Norbest producer to lay off 450
Moroni Feed hopes to resume operations by March
Grace Leong
You'll still be able to get a Norbest turkey this Thanksgiving and Christmas, but odds are, it'll cost you more.
Record high corn prices in the wake of the worst flooding in the Midwest "Corn Belt" in 15 years and demand from corn-based ethanol fuel producers are forcing many national turkey processors, including Moroni Feed Co. in central Utah, to cut their production. Moroni Feed will temporarily shutter its processing plants and its breeder farms in Sanpete, Juab and Sevier counties after Thanksgiving.
Moroni Feed, which markets its turkeys under the Norbest brand and is the largest employer in Sanpete county, hopes to resume operations by March 2009. Founded in 1938, the company raises and processes around 5 million turkeys, or 100 million pounds of turkey, annually. It accounts for about 2 percent of U.S. turkey production nationwide.
The cutbacks will result in the temporary layoff of about 450 workers, or between 65 and 70 percent of the 675-worker turkey farm cooperative, said Kent Barton, spokesman for Moroni Feed. He said the affected workers could be laid off for as little as a couple of weeks to as many as three months. Most of the layoffs affect production line workers.
Corn feed accounts for 60 percent of the cost of raising turkeys. And corn prices -- which typically ranged between $2.25 and $2.50 a bushel this past decade -- skyrocketed to more than $7 a bushel in the past week because of increased worldwide demand, a weak dollar that has made U.S. corn more affordable overseas, and because 25 percent of corn produced locally 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.
"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," Barton said.
"We expect this layoff to have an impact. We've been a major player and the decision we've made wasn't made lightly," he said.
Lecia Langston, regional economist with the Utah Department of Workforce Services, said Moroni Feed's layoffs aren't expected to deal a huge blow to the central Utah economy as long as the cutbacks are temporary.
Barton said the Moroni Feed layoffs are part of an industrywide adjustment by livestock and poultry producers to high corn feed prices.
Earlier this month, Butterball LLC, which is owned by Smithfield Foods Inc., announced plans to lay off more than 200 workers in August at a turkey plant in Longmont, Colo., and other nearby turkey farms. Tyson, the largest U.S. meat producer of beef, pork and chicken, is also cutting about 190 jobs at its Glen Allen, Va., poultry processing plant.
Spam maker Hormel in May said it plans to cut turkey production by 5 percent. And its subsidiary Jennie-O Turkey Store, which processes more than 1 billion pounds of turkey annually, is struggling to make money on turkeys that were fed $6-a-bushel corn.
Moroni Feed plans to suspend operations at its primary processing plant in Moroni in November, and its Moroni Turkey hatchery will close in August and reopen in September. Its breeder farms including Juab Breeder Farm in Nephi and two others in St. George and Salina will also stop producing eggs for three months. But a further processing plant in Salina that processes meat for deli sales, and its Nutri-Mulch plant in Moroni, which makes fertilizer, will remain open.
The cutbacks will reduce Moroni Feed's annual output by 20 percent, or 80 million pounds, for the 2008 and 2009 production years, Barton said.
This temporary closure represents the first one the company has implemented in seven years, he said.
"Prior to 2001, we used to lay off workers for three months after Thanksgiving because demand for turkey was usually lower in the first quarter of the year," he said. But since 2001, Moroni has been running its production on an annual basis because it diversified into producing more profitable items such as turkey deli breasts, turkey roasts, hams and ground turkey.
"We're hoping corn prices will drop or meat prices will go up. If that adjustment happens earlier, we can go back to full production more quickly," Barton said.
Leonard Blackham, commissioner of the Utah Department of Agriculture and Food, blamed the country's questionable food-to-fuel policies in part for inflated commodity prices.
Ethanol producers are given subsidies to buy corn -- which critics say is a particularly inefficient source of ethanol -- while the meat and dairy industries buy corn at market prices.
"We need to take corn out of the fuel tank and put it back in the feed trough, or at least level the playing field for the meat and dairy sector," Barton said.
"Agriculture is now tied to energy because we produce ethanol with corn," Blackham said. "We need to get back to drilling for more oil, stop putting homes on prime agricultural land, get rid of unnecessary environmental laws, and we can't kick out all the immigrant workers for the farms. China and India will continue to demand more oil, so we have to get our natural resources in a smarter way."
