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Pilgrim's Pride Cuts Production

by 5m Editor
15 April 2008, at 9:15am

US - US chicken producer and processor Pilgrim's Pride is to reduce weekly chicken processing by about five per cent in the second half of the 2008 financial year.

The move is part of its continuing effort to better balance supply and demand amid record-high costs for feed ingredients such as corn and soybean meal.

The reduction began with eggs set earlier this month and should take full effect with weekly processing beginning in June.

The company said the reduction will remain in effect until average industry margins return to more normalized levels. The five per cent reduction includes the impact of the previously announced closing of the Pilgrim's Pride plant in Siler City, North Carolina, which should be completed by June.


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"We believe the cuts we are enacting will strike a better balance between production and demand"
Clint Rivers, president and chief executive officer.

"Soaring feed-ingredient costs fueled by the federal government's misguided ethanol policy has created a crisis in our industry, the true effects of which are only just now beginning to be felt by American consumers in the form of higher food prices," said Clint Rivers, president and chief executive officer.

"Over the past two weeks, a growing number of smaller chicken producers have announced production cutbacks in an effort to manage these unprecedented increases for corn and soybean meal, which are expected to add billions of dollars of cost to our industry this year.

"It is clear that chicken producers of all sizes are feeling the tremendous financial strain from these additional grain costs.

"We have been encouraged by these public announcements, for they indicate that the production cutbacks this time are being shared more broadly across the industry, rather than limited to just the largest processors, as was the case last year.

"We believe the cuts we are enacting will strike a better balance between production and demand and strengthen our competitive position. As we have said in the past, reducing overall supply to better match demand is an important component in helping return the industry to profitability."

The company also said it is continuing to review its production facilities for potential mix changes, closure and/or consolidation in response to current negative industry fundamentals. Pilgrim's Pride acknowledged that its processing complex in El Dorado, Arkansas, is among those being reviewed for possible closure. But the company emphasized that no decision has been made at this time.

5m Editor