Sanderson Farms, Inc. Provides Update On Hurricane Katrina Damage

Business Wire, Sept 6, 2005

LAUREL, Miss. -- Sanderson Farms, Inc. (NASDAQ/NM:SAFM) today reported that it is near completion of its assessment of damage caused by Hurricane Katrina. The Company is pleased to report that it has still received no report of serious injuries or loss of life among its employees and growers.

As earlier reported, the Company experienced no significant damage to any of its Mississippi or Louisiana processing facilities, feedmills or hatcheries. The Company's four hatcheries located in the affected area, all in Mississippi, maintained generator power until electrical service was restored. The Company resumed operations at all three of its Mississippi feedmills by the end of last week, began operations over the weekend at all of its Mississippi and Louisiana processing plants except for the Laurel, Mississippi, plant, and will resume operations at its Laurel processing plant on Wednesday, September 7, 2005. The slower resumption of operations at the Laurel plant has been caused by a delay in the completion of water quality tests in the city of Laurel. The Company's Georgia and Texas operations were not affected by the storm.

Sanderson Farms said it is currently evaluating the terms, conditions and extent of its insurance coverage, which is expected to cover a significant portion of the loss.

Over the weekend, the Company was able to complete its assessment of damage and losses to its live inventories. The Company estimates that, out of a total of 1,874 broiler houses in Mississippi, 72 were totally destroyed. Another 86 experienced considerable damage and will be unable to house broilers until repairs are made. In addition to broiler houses, two breeder houses out of a total of 187 in Mississippi were either totally destroyed or heavily damaged, and two pullet houses out of a total of 100 were destroyed or heavily damaged. As a result of these losses, the Company estimates that approximately 3.0 million head of broiler chickens out of an average live inventory of approximately 35.0 million head, ranging in age from 7 days to 62 days, have been destroyed. The Company does not believe the loss of this housing capacity will affect its ongoing operations however, as it can shorten layouts and take other temporary measures to compensate for these losses.

In addition to the loss of live birds, the Company was unable to hatch and place live broilers in the field at its normal rate during the past week. While the Company maintained operations at its hatcheries, the incubation process was halted on some hatching eggs and the Company was unable to set eggs in its hatcheries on its normal schedule. As a result of these interruptions, the Company estimates that approximately 5.2 million hatching eggs were either lost or destroyed and will not be placed as broiler chicks. Because chicks are raised in the field for 48 - 64 days, the reduced egg sets and chick placements will affect the Company's weekly processing volumes through November, with the reductions occurring primarily during October. During normal operations, the Company processes approximately 4.2 million head per week at its Mississippi and Louisiana plants.

While electrical power is being restored to the farms of independent contract producers on a steady basis, the Company believes that it could be as long as three to four weeks before power is fully restored to all of its independent contractors' farms. Until power is restored, equipment on grow-out farms, including ventilation, feeding and watering equipment, will be operated using electricity generated by diesel-powered generators. The Company currently is providing diesel fuel to its independent contract producers to allow them to run their generators and maintain power to farms. While the source of diesel over much of last week was tight, the Company was able to secure sufficient diesel fuel to operate substantially all of the farms housing its live inventories. While supplies of diesel have become more available each day since the hurricane, the Company's ability to secure diesel fuel until power is fully restored to its farms will be an important factor in maintaining its live inventories.

Joe Sanderson, Jr., chairman and chief executive officer, commented, "I am relieved that it appears the Company's employees and independent contract growers experienced no loss of life or serious injuries. The magnitude of this storm and the damage it caused were great and widespread, and I am pleased that our people remained safe."

Sanderson continued, "I am also pleased that our assets were not significantly damaged by the hurricane. While the storm's impact on our live inventories and our live production process will have an impact on the Company's capacity and volume over the next three months, none of the losses we sustained will affect the Company over the long term. The impact on volume from our live losses amounts to approximately two week's volume spread over three months. Working with our management team over the last week has reinforced my confidence in the long-term success of this Company and its ability to recover from this short-term set back. Our focus over the next few weeks will include working to maintain our assets, responding to our customers' needs and replenishing our live production inventories. Our customers have been very supportive over the last week, and we believe that by week's end we will be in a position to fully service their needs.