House of Raeford Farms, one of the US’s top 10 fully integrated poultry processors has announced a decrease in broiler production by 10%.
Beginning in early February, the company began reducing the number of egg sets as well as making other adjustments to improve profits and cash flow.
The unprecedented cost of corn which is the primary ingredient in poultry feed as well as indicators from the US Department of Agriculture (USDA) that corn supplies are at their tightest levels in 15 years has contributed significantly to this decision. Supported by federal subsidies, the ethanol industry is draining 40% of US corn production (up from 7% in 2001). This has resulted in corn prices nearly doubling in a single year and expectations are that the costs will remain at elevated levels for the foreseeable future.
High unemployment continues to negatively influence foodservice sales. As a result, an oversupply of chicken has caused the market price to decrease dramatically.
“We decided that acting now was a responsible action for our company in light of continuing unstable economic conditions,” said Bob Johnson, CEO. “Hopefully the chicken prices will begin to increase later this year. In addition, if Congress will take action to cut unreasonable government support for the ethanol industry, then grain prices should decrease to a more manageable pricing level.“
Source: House of Raeford Farms