by Charles Lemos, Tue Apr 28, 2009 at 10:50:22 PM EDT
On February 17, 2009, Smithfield Foods acquired Vall, a hog producer, for $60.7 million, solidifying its position as the nation's number one producer of pork products. The company boasts over $12 billion in total sales. The company's growth has been nothing short of spectacular. Since 1990, Smithfield Foods has grown by more than 1,000 percent. In 1997 it was the nation's seventh-largest pork producer; by 1999 it was the largest. Today, it accounts for 27% of hog production in the United States, doubled what it accounted for just three years ago.
Based in Virginia, Smithfield has embarked on aggressive acquisition strategy to fuel its growth. While the company has production facilities across the US as well as overseas most of its operations are in the southeastern region of North Carolina. Smithfield raised 14 million hogs in 2006. This tremendous population of hogs enabled Smithfield to produce about 3.1 billion pounds of fresh pork in 2006. In 2001, Smithfield expanded into the beef industry and it is already the nation's 5th leading beef producer. The Smithfield family of brands consists of over 50 brands and 21 major subsidiaries. Smithfield employs 52,500 people globally, including 11,000 in North Carolina. In addition, Smithfields acquired the Butterball turkey brand.
Founded in 1936 in Smithfield, Virginia, Smithfield Foods overcame financial difficulties in the 1970s under the leadership of Joseph W. Luter III, its combative CEO until he retired a year ago. Mr. Luter began an expansion of the company during the early 1980s that continues through today. Since 1981, Smithfield Foods has made more than 30 acquisitions both domestically and internationally. Smithfield owns subsidiaries in France, Poland, Romania and the United Kingdom, and has joint ventures or major investments in Brazil, Mexico, Spain and China. Like many of the other major players in the industry, they are making a major push into the emerging Japanese pork market and of course the ever alluring Chinese market, the world's largest consumer of pork products.
To state that Smithfield has transformed the American pork industry is an understatement. Like Wal-Mart, it started out a small family owned enterprise but unlike Wal-Mart its growth has come almost entirely by consolidating the industry via acquisitions. However, another similarity with Wal-Mart is the company's business practices with its suppliers. Smithfield employs a combination of ownership and contractual-based work allowing it to bypass traditional commodity markets that had characterized the industry for over a century. Smithfield does not own all its farms, but provides the animals and feed in exchange for the farmers raising the hogs to market. The farmer is forced to take out a loan, often from Smithfield, to finance the farming infrastructure. In this way, the farmers assume all the risk while Smithfield is not saddled with the associated long-term debt. And the practice has led to a culling of the number of US pig farms over the past 30+ years. As a measure of how the landscape of the American pork industry has changed, there is this: in 1965, the US raised 53 million hogs on more than 1 million farms, today 65 million hogs are concentrated in just 65,000 facilities. And that number was 114,000 just seven years ago. Most of these are confined animal feeding operations or CAFOs where hogs are kept by the thousands. In the 1960s, it was rare that any single one farm had more than a couple hundred animals.
Now Denmark is a country that knows something about pigs. Though there are only 5.4 million Danes, the Danes have 12.9 million hogs. Concern over epidemic disease is so great that Danish laws have capped the number of pigs per farm and put a ceiling on the total number of pigs allowed to be raised in the country. No such limit exists in the United States. Here's why the Danes regulate their hog farms:
"Influenza [in pigs] is closely correlated with pig density," said a European Commission-funded researcher studying the situation in Europe. As such, Europe's rapidly intensifying pig industry has been described in the journal Science as "a recipe for disaster." Some researchers have speculated that the next pandemic could arise out of "Europe's crowded pig barns."
Sorry, Europe. Mexico beat you to it. Here's Michael Greger, M.D. of the Humane Society of the United States on why factory farms are a "fast track to disaster":
The H1N1 swine flu virus in North America currently concerning global public health officials is not the first triple hybrid human/bird/pig flu virus to be discovered.
First Found on a Factory Farm
The first was discovered in a North Carolina factory farm in 1998. Since the 1918 pandemic, an H1N1 flu virus has circulated in pig populations, becoming one of the most common causes of respiratory disease on North American pig farms.
In August 1998, however, a barking cough resounded throughout a North Carolina pig farm in which all the thousands of breeding sows fell ill. An aggressive H3N2 virus was discovered, the type of influenza that had been circulating in humans since 1968.
Not only was this highly unusual--only a single strain of human virus had ever previously been isolated from an American pig population--but upon sequencing of the viral genome, researchers found that it was not just a double reassortment (a hybrid of human and pig virus, for example), but a never-before-described triple reassortment, a hybrid of three viruses--a human virus, a pig virus and a bird virus.
