April 04, 2008

Fieldale Farms Reducing Chicken Production

Fieldale Farms cuts chicken production, blames oversupply and high feed costs.Fieldale Farms of Baldwin, GA announced on Thursday that it was reducing it's chicken production by 5%. Below is the entire press release.

BALDWIN, Ga.--(BUSINESS WIRE)--Due to dramatic cost increases, effective immediately Fieldale Farms is reducing live chicken production by 5%. According to Executive V.P., Mr. Gus Arrendale, the decision was due substantially to current excess supply and the high cost of chicken feed, particularly corn.

According to Arrendale, “It’s a tough decision to make, but unfortunately, the markets we sell in have not yet caught up to the rapidly rising cost of feed and it seems to be getting worse. Not long ago feed corn cost a little over $2/bu, now it’s approaching $6 and some are predicting $8/bu this summer. With the U.S. Agriculture Department anticipating a substantial drop in planting acreage this year, further impacted by feed corn being committed to production of ethanol, prices are not likely to fall.”

Fieldale Farms, headquartered in Baldwin, GA, is one of the country’s largest poultry producers, supplying fresh and frozen chicken products to retail and food service outlets throughout the United States.

Notice the part about excess supply. No matter what feed costs are you would expect that in a situation of an excess supply of chicken, the fix would be to lower production.

A couple of weeks ago, Pilgrim's Pride announced it was closing a facility citing feed costs and an oversupply of chicken. Many of the articles that later came out didn't mention anything about the oversupply.

Now the same thing is happening again. This article just appeared in the news that puts all the blame on feed prices and no mention at all about an oversupply.

1 comment:

Dave said...

You are right on about the over-supply issue. A lot of farmers I talk to around here pin a lot of blame on corporate farms who have allowed high production levels to occur even when demand had been met and input costs were increasing. It sounds like to me there is going to have to be a shake-down in the livestock market this summer to correct the number of animals we've got going to slaughter.

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