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Sanderson Poultry Complex on Back Burner

by 5m Editor
27 June 2008, at 10:09a.m.

KINSTON, US - Sanderson Farms has delayed construction of the company's poultry complex in Kinston due to adverse economic conditions, including the costs of feed ingredients.

In making the announcement today, Sanderson said it was still committed to fulfilling plans here.

In April, Sanderson announced plans to invest $126.5 million for constuction of a new feed mill, poultry processing plant and hatchery. Construction was to start this year and the processing plant was to go into operation in 2009.

Bob Billingsley, Sanderson Farms director of development and engineering, traveled to Kinston Thursday to meet with local officials to discuss the delay.


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"There is a lot of uncertainty in the market right now"
Bob Billingsley, Sanderson Farms director of development and engineering

"There is a lot of uncertainty in the market right now," he said. "We are still committed on going ahead and finalizing the deal on the property."

Billingsley said Sanderson Farms is still committed to building its facility in Kinston.

Joe Sanderson Jr., Sanderson Farms chairman and chief executive officer, said in a statement: "We believe it is in the best interest of Sanderson Farms and our shareholders to delay construction of the Company's proposed Kinston, North Carolina, project. In light of escalating prices for corn and soybean meal, our primary feed ingredients, it has become increasingly difficult to predict our future input costs. Because a third of the United States corn crop is now expected to be used to produce ethanol, the poultry industry and other animal feeders are being challenged by increasingly tighter supplies of grain and historically high prices. The recent flooding in the Midwest has further affected this season's corn and soybean crops, creating more uncertainty. While our balance sheet remains strong, we believe it is prudent to be conservative with our working capital and our balance sheet at this time."

According to Sanderson, the company will remain "committed to our long-term growth, to the new Kinston complex, and to the local communities of North Carolina that have graciously supported this project."

Lenoir County Economic Development Director, Mark Pope, said he met with Billingsley today to discuss the delay. "They talked to us to let us know what was happening," he said.

5m Editor