TURKEY SUPPLIES MAY FEEL THE HEAT

PAMELA BLAMEY

BROADWAY, Va. -- Low poultry prices, a vicious heat wave and disease outbreaks in a major turkey producing region may make the quality of turkey supply uncertain for the impending holiday season.

That's what WLR Foods, based here, disclosed in reporting its comparatively low fourth-quarter results.

The company reported a quarterly net income of $807,000 for its fourth quarter of 1995, down from $7,331,000 for the same quarter in 1994.

"We're among several companies currently experiencing a problem down in North Carolina and northern South Carolina, where our turkey operations are located," said Stan Gray, director of investment relations at WLR.

North Carolina is one of the top-three areas in turkey production, according to an official at the National Turkey Federation, Reston, Va.

The full effect of the heat and of the disease (spiking mortality of turkeys or SMT, and a milder version known as EMT, or excess mortality of turkeys) on turkey supply, and therefore turkey wholesale prices, may not be known until some time closer to Thanksgiving, said Gray.

WLR already has seen its dark turkey meat fetch slightly better prices since the earnings report, he added.

"Prices have come up a point or two on a couple of dark turkey meat commodity prices," Gray told SN.

"Turkey thigh meat, for example, has been down year on year over 25%, and it was down over a dozen percent since June 1, so to see that start turning is a good indicator," he said.

Gray said a particularly drastic heat wave this summer had an impact as well.

"It's those 100-degree days with the 99% humidity that really has the impact on the birds and the systems that are in place to keep them alive," he said.

"We had a Saturday in the middle of July when we had one of those kinds of days, and we had some losses, but I would say industrywide that particular weekend it was probably in the neighborhood of 4 million to 5 million birds that were lost," Gray estimated.

Heat also may account for smaller birds hitting the meat cases this year, Gray said.

"There's birds still in the field that were just fortunate enough to survive for another 10 or 20 days to make it to the dinner plate, and [the heat] ends up making those birds smaller sometimes. The turkeys just don't grow out the same as they do when the weather's cooler."

Long-term effects will not be known for some time, he added. "Some of the [breeder] production levels go off, so we don't end up with as many eggs being set as we normally would, [and] that reduces the numbers that are going out into the grow-out. So that impact is going to be several weeks from now or a month or two months from now."

Gray said this could have an impact on both chicken and turkey operations. "The long and short will be that there's probably going to be some drop in production."

The outbreak of SMT, meanwhile, is the worst in three years, according to WLR spokeswoman Gail Price, and it has affected turkey flocks in Union and other counties in North Carolina, as well as parts of South Carolina, Georgia, Virginia and Indiana.

SMT affects young turkeys between the ages of seven and 28 days and can result either in mortality or reduced body weights.

"Whatever the cause is, heat seems to worsen it," Gray said. "We've taken steps and changed our management practices, introduced new disinfectant techniques way beyond what we would normally do to see if we can get the bug out of there.

"I think we'll see some company impacts -- we just let the analysts know that that was one of the reasons that our expectations for the quarter were going to be a little bit down compared to what we did last year," Gray said. He was reluctant to specify the extent of the damage WLR experienced.

"We haven't disclosed anything financially other than the fact that it has cost us in this current quarter we're in probably several million dollars," he said. "I think that would be an understatement."

Researchers, including a task force formed by industry leaders in 1992, have been unable to uncover either the specific agents that cause the disease or a cure to prevent or stem it.

"Two or three years ago when it first broke down there, it seemed to be mostly involved with Cuddy Farms when we first bought them," Gray said. "It was something we thought we'd hopefully have a solution for by now but we're still waiting."

For now, Gray is remaining conservative about the potential for ultimate harm to the supply situation. "I think at this point, if you look at the whole industry, as long as it's contained in that area down there, my guess would be there's not going to be a big overall impact," he said.

A group at North Carolina State University tracking the disease estimated that losses from a 1994 outbreak amounted to $15 million.

"There is no question that SMT/EMT is the most serious disease to affect turkeys in the past decade and that it threatens the entire industry," said the group's report in August.