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Chicken Plant Purchase will Boost Foster Farms

by 5m Editor
27 March 2009, at 10:15a.m.

US - Foster Farms' pending purchase of a chicken processing plant in Louisiana will not affect its core operations in the San Joaquin Valley, CEO Ron Foster said.

"We view this acquisition as complementary to our current business," Foster said in a written response to questions from The Modesto Bee. "When the purchase is successfully completed, it will provide us with incremental capacity and new capabilities." Foster Farms, based in Livingston, reached a tentative agreement last week to buy the plant in Farmerville, Louisiana, from the struggling Pilgrim's Pride Inc.

Foster Farms and the state of Louisiana each will pay $40 million for the plant, which otherwise would have closed. It employs about 1,300 people and buys chickens from about 300 farmers, reports Merced Sun-Star.

The acquisition could add "perhaps upwards of 15 to 20 per cent" to Foster Farms' production capacity, the CEO said.

"This acquisition does not indicate any material expansion of our marketing effort geographically, or a shift of production away from California," Foster said. "It simply supports our existing growth needs." Foster Farms, founded in Modesto in 1939 by Max and Verda Foster, employs more than 10,000 people. It has operations in Livingston, Turlock and a few other California locations, along with Oregon, Washington, Colorado, Arkansas and Alabama.

The Alabama plant, a corn dog producer acquired by Foster Farms in 1996, was the company's first foray into the South, the center of US chicken production.

Even with the latest acquisition, Foster Farms will be a small player in that region compared with industry giants such as Pilgrim's Pride and Tyson Foods Inc.

Nonetheless, the move will spread Foster Farms' reputation for quality, said Bill Mattos, president of the California Poultry Federation, based in Modesto.

"They are a successful, family-owned company on the West Coast, and they do a lot of things that will be good for the southern United States," he said.

Foster said the company has not determined what specific chicken products will be produced at the Farmerville plant. Foster Farms markets hundreds of chicken and turkey products, ranging from whole birds to sliced deli meat.

Foster Farms and Pilgrim's Pride still need to sign a formal purchase agreement, which must be approved by the bankruptcy court overseeing the latter's finances.

The pending deal was welcomed by public officials in Louisiana, including Gov. Bobby Jindal.

"This is a major victory for the people of northeast Louisiana and our entire state," the Republican said in a written statement.