http://en.wikipedia.org/wiki/Pine_Processionary

The Pine Processionary (Thaumetopoea pityocampa) is a moth of the family Thaumetopoeidae. It is sometimes placed in the genus Traumatocampa. It is an abundant species found in pine woods in central and southern Europe, and an important economic pest. The species is notable for the behaviour of its caterpillar larvae, which overwinter in tent-like nests high in pine trees, and which process through the woods in nose-to-tail columns, protected by their severely irritating hairs, as described by the pioneering entomologist Jean Henri Fabre.

The larva is a major forest pest, living communally in large "tents", usually in pine trees but occasionally in cedar or larch, marching out at night in single file (hence the common name) to feed on the needles. There are often several such tents in a single tree. When they are ready to pupate, the larvae march in their usual fashion to the ground, where they disperse to pupate singly on or just below the surface.

The larvae should never be handled as the abundant hairs on their bodies cause extreme irritation (urticaria) to the skin. 5th stage larvae can eject hairs when threatened or stressed; the hairs, which have the form of harpoons, then penetrate and irritate all areas of exposed skin nearby with an urticating protein. Allergic reactions may follow in susceptible individuals on subsequent exposure to the hairs.

Fabre conducted a famous study on the processionary pine larvae where a group of them were attached nose-to-tail in a circle with food just outside the circle; they continued marching in the circle for a week. The caterpillars may follow a trail of pheromones or silk, but the main stimuli that induce following are from the hairs (setae) on the end of the abdomen of the caterpillar in front.

The Pine Processionary is an economic pest in coniferous forests in southern Europe. It is controlled to some extent by predators, parasites and viruses which attack the moth at different stages of its life-cycle