Hurricane Florence: Sanderson Farms reports loss of 1.7 million broilers

USA - Sanderson Farms, Inc reported that the Company continues its assessment of damage to its North Carolina assets caused by Hurricane Florence
calendar icon 19 September 2018
clock icon 5 minute read

The Company is pleased to report that it has still received no report of serious injuries or loss of life among its employees and growers.

As earlier reported, the Company experienced no significant damage to either of its North Carolina processing facilities, feed mill or two hatcheries. The Company’s facilities located in the affected area maintained generator power until permanent electrical service was restored. The Company resumed operations at its feed mill located in Kinston, North Carolina, this morning. However, many roadways in North Carolina remain impassable, serious flooding continues, and local streams and rivers are expected to crest later this week. The Company will resume operations at its Kinston, North Carolina, processing plant on Tuesday, and at its St. Pauls processing plant by the end of this week, once it is safe for employees to navigate roads and highways.

The Company continues its assessment of damage to independent farms and losses to its live inventories. Out of 880 broiler houses in North Carolina, 60 have flooded. Another six houses experienced damage and will be unable to house broilers until repairs are made. In addition to the affected broiler houses, four breeder houses out of a total of 92 in North Carolina flooded. At this point, none of the Company’s 33 pullet houses have reported serious damage. As a result of these losses, the Company estimates that approximately 1.7 million head of broiler chickens out of an average live inventory of approximately 20 million head, ranging in age from six days to sixty-two days, were destroyed as a result of flooding. In addition, approximately thirty farms, housing approximately 211,000 chickens per farm, in the Lumberton, North Carolina, area are isolated by flood waters and the Company is unable to reach those farms with feed trucks. Losses of live inventory could escalate if the Company does not regain access to those farms.

The Company does not believe the loss of housing capacity will affect its ongoing operations, as it can shorten layouts and take other temporary measures to compensate for these losses.

In addition to the loss of live birds, the Company will be unable to hatch and place live broilers in the field at its normal rate during the coming week. While the Company maintained operations at its hatcheries, the Company was unable to set eggs in hatcheries on its normal schedule. The reduced egg sets and chick placements will affect the Company’s weekly processing volumes through December, with the reductions occurring primarily during October and November.

Electrical power is being restored to the farms of independent contract producers on a steady basis, but the Company believes it could be as long as three weeks before power is fully restored to all of its independent contractors’ farms. Until power is restored, equipment on grow out farms, including ventilation, feeding and watering equipment, will be operated using electricity generated by diesel-powered generators. The Company is providing diesel fuel to its independent contract producers to allow them to run their generators and maintain power to farms. The Company believes it has been able to secure sufficient diesel fuel to operate all of the farms housing its live inventories.

Sanderson Farms believes the terms, conditions and extent of its insurance coverage will cover a significant portion of losses resulting from this storm. The Company’s retention under its policy is $2.5 million.

Joe Sanderson, Jr, chairman and chief executive officer of Sanderson Farms, Inc., commented, “I am relieved that it appears the Company’s employees and independent contract producers experienced no loss of life or serious injuries. The magnitude of this storm and the damage it has caused continue to be widespread, and I am pleased that our people remain safe.”

Sanderson continued, “I am also pleased that our assets were not significantly damaged by the hurricane. While the storm’s impact on our live inventories and live production process will have an impact on the Company’s capacity and volume over the next two months, none of the losses sustained will be long term. The impact on volume from our live losses will be spread over three months, although inefficiencies resulting from bird stress, overtime pay and loss of processing days will affect the Company’s fourth fiscal quarter. Our focus over the next few weeks will include working to maintain our assets, responding to customers’ needs and replenishing our live production inventories.

“Most importantly, we will provide ice, water, food and other necessities to those affected by this catastrophic storm. While we will work hard over the next week to get our operations back on line, our primary focus will be to respond to the needs of our local communities. We are fortunate that Sanderson Farms sustained only minimal damage and no loss of life as a result of the storm. We will continue to help those whose lives have been more seriously disrupted,” Sanderson concluded.

Ryan Johnson

Editor at The Poultry Site

Ryan worked in conservation from 2008 to 2017, during which time he operated a rainbow trout hatchery and helped to maintain public and protected green spaces in Canada for the Toronto and Region Conservation Authority. As editor of The Poultry Site, he now writes about challenges and opportunities in agriculture across the globe.

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