March 13, 2008

Pilgrim's Pride to close 7 poultry facilities
 

Pilgrim's Pride has announced on Wednesday that it will be closing a chicken processing facility and six distribution centres in the US due to soaring feed costs and oversupply of chickens.
 

The difficult decision was made to bring about a healthy balance of supply and demand, according to Clint Rivers, chief executive officer of Pilgrim's Pride.

He added that the company is unable to sustain the demand of products that are sold below the cost of production. In a news release, Rivers had also said current commodity prices would cost an additional US$1.3 billion than two years ago to feed the company's poultry flocks.

Corn and soymeal are the main ingredients of poultry feed, but demand from the ethanol industry and competition for acreage has driven up grain prices, which hits chicken processors hard.

Paul Aho, an economist with the consulting firm Poultry Perspective, said he is not surprised by Pilgrim's Pride decision due to the exorbitant grain prices, which are restricting domestic chicken production.

The company will be taking a charge of about US$35 million for the closures, which will result in a loss of 1,100 jobs.

Pilgrim's Pride is currently reviewing its other production facilities for potential changes or even closures.