Sometimes the fates are not only adverse, but perverse. As reported by The Wall Street Journal, turkey producer Zacky Farms LLC recently filed for Chapter 11 just several weeks before the peak holiday sales season. The company has struggled with cash flow problems due to feed costs. Corn and soybean prices have soared recently due to drought and the ongoing diversion of grain resources into ethanol production. (Yes, another government mandate strikes again, thanks to the Energy and Independence Security Act of 2007.)
The bankruptcy is a symptom of the inflationary pressures that have been rippling through the economy and heading the consumer’s way:
The U.S. Department of Agriculture reported that American consumers paid 5.3% more for chicken and 6.9% more for turkey in August than they did a year ago. It added that poultry prices are expected to be among the first to reflect the ravages of the drought. Consumers are likely to feel the effects more keenly in coming months, especially as producers who had temporarily locked in lower grain prices start to face the higher market prices for corn and soymeal.
The company expects to recapitalize in bankruptcy, assisted by several Zacky family trusts. Yet the misfortune speaks volumes about the current state of commerce in this country. Price inflation amidst recession and the ongoing struggle to access credit continue to plague businesses large and small. For this Thanksgiving season, economic malaise promises to be the biggest turkey of them all.
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