meat industry flyin high in profits

[Guest guest]

Hog Futures

How the meat industry thrives, even as costs rise

By Tom Philpott

13 Sep 2007

 

Note: This is the second installment of a two-column series on global trends in

agriculture. The first was on U.S. fruit and vegetable farming.

 

When corn prices spiked last fall, things looked dire for industrial meat

processors.

 

These enormous companies thrive by confining (or contracting with farmers to

confine) livestock into tightly packed quarters and stuffing them with corn.

Pricier corn -- in this case, pushed up by the government-backed surge in

ethanol production -- seemed to translate to lower profits for the industrial

meat giants. On cue, Big Meat executives like Tyson's Richard Bond complained

bitterly about the end of cheap corn.

 

 

Corn prices? We're swine with it.

Photo: iStockphotoI, for one, looked forward to a slowdown in one of the globe's

most environmentally destructive industries. (As the U.N.'s Food and Agriculture

Organization pointed out last fall, feedlot meat production spews more

greenhouse gases even than automobile use.)

 

If nothing else useful came out of the ethanol boom, I thought to myself, at

least industrial meat would take a hard hit. But a funny thing has happened on

the way to my industrial-meat schadenfreude: the meat titans are shaking off

higher corn prices and thriving. And now I'm the one complaining bitterly.

 

Smithfield Foods, the world's largest pork processor and among the largest beef

and poultry producers, recently reported that its earnings for the May to July

2007 quarter more than doubled over the same period a year ago.

 

Its rival Tyson -- the world's largest chicken producer, and a leader in pork

and beef -- also reported what analysts hailed as a " stellar " quarter, handily

exceeding Wall Street's performance expectations.

 

What happened?

 

No Bones About It

 

For one thing, Smithfield and Tyson have managed to raise meat prices, forcing

consumers to carry the costs of pricier corn. As the investment site Motley Fool

put it, " It's been relatively easy for Tyson to push price increases through to

its customers [i.e., large food retailers like Wal-Mart], who in turn have

pushed through food inflation to consumers. "

 

The second factor propping up the meat giants is that they have entered what

seems like the early stages of a long-term export boom: They're swamping Eastern

Europe and parts of Asia with U.S.-raised meat. In the most recent quarter,

Tyson increased its export sales by nearly a third. Smithfield, meanwhile,

reported a jump in operating profit for its international unit -- and promptly

announced a sizable sale of U.S.-grown pork to China.

 

Note the contrast to the plight of large-scale U.S. vegetable farmers, which I

laid out in the previous Victual Reality. Like meat processors, vegetable

farmers have also seen the price of a key input rise: in their case, labor costs

are up because of a crackdown on undocumented workers.

 

But unlike meat processors, vegetable growers can't easily pass higher costs

onto the big buyers like Wal-Mart and other food retailing giants. Those buyers

can simply reject pricier U.S.-grown goods and buy produce from other countries

where labor costs are lower, such as Mexico and China.

 

Meat is a different story. Whereas thousands of U.S. vegetable farmers compete

among themselves and foreign rivals for space in Wal-Mart's produce section, a

precious few companies control the meat trade. Just two companies -- Smithfield

and Tyson -- process 43 percent of pork consumed in the U.S. Their three largest

competitors, Swift, Cargill, and Hormel, have together sewn up another 27

percent of the pork market. When players this big experience higher costs, not

even a giant like Wal-Mart can say no to higher prices.

 

Moreover, while U.S. vegetable farmers rightly fear cheap imports from foreign

competitors, the opposite holds true with meat. The U.N.'s Food and Agriculture

Organization projects that U.S. producers will " dominate " the growing global

pork market over the next decade. By 2016, the FAO predicts, nearly one of every

three pounds of pork traded globally will originate in the U.S. The FAO also

expects the nation's beef and poultry production to thrive in the global market.

 

The lowly state of the U.S. dollar -- widely projected to remain weak over the

next decade -- explains part of the power of the U.S. meat-exporting machine. A

weaker dollar makes our exports cheaper, and thus more competitive, overseas.

 

But an even more important factor, I think, is that our huge and highly

consolidated meat giants have managed to establish classic " Third World " labor

and environmental conditions right here in the United States.

 

 

Have You Seen the Little Piggies?

 

In Iowa, the nation's leading pork-producing state, confined-hog operations

churn out 50 million tons of excrement each year, the great bulk of which

festers in massive lagoons, belching putrid fumes into surrounding communities

and leaking into groundwater. In Hardin County, where I visited this summer,

18,000 residents live amid more than a million confined hogs and hundreds of

manure lagoons. The county's once-teeming creeks and waterways have become dead

zones, and an eye-stinging stench hangs in the air. It reminds you who benefits

from the arrangement -- not the remaining residents or the hogs, but rather the

confinement owners and the companies they work for under contract: Smithfield

and its few meat-packing peers.

 

In North Carolina, the No. 2 hog-producing state, similar conditions hold sway.

And there, just as in the " Third World, " the poor pay dearest for highly

profitable environmental banditry. According to a University of North Carolina

study, " There are 18.9 times as many hog operations in the highest quintile of

poverty as compared to the lowest. " People of color get it worst of all: " The

excess of hog operations is greatest in areas with both high poverty and high

percentage non-whites. "

 

Labor conditions, too, resemble those that might hold sway under a miserable

dictatorship run by blinkered elites in thrall to foreign investors. In 2005,

Human Rights Watch issued a blistering report on labor issues in U.S.

slaughterhouses. " Meat-packing is the most dangerous factory job in America, "

the report declared. " Dangerous conditions are cheaper for companies -- and the

government does next to nothing. " The report also documents meat-packers' heroic

efforts to squash unions.

 

Indeed, in its anti-unionism, the meat industry takes a hint from practices used

during the 1980s-era heyday of death squads in Central America. Speaking of a

Smithfield plant in North Carolina, one Salvadoran worker told Human Rights

Watch that, " The company has armed police walking around the plant to intimidate

us ... It's especially frightening for those of us from Central America. Where

we come from, the police shoot trade unionists. "

 

Thus, it turns out, it will take much more than pricy corn to cut down the U.S.

industrial-meat behemoth. Global demand for meat is rising, and U.S. producers

are well positioned to dominate the market. But why let the U.S. become manure

lagoon to the world?

 

Without access to exploitable labor and comically lax environmental codes, the

industrial-meat complex would surely wither away -- and the world would be a

better place. What can ordinary citizens do? Rejecting industrial meat is a

necessary but insufficient step. Efforts to organize meat-packing workers

deserve broad public support, as does the movement to force the industry to take

responsibility for the extraordinary environmental costs now being borne by

people who live near its feedlots.

 

 

Grist contributing writer Tom Philpott farms and cooks at Maverick Farms, a

sustainable-agriculture nonprofit and small farm in the Blue Ridge Mountains of

North Carolina.

 

 

I never thought about the universe, it made me feel small

Never thought about the problems of this planet at all

Global warming, radio-active sites

Imperialistic wrongs and animal