Smithfield Foods, Inc., is a meat-processing company and wholly owned subsidiary of WH Group of China. Founded as the Smithfield Packing Company in 1936 by Joseph W. Luter and his son in Smithfield, Virginia, the company is said to be the largest pig and pork producer in the world. Its 973,000-square-foot meat-processing plant in Tar Heel, North Carolina, was reported in 2000 to be the world's largest, processing 32,000 pigs a day. The company had 50,200 employees globally in 2016 and an annual revenue of $14 billion, with facilities in several U.S. states, Mexico, Poland, Romania, Germany, and the UK.
WH Group, then known as Shuanghui Group, purchased Smithfield Foods in 2013 for $4.72 billion, more than its market value. It was the largest Chinese acquisition of an American company to date. The acquisition of Smithfield's 146,000 acres of land made WH Group, headquartered in Luohe, Henan province, one of the largest overseas owners of American farmland.
Smithfield Foods began its growth in 1981 with the purchase of Gwaltney of Smithfield, followed by the acquisition of nearly 40 companies between then and 2008, including Eckrich; Farmland Foods of Kansas; John Morrell; Murphy Family Farms of North Carolina; Circle Four Farms of Utah; and Premium Standard Farms. The company was able to grow as a result of its highly industrialized pig production, confining thousands of pigs in large barns known as concentrated animal feeding operations, and controlling the animals' development from conception to packing.
As of 2006 Smithfield raised 15 million pigs a year and processed 27 million, producing over six billion pounds of pork. It was the top pig-slaughter operation in the United States in 2007, at 114,300 pigs a day, and along with three other companies slaughtered 56 percent of the cattle processed there until it sold its beef group in 2008. Smithfield sells its products under several brand names, including Cook's, Eckrich, Gwaltney, John Morrell, Krakus, and Smithfield. Kenneth M. Sullivan became the president and chief executive officer in 2015.
Video Smithfield Foods
Company profile
History
The company traces its history to 1936, when Joseph W. Luter, Sr. and his son, Joseph W. Luter, Jr., opened the Smithfield Packing Company in Smithfield, Virginia. The latter served as chief executive officer (CEO) until his death in 1962. A grandson, Joseph W. Luter III, joined the company in 1962 and became chairman and CEO in 1966, serving until Smithfield was taken over by Liberty Equities in 1969. The company hired Luter again as CEO in 1975 when it found itself in financial difficulties; his restructuring of the company is credited with its improved performance. His son, Joseph W. Luter IV, became an executive vice president of Smithfield Foods and president of the Smithfield Packing Company, the parent company's largest subsidiary.
Mergers and acquisitions
Smithfield began to expand in 1981 with its purchase of its main competitor, Gwaltney of Smithfield. This was followed by the acquisition of almost 40 companies in the pork, beef, and livestock industries between 1981 and around 2008. The company Patrick Cudahy was purchased in 1984 and Schluderberg-Kurdle in 1986. In 1992 Smithfield opened the world's largest processing plant, a 973,000-square-foot facility in Tar Heel, North Carolina, which by 2000 could process 32,000 pigs a day.
Smithfield purchased John Morrell & Co in Sioux Falls, SD, in 1995 and Circle Four Farms in 1998. In 1999 it bought two of the largest pig producers in the United States: Carroll's Foods and Murphy Family Farms of North Carolina, at that point the largest producer. According to agricultural researchers Jill Hobbs and Linda Young, Smithfield's purchase of these companies constituted a major structural change in the U.S. pig industry.
Farmland Foods of Kansas City was added in 2003, as were Sara Lee's European Meats, ConAgra Foods Refrigerated Meats, Butterball (the poultry producer), and Premium Standard Farms in 2007. The company sold its 49 percent share in Butterball in 2008 for an estimated $175 million. The acquisitions caused concern among regulators in the United States regarding the company's control of the food supply. After Smithfield's purchase of Murphy Family Farms, the Agriculture Department described it as "absurdly big". As of 2006 four companies--Smithfield, Tyson, Swift & Company, and Cargill--were responsible for the production of 70 percent of pork in the United States.