Intensive Farming is the Problem
Dr. Robert Webster, one of the world's leading experts of flu virus evolution, blames the emergence of the 1998 virus on the "recently evolving intensive farming practice in the USA, of raising pigs and poultry in adjacent sheds with the same staff," a practice he calls "unsound.""Within the swine population, we now have a mammalian-adapted virus that is extremely promiscuous," explained another molecular virologist at the time, referring to the virus's proclivity to continue to snatch up genes from human flu viruses. "We could end up with a dangerous virus." This may indeed be what we are now facing.
Within months of the 1998 emergence, the virus showed up in Texas, Minnesota, and Iowa. Within a year, it had spread across the United States. This rapid dissemination across the country has been blamed on long-distance live animal transport.
Long Way to Go
In the United States, pigs travel coast to coast. They can be bred in North Carolina, fattened in the corn belt of Iowa, and slaughtered in California. While this may reduce short-term costs for the pork industry, the highly contagious nature of diseases like influenza (perhaps made further infectious by the stresses of transport) needs to be considered when calculating the true cost of long-distance live animal transport.
What led to the emergence of the North Carolina strain in the first place? What changed in the years leading up to 1998 that facilitated the surfacing of such a unique strain? It is likely no coincidence that the virus emerged in North Carolina, the home of the nation's largest pig farm. North Carolina has the densest pig population in North America and reportedly boasts more than twice as many corporate swine mega-factories as any other state.
The year of emergence, 1998, was the year North Carolina's pig population hit ten million, up from two million just six years before. At the same time, the number of hog farms was decreasing, from 15,000 in 1986 to 3,600 in 2000. How do five times more animals fit on almost five times fewer farms? By crowding about 25 times more pigs into each operation.
In the 1980s, more than 85 percent of all North Carolina pig farms had fewer than 100 animals. By the end of the 1990s, operations confining more than 1,000 animals controlled about 99 percent of the state's inventory. Given that the primary route of swine flu transmission is thought to be the same as human flu--via droplets or aerosols of infected nasal secretions--it's no wonder experts blame overcrowding for the emergence of new flu virus mutants.
Starting in the early 1990s, the U.S. pig industry restructured itself after Tyson's profitable poultry model of massive industrial-sized units. As a headline in the trade journal National Hog Farmer announced, "Overcrowding Pigs Pays--If It's Managed Properly."
Overcrowding pigs certainly paid well enough for Smithfield Foods. It ranks 183 on the Fortune 500 list for 2009 up from 222 in 2008. It's the third largest food producer in the United States behind Archer Daniels Midland and Tyson Foods. Its revenues rose 19.5% in 2008 over 2007 even as its profits declined 22% leading to a recently announced major restructuring of its pork division. Job cuts and tax breaks, I am sure, are soon to follow.
Still its market capitalization is $1.4 billion. Driving the company's growth is its increasing exports to East Asian and Eastern European markets that have traditionally consumed large quantity of pork. It can compete well with European producers because of the sheer scale of its operations. But as we are seeing that is coming at a price of global health.
Over at the UK Guardian, Mike Davis writes:
Last year a commission convened by the Pew Research Center issued a report on "industrial farm animal production" that underscored the acute danger that "the continual cycling of viruses ... in large herds or flocks [will] increase opportunities for the generation of novel virus through mutation or recombinant events that could result in more efficient human to human transmission." The commission also warned that promiscuous antibiotic use in hog factories (cheaper than humane environments) was sponsoring the rise of resistant staph infections, while sewage spills were producing outbreaks of E coli and pfiesteria (the protozoan that has killed 1bn fish in Carolina estuaries and made ill dozens of fishermen).
Any amelioration of this new pathogen ecology would have to confront the monstrous power of livestock conglomerates such as Smithfield Farms (pork and beef) and Tyson (chickens). The commission reported systemic obstruction of their investigation by corporations, including blatant threats to withhold funding from cooperative researchers.
That monstrous power of livestock conglomerates reared its ugly head today in Washington where officials were rallying behind our corporate cannibals.
U.S. officials were on message today: It's no longer "swine flu" that Mexican and global health authorities are fighting, but the "2009 H1N1 virus outbreak."
"This really isn't swine flu. It's H1N1 virus," Agriculture Secretary Tom Vilsack said at an afternoon news briefing with U.S. Trade Representative Ron Kirk and Homeland Security Secretary Janet Napolitano.
"We want to say to consumers here and abroad that there is no risk to you, there is no scientific evidence whatsoever that there is any link between consuming pork, prepared pork products, and the H1N1 virus," Kirk added.
Lest the point be lost, Napolitano threw in, "We are establishing an operations coordination task force to deal with the 2009 H1N1 outbreak."
The switch was anything but casual. International prices of U.S. pork, corn and soybeans plummeted yesterday after Russia, China and the Philippines suspended pork imports from Mexico and some U.S. states where the virus has been detected, despite the absence of any link between pork consumption and the virus.
The link is not between pork consumption and the virus; the link is between industrial pork production and the virus. As Mike Davis concludes we face a planetary catastrophe due to "industrialized and ecologically unhinged livestock production" based on a swine capitalism.