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.

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The United States is the world's second largest pork producer and pork production has been growing at quite a clip. From 2000 through 2006, US pork production expanded 15.8%. Only China, the world's largest pork producer and consumer, grew faster. When it comes to the global pork trade, China distorts the picture only because it is so dominant. In 2006, China accounted for 48% of total world hog production.

Over the last 20 years, the number of backyard hog farms in China has gradually declined, but backyard hog operations still dominate in both the number of hog farms and share of total pork production in China. Still the trend is towards industrial hog production in what is termed a confined animal feeding operation or CAFO. Indeed, the Chinese budget for 2008-09 allocates 2.8 billion yuan from to support live pig production to build breeding farms and standard large scale piggeries. If the experience with CAFOs of the United States and now Mexico is any indication, China is unwittingly creating an environmental and health disaster. Still this is for the future, it is the present that should concern us.

Today the Mexican Health Secretary, José Ángel Córdova, reported that tests now prove that a four-year-old boy contracted swine flu in the La Gloria community of Veracruz state, where that community has been protesting pollution from a CAFO that isn't so confined. These tests now put the start date for the swine flu epidemic at least two weeks earlier than the first death previously confirmed by the Mexican government and more importantly begins to pinpoint the start of the epidemic in La Gloria. The CAFO is run by Granjas Carroll de México which is a joint venture of Agroindustrias Unidas de México and Smithfield Foods.

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Usually, they will put central in front of it for full force. Central planning is the latest conservative epithet in the wake of President-elect Obama's bold and sweeping proposals for revitalizing the increasingly moribund American economy. Here's Robert Tracinski, the editor of The Intellectual Activist:

The real story of the bailout of the Detroit auto industry is not simply the waste of taxpayers' money on failing enterprises. Rather, the real news is Congress's apparent confidence that the way to revive Detroit is to impose central planning on the auto industry. This would be done by appointing a "car czar" empowered to "act as a kind of trustee with authority to bring together labor, management, creditors and parts suppliers to negotiate a restructuring plan. He or she also would be able to review any transaction or contract valued at more than $25 million."

The term "car czar" is not quite right. As a metaphorical description of the bailout, it evokes the right location--Russia--but the wrong era. "Car commissar" would be much more exact. Perhaps he will begin his work by issuing a five-year plan for the revival of the Big Three.

After all, it's Frei Marktwirtschaft Uber Alles. The free market will provide an answer. How bankrupt is this line of thinking? Not as much as it should be. The nation and the health of the American economy is being held hostage by recalcitrant elements of the Republican party who in pursuit of some perverse ideological point about "free markets" and "limited government" seem willing to let an industry that directly employs a quarter of a million Americans and indirectly contributes to perhaps another five million jobs collapse. It is as if they want the country to fail. The truth is they want government to fail but are they are willing to let country fail to achieve such.

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Half of the American budget is devoted to defense spending and the economy would be in a real quandary without it.  American political leaders would have to decide how to spend all the money freed up and since they believe in minimal government (except for defense, of course), they will face a real challenge.  Possibly they could invest more in space travel to speed up our Mar's program.  Imagine the thrill of the average American, hungry or not, of witnessing such a stupendous technological accomplishment.  If we are sufficiently fortuitous, we might encounter hostile aliens who would force us to spend more on defense again.

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Cross posted on
The Economic Populist -
A Community Site for Economics Freaks and Geeks

Failure in war can be a bad thing.  Failure in business can be a personal loss, and in some instances a detriment to the economy.  With the recent calamity hitting the two largest mortgage lenders, not to mention other large American business concerns, it seems to a select few that failure is indeed a viable and good option.

A gamble with very high stakes is being openly promoted by adherents to a free-market orthodoxy.  These individuals, gaming on anger and the perceived loss of utility of these given enterprises, are pushing the public onto this wager.

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