IATP Hog Report - Institute for Agriculture and Trade Policy

Section 1
results despite a $58.6 million pretax loss," incurred by its Hog Production
Group due to record low prices for hogs and a $12.6 million fine levied
against its Virginia operation for polluting. 42
In January 2000, Smithfield purchased Murphy Family Farms for 11.1
million shares of Smithfield Foods, Inc. common stock, and the
assumption of approximately $203 million in debt and other liabilities. 43
Together with Smithfield's other "domestic hog production subsidiaries,"
Brown's of Carolina, Inc. and Carroll's Foods, Inc., Smithfield's operations
were expected to involve control of some 700,000 sows. 44 Over 60 percent
of the hogs slaughtered by Smithfield every year would be owned by
Smithfield from birth to slaughter, continuing the erosion of competition
in hog markets and closing the door to the market for many independent,
family hog producers in regions where Smithfield companies raise and
process their own hogs. 45
Regarding Smithfield's Murphy purchase, Missouri hog farmer Steve
Madewell commented that the merger was another nail in the coffin of
independent operators. "They are going to put us out of business. How
they are going to do it is to take our markets from us." 46 Wayne Prewitt,
farm management specialist with the University of Missouri Extension
Office in Vernon County, Missouri, and a contract grower for Murphy
commented: 47
It's sad; in all honesty, it brings tears to my eyes.
Smithfield will be controlling a significant amount of the
market. As an ag economist, I understand it well, but our
communities are going to lose a lot when they lose their
farmers.
Smithfield has also acquired interests in other countries, including 51% of
the voting control of Animex, Poland's largest meat and poultry processing
company. 48 Smithfield is meeting staunch opposition from Poland's
family farmers and food workers. 49
Smithfield's domestic acquisition plans have drawn strong criticism from
farm organizations and calls for the Justice Department to investigate their
anti-trust implications. 50 Iowa Senator Tom Harkin asked the Justice
Department to force Smithfield to divest selected assets to prevent market
concentration in certain regions. Senator Tim Johnson of South Dakota
announced that he is drafting a bill to ban meatpackers from owning
livestock for slaughter. He noted: 51
Current antitrust law fails to address the concerns of
livestock producers in the marketplace, and instead creates
an imbalance in bargaining power between huge
meatpackers and independent livestock sellers.
http://www.iatp.org/hogreport/sec1.html (9 of 23)2/27/2006 3:50:02 AM