BB—Lancaster Farming, Saturday, December 27,1980
BYDONCUNNION
Staff Correspondent
The year 1981 shapes up as
a crucial one for Penn
sylvania egg producers,
according to representatives
of three banks heavily into
producer financing
The situation is par
ticularly serious for in
dependent producers who
lost anywhere from 20 cents
to $2 a bird m 1980.
Most vulnerable are those
who took on heavy debt loads
to put up large, automated
facilities during the recent
boom which saw Penn
sylvania egg output rise
some 30 percent between
1976 and 1979.
“The problem could be
worse than the 1967 bust,”
one banker pointed out,
because of bigger debt loads,
higher interest rates and
higher operating costs.
“Some of our customers
lost as much as $lOO,OOO on
their flock in 1980,” another
said. “It will be impossible
for them to make this up
with the new flock under the
best of conditions The loss
will just have to be carried
forward ”
The bankers are making
every effort to keep
producers afloat one way or
another. In many cases only
payments on interest are
being made, with payments
on principal extended for
further negotiation.
“We have no desire to take
any of them over,” one
banker said. “Even if we
did, where would we find a'
buyer under current con
ditions’”
Fortunately, many of the
banks’ loan customers are
contract producers or far-
Poultry firm
to honor drivers
LEBANON - Penn
sylvania Manufacturers’
Association Insurance
Company will present its
Safe Driver Award to CF
Manbeck, Inc, in honor of
the poultry producer com
pany’s outstanding em
ployee driving record.
The presentation of the
award will take place at C.F.
Manbeck’s annual Holiday
Banquet, Saturday, January
3, 1981, at 7.00 p.m. in the
Banquet Room of the
Lebanon Treadway Inn
Attending the banquet will
be • Pennsylvania State
Senator Clarence Manbeck,
president; Earl Hollmger,
fleet safety director; Harry
Stoessel, plant safety
rs HEAVY
% BREEDER
i . A CONTRACT
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W Jr 10,000-12,000 sq. ft.
house needed for
beginning of
February
Contact
CHICKS, INC.
Quakertown, PA 18951
215-536-3155
Bankers review egg situation,
blast
mers who have other
agricultural enterprises to
fall back on. Contract
producers generally are
squeaking by* but some are
showing losses because their
building loans are based on
variable interest rates,
which appear to be varying
only one way up
Some observers say
market prices m 1981 will be
stronger in the first quarter,
decline in the spring and
then come on again to
average 78 to 82 cents in the
last six months The bankers
aren’t so sure this would be
enough to offset increasing
operating costs - higher costs
for birds, feed and energy.
One ventured that a dollar
'a dozen might be a more
realistic price 50 far as
producers are concerned
This would help pay for
losses incurred in 1980 and
maybe leave something to
live on
Current production costs
generally are over 50 cents a
dozen, one banker noted
This includes feed cost, cost
of birds and interest on the
loan for the birds, and such
overhead as mortgage
payments and energy
If a processor is paying 23
cents under the market
and some are and the
market is 75 to 76 cents, the
producer is within a whisker
of- (1) breaking even; (2)
losing; (3) gaining
One producer told us his
current operating costs are
52 to 56 cents a dozen,
depending on feed prices At
the time he was getting 56
cents from the processor He
said he needs a “large”
market price of 77-80 cents to
director and Safety Com
mittee chairman; and
Joseph Armstrong, assistant
manager of loss prevention
in PMA’s Central Region
The award will be
presented to the company’s
200 drivers who average
1,300,000 miles annually in
Pennsylvania, Ohio,
Washington, D.C.,
Massachusetts and
Maryland.
Driver Gary Ham will also
• receive a special award for
achieving 35 consecutive
years without an accident
butter eggs
current
make a profit of one cent a
dozen.
The bankers say they feel
some operators - are bound to
be forced out of business in
1981. These include those
with out-moded, inefficient
units or those with large,
new units heavily fmanced.
One banker pointed out
“You get some idea of how
heavily mortgaged some
new operations are when you
consider they paid about
$6.50 per bird for their
facilities For a 60,000 layer
house that’s nearly $400,000.
“To that you add the cost
of the flock, at least $150,000
more, and the operator
starts off $550,000 in the hole
even before he orders his
first load of feed. A few
years ago starting costs
were about half that much,
not to mention lower interest
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pricing system
rates ”
All three bankers took pot
shots at the egg pricing
system, noting that quoted
prices do not reflect regional
conditions. One said; “Here
in the northeast we’re in a
deficit situation with not
enough home-produced'eggs
to meet our needs. But prices
are based on the national
picture which shows a
surplus. If we had regional
pricing our producers
probably would be better
off”
Another said better egg
promotion in the nor
theastern states might help,
noting that government
figures show per capita
consumption in cities like
Philadelphia, New York and
Boston below the national
average, while Atlanta,
Dallas and Los Angeles are
✓
&
Tnfcco
HP
~<v
I
above the average.
It was suggested a
vigorous effort to develop
export markets for Penn
sylvania and northeastern
eggs might help. Big egg
producing states in the South
have been exporting shell
eggs for some time, mostly
through Charleston, S C.,
where special facilities have
been set up.
Information from the
Foreign Agricultural Ser
vice indicates that requests
for U.S. eggs are being
received regularly from
many countries In
December requests came in
from Egypt and Venezuela
Egypt wanted up to 2,000
cases monthly, Venezuela
sought a quote on 100,000
cases
“We may not be producing
as many eggs as we consume
HOIST
rk'o
■ 'irf 1
in the northeast,” it was
suggested, “but if our
producers can’t get a fair
and equitable price maybe
they should take a serious
look at profit possibilities in
overseas markets. ’ ’
The concensus was that
the egg marketing situation,
especially in Pennsylvania,
needs to get a lot more at
tention that it’s been getting
if the industry hopes to
maintain its present level of
production.
As it stands, all three
bankers expressed grave
concern about the 1981
> outlook. One said- "Things
may get worse before they
get better.’’Another said; ‘T
just hope our producers can
break even in 1981.” The
third. “We can’t survive two
back-to-back years like
1980 ”
up
y* '