04/04/10 — Mum still word on chicken facility

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Mum still word on chicken facility

By Steve Herring
Published in News on April 4, 2010 1:50 AM

Wayne County officials remain tightlipped about a proposed new $94 million chicken deboning facility that could employ up to 1,100 people and its potential impact on the county's economy.

They argue that is simply too premature to comment since there is no guarantee Mississippi-based Sanderson Farms will even build in the county. It also is too early to talk about what incentives, if any, would be part of the deal, they said.

Fueling that reticence could be the secrecy and confidentiality restraints normally associated with industrial development. The project has been the subject of closed-door commissioners' meetings over the past several months.

However, county agricultural officials, while unable to speak to any specifics of the project, foresee it pumping millions of dollars annually into the economy.

Economic ripples from a Goldsboro plant, as well as from the one in Kinston, are expected to cross into surrounding counties, too, as farmers sign on as contract growers.

Farmers who do so will be making a "pretty significant investment," Wayne County Extension Director Howard Scott said. Construction of the required minimum of four chicken houses alone could exceed $900,000.

Officials at Sanderson's Kinston location referred calls to the company headquarters. A call there was not returned prior to presstime Saturday.

"This project is speculative at this point, and it is too early to give estimates on impacts to the county and community, be it tax base or employment," County Manager Lee Smith said. "I anticipate more information over the next couple of months and will share those details as they are delivered to the county commissioners and Wayne County Development Alliance."

According to company officials, the plan is contingent on several factors, including state and local economic incentives and obtaining the property and permits. Sanderson Farms' lenders also would have to sign off on any change to the company's revolving credit agreement.

If all of those conditions are met, construction could begin in the second quarter of fiscal 2011, with operations starting in the third quarter of fiscal 2012.

While Smith declined to speculate on the project's impact, he said it would have a major effect on the labor market and on property taxes.

"Industries, you depend on for the tax base," he said. "Residents produce property taxes, too, but not at that level (of industry)."

"In a word, huge (impact), but we want to make sure huge in a positive way," Development Alliance President Joanna Helms said. "We are sort of at the beginning of the process."

Sanderson continues to look at options in other states, she said.

Smith said that if the progress of the project could be measured in percentages, with being open and operating as 100 percent, the Wayne County Sanderson project is at about 5 percent.

Both Sanderson and the county are in the early stages of their respective due diligence procedures "to figure out if it will work," Mrs. Helms said.

"They approached us as part of Phase II of their Kinston project," she said.

Sanderson already has a plant under construction on U.S. 70 East just outside Kinston. The Goldsboro project, if built, would consist of an expansion of the feed mill for the Kinston plant, a hatchery, a processing plant with capacity to process 1.25 million "big bird" chickens per week and a wastewater treatment facility.

A Goldsboro plant could employ about 1,100 people, require about 150 contract growers, and be equipped to process and sell 8.9 million pounds of dressed meat per week.

"The announcement not so much looked at Goldsboro, but the stock offering that required them to make the disclosure," Smith said.

Smith was referring to a Sanderson press release announcing its stock offering. One requirement of such an offering is to say how proceeds from the stock offering would be used.

According to the press release, net proceeds from the offering, along with "other funds" would be used to finance the Kinston project and a "potential new big bird complex" near Goldsboro.

No specifics of the project have been discussed, Smith said.

A location has not been announced, but there has been speculation that the plant could be built north of Goldsboro.

Site selection could "take months and months," he said. Nor is the project at the stage where any incentives can be discussed, Smith said.

"They may be eligible for state grants," he said. "It would really trickle down (to the local level) from the state. We have not gotten those details, yet."

Also, any incentive would require a public hearing, he said.

"We are a long way from that," Smith said.

Meanwhile, agriculture officials see the plant providing more options for farmers.

"Well, basically they (contract growers) have a guaranteed income as long as they do like the company says to do," said James Parsons, Extension Service poultry area specialized agent. "It is going to provide I don't how many jobs. I think the big thing is that farmers would be getting some kind of payment basically year round rather than waiting until they sold their crops. I think that is the way a lot of folks are looking at it.

"Everybody is, I think the term is diversifying, so they won't be so dependent on just the crops. Just like this past winter very few people got their wheat in the ground. They lost that money."

The plant could also create another fertilizer source if managed right, he said.

"All companies now are requiring what we call a nutrient management plan," Parsons said. "The grower just can't just go out there and put two truckloads of (chicken) litter to the acre. In fact, our plans are based on nitrogen and how many pounds of nitrogen to put per acre."

"It is just another way to diversify," Scott said. "It is not going to be for everybody because it is going to take a significant amount of time. They have to be committed to it. There is no easy money."

According to information on the company's Web site, Sanderson Farms is one of the nation's leading food corporations, with annual sales of more than $1.789 billion. Sanderson has plants in Mississippi, Louisiana, Texas and Georgia that process more than 8.125 million chickens per week. It also has six feed mills and seven hatcheries.

Sanderson was founded 1947, was incorporated in 1955 and is the fourth-largest poultry producer in the U.S. and employs more than 10,000 workers and utilizes 770 independent growers.