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Circle Four hit by high corn, fuel prices
Grace Leong
More livestock producers in Utah are getting clobbered by high corn and fuel prices.
Circle Four LLC, a hog producer in Milford that produces hogs for Hormel for processing under the Farmer John brand, joins a growing list of livestock producers nationwide that have been forced to cut production because of skyrocketing input prices. Just this past weekend, Norbest turkey producer Moroni Feed announced plans to cut production and temporarily lay off 450 workers at its processing plant and breeder farms in Sanpete, Juab and Sevier counties after Thanksgiving.
The cutbacks at Circle Four are part of a companywide reduction announced earlier this year by Smithfield Foods Inc., parent of Murphy Brown LLC, a Warsaw, N.C.-based livestock producing subsidiary that owns several hog producers nationwide.
Smithfield is cutting its 1 million-plus sow or female breeder herd by 5 percent, or 50,000 sows companywide. That will in turn, reduce the number of hogs it produces by 895,000. Annually, Smithfield produces 17.9 million market hogs, or hogs grown to a market weight of 265 pounds each.
"We're not specifying how many sows will be cut at Circle Four," said Don Butler, Murphy Brown's director of government relations and public affairs. Circle Four produces 1.2 million hogs annually in central Utah, most of which are processed by Hormel in California, and the remainder by Yosemite Meat.
"The reductions can be done without impact to its workers and the community in Utah," Butler said. Circle Four has no plans to lay off any of its 480 workers in Milford.
But Butterball LLC, another Smithfield Foods subsidiary, is laying off more than 200 workers in August at its turkey plant in Longmont, Colo., and other nearby turkey farms.
"Corn and soybeans for feed have more than tripled in costs, diesel and gasoline costs have doubled. Pork producers are losing money on every hog they send to market. We're losing anywhere between $15 to $50 for every hog that goes to market," Butler said. "Nationally, production costs are between 60 cents and 75 cents a pound live weight [or the weight of the animal when it is alive] while market prices are in the 50 cents per pound range."
Corn feed accounts for 60 percent of the cost of raising livestock. And corn prices -- which typically ranged between $2.25 and $2.50 a bushel this past decade -- skyrocketed to more than $7 a bushel in the past week because of increased worldwide demand, a weak dollar that has made U.S. corn more affordable overseas, and because 25 percent of corn produced locally goes to ethanol production. Aggravating the situation are storms and severe weather in the Midwest since mid-May, which have flooded more than 3.4 million acres of land and caused billions of dollars of damage to crops.
"Livestock producers are in extreme financial distress. It is foolish to keep burning food for fuel. There should be an elimination or overhaul of corn-based ethanol policies. It's not a complete fix, but it will make a big difference," Butler said. |
