Friday, December 12, 2008

Chicken Hawk Down!

A Change in the Pecking Order

December 12, 2008

Melissa del Bosque
The Texas Observer
Copyright 2008

Oh, how the mighty have fallen.

The nation’s financial crisis has already taken down Lehman Brothers, AIG, and Washington Mutual. Now one of Texas’ most influential tycoons has hit hard times. Pilgrim’s Pride—the country’s largest chicken producer, owned by East Texas chicken magnate Lonnie “Bo” Pilgrim—filed for Chapter 11 bankruptcy protection on Dec. 1.

Besides massive chicken feedlots, Bo Pilgrim is famous for his financial largesse when it comes to funding Republican candidates and lobbying for legislation that favors his poultry business.

In 1989, the silver-haired millionaire infamously handed out $10,000 checks directly to lawmakers on the floor of the Texas Senate to smooth the passage of a workers’ comp bill. The incident spurred the creation of the Texas Ethics Commission in 1991 and led to new ethics rules, including a ban on lobbyists talking with lawmakers on the Senate and House floors.

More recently, Pilgrim gave $100,000 to Gov. Rick Perry and the Republican Governors Association to push through a federal waiver on corn ethanol production, which Pilgrim believes is causing higher grain costs.

The high cost of grain has hurt the Pittsburg, Texas-based Pilgrim’s Pride. Also contributing to the company’s financial problems were the illegal immigration crackdown, a glut of chicken on the world market, and Pilgrim’s $1.5 billion takeover of competitor Gold Kist Inc. in 2007.

Pilgrim’s Pride filed for bankruptcy in U.S. Bankruptcy Court, claiming $3.7 billion in assets and $2.72 billion in debts. Clint Rivers, president and chief executive officer of Pilgrim’s Pride, tried to put a positive spin on the bankruptcy in a press release. He said that the company’s board determined that a Chapter 11 filing was the best way to continue financing regular operations. “We expect to emerge from this restructuring a stronger, more competitive company that is well positioned for growth and enhanced profitability,” Rivers said in the release.

Pilgrim’s financial woes have other chicken producers ready to, um, pluck the company from its depths. Several business journals have reported that the nation’s No. 2 and No. 3 chicken producers, Sanderson Farms and Tyson Foods, are both considering a buyout of the nation’s top producer.

While Pilgrim’s business may be in the doldrums, the millionaire—and his personal fortune—shouldn’t be counted out yet as a political player, says Craig McDonald, executive director of the nonprofit Texans for Public Justice. “Despite Pilgrim’s financial troubles, I don’t think it will lessen his political clout around the statehouse,” McDonald says. “He’ll still be spreading his chicken feed around the capitol.”

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