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Better Farming Ontario Featured Articles

Better Farming Ontario magazine is published 11 times per year. After each edition is published, we share featured articles online.


Feed prices hurt integrators

Tuesday, February 3, 2009

Record high feed prices have not been kind to American meat integrators, but some have done better than others.

Focusing on the bottom line, Smithfield Foods squeezed out net income of $4.2 million for its second quarter in fiscal 2008, down from $17.4 million the year before. Hog production losses continued due to high feed costs.

Since announcing a breeding stock kill-down in February, the company has liquidated seven per cent of its U.S. sow herd, with more stock scheduled for culling. Corn costs were cited as being 65 per cent higher than the year before, and cash costs of raising pigs was $63 per hundredweight, compared to $49. However, live hog market prices were $53 per hundredweight, compared to $46 in the same quarter last year.  

Better to have shares in Smithfield than in Pilgrim's Pride, the largest American chicken processor. On Dec. 1, the Texas-based company filed for bankruptcy protection. Pilgrim's had worked out three separate deals since September to extend lines of credit and avoid filing for bankruptcy. Last May, it announced a public offering of 7.5 million shares of common stock at $25 a share, prompting analysts to express concerns about the company's ability to profit from better economics in the future. Pilgrim's was hurt not only by higher feed costs but also by a surplus of chicken. BF
 

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