Smithfield Foods recently closed three pork packing plants in the upper Midwest after one worker died from the coronavirus and hundreds of others tested positive. However, the pork processing giant waited nearly three weeks after the first worker tested positive to close the largest of these, a plant in Sioux Falls, South Dakota, which processes 5 percent of US pork. By the time the company eventually agreed to close the facility — at the urging of the city’s mayor — there were 644 cases among employees and those connected to them, accounting for 55 percent of the state’s total cases and making the plant the country’s single largest “hot spot.”
In the big picture, US hog farmers are raising far more hogs than needed to supply all of Americans’ pork needs, largely because many of those animals are actually bound for China. The potential profits are so great that Smithfield retooled its plants last summer — including the one in Sioux Falls — to produce pork products for Chinese export. In the following months, the company tripled its shipments to China, where the hog industry has been devastated by the African swine flu. Even with tariffs levied on imports from the US, the Chinese hog shortage has bumped pork prices four to six times higher than in the US.
So for the moment, the US has more hogs than we can eat, but our meatpacking plants — which turn pigs into pork chops and bacon — are so concentrated that, with recent closures, we may not be able to process it all. Almost 45 pork processing plants have closed since 1993, but the remaining plants are processing many more hogs than before: the US went from processing 1.9 million a week in 2000 to 2.4 million in 2018. At the Sioux Falls Smithfield plant, production has increased 10-13 percent annually for the last five years. And nationwide, two-thirds of hog slaughter is controlled by just four companies: Smithfield, JBS, Tyson and Cargill.
Watchdogs have warned for years that consolidating all this capacity into fewer plants increases the chance of shock if something happens at one of those plants. Sure enough, just three of the pork plants now shuttered due to coronavirus outbreaks together account for a whopping 10 percent of the nation’s pork supply.
The trend towards increased pork production and consolidation did not happen by accident. US farm policy has long supported ever-growing operations, and the pork industry, like all major commodities, has poured vast sums into growing pork production and consumption. They do this through a mandatory fee, called a checkoff, paid by the farmer every time a hog is sold. The funds go to the National Pork Board (NPB), who uses them for research, education, and promotion.
“Pork. The other white meat,” was developed by NPB to tout the lean cuts of modern hog breeds, and remains a recognizable slogan even after being retired a decade ago. Results of promotional spending can be immediate: in 2003, the checkoff spent $1.1 million on retail promotion; in the following year, stores sold 16 percent more pork products. From 2010 to 2017, US pork consumption grew more than 8 percent, while exports grew by one-third, as a result of NPB promotional activity. In the last year, those exports have just kept growing, especially to China.
Checkoff funds are not legally allowed to be spent on political lobbying, but another entity, the National Pork Producers Council (NPPC), works closely with NPB to advance a political agenda for the pork industry. A 2015 Politico investigation found that NPB pays a $3 million annual fee to NPPC to license the now-retired “the other white meat” slogan, which may simply be a way of using checkoff revenues to fund NPPC’s lobbying.
Who Benefits from Consolidation?
There were already more hogs in production at the beginning of the year than meatpackers were going to be able to handle, even before the beginning of the global pandemic. The prices farmers are paid for hogs started 2020 lower than their five-year average, but the supply bottlenecks caused by closed packing plants have hit hard. Fears about a growing oversupply of hogs have sent farmer prices this week lower than in years, with no bottom in sight. Most regions of the country have just one processing facility; with these plants closed or slowing production, producers are left to weigh the costs of euthanizing some of their hogs as the animals grow larger than appropriate slaughter weight.
Meanwhile, the processing bottlenecks could also cause longer-term price hikes for supermarket shoppers as supplies temporarily tighten. As farmer prices fall and consumer prices rise, it is the middleman — the big meatpackers like Smithfield — who will benefit, even though it is the consolidation of their facilities that is causing the problem.
Small farmers are frustrated. Minnesota farmer Paul Sobocinski sold his hogs to the John Morrell Company, the previous owners of the Sioux Falls packing plant, for 30 years. When Smithfield bought the plant, they stopped buying from small producers. Sobocinski now raises hogs for Niman Ranch and is an organizer with Land Stewardship Project, which worked closely with MRCC on the 2000 anti-checkoff referendum.
“As the meat industry has become consolidated to an unimaginable scale, companies like Smithfield have gained unprecedented power,” he said in a statement. “Now, a single meat processor can be the only game in town for hundreds of miles. When that plant shuts down, either temporarily or permanently, the negative repercussions start in rural communities and extend to your local grocery store.”