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"Pilgrim's Pride Corp. swung to a quarterly loss and set plans to shut a Texas chicken-processing plant, highlighting the problems facing U.S. food producers as they wrestle with high grain costs and a tough pricing environment.
The second-largest U.S. poultry producer by revenue lost $128 million in the second quarter and will shutter a plant in Dallas with 1,000 staff in an effort to curb the glut of chicken that has depressed prices.
"Our industry's business model is not sustainable at these [price] levels," said Pilgrim's Pride Chief Executive Bill Lovette on a conference call. The company will have 29 bird-processing plants after Dallas closes, and eight of those facilities are already idle.
The chicken industry has suffered compared with pork and beef producers, which have been lifted by strong exports, though the entire meat-producing sector has been stung by soaring feed costs. Chicken producers have had the toughest time passing on price increases to retailers and consumers.
Pilgrim's, which has 42,000 employees, was the largest casualty of a similar spike in animal-feed prices in 2008 that combined with wrong-way bets on derivatives contracts that left the company nursing a $1 billion full-year loss and pushed it into bankruptcy protection alongside a host of smaller producers
