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Why Did the Chicken Plant Close and 185 Workers Lose Their Jobs?

Well, it all starts with the benevolent idea of biofuels

Oct 06, 2011


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OCTOBER 6 2011


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Why Did The Chicken Plant Close and 185 Workers Lose Their Jobs?

We could have also titled this newsletter The Law of Unintended Consequences. High feed prices are having a tremendous impact on many businesses all over the country and the world. They say high feed prices had a lot to do with the Arab Spring. However, we won't try to explain the economy of the entire world today. We'll just take a look at the story below which will explain a lot by taking a look at just one business that's going out of business.

Why are feed prices high? Well, it all starts with the benevolent idea of biofuels. The U.S. government subsidizes the production of ethanol. The subsicy encourages farmers to divert grain to fuel and leads to higher food prices. Ethanol is supposed to help us break our dependence on foreign oil. How's that working out for you? Subsequently, 40% of all corn is out of the food picture and into the ethanol picture. This has driven up the price of corn worldwide. Not only corn, but because alfalfa and other grains are being used to substitute for corn, their prices are also up. And now, the price of feeding chickens is higher than the price you can get for a chicken. So, the chicken will be crosssing the road along with the 185 workers who are now looking for another job. The sad thing is that many of these workers will now have to go on unemployment and may end up supporting the politicians who guarantee them more unemployment payments, who also happen to be the same politicians who support ethanol policy, who also happen to be the politicians who cost them their jobs in the first place.


High feed prices forcing closure of Turlock chicken producer

By John Holland

High feed-corn costs will force a premium chicken producer to close early next year, putting about 185 people in the Northern San Joaquin Valley out of work.
The company, Fulton Valley Farms, has been sold to a Chinese buyer that does not plan to keep it going at least in the near future, Chief Executive Officer Andrew Carlson said Tuesday.

"(Feed) prices have disallowed us from running our business model like we would like to run our business model," he said.

The Turlock-based company, which also goes by Central Coast Farms, raises poultry at its ranches and contract ranches around the north valley.

The birds are processed at Squab Producers of California, in Modesto, and Pitman Family Farms in Sanger, Fresno County.

Fulton is trying to find other outlets for its chicken farmers, Carlson said. The new owner might restore jobs in two to five years, he said.

The company has produced about 12 million chickens a year, a tiny amount compared with Foster Farms, the leading West Coast poultry outfit.

Fulton's products include organic and free range chickens, game hens and types known as poussin and bleu leg. The company dates to 1925 and recently moved its headquarters from the Bay Area to Geer Road in Turlock. Central Coast Farms changed its name from Central Coast Fryers.

The operation includes Heartland Grains & Milling, along Highway 99 just north of Keyes.

The closure will happen in mid-January, Carlson said. The sale agreement does not allow him to disclose the buyer, he said.

The sharp rise in corn prices has been hard on many producers because this grain makes up most of the feed, said Bill Mattos, president of the California Poultry Federation in Modesto.

He blames the problem on increasing demand from ethanol producers and supports efforts to end federal subsidies for the alternative fuel.

"It's just devastating for the livestock industry, particularly poultry," Mattos said. "You can't afford to buy corn at these prices and still make a profit from a chicken."

Turkey producers are faring better because they are getting higher prices for their meat, he said.

Squab Producers of California is the nation's largest supplier of these young pigeons. Losing the Fulton chicken processing contract could affect 12 to 24 of the nearly

60 jobs at the plant off Crows Landing Road, President Robert Shipley said.

There is a chance that the squab plant can find another poultry company that needs processing before the Fulton work ends, he said.

Shipley added that Carlson "has been extremely gracious about it in terms of the way he's winding down."

Bee staff writer John Holland can be reached at jholland@modbee.com or (209) 578-2385.

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