Anniversary of Townsend Poultry Plant Shutdown

One year ago this week, the owner of poultry processing plants in Siler City and Mocksville, NC formerly owned by Townsend announced their plan to shut operations down by October 2011. The Ukrainian company Omtron had purchased the Townsend plants in February of that year, several months after Townsend’s LLC had declared bankruptcy. At the time of purchase, Omtron was heralded as a hero. The company signed 3-year contracts with local poultry growers and promised to keep the plants open and operating more efficiently than their predecessor. They shut their doors by October.

The impact of the shutdown has been tremendous. Nearly 1,000 workers in the processing plants lost their jobs. The local water utility in Siler City lost $1.5 million in annual revenue and has 16 staff position on the line. Banks now have scores of non-performing loans to resolve.

Closest to my heart, 180 farmers have lost their livelihoods and their ability to service their debts. As is standard faire in the poultry industry, farmers are required to invest in the construction of their facilities up front, followed by industry-required upgrades over the years. They finance these expenses through loans that they pay back over time, typically based on a portion of the payments they receive per poultry flock.

Without a contract, they have not only lost the income needed to make payments on their facilities, but the value of their farm has plummeted. The poultry houses, often costing $250,000 per house to build, are worth only the value of the land they are sitting on. These farmers are under water and at the brink of losing everything they own.

When the announcement came last August, outrage from elected officials, extension agents, and community members encouraged the growers that they were not alone. Now, a year has passed and the avenues of assistance that were pursued have fallen flat.

Disaster payments from the USDA are not available. Negotiations from potential buyers of the plant were not successful. A pre-feasibility study commissioned by Cooperative Extension showed that forming a grower cooperative is not practical or attainable at this time.  Legal action to force a sale of the plant and appoint a receiver or require damage claims for the growers is going forward, however the timeline and likelihood for success are unclear.

It is not for lack of effort or local good will that little progress has been made to improve the situation for this set of growers. However, a year is an incredibly long time to be hanging in the balance. I have been bearing witness to the strain this is putting on growers and their families. With the home, farm, and inherited property on the line, it is no surprise that financial stress has translated into other problems. In the past six months that I have been meeting with growers, I have heard tell of health problems that have worsened, retirements lost, and marriages that are falling apart. I have had farmers confess that they think about ending it all.

While no long-term solutions for these growers have been identified, one bright spot in the process is the fact that thus far, the banks have been willing to give farmers forbearance on their loans. As of now, none of the farmers that RAFI has been working with have been foreclosed on.

Throughout our history, we have frequently been critical of banks and lending policies.  We are very glad to also praise courageous actions. In our meetings with farmers and lenders over the past months, we have been in the room when a banker has told a farmer that they were committed to seeking real solutions instead of foreclosing on their non-performing loans as quickly as possible. This ability on behalf of the banks to see their clients as people, not just numbers, is saving farms and probably saving lives. We are especially grateful to Fidelity Bank in Liberty, First Bank in Sanford, Carolina Farm Credit, Cape Fear Farm Credit, Community One in Asheboro, and the NC U.S.D.A. Farm Service Agency for their flexibility with their Townsend clients.  We thank you, and hope that this is a trend that continues.

I’d like to add that although my focus is working on one-on-one with farmers in distress, RAFI is definitely paying attention to the bigger picture and is working towards structural changes that protect family farmers. One such effort is with the GIPSA rule that went into effect in February of this year with help from RAFI’s campaign. The regulation would protect livestock producers in a variety of capacities. However, it is under assault in the House of Representatives in the Agriculture Appropriations Bill and the Farm Bill.  For more information and to take action to support this important protection for farmers, click here.

For the Townsend growers, know that you have not been forgotten and that we at RAFI will continue to strategize on your behalf. Our financial counseling services remain available to those who are interested. Additional resources listed below.

Resources for Former Townsend & Omtron Farmers:

  • If you receive notice of foreclosure, call the Land Loss Prevention Project toll-free at 1-800-672-5839
  • To learn about NC Foreclosure Prevention services for your home, click here
  • For more information about RAFI’s financial counseling services, call our office at (919)542-1396 or click here
  • For a list of local counseling services, click here
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