Chicken Farmers Have Hearts Plucked Out

Last December, Pilgrim's Pride Went Bankrupt. The repercussions on chicken farmers are still being felt.

Please consider At Chicken Plant, a Recession Battle.

DOUGLAS, Ga. -- This small town was devastated in February when its largest employer, Pilgrim's Pride Corp., said it would close a chicken-processing plant as part of the company's bankruptcy filing.

Since then, city and county officials have been working to find a buyer who could save the plant's nearly 1,000 jobs and $300,000 in annual county tax revenues. But there's a problem: Pilgrim's Pride isn't eager to sell.

Pilgrim's has so far rejected a $32 million bid for the plant from Amick Farms LLC of Batesburg, S.C., company and city officials say. Another chicken company took a look and decided Pilgrim's asking price was too high, say people familiar with the matter. City officials say the company kept a prospective bidder from touring the plant, making it a challenge to market.

Pilgrim's says it hasn't been offered a fair price for the plant and is cautious about letting rivals see its manufacturing processes. In an email to the city of Douglas, Pilgrim's President and Chief Executive Don Jackson said, "With declining demand for chicken in this terrible economy we need to remove chicken from the market. This would not be accomplished with a sale." While he said he recognized the "devastating impact" a closing would have on Douglas, "the actions do strengthen the company and help protect the jobs" of the company's 40,000 U.S. employees and farmers.

Many businesses in the U.S. are struggling with excess capacity. From autos to airlines to houses, "there's a landscape of industries and sectors that are recognizing that they're going to need to scale down," says Nancy L. Rose, an economist at the Massachusetts Institute of Technology Department of Economics in Cambridge.

With no plant to process the birds they raise, local chicken farmers have no income to pay off debts. Months ago, the hundreds of cavernous, metal-and-wood chicken houses in the county were worth at least $200,000 each when filled with chickens, farmers say. Now, except for flies and old feathers, the structures sit empty and are virtually worthless.

Mr. Jackson, Pilgrim's CEO, appears to have struggled over the decision to shut the plant. In a March 11 email to Ms. Lewis, the Economic Development Authority official, he said: "I do not mean to 'pluck the heart' out of Douglas or any other community. All of my 58 years have been spent in agriculture. Thirty of it in the chicken business. I grew up on a farm and my father spent his entire life farming. Not some 'rich' farmer but one just like your neighbors in Coffee County. He would be sick over this situation." Mr. Jackson declined to be interviewed.

Pilgrim's began dismantling chicken operations in the area, slaughtering hens and selling off eggs. The steps were necessary because "you can't close a plant and have tens of thousands of live chickens there with no place to go," Pilgrim's bankruptcy attorney, Stephen A. Youngman, said in court transcripts.

Douglas residents still hope the plant will reopen. One recent afternoon, after a corporate jet landed at the local airport, rumors flew that a buyer might have arrived. It turned out the plane was carrying executives from Little Debbie, a maker of cookies and cakes, doing business in the region.

Oh' The Humanity!

I am not sure quite why but the above story reminds me of a scene from the Cincinnati WKRP Turkey Drop Episode.

"As God is my witness, I thought turkeys could fly!!!" -- Arthur Carlson, WKRP in Cincinnati.

The above quote is from the famous WKRP in Cincinnati episode where Station Manager, Arthur Carlson (played by Gordon Jump), arranged to have live turkeys dropped from a helicopter as an advertising stunt.

Unfortunately, this turned out to be a serious miscalculation. The poor birds plunged to earth, never even having a chance. Their tragic "last flight" was relayed to WKRP listeners by reporter Les Nessman, played by Richard Sanders:

"It's a helicopter, and it's coming this way. It's flying something behind it, I can't quite make it out, it's a large banner and it says, uh - Happy... Thaaaaanksss... giving! ... From ... W ... K ... R... P!! No parachutes yet. Can't be skydivers... I can't tell just yet what they are, but - Oh my God, Johnny, they're turkeys!! Johnny, can you get this? Oh, they're plunging to the earth right in front of our eyes! One just went through the windshield of a parked car!

Oh, the humanity! The turkeys are hitting the ground like sacks of wet cement! Not since the Hindenburg tragedy has there been anything like this!"

Tomorrow a report on lobsters.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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