Grace Leong
You'll still be able to get a Norbest turkey this Thanksgiving and Christmas, but odds are, it'll cost you more.
Record high corn prices in the wake of the worst flooding in the Midwest "Corn Belt" in 15 years and demand from corn-based ethanol fuel producers are forcing many national turkey processors, including Moroni Feed Co. in central Utah, to cut their production. Moroni Feed will temporarily shutter its processing plants and its breeder farms in Sanpete, Juab and Sevier counties after Thanksgiving.
Moroni Feed, which markets its turkeys under the Norbest brand and is the largest employer in Sanpete county, hopes to resume operations by March 2009. Founded in 1938, the company raises and processes around 5 million turkeys, or 100 million pounds of turkey, annually. It accounts for about 2 percent of U.S. turkey production nationwide.
The cutbacks will result in the temporary layoff of about 450 workers, or between 65 and 70 percent of the 675-worker turkey farm cooperative, said Kent Barton, spokesman for Moroni Feed. He said the affected workers could be laid off for as little as a couple of weeks to as many as three months. Most of the layoffs affect production line workers.
Corn feed accounts for 60 percent of the cost of raising turkeys. And corn prices -- which typically ranged between $2.25 and $2.50 a bushel this past decade -- skyrocketed to more than $7 a bushel in the past week because of increased worldwide demand, a weak dollar that has made U.S. corn more affordable overseas, and because 25 percent of corn produced locally 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.
"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," Barton said.
"We expect this layoff to have an impact. We've been a major player and the decision we've made wasn't made lightly," he said.
Lecia Langston, regional economist with the Utah Department of Workforce Services, said Moroni Feed's layoffs aren't expected to deal a huge blow to the central Utah economy as long as the cutbacks are temporary.
Barton said the Moroni Feed layoffs are part of an industrywide adjustment by livestock and poultry producers to high corn feed prices.
Earlier this month, Butterball LLC, which is owned by Smithfield Foods Inc., announced plans to lay off more than 200 workers in August at a turkey plant in Longmont, Colo., and other nearby turkey farms. Tyson, the largest U.S. meat producer of beef, pork and chicken, is also cutting about 190 jobs at its Glen Allen, Va., poultry processing plant.
Spam maker Hormel in May said it plans to cut turkey production by 5 percent. And its subsidiary Jennie-O Turkey Store, which processes more than 1 billion pounds of turkey annually, is struggling to make money on turkeys that were fed $6-a-bushel corn.
Moroni Feed plans to suspend operations at its primary processing plant in Moroni in November, and its Moroni Turkey hatchery will close in August and reopen in September. Its breeder farms including Juab Breeder Farm in Nephi and two others in St. George and Salina will also stop producing eggs for three months. But a further processing plant in Salina that processes meat for deli sales, and its Nutri-Mulch plant in Moroni, which makes fertilizer, will remain open.
The cutbacks will reduce Moroni Feed's annual output by 20 percent, or 80 million pounds, for the 2008 and 2009 production years, Barton said.
This temporary closure represents the first one the company has implemented in seven years, he said.
"Prior to 2001, we used to lay off workers for three months after Thanksgiving because demand for turkey was usually lower in the first quarter of the year," he said. But since 2001, Moroni has been running its production on an annual basis because it diversified into producing more profitable items such as turkey deli breasts, turkey roasts, hams and ground turkey.
"We're hoping corn prices will drop or meat prices will go up. If that adjustment happens earlier, we can go back to full production more quickly," Barton said.
Leonard Blackham, commissioner of the Utah Department of Agriculture and Food, blamed the country's questionable food-to-fuel policies in part for inflated commodity prices.
Ethanol producers are given subsidies to buy corn -- which critics say is a particularly inefficient source of ethanol -- while the meat and dairy industries buy corn at market prices.
"We need to take corn out of the fuel tank and put it back in the feed trough, or at least level the playing field for the meat and dairy sector," Barton said.
"Agriculture is now tied to energy because we produce ethanol with corn," Blackham said. "We need to get back to drilling for more oil, stop putting homes on prime agricultural land, get rid of unnecessary environmental laws, and we can't kick out all the immigrant workers for the farms. China and India will continue to demand more oil, so we have to get our natural resources in a smarter way."
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