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Pilgrim's Pride, the largest US chicken
processor, announced that it is
closing a
North Carolina chicken processing facility. This move is
another verification that farming, energy,
and food are closely connected. |
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The company announced that it will also
close six distribution centers due to
increased feed costs.
Feed costs have significantly increased over
the recent year and are squeezing profit
margins for all livestock and poultry
processors. |
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Corn and soy
meal are the main ingredients in poultry
rations. Demand from the ethanol industry
has increased corn prices. At the same time,
competition for farm land to grow corn and
soy has increased prices for these and other
grains. |
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Closure of
this facility will reduce Pilgrim's Pride's
processing capacity by about 1.5% and
the industry's capacity by about 0.4%.
Pilgrim's
Pride's
decrease in chicken production will increase
chicken prices for all consumers. |
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This
plant closing will have a small impact upon
industry capacity and increase poultry
prices somewhat, however it is an indicator
of the trend to close food processing plants
in favor of opening ethanol plants. The
grains that would have been used to feed
chickens and other livestock will instead be
used to manufacture ethanol. |
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Ethanol
production will increase due to government
subsidizes and legislation mandating that
more ethanol be used in cars. |
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This
production pattern change from food to
ethanol is an indicator
of changes to be made by Pilgrim's Pride and
other food processors to curtail production
and cut costs. |
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In the coming years there will be less
chicken to eat and more ethanol to fuel
vehicles. Hungry drivers may have ethanol to
fuel their drives to grocery stores, but
they may not be willing to pay the high
prices for chicken when they arrive. |