Georgia's Largest Poultry Company files Bankruptcy

[surepip]

This one hits home for us, even though we have been expecting it. Pilgrim's Pride, based out of Pittsburg, Texas filed for Chapter XI bankruptcy Monday December 1st. Pilgrim's Pride is the largest poultry producer in the world.

 

Citing unheralded feed costs over the past year, coupled with transportation cost increases and a reduced demand for poultry products Pilgrim's was unable to meet its end of year financial committments. Pilgrim's has posted projected losses for 2008 of close to $1Billion Dollars.

 

Georgia is the number 1 poultry producing state, to the tune of more than $20 BILLION dollars in poultry income projected for 2008.

 

Poultry is the number 1 agricultural industry for Georgia, coming in at more than 45% of the State's Agricultural income. Basically more than ALL of the other agricultural incomes added together including cotton, cattle, catfish, peanuts, peaches and pine trees.

 

Poultry accounts for more than 120,000 jobs in Georgia, NOT including people like me, who are involved with the production and sales of equipment and machinery to the industry.

 

And, Pilgrim's Pride accounts for almost 2/3 of Georgia's Poultry.

Over the past 6 years Pilgrim's acquired both ConAgra Foods/ConAgra Poultry in 2003 and GoldKist, Inc. in December 2006. Basically all of the poultry in West/Northwest Georgia is Pilgrim's with hatcheries in Bowdon, Calhoun, Cohutta, Canton and Talking Rock as well as just across the state line in Ranburn, Ft Payne, Crossville and Boaz, Alabama.

 

Pilgrim's basically got caught by the governmemts economically foolish plan to both create and subsidize the production of ethanol from corn, driving corn prices from $2.50 a bushell to more than $8.00 a bushell. That coupled with restrictive Federal HAACP guidelines for new standards in the killing plants has severely reduced USA exports of poultry causing a glut, and poor pricing on the domestic markets.

 

For Georgians, this is a biggy. Hopefully poultry meat prices will begin to rebound and Pilgrim's can survive the Chapter XI reorganization.

[surepip]

Amazing.....one of Georgia's largest employers, more that 50,000 workers affected, and not even 1 comment ?

[wcso84]

Amazing.....one of Georgia's largest employers, more that 50,000 workers affected, and not even 1 comment ?

I’m just taking a stab in the dark here; but maybe no one is interested because the main demographic most folks think will be affected is the Illegal workers in the plants.

[Ugadawgs98]

It will be hard on my cousin since he is a grower. They have known about it since summer though.

[surepip]

I’m just taking a stab in the dark here; but maybe no one is interested because the main demographic most folks think will be affected is the Illegal workers in the plants.

 

The main demographics which will be hit are the farmers with the 15,000+ grow out houses scattered throughout the state who have payments to make on their farms/chicken houses. The killing/processing plant employees are just the tip of the iceberg.

[Erin]

 

Feed is way too expensive. So expensive lately that my father had to go ahead and kill all of his meat birds and pigs. It was cheaper to go ahead and eat them. All he has left are his hens for eggs.

[confederaterose]

The AJC said that one of their main problems, was all the debt they took on when they took over Goldkist. Wasn't that a hostile take over and why would they go into so much debt to take over an excellent GA based company?

 

My cousin is a very large grower in Comer. I have not spoken to them since I read this in the AJC; but, I know they are very upset.

 

Everyone is so worry about the Big 3 and since they have shut down all or most of their GA plants, this is not too much of a GA issue. Construction and related business, such as carpet, etc. are biggies for GA, just as the poultry industry is a biggie for GA and no one seems to care about either.

[surepip]

The AJC said that one of their main problems, was all the debt they took on when they took over Goldkist. Wasn't that a hostile take over and why would they go into so much debt to take over an excellent GA based company?

 

My cousin is a very large grower in Comer. I have not spoken to them since I read this in the AJC; but, I know they are very upset.

 

Everyone is so worry about the Big 3 and since they have shut down all or most of their GA plants, this is not too much of a GA issue. Construction and related business, such as carpet, etc. are biggies for GA, just as the poultry industry is a biggie for GA and no one seems to care about either.

The Gold Kist acquisition was actually planned from early on. GK went public with a stock offering back in 2002/2003 specifically so they could be bought out [prior to then they operated as a "Co-Op" which is next to impossible to sell per se].

 

After waiting the prescribed time period sind the initial stock offering Pilgrims began negotiating with GK management, offering $20 for stock which was trading at $13-$14. After several weeks of dickering the end of 2006, they settled on $22 per share, which in all reality was WAY over priced.

 

But, Pilgrim's had acquired ConAgra several years prior to then on a similar package and had done quite well with integrating ConAgra into their marketing and production and had paid off their debt to acquire several years ahead of time. But, with ConAgra they also maintained a marketing relationship, selling ConAgra all of the chicken they wanted on a cost plus contract which is still ongoing. ConAgra is the parent company for Healthy Choice, Banquet, and some other tradenames offering cooked; ready-to-eat products.

 

With Gold Kist, Pilgrim's got a company which was in the midst of losing much of their export market due to a ban by the EEC countries over USA poultry products. This is based on the methods used by the USA poultry producers to put the birds through a final rinse process where by the carcass is sterilized using sanitizing chemicals.

 

It took Pilgrims 12 to 14 months to re-organize Gold Kist into Pilgrims, deciding who was in charge of what, and what products they various operations would offer. Bare in mind Pilgrims went from Zero presence in the Southeast in 2002, to close to a 60% presence they have today. There were many overlapping territories and products.

 

Grain started going out of sight pricewise the end of the winter last March or so. Couple that with what fuel did from that time until recently and Pilgrim's just could not cover the increased costs of $7+ corn, $4+ diesel, and $0.75 a pound for the chicken.

 

They have some very profitable divisions, including the largest production facilities in Mexico and Puerto Rico. But the state of the Poultry Industry in North America has left all of the producers severely short on cash, and with all the banking snafus of late there is no one with the credit available to buy up anything.

 

It is only a Chapter XI reorganization bankruptcy, with operations continuing as they move forward. But if they are unsuccessful with reorganizing the ramifications economically for Georgia could be devastating.

[Teatime]

Can't say I'm not happy about it

[GeorgiaTornado]

Dang..........I love chicken!

[cuteyellowbug]

Due the the feed prices my parents sold most of their goats...

 

A lot of farmers are having to sell making meat prices cheaper now because of mass sales.. but we will all (non-vegetarians!) probably be paying much higher costs for meat in the near future due to non-availability. I would say to stock those freezers now!