And The Hits Just Keep On Coming

Pilgrim's Pride is the latest chicken producer to report a loss.  The report by this company, the largest chicken producer in the country, follows the loss reported by Tyson Foods, the world's largest meat producer, of a loss for the third quarter.  Purdue Farms, the largest poultry producer on the Shore, is privately held and doesn't report profit and loss, but I would be surprised if they were not struggling also.

The primary culprit in each case is high grain prices with some contribution from high energy prices and transportation costs.  The companies have been unanimous in blaming flawed government ethanol policies for contributing to the higher cost of grain.  To a significant extent, they are right.  The huge subsidies for ethanol production has led to an explosion in the number of ethanol plants that now suck up about a quarter of our total corn production.  Further, the demand for corn has led many farmers to shift production out of wheat and other grains into corn.

This demand, coupled with crop failures overseas and increased demand from rapidly developing countries like India and China has sent grain prices up substantially and has affected the price of many other foodstuffs.  But anyone who shops for food already knows that. 

On top of all this, of course, the congress is prepared to pass a wasteful and grossly inflated farm bill which will increase subsidies to farmers and significantly increase consumer prices for many things.  But I digress.

It seems that a cutback in poultry production may be coming and that will be just another hit for the Eastern Shore, where the economy is already hurting due to the sharp decline in residential housing construction.  With the cost of gasoline more than $3.50 a gallon, it's likely we will see a reduction in tourism too.  We already know the crabbing industry is taking a hit. 

So it could be a difficult year here on the Shore.  We'll have to see what comes next.