SILOAM SPRINGS — Simmons Foods Inc. said 223 jobs at its Siloam Springs slaughtering plant will be eliminated by August with remaining production shifted to its neighboring Decatur facility.

Production will continue in the Siloam Springs plant, which also houses pet-food canning operations. The full-service chicken-production company, ranked 12th in the U.S. chicken industry, characterized the move as a consolidation intended to better align the business to charge higher prices.

Mark Simmons, chairman of the family-owned business, Friday pinned the company’s economic predicament on the price of corn.

Corn has “more than doubled in price and it’s what we make our feed outof,” he said in a telephone interview. “We’ve not been able to raise the price of chicken to compensate for that, so we’re having to reduce production to try and get it in line with demand and get prices back up.”

The company in a news release said it will make every effort to offer open positions to affected employees.

Siloam Springs is 14 miles south of Decatur and about 26 miles from Jane, Mo., where hatchery operations once located in Decatur will be moved by the end of next month.

The unemployment rate in April for the Fayetteville, Springdale, Rogers metropolitan statistical area stood at 5.8 percent, well below the statewide average of 7.6 percent.

The statistical area encompasses Benton, Madison and Washington counties in Arkansas and McDonald County in Missouri and is home to entities such as Wal-Mart Stores Inc., J.B. Hunt Transportation Services Inc., the University of Arkansas at Fayetteville and Tyson Foods Inc.

The Siloam Springs processing plant laid off a second shift in October, said Mark Simmons, who called the job cuts a tough decision to have to make.

Simmons Foods supplies mostly high-volume restaurant chains with chicken tenderloins, breasts and chicken wings. It also makes pet food under Simmons Pet Food Inc. About 300 poultry farms grow birds for the privately held business.

Simmons started out in Decatur in 1949, but then moved to Siloam Springs in 1952, where its main headquarters are on North Hico Street.

The business employs 6,000 people in Arkansas, Oklahoma, Missouri, Kansas, New Jersey and Canada, the news release said.

The last time a poultry plant was shuttered in Arkansas was in February when a Petit Jean Poultry Inc. plant in Danville closed. The plant shed 385 positions as a result of Tyson Foods Inc. ending its contract at the Clark County location, the Arkansas Democrat-Gazette previously reported.

The poultry industry finds itself in a similar situation with corn prices as it did in 2007, when corn spiked alongside expanded ethanol production, the Renewable Fuel Association, a trade group representing mainstream ethanol interests, said on its website.

The group objects to accusations about its influence on the commodity markets.

Higher corn prices are forcing some companies to cut costs or go out of business, Richard Lobb, a National Chicken Council spokesman, said Friday.

Feed represents twothirds of the cost to produce a chicken, he said.

The council, a Washington D.C.-based lobbying group representing the country’s chicken industry, blames ethanol production for increased corn prices and says the federal government’s 2007 renewable-fuel-standards mandate is a significant price driver.

“Simmons is just telling you the facts,” Lobb said, adding that Cagle’s Inc. of Atlanta recently announced the shutdown of a second shift, leaving about 300 workers without a job come September, because of increased feed prices and lower demand for boneless breast meat.

Allen’s Family Foods of Seaford, Del., this month also cited high feed costs when it filed for Chapter 11 bankruptcy protection.

Regarding Simmons, Lobb said that while “we understand there are other factors, corn is extremely expensive.”

Corn prices fell for a fifth straight week on speculation that warmer weather will aid crop development in the U.S., the world’s biggest producer and exporter, Bloomberg News reported Friday.

Corn futures for December delivery fell 14 cents, or 2.2 percent, to close at $6.32 a bushel on the Chicago Board of Trade. The price of corn hit an all-time high earlier in April at $7.84 a bushel, well over the previous high of $7.65 in June 2008.

Local poultry researchers say ethanol’s influencecannot be completely overlooked.

“Indeed prices are high and have gone up a lot and ethanol probably contributes to it, but it’s not the sole reason prices of corn increased,” said Richard Roeder, interim director of the agricultural experiment station, the research arm of UA’s Agriculture Division. “Prices of most grains and most farm products have increased.”

News, Pages 7 on 07/06/2011