Saturday, May 7, 2011

Twisters Pummel Poultry Industry

Saturday, May 7, 2011

SIMCOE, Ala. — Poultry breeder Terry Smith's hilltop chicken houses lie in ruins. Thousands of birds are dead. Hundreds of thousands of dollars worth of equipment has been lost.

When a tornado met the metal buildings, "it was an explosion," Mr. Smith recalled.

Ryan Dezember/Dow Jones Newswires

Terry Smith's chicken houses

Similar scenes played out across northern Alabama last week as the most destructive storms in decades swept across the Southeast. In addition to a death toll that stood at 329 people Friday and left thousands homeless, Alabama's nearly $3 billion-a-year poultry business, the largest segment of an agricultural industry that dominates the state, was dealt a crippling blow.

Last year, Alabama churned out 1.04 billion chickens, or about 12% of total U.S. production, ranking the state behind only Georgia and Arkansas, according to the U.S. Department of Agriculture.

Much of Alabama's bird business is located in the hard-hit northern half of the state, where the rolling terrain is better suited to raising chickens than row crops.

The state's latest count of confirmed chicken deaths is nearly 3.2 million. "That's only what we've been able to identify," said John McMillan, Alabama Agriculture Commissioner. "There's going to be a lot more."

Ryan Dezember/Dow Jones Newswires

Alabama farmer Terry Smith, pictured, said last week's twisters killed 2,000 birds and ruined hundreds of thousands of dollars worth of equipment.

Lost birds are only a part of the problem. Widespread power outages have shut down feed mills, processing plants and rendering facilities, which turn offal, feathers and other by-products into protein meal that is fed to the next generation of broilers, disrupting a tightly coordinated production cycle.

"It may take up to a year to smooth this thing out, maybe more," said Guy Hall, who heads the Alabama Farmers Federation's poultry division.

At the moment, it isn't clear how many of the lost birds were breeders, which are harder to replace than those raised for meat production, and thus difficult to gauge the storm's long-term impact, said BB&T Capital Markets analyst Heather Jones.

But Ms. Jones said water shortages at many growing houses could prompt premature slaughters, pushing chickens that had been destined for commodity markets, where they would be sold whole or as fryer parts, to prepared-food facilities and turned into chicken nuggets and cutlets instead.

Ultimately, prices could rise, Ms. Jones said, which would help processors and growers who have been pinched by depressed prices and rising feed costs.

Tyson Foods Inc., the largest U.S. chicken processor, which has more than 340 contract growers in Alabama, lost some houses and birds and was without power at two of its processing plants for several days. "Because we have other poultry facilities in the region, we've been able to continue to meet the needs of our customers," said spokesman Gary Mickelson.

Pilgrim's Pride Corp., the nation's second-largest chicken processor, had about 100 houses damaged or destroyed and for five days lost power at a pair of its plants, which were restarted Monday with generators.

Bill Ingram, who owns Golden Rod Broilers Inc., said he has had to order soy meal from Indiana and Georgia with his interstate supplier shut down and is scrambling to make sure his growers are supplied. It will take Golden Rod, which typically puts out 1.1 million chickens a week, two to three weeks to catch up on its processing.

"We're just trying to catch our breath," said Mr. Ingram, whose father founded the business in 1951 in Cullman and helped the county seat become the state's chicken capital.

The mass death also has sparked a public-health problem as millions of chickens lay rotting in the Southern sun and guts and offal are backed up at powerless rendering plants. "Incineration is an option, but with this volume burial is the only way to deal with them," said Mr. McMillan, the agriculture commissioner. He has been lobbying the federal government for help cleaning up and distributing diesel to growers who must run generators to cool their coops and prevent die-offs.

Mr. Smith, a 67-year-old former jeweler who started breeding chickens 23 years ago, said that although he is fully insured, a year's salary went up in the funnel cloud and he will retire. "I really didn't want to," he said. "I hate it."

Surprisingly, considering the condition of his houses, only about 2,000 of Mr. Smith's 20,000 birds died in the storm.

Hens clustered around the wreckage, pecking at the ground amid stiffened members of their flock that lay scattered about.Two roosters stretched their necks and butted chests. Some hens squeezed into their nesting nooks and plopped eggs onto idled conveyor belts.

Pilgrim's Pride, which contracts with Mr. Smith to supply its hatcheries with eggs, was relocating what birds it could to other facilities. Others would have to be euthanized.

As he contemplated the equipment that might be salvaged from his collapsed buildings, an Alabama Department of Transportation crew arrived with a backhoe.

They maneuvered it between two houses and began to dig a 5-foot-by-40-foot grave.

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