Chicken Plant Closing Would Impact Moore
A Ukrainian billionaire's purchase of Townsends' poultry assets threatens the livelihood of 15 Moore County growers and further erosion of the local economy.
The projected Oct. 1 shutdown of Town-sends' facilities has the potential of leaving poultry farmers as much as $59.2 million in debt on their chicken houses. That excludes the trickle-down effect on lost income, damage to area businesses and loss of taxable property and income.
"How we're going to pay off that indebtedness is the big question," said Craven Hudson, director of the Moore County Cooperative Extension Service. "Those chicken houses are not inexpensive to construct."
The 15 contractors in Moore County own 148 chicken houses.
Hudson said state business and agriculture officials have been "extremely busy trying to react quickly" to the economic dilemma.
Negotiations are already under way to persuade the Ukrainian buyer, Oleg Bakhmatyuk, to sell Townsends' assets to a North Carolina corporation and, if necessary, to line up low-interest loans to ease such a sale.
Dan Campeau, Extension Service area poultry agent, said Thursday that a North Carolina delegation is presently in Ukraine for negotiations with Bakhmatyuk.
Campeau credited state Agriculture Commissioner Steve Troxler with quick action to mitigate the economic woes generated by the Townsends losses. He said Troxler has already lined up a couple of "definite buyers," provided the delegation can work out arrangements with Bakhmatyuk.
The hold-up apparently lies with the Ukrainian billionaire, who reportedly is asking 25 percent more than he paid to buy out Townsends from bankruptcy.
"We're in the negotiation stage now, but there's nothing we can do to force him to sell if he doesn't want to," Campeau said.
The delegation was organized by the N.C. Department of Agriculture and the Agriculture Consortium. One of its members speaks Ukrainian and likewise has a background in farming.
Earlier this year, Bakhmatyuk paid $24.9 million to acquire Townsends' assets and take over the poultry company's bankruptcy liabilities. More recently, the new owners announced plans to close all company facilities in North Carolina by Oct. 1. That would put about 1,200 employees of processing plants in Siler City and Mocksville out of work and terminate contracts with hundreds of poultry growers.
Campeau said 171 of those contractors live within the eight counties in the district he serves. His office is in the Extension Service center in Chatham County.
Many of those farmers still owe heavily on the poultry houses and equipment used to fulfill their contracts with Townsends. The indebtedness is estimated between $300,000 and $400,000 per farmer, depending on the age of the facilities.
Add to this the loss of annual income of $40,000 to farmers and the annual income of $30,000 for each of the processing plant employees, and the direct financial loss to the state adds up quickly into the millions.
Campeau said this is just the beginning of the estimated loss, which will be felt by local retail businesses and by state and local governments in lost tax potential.
In addition, Campeau expressed concern that the loss of yet another aspect of agriculture poses a serious threat to national security when it comes to this nation's ability to feed itself.
Campeau said that the United States now produces only 60-65 percent of its food supply and imports the remainder.
"We really need to get the numbers up, because this is a national security issue," Campeau said.
The problem does not lie with the American consumer, because poultry is more popular than ever - from the home dining room table to fast food restaurants. However, production of poultry is increasingly expensive because of, among other factors, the high cost of feed corn, much of which is being diverted into the ethanol energy industry.
The result is that America is more and more relying on purchases from South American countries.
The Townsends buyout is the latest in a series of setbacks for poultry growers. Pilgrim's Pride, another major poultry company, went out of business a few years ago and likewise eliminated contracts with a number of farmers in Moore and other North Carolina counties.
In 2008, Moore County producers raised 35 million chickens valued at $118 million, making the county the sixth largest poultry producer in the state, according to the 2009 statistics collected by the U.S. Department of Agriculture, National Agricultural Statistics Service, and the N.C. Department of Agriculture and Consumer Services.
Contact Florence Gilkeson at firstname.lastname@example.org.
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