing inspections from the Food and Drug Administration. “I think we’re the ones who are the best suited to know how to do this,” said Peterson, according to the Bemidji (Minn.) Pioneer. Peterson is chairman of the U.S. House Agriculture Committee, which has jurisdiction over the USDA.
“We have jurisdiction over meat and catfish,” says Peterson. “FDA has jurisdiction over everything else. We’re not perfect, but our track record is a helluva lot better at USDA than it is at FDA.” He says that the FDA operates like the Securities and Exchange Commission (SEC). “Their idea is to go out and … license a plant, give them a bunch of rules that they have to follow. Then, instead of having somebody there, they come in and test once in a while.”
Peterson said that he had authored bills in the past to move FDA food inspection duties to the USDA and plans to introduce it again in the wake of the peanut Salmonella outbreak.
Source: Bemidji Pioneer
Feed yards hurting as consumers switch to hamburgerAmericans are eating more ground beef and fewer steaks, and that dietary change has led to large losses at feed yards, where cattle are fattened for steaks. Feed yards from Nebraska are selling cattle well below production costs, leading to a loss of $100 million each week, Reuters reports.
Economists are predicting that many feed yards will either close or shrink, leading in turn to higher-priced beef when the economy does recover. “The losses have been so large in the first three months of 2009 that it is going to be months and months and months until feed yards even have a chance to recover those losses. It is depressing,” said Jim Robb, economist at the Livestock Marketing Information Center.
“I think what people are missing is it is not a drop in beef demand so much, as it is what sort of beef people are eating,” John Josserand, president of AzTx Cattle Co, said of the change in beef consumption. “People are eating at McDonalds instead of Outback.” AzTx Cattle Co. has five feed yards, but the company is planning to close one, and some of the existing cattle pens are empty or partially filled.
Caviness wins NMA's Forbes Award
NMA’s E. Floyd Forbes Award is named after the first president of NMA’s predecessor organization, Western States Meat Packers Association (WSMPA). This award is presented annually at NMA’s Annual Convention for exemplary service to NMA and the meat and poultry industry.
“Mr. Caviness has been an incredibly active representative of our industry and of the state of Texas since he joined his family’s business in 1969...NMA is proud to present him with our highest recognition,” read a statement from NMA. In 1982 he became president of the company, and later that year, the company acquired Palo Duro Meat Processing in Amarillo, Texas. He is also involved with various business and civic organizations. He is past chairman of the board of National Meat Association, and a past board member of Southwest Meat Association.
He has served as a director or officer for several local area non-profit organizations, including Amarillo Area Foundation, West Texas A&M University Foundation, Presbyterian Home for Children, and Maverick Boys and Girls Club. He is an Elder at First Presbyterian Church in Amarillo and is a board member of FirstBank Southwest, a regional bank in Amarillo.
Source: National Meat Association
National Beef to acquire tanning companyDays after the proposed acquisition by JBS SA fell through, National Beef has announced an acquisition of its own. It’s subsidiary, National Beef Leathers, has made a deal to acquire Prime Tanning Corp. of St. Joseph, Mo., reports the Kansas City Star.
The deal will allow National Beef to expand into wet blue hide tanning, a process that produces the raw material used by finished leather manufacturers. Terms of the deal were not disclosed.