Purchase by Shuanghui Group
On May 29, 2013, WH Group Ltd., then known as Shuanghui Group or Shineway Group, the largest meat producer in China, announced the purchase of Smithfield Foods for $4.72 billion. Shuanghui announced that it would list Smithfield on the Hong Kong Stock Exchange after completing the takeover. On September 6, 2013, the U.S. government approved Shuanghui International Holding's purchase of Smithfield Food, Inc. The deal was valued at approximately $7.1 billion, which included debt. It was the largest stock acquisition by a Chinese company of an American company. At the time of the deal, China was one of the U.S's largest pork importers, although it had 475 million pigs of its own, roughly 60 percent of the global total. Smithfield's CEO, Ken Sullivan, said in 2017 that he sees the company's future as a "consumer-packaged goods business".
For decades Smithfield had run its acquisitions as independent operating companies, but in 2015, after the purchase by WH Group, it set up the "One Smithfield" initiative to unify them. Circle Four Farms in Milford, Utah, for example, became Smithfield Hog Production-Rocky Mountain Region. In 2016 Smithfield purchased the Californian pork processor Clougherty Packing PLC for $145 million with its Farmer John and Saag's Specialty Meats brands. Smithfield also acquired PFFJ (Pigs for Farmer John) LLC and three of its farms from Hormel Foods Corporation. In September 2017 it announced that it would purchase two Romanian packaged-meat suppliers, Elit and Vericom.
Employees, brands
In 2016 Smithfield had 50,200 employees in the United States, Mexico and Europe, and an annual revenue of $14 billion. As of July 2017, the company's brands included Armour, Berlinki, Carando, Cook's, Curly's, Eckrich, Farmland, Gwaltney, Healthy Ones, John Morrell, Krakus, Kretschmar, Margherita, Morliny, Nathan's Famous, and Smithfield. In 2012 it opened a restaurant, Taste of Smithfield, in Smithfield, Virginia, located in the same Main Street building as its retail store, The Genuine Smithfield Ham Shoppe.
Maps Smithfield Foods
Pig production
Vertical integration and contracts
In 1990 Smithfield began buying hog-farming operations, making it a vertically integrated company. As a result, it was able to expand by over 1,000 percent between 1990 and 2005. Vertical integration allows Smithfield to control every stage of pig production, from conception and birth, to slaughter, processing and packing, a system known as "from squeal to meal" or "from birth to bacon".
The company contracted farmers who had moved out of tobacco farming, and sent them piglets between eight and ten weeks old to be brought to market weights on diets controlled by Smithfield. Smithfield retained ownership of the pigs. Only farmers able to handle thousands of pigs were contracted, which meant that smaller farms went out of business. In North Carolina, Smithfield's expansion mirrored hog farmers' decline; there were 667,000 hog farms there in 1980 and 67,000 in 2005. When the U.S. government placed restrictions on the company, it moved into Eastern Europe. As a result, in Romania there were 477,030 hog farms in 2003 and 52,100 in 2007. There was a similar decline, by 56 percent between 1996 and 2008, in Poland.
Joseph W. Luter III said that vertical integration produces "high quality, consistent products with consistent genetics". The company obtained 2,000 pigs and the rights to their genetic lines from Britain's National Pig Development Company in 1990, and used them to create Smithfield Lean Generation Pork, which the American Heart Association certified for its low fat, salt, and cholesterol content. According to Luter, it was vertical integration that enabled this.
Housing and lagoons
The pigs are housed together in their thousands in identical barns with metal roofs, known as concentrated animal feeding operations (CAFOs). The floors of the buildings are slatted, allowing waste to be flushed into 30-feet-deep "open-air pits the size of two football fields", according to the Washington Post. These are referred to within the industry as anaerobic lagoon. They dispose of effluent at a low cost, but they require large areas and release odors and methane, a major contributor to greenhouse gas.
Smithfield Foods states that the lagoons contain an impervious liner made to withstand leakage. According to Jeff Tietz in Rolling Stone, the waste--a mixture of excrement, urine, blood, afterbirths, stillborn pigs, drugs and other chemicals--overflows when it rains, and the liners can be punctured by rocks. Smithfield attributes the pink color of the waste to the health of the lagoons, and states that the color is "a sign of bacteria doing what it should be doing. It's indicative of lower odor and lower nutrient content."
