March 12, 2008

Pilgrim's Pride To Close Chicken Facility. Ethanol to Blame?

When I first looked through the news items today I saw this article.

DOW JONES NEWSWIRES - Pilgrim's Pride Corp. (PPC) said it will cut 1,100 jobs from closing a complex and six of its 13 distribution centers as the world's largest chicken processor struggles with the continued surge in feed costs. The company, which blamed corn-based ethanol production for the feed-cost increase, said the retrenchment is "part of a plan to curtail losses amid record-high costs for corn, soybean meal and other feed ingredients and an oversupply of chicken" in the U.S.

Notice the part about an oversupply of chicken.

Well, I thought that maybe I could find a better article to quote since this article was just the highlights of todays top stories. The next article I read didn't mention anything about an oversupply of chicken. Plenty of blame for ethanol and feed costs but not a word about any kind of oversupply situation.

So I did a search on Google News for "Pilgrim's Pride" and 138 articles came up. Next I did a search for "Pilgrim's Pride oversupply" and only 10 articles came up. So the majority of articles didn't mention anything about the oversupply. And they were all dealing with the same information since all this came from a company press release.

They say that there are two sides to every story. The problem is that today the majority of the press is only interested in telling the parts of the story that represent the situation the way that they want it to be perceived.


Dave said...

Nice report. I've got a few relatives in the livestock business (cattle) and the markets are pretty crappy -- low prices with high input costs. Lots of them are talking about how corporate farms aren't reducing their herd size since they can withstand tighter margins and the result has been a glut of meat coming onto the market during an overall downturn in meat consumption during this 'recession.' Its hard to feel sad either way really but most market analysts seem to agree that later this summer we will see the results of herd size diminishing and meat prices will rise quickly. However, like I said before, you presented a really good argument about how the oversupply issue is rarely raised.

Michael A. Gregory said...

Sorry to hear that your relatives are having a hard time. Anytime situations change such as higher commodity prices it creates opportunities for some and challenges for others. But that is the normal cycle that goes on in agriculture. I think over the long term it will all even out.

Anonymous said...

Getting into your posts a little late but would appreciate your thoughts. I have a small manufacturing company that utilizes both beef trimmings and chicken. Why is there an oversupply of chicken with feed cost so high. While feed costs have tempered and, in fact dropped, we continue to hear about the oversupply of chicken. Why would a farmer feed $8.00 corn to an animal that isn't going to cover its cost to maturity.

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