Utah Turkey Producer Lays Off 65-70% Of Workforce
(Daily Herald) -- Record high corn prices in the wake of the worst Midwest flooding in 15 years are forcing Moroni Feed Co. in central Utah to cut its production and temporarily shutter its processing plants and its breeder farms in Sanpete, Juab and Sevier counties after Thanksgiving. The company hopes to resume operations by March 2009.
The cutbacks will result in the temporary layoff of about 450 workers, or between 65 percent and 70 percent, of the 675-worker turkey farm cooperative. Moroni Feed, which markets its turkeys under the Norbest brand, raises and processes around 5 million turkeys or 100 million pounds of turkey annually. It accounts for about 2 percent of the industry's turkey output nationwide.
The lay-offs will begin at Moroni's Sanpete County hatchery in August, followed by it's main processing plant (120m south of Salt Lake City) in November.
Corn makes up 60 percent of turkey feed, and corn prices have skyrocketed to as high as $7.54 a bushel, due to increased worldwide demand, a weak dollar that has made U.S. corn more affordable overseas, and because 25 percent of domestic corn produced goes to ethanol production. Aggravating the situation are storms and severe weather in the Midwest since Mid-May, which have flooded more than 3.4 million acres of land and caused billions of dollars of damage to crops. About 12 percent of the U.S. corn crop is believed to be decimated by the floods this past month.
"Based on current corn prices, it costs about 15 percent more to produce a turkey than it can be sold for. If we were to continue producing at this rate, that translates to millions of dollars in losses," said Kent Barton, spokesman for Moroni feed. "In the past decade, corn prices have typically ranged between $2.25 and $2.50 a bushel."
"We expect this layoff to have an impact. We've been a major player and the decision we've made wasn't made lightly. We have a $15 million annual payroll in the community. We understand a lot of those dollars are spent locally. There'll be a trickle-down effect, but it's the best decision to preserve our strength so we can remain a contributor."
Elsewhere, poultry processor Perdue Farms is laying off some workers at its plant in Monterey.
Company Vice President Julie DeYoung said a total of 76 employees were told of their layoffs, which take effect when a production line closes July 11.
The cutbacks will result in the temporary layoff of about 450 workers, or between 65 percent and 70 percent, of the 675-worker turkey farm cooperative. Moroni Feed, which markets its turkeys under the Norbest brand, raises and processes around 5 million turkeys or 100 million pounds of turkey annually. It accounts for about 2 percent of the industry's turkey output nationwide.
The lay-offs will begin at Moroni's Sanpete County hatchery in August, followed by it's main processing plant (120m south of Salt Lake City) in November.
Corn makes up 60 percent of turkey feed, and corn prices have skyrocketed to as high as $7.54 a bushel, due to increased worldwide demand, a weak dollar that has made U.S. corn more affordable overseas, and because 25 percent of domestic corn produced goes to ethanol production. Aggravating the situation are storms and severe weather in the Midwest since Mid-May, which have flooded more than 3.4 million acres of land and caused billions of dollars of damage to crops. About 12 percent of the U.S. corn crop is believed to be decimated by the floods this past month.
"Based on current corn prices, it costs about 15 percent more to produce a turkey than it can be sold for. If we were to continue producing at this rate, that translates to millions of dollars in losses," said Kent Barton, spokesman for Moroni feed. "In the past decade, corn prices have typically ranged between $2.25 and $2.50 a bushel."
"We expect this layoff to have an impact. We've been a major player and the decision we've made wasn't made lightly. We have a $15 million annual payroll in the community. We understand a lot of those dollars are spent locally. There'll be a trickle-down effect, but it's the best decision to preserve our strength so we can remain a contributor."
Elsewhere, poultry processor Perdue Farms is laying off some workers at its plant in Monterey.
Company Vice President Julie DeYoung said a total of 76 employees were told of their layoffs, which take effect when a production line closes July 11.