Pregnant sows
Smithfield said in 2007 that it would phase out gestation crates by 2017, but in 2009 said it would not meet the timeline because of operating losses caused by the recession. In December 2011, however, it returned to its commitment to the 2017 deadline in the U.S., and to doing the same in Europe and Mexico by 2022. Pregnant sows spend most of their lives in these stalls, which are too small to allow them to turn around. When they give birth, they are moved to a farrowing crate for three weeks, then artificially inseminated and placed back into a gestation crate. The practice has led to criticism from animal welfare groups, supermarket chains and McDonald's.
In January 2015 it said that 71.3 percent of pregnant sows on its company-owned farms had been moved into group housing and out of the crates. It did not commit to requiring its contract farms, where almost half its sows live, to phase out the crates. In January 2017, the company announced that 87% of sows on company-owned farms were no longer in crates, and that it would require contract farms to phase out crates by 2022.
Environmental and animal-welfare record
Emissions
Smithfield has come under criticism for the millions of gallons of untreated fecal matter it produces and stores in the lagoons. In a four-year period in North Carolina in the 1990s, 4.7 million gallons of hog fecal matter were released into the state's rivers. Workers and residents near Smithfield plants reported health problems and complained about the stench of hog feces.
The company was fined $12.6 million in 1997 by the Environmental Protection Agency (EPA) for 6,900 violations of the Clean Water Act after discharging illegal levels of slaughterhouse waste into the Pagan River in Virginia. Its facilities in North Carolina came under scrutiny in 1999 when Hurricane Floyd flooded lagoons holding fecal matter; many of Smithfield's contract farms were accused of polluting the rivers. Smithfield reached a settlement in 2000 with the state of North Carolina, agreeing to pay the state $50 million over 25 years.
According to Ralph Deptolla of Smithfield Foods, the company created new executive positions to monitor the environmental issues. In 2001 it created an environmental management system and the following year hired Dennis Treacy, director of the Virginia Department of Environmental Quality since 1998, as Executive Vice President and Chief Sustainability Officer. Treacy had previously been involved in the enforcement efforts against Smithfield. In 2005 the company received ISO 14001 certification for its hog production and processing facilities in the U.S., with the exception of new acquisitions, and, in 2009, 14 plants in the U.S. and 21 in Romania received certification. By 2011, 578 Smithfield facilities were ISO 14001-certified. In 2006 its subsidiary Murphy-Brown reached an agreement with the Waterkeeper Alliance, once one of Smithfield's biggest critics, to enhance environmental protection at the former's facilities in North Carolina. In 2009 the company said it had reduced its emissions since 2007, including its greenhouse-gas emissions by four percent; it attributed this to the divestiture of the beef group. In 2010 it released its ninth annual Corporate Social Responsibility report, and announced its appointment of a chief sustainability officer and two sustainability committees.
Operations in Mexico
The earliest confirmed case of the H1N1 virus (swine flu) during the 2009 flu pandemic was in a five-year-old boy in La Gloria, Mexico, near several facilities operated by Granjas Carroll de Mexico, a Smithfield Foods subsidiary that processes 1.2 million pigs a year and employs 907 people. This, together with tension between the company and local community over Smithfield's environmental record, prompted several newspapers to link the outbreak to Smithfield's farming practices. According to The Washington Post, over 600 other residents of La Gloria became ill from a respiratory disease in March that year (later thought to be seasonal flu). The Post writes that health officials found no link between the farms and the H1N1 outbreak. Smithfield said that it had found no clinical signs of swine flu in its pigs or employees in Mexico, and had no reason to believe that the outbreak was connected to its Mexican facilities. The company said it routinely administers flu virus vaccine to its swine herds in Mexico and conducts monthly tests to detect the virus.
Residents alleged that the company regularly violates local environmental regulations. According to the Washington Post, local farmers had complained for years about headaches from the smell of the pig farms and said that wild dogs had been eating discarded pig carcasses. Smithfield was using biodigesters to convert dead pigs into renewable energy, but residents alleged that they regularly overflowed. Residents also feared that the waste stored in the lagoons would leak into the groundwater.
Packaging reduction
In 2009 Armour-Eckrich introduced smaller crescent-style packaging for its smoked sausages, which reduced the plastic film and corrugated cardboard the company used by over 840,000 pounds per year. In 2010 the John Morrell plant in Sioux Falls, SD, reduced its use of plastic by 40,600 pounds a year, and Farmland Foods reduced the corrugated packaging entering waste streams by over five million pounds a year. Smithfield Packing used 17 percent less plastic for deli meat. The company also eliminated 20,000 pounds of corrugated material a year by using smaller boxes to transport chicken frankfurters to its largest customer.
Use of antibiotics
Concerns have been raised about Smithfield's use of low doses of antibiotics to promote the pigs' growth, in addition to using antibiotics as part of a treatment regime. The concern was that the antibiotics were harmful to the animals and were contributing to the rise of antibiotic-resistant strains of bacteria. Smithfield said in 2005 that it would administer antibiotics only to animals who were sick themselves, or who were in close proximity to sick animals; however, in CAFOs all pigs are in close proximity to each other. The company introduced an antibiotic-free Pure Farms brand in 2017; it promoted the brand as free of antibiotics, artificial ingredients, hormones, and steroids.
2006 CIWF investigation
In Poland, Smithfield Foods purchased former state farms for what its CEO said were "small dollars" and turned them into CAFOs using grants from the European Bank for Reconstruction and Development. Compassion in World Farming (CIWF) conducted an undercover investigation into Smithfield CAFOs there in 2006, and found sick and injured animals in the barns, and dead animals rotting. The CAFOs were run by Animex, a Smithfield subsidiary. In one barn, 26 pigs were reported to have died in a five-week period. The CIWF report said of a Smithfield lagoon in Boszkowo: "Everywhere is the detritus of industrial factory farming--plastic syringe casings, intravenous needles and white clinical gloves--floating in the rancid cesspit and discarded on adjacent farmland."
2010 HSUS investigation
In December 2010 the Humane Society of the United States (HSUS) released an undercover video taken by one of its investigators inside a Smithfield Foods facility. The investigator had worked for a month at Murphy-Brown, a Smithfield subsidiary in Waverly, Virginia. The Associated Press (AP) reported that the investigator videotaped 1,000 sows living in gestation crates. According to the AP, the material shows a pig being pulled by the snout, shot in the head with a stun gun, and thrown into a bin while trying to wriggle free. The investigator said he saw sows biting their crates and bleeding; staff jabbing them to make them move; staff tossing piglets into carts; and piglets born prematurely in gestation crates falling through the slats into the manure pits. The video won a 2012 Webby Award in the "Public Service and Activism" category.
In response, Smithfield told the AP that it has "zero tolerance for any behavior that does not conform to our established animal well-being procedures". The company asked Temple Grandin, a professor of animal husbandry, to review the footage; she recommended an inspection by animal welfare expert Jennifer Woods. Smithfield announced on December 21 that it had fired two workers and their supervisor. At the company's invitation, the Virginia state veterinarian Richard Wilkes visited the facility on December 22. He told The Virginian-Pilot that Smithfield had been "very responsive and very responsible in how they've addressed the issues", and that he had not seen "any indication of abuse" of the pigs and was impressed by their demeanor. A Humane Society spokesman said that Smithfield had provided the vet "with a pre-announced, white glove tour".
Lawsuits
In 2010 a jury in Jackson County, Missouri, awarded 13 plaintiffs $825,000 each against a Smithfield subsidiary, Premium Standard. Two other plaintiffs were awarded $250,000 and $75,000. The plaintiffs argued that they were unable to enjoy their property because of the smell coming from the Smithfield facilities.
As of 2017 in Wake County, North Carolina, nearly 500 residents are suing a Smithfield subsidiary, Murphy-Brown, in 26 lawsuits, alleging nuisance and ill health caused by smells, open-air lagoons, and pig carcasses. Residents say their outdoor activities are limited as a consequence, and that they are unable to invite visitors to their homes. Smithfield has said the complaints are without merit.
Legal and labor issues
Working conditions
Human Rights Watch (HRW) issued a 175-page report in 2005 documenting what it said were unsafe work conditions in the U.S. meat and poultry industry, citing working conditions at Smithfield Foods as an example. In particular, the report said, workers make thousands of repetitive motions with knives during each shift, leading to lacerations and repetitive strain injuries. It also alleged that the workers' immigrant status may be exploited to prevent them from making complaints or forming unions. According to the report, the speed at which the pigs are killed and processed makes the job inherently dangerous for workers. A Smithfield manager testified in 1998, during an unfair labor practices trial, that at the Tar Heel plant in North Carolina it takes 5-10 minutes to slaughter and complete the process of "disassembly" of an animal, including draining, cleaning, and cleaving. One worker told HRW that the disassembly line moves so fast that there is no time to sharpen the knives, which means harder cuts have to be made, with the resultant injuries to workers. Similar criticism was made by other groups about Smithfield facilities in Poland and Romania.
Union dispute
The Smithfield Packing plant in Tar Heel, North Carolina, was the site of a 15-year dispute between the company and the United Food and Commercial Workers Union (UFCW), which had tried since the early 1990s to organize the plant's roughly 5,000 hourly workers. Workers voted against the union in 1994 and 1997, but the National Labor Relations Board (NLRB) alleged that unfair election conduct had occurred and ordered a new election. During the 1997 election the company is alleged to have fired workers who supported the union, stationed police at the plant gates, and threatened plant closures. In 2000, according to Human Rights Watch, Smithfield set up its own security force, with "special police agency" status under North Carolina law, and in 2003 arrested workers who supported the union.
Smithfield appealed the NLRB's ruling that the 1997 election was invalid, and, in 2006, the U.S. Circuit Court of Appeals found in favor of the NLRB. After demonstrations, lockouts, and a shareholder meeting that was disrupted by shareholders supporting the union, the union called for a boycott of Smithfield products. In 2007 Smithfield countered by filing a federal RICO Act lawsuit against the union. The following year Smithfield and the union reached an agreement, under which the union agreed to suspend its boycott in return for the company dropping its RICO lawsuit and allowing another election. In December 2008, workers voted 2,041 to 1,879 in favor of joining the union.
Justice Department penalty
In 2009 Smithfield was assessed a $900,000 penalty by the U.S. Justice Department to settle charges that the company had engaged in illegal merger activity during its takeover of Premium Standard Farms LLC in 2006.
Medical supplies
Smithfield is a supplier of heparin, which is extracted from pigs' intestines and used as a blood thinner, to the pharmaceutical industry. In 2017 the company opened a bioscience unit and joined a tissue engineering group funded by the United States Department of Defense to the tune of $80 million. According to Reuters, the group included Abbott Laboratories, Medtronic and United Therapeutics.
Philanthropy and sponsorship
Smithfield-Luter Foundation
The Smithfield-Luter Foundation, established in 2002, is a non-profit organization that acts as the philanthropic wing of Smithfield Foods, dedicated primarily to providing scholarships to the children and grandchildren of Smithfield employees. The foundation gave $5 million to Christopher Newport University in Newport News, Virginia, to establish the Luter School of Business, and in 2006 gave $5 million to the University of Virginia Cancer Center in Charlottesville, Virginia. It has also supported its "learners to leaders" programs, begun in 2006, in Sioux Falls, South Dakota; Green Bay, Wisconsin; Denison, Iowa; and Norfolk, Virginia.
Sports sponsorships
In 2012 Smithfield announced a 15-race sponsorship with Richard Petty Motorsports (RPM) and driver Aric Almirola driving the No. 43 Ford Fusion in the NASCAR Sprint Cup Series. The sponsorship was increased to 30 races beginning in 2014. Smithfield rotates its brands on the car, featuring Smithfield, Eckrich, Farmland, Gwaltney, and Nathan's Famous. It is also the official food of Richmond International Raceway in Henrico County, Virginia. Smithfield and RPM parted ways in September 2017, allowing Smithfield to sponsor Stewart-Haas Racing in 2018.
See also
- An American Trilogy (2009)
- Fast Food Nation (2001)
- Food, Inc. (2008)
- Pig Business (2009)
Notes
References
Further reading
External links
Books
Articles
Source of the article : Wikipedia
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