Pilgrim's Pride Bankruptcy and Its Effect On Harnett County Farmers
Many people have asked for my input on the Pilgrim’s Pride bankruptcy that has so adversely affected many family farmers in Harnett County.
First, let me say that I am deeply concerned and saddened by the economic and personal losses suffered by the growers and others affected by Pilgrim’s Pride bankruptcy and cancellation of contracts with independent growers.
I will do all I can to help these family farmers overcome this devastating blow. I have begun working closely with the Department of Agriculture to see what State Resources can be used to help ease this terrible burden on our local farmers.
Background on the Matter:
Anecdotally observers point to Pilgrims Pride’s purchase of Gold Kist at the beginning 2007 coupled with the declining economy (less consumer demand and higher input costs) as the catalyst for the company’s financial difficulties. As you know, Pilgrim’s Pride filed for Chapter 11 bankruptcy on December 1, 2008. Importantly, during the "First Day" hearing on December 2, 2008, the company received the Court’s approval to pay contract growers all pre-petition amounts owed for services. In addition, they received interim approval to access $365 million of their $450 million debtor-in-possession (DIP) financing, which will be used to fund post-petition operating expenses, including their contract grower obligations – meaning that they will be allowed to operate as usual during the restructuring.
Unfortunately cost-savings measures taken by Pilgrim’s Pride prior to filing for bankruptcy have negatively impacted some NC growers. Pilgrim’s Pride first warned 44 contract growers on October 20, 2008 that their contracts would be terminated. Additionally, 5 breeder growers were also cut off as a result of the previous cuts.
State Action:
The Department of Agriculture has been involved in a series of meetings to aid the 44 growers who lost their contract with Pilgrims Pride in October. Kim Decker, a representative from our Marketing Division has been meeting with folks from the Cooperative Extension Service, farm credit organizations and commodity associations to identify ways to assist the affected growers. One strategy that that this working group has been developing is a marketing book which will include farm/family photo, years of experience, farm specifications such as acres, number and age of houses, types of ventilation, feed equipment, drinkers, ie: general farm specifications – in hopes that some of these growers will be picked up for contracts with other poultry firms. Also there has been discussion of researching the possibility of a feasibility study concerning forming an independent cooperative.
One important thing to note – at the initial meeting for these growers, 34 farms were represented with 141 houses and a combined debt of $12,592,000. These poultry houses are the sole income for all who participated in this survey.
The Department is continuing to work with growers and industry alike to continue to promote NC products domestically while developing and maintaining international markets. Also please note that this year’s AgForum, an event we host during the annual Farm Show, will be centered around the topic of farm credit. The AgForum is scheduled for February 5th at 10 a.m. at the fairgrounds and will feature a panel discussion from farm credit groups and an economic outlook by Mike Walden.
Conclusion:
I wish I could say a solution has been found but that is, unfortunately, not the case. I can say that this is vitally important to many people in Harnett County and I will continue to work with the Department of Agriculture and Department of Commerce to help our local farmers work out from out of this trying situation.
My thoughts and prayers are with the families affected. I hope they will call on me at anytime I can be help.
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