Reprinted with permission from The News & Observer of Raleigh

By David Bracken

The News & Observer of Raleigh

The state's poultry industry suffered another blow last week as House of Raeford Farms announced it will close its turkey slaughtering plant in Raeford that employs 950 people.

The company is also shuttering its turkey hatchery in Rose Hill and ending its relationship with about 140 turkey farmers in eastern North Carolina.

The slaughterhouse is by far the largest employer in Raeford, a city of fewer than 5,000 people just south of Fort Bragg, and its work force is largely made up of the working poor.

Although not many workers are believed to be Moore County residents, the job losses are bound to be felt here, where many people come from surrounding rural counties to shop.

"With a low-wealth county like ours, if you lose three or four jobs that's traumatic, but 950 is a major hit," said Don Porter, executive director of the Raeford-Hoke Economic Development Commission. "These are poor people who we're really going to have to try and find some way to get them back to work. That's a major concern."

Pat Corso, executive director of Moore County Partners in Progress, called the plant closing "a dramatic loss" for the region.

"It's not just a hiccup," Corso said. "It's a mammoth blow."

Corso said the loss underscores the need for a rural economic development strategy in North Carolina.

"There is a statewide strategy, but it gravitates toward the urban centers," he said. "I think it's imperative to develop a strategic response to the problems that are happening in our rural counties. You can't just orphan them."

House of Raeford's decision is the latest example of how the high price of corn - the main ingredient in chicken and turkey feed - is eroding profits in one of the state's largest industries. The family-owned company said in a statement that elevated corn prices, as well as falling turkey prices and flat turkey consumption in recent years, have made the business unprofitable.

Getting out of the breeding and slaughtering business will allow the company to focus on increasing chicken production and expanding its lines of fully cooked turkeys and chickens over the next several years. Chickens now account for more than 90 percent of House of Raeford sales. Based in Rose Hill in Duplin County, the company will still employ about 2,300 people in North Carolina after the closings, including 400 at a plant in Raeford where they cook turkeys to package and sell in grocery stores.

North Carolina ranks second nationally in turkey production behind Minnesota. The industry accounted for more than $772 million in sales in 2011, making turkeys the state's third-most-valuable commodity behind broilers and hogs.

The economic effects of House of Raeford's decision will extend far beyond the lost jobs. A similar ripple effect played out when Townsends, another major poultry operator in the state, closed its chicken facilities in Siler City and Mocksville.

In addition to being the largest employer, House of Raeford is also the largest water user in Raeford. City Manager Mike Wood estimated the company accounted for $1 million in water and sewer revenues annually.

"That's probably 30 percent at least of our water and sewer budget," he said. "It's going to be extremely difficult to be able to make that up with a rate increase."

House of Raeford's network of turkey farmers also faces an uncertain future. Farmers typically borrow large sums of money upfront to build houses for their birds and are dependent on a processor to provide them with turkeys and turkey feed to keep their operations running.

House of Raeford said it will work with individual growers to see whether they have interest in transitioning to raising chickens. But such a move would require farmers to make significant investments.

"A lot of their turkey grower houses have got a lot of age on them," said Jesse Grimes, a professor and extension turkey specialist with N.C. State University's Poultry Science Department. "I'm not sure how many people are going to elect to switch to broilers and invest that much money."

After its closing, North Carolina will have two turkey processing facilities. Butterball, which is based in Garner and is the country's largest turkey producer, operates a plant in Mount Olive, and Prestige Farms has one in St. Pauls in Robeson County.

Corso added that the House of Raeford closing, coupled with last year's announcement that Gulistan Carpet was shuttering its Aberdeen and Wagram operations this year, highlights the importance of joint projects like the Heart of North Carolina MegaPark.

"Hopefully, that project will benefit multiple counties and get the attention of the General Assembly," he said. "Montgomery and Moore counties are trying to prepare themselves for opportunity."

Pilot staff writer Ted M. Natt Jr. contributed to this report.