PITTSBURG, Texas -- Clint Rivers, president and CEO of Pilgrim's Pride Corp. which has reported a second quarter net loss, said these financial results "reflect the crisis facing our company and industry" caused by a "deeply flawed ethanol policy."
The company reported a net loss of $111.4 million, or $1.67 per share, on net sales of $21. billion for the second fiscal quarter ended March 29.
"The operating environment for chicken producers today is among the most difficult I have seen during my 27 years in the business," Rivers said.
"The federal government has helped spark a growing worldwide food crisis by mandating corn-based ethanol production at the expense of affordable food," Rivers said, and warned that American consumers are only just beginning to feed the impact of sharply higher food prices.
Pilgrim's Pride said its costs for corn and soybean meal in the second quarter climbed $200 million, when compared to the same period a year ago, as the average price for a bushel of corn increased 29 percent and soybean meal gained more than 64 percent.
Based on the actual costs incurred for the first half of the fiscal year and current commodity futures markets for the remainder, the company's total feed ingredient costs for fiscal 2008 would be up more than $800 million from last fiscal year.
"While we continue working to pass along price increases to our customer, the simple fact is that to date, we have not been able to raise prices fast enough to match the extreme price volatility in the grain markets," Rivers said.
To combat supply and demand disruptions, Pilgrim's Pride recently closed a processing plant and six distribution centers and plans a reduction in production by 5 percent in the second half of fiscal 2008.
"While consumer demand for chicken remains strong, we believe that production cuts are necessary to bring supply into better balance with demand at appropriate selling prices to cover input costs," Rivers noted.
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