October 1, 2006
COMMENTARY:
Smithfield Buyout Poses a Threat on Many Fronts
A lot of people are closely watching what Congress, the Administration and the Department of Justice are going to do about the proposed Smithfield Foods buyout of Premium Standard Farms.
Smithfield, the world’s largest pork producer and packer, wants to buy Premium Standard Farms, the second largest pork producer and the sixth largest packer in the United States, for about $810 million. If this buyout is allowed to go forward, Smithfield would process about 28 percent of the hogs in the United States and outright own almost 20 percent of them, according to Smithfield Chairman Joseph Luter III. This is bad news for hog farmers, rural communities, meatpacking workers, our environment and consumers. It’s even bad for contract growers —they will be squeezed with fewer options for contracting.
As livestock producers, we are outraged that the Administration and Congress have let merger after merger in the hog industry go unchallenged. As Smithfield continues to buy up its competitors, our access to markets continues to shrink — and our share of the retail dollar and the price we get for our livestock shrinks right along with it. From 1985 to 2005, the retail price of pork increased 75 percent. During the same period, the hog producers’ share of the retail dollar (the amount of every retail dollar that the producer receives) has decreased 30 percent, from 44 cents to 31 cents.
Meatpacking workers are also concerned about Smithfield’s growing control over the industry. Smithfield’s treatment of its workers speaks for itself: terribly low pay, serious OSHA violations, and the breaking of workplace labor laws, including firing union supporters and conspiring with the local county sheriff’s department to physically intimidate and assault union supporters at their Tar Heel plant in North Carolina, the world’s largest pork packing facility.
Those of us who care about cleaning up our water are keeping a watchful eye, too. In 1997, Smithfield was slapped with a $12.6 million fine by the Environmental Protection Agency — one of the largest EPA fines ever — for 7,000 violations of the Clean Water Act at its Virginia packing plants. Premium Standard Farms’ environmental track record isn’t any better, discharging more than a million gallons of liquid manure into the rivers and streams of three northern Missouri counties.
The only ones who don’t seem concerned are the National Pork Producers Council (NPPC) and the National Pork Board (NPB). The NPB, which takes $45 million to $50 million annually from hog farmers through the mandatory pork checkoff, and the NPPC, which claims to be the “global voice for the U.S. pork industry,” were silent on the issue. A review of press releases on their websites shows they didn’t even take the time to make a statement on Smithfield’s proposed buyout.
Now is not the time to sit back and watch — it’s time to act. The Campaign for Family Farms and the Environment (CFFE) has been working with independent hog producers to fight factory farms and corporate control of the livestock industry for over a decade. We applaud Senator Charles Grassley’s (R- IA) swift and strong opposition to this merger, and his statement to the press expressing his support for banning packer ownership of livestock. A ban on packer ownership of livestock should be part of the 2007 Farm Bill.
The 2007 Farm Bill should also make factory farms pay the cost of production for their feed sources. Recent studies from Tufts University have shown that the current taxpayer-subsidized federal commodity program provides factory farms with a hidden advantage equivalent to 10 percent to 15 percent of their total operating cost. The U.S. government’s cheap grain policy, which costs Americans billions of dollars each year in taxes, results in cheap inputs for Smithfield, which means lower operating costs and higher profits. This equation fuels Smithfield’s ability to consolidate meatpacking and hog production ownership in its hands.
In addition to supporting a ban on packer ownership of livestock, the CFFE is working on a unified package of initiatives which include significant commodity reform that provides farmers with a fair price for their grain, expansion of the Conservation Security Program and other common-sense conservation measures, and launching a New Farm Initiative that supports beginning farmers as well as farmers growing for local and regional markets.
The preliminary work on the 2007 Farm Bill is already underway, and the pro-factory farm commodity groups and agribusiness corporations are working hard to take the biggest piece of the pie for themselves, leaving farmers working harder for less. Members of Congress have been hearing from agribusiness lobbyists for a long time. Who they haven’t heard from is you. Call your members of Congress today. Let them know that you want action to halt corporate concentration in the food industry and to work for agricultural policy reforms that will benefit family farmers, rural communities, meatpacking workers, our environment and consumers.
This commentary was written by the Campaign for Family Farms and the Environment livestock producers Paul Sobocinski, Land Stewardship Project (Minnesota); Peggy Birchmier, Iowa Citizen for Community Improvement; Keith Bolin, Illinois Stewardship Alliance; Rhonda Perry, Missouri Rural Crisis Center; and Jolinda Buchanan, Citizen Action Coalition of Indiana.
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