Poultry industry hit hard by rising corn costs - WALB.com, Albany News, Weather, Sports

Poultry industry hit hard by rising corn costs

Posted: Updated:

ADEL (WALB) -  One of the most important segments of Georgia's agriculture economy is facing tough times.

When you think of Georgia's top products, peanuts and cotton may come to mind.

But poultry production dwarfs those crops.

In fact, the poultry business brings in more money than peanuts, cotton, and vegetables combined.

Sanderson Farms, which has a huge operation in Colquitt County, is losing tens of millions of dollars right now.

The culprit? Corn.

"Just this past year, the corn and soy process increased our costs by $334 million in 2011 compared to 2010," said Mike Tamimi, Adel Division Manager for Sanderson Farms.

That's an 85% increase in feed costs over the previous year.

This past quarter the Mississippi based company, which employees hundreds of people at its Moultrie production facility, posted a net loss of nearly $56 million, mainly because of rising corn and soy bean costs.

"We buy about 90 million bushels of corn company wide," said Tamimi.

High gas prices are also having an impact, but it's what is going into the gas that is the bigger issue.

For the first time ever, the USDA says more corn could be used for ethanol production than for human and livestock consumption. That's driving up corn prices.

While Sanderson did post $200 million in earnings last year, a record for the company, it will likely not see those numbers again until the price of feed goes down.

"We'll get out of this cycle," said Sanderson CFO Mike Cockrell. "Our industry has always been cyclical. We've had our ups and down and it's not our first one. The industry will adjust and return to profitability."

Sanderson is planning to cut production by 4%, but they do not foresee cutting any jobs.

In fact, there are plans to open another chicken processing plant in North Carolina in the near future.

Powered by WorldNow