Food Safety News: Amendments to Nebraska Bill Might be Expansion Card for Smithfield Foods

Amendments to Nebraska Bill Might be Expansion Card for Smithfield Foods

Food Safety News
By Dan Flynn | March 5, 2015

Recently filed amendment language now pending in the Nebraska Legislature could clear the way for Chinese-owned Smithfield Foods Inc. to own, control, and feed hogs in contract swine operations in the state. The foreign-owned agribusiness is already a major employer in Nebraska.

At a public hearing last month, Legislative Bills (LB) 175 and 176 pitted the independent Billings, MT-based Ranchers Cattlemen Action Legal Fund, United Stockgrowers of America (R-CALF USA) against the Nebraska Pork Producers Association over whether pork processors should be permitted to own livestock and expand in so-called livestock-friendly counties.

In a letter from Bill Bullard, R-CALF’s chief executive — hand-delivered to Lincoln, NE — the independent cattle producers lined up against any change to Nebraska’s Competitive Livestock Act, while Larry Sitzman, the pork association’s executive director, said those changes are needed because the state is in danger of losing its pork processing industry.

In his letter, Bullard suggested that changes to Nebraska’s 1999 law to prevent meatpackers from owning, controlling or feeding livestock for more than five days prior to slaughter stem from demands by the company.

Smithfield was purchased in 2013 by Chinese meat processor Shuanghui International Holdings Ltd. (now known as WH Group) for about $4.72 billion in a deal that took the world’s biggest pork producer private.

It was the biggest acquisition in history of a U.S. firm by a Chinese buyer and opened up a vast food distribution network in Asia to Smithfield. In Nebraska, Smithfield owns the Cook’s Ham plant in Lincoln, with almost 500 employees; the Farmland Foods pork plant at Crete, with almost 2,000, and an Armour-Eckrich sausage plant in Omaha that employs almost 200.

WH Group, based in Hong Kong, owns global businesses that include food, logistics and flavoring products. It was already China’s largest meat processor before acquiring Smithfield, with facilities in 25 other U.S. states, 10 European countries, and Mexico. It has a total of 46,000 employees, and its last publicly known revenues topped $13 billion.

Amendments filed to LB 176 would keep some restrictions on livestock packing interests, while specifically exempting "the ownership, keeping, or feeding of swine by a packer at one or more contract swine operations in this state if the packer does not own, keep or feed swine in this state except for the purpose of the slaughtering of swine or the manufacturing or preparation of carcasses of swine or goods originating from the carcasses in one or more processing facilities owned or controlled by the packer."

Sitzman says Nebraska needs to take advantage of being the closest pork-producing state to the West Coast and Pacific Rim markets. He says the two bills will help diversify Nebraska agricultural markets at a time when both grain and farm land prices have started to decline after several years of increases.

LB 175 sets up procedures for Nebraska to designate and fund projects in so-called livestock-friendly counties. Exactly how the state’s nonpartisan unicameral legislature will proceed on either bill is unclear. Nebraska lawmakers are in session until early June.

Bullard sees any legislative attempt to help Smithfield as a step toward "the industrialized poultry model" for pork producers.

"In essence they are working to chickenize the hog and cattle industries," he writes. Much of the poultry industry is organized around contract farmers who raise birds that are owned from birth to slaughter by the major brands.

According to R-CALF, the percentage of cattle in the "price discovery cash market" has fallen to 23 percent, down from 52 percent as recently as 2005. In other words, only 23 percent of the time is the price paid for cattle not set until they go to market. The rest are already under contract or owned by the company doing the slaughter.

"In sharp contrast, and as a direct result of Nebraska’s Competitive Livestock Markets Act that limits the packers ability to shrink the price-discovery market by capturing the livestock supply chain away from independent producers, the volume of fed cattle comprising the competitive cash market in the Nebraska fed cattle procurement region is at 38 percent, which is much higher than the national average," Bullard’s letter states.

The competitive market is his main concern. "And, where Nebraska’s hog industry goes, the state’s cattle industry is certain to follow," he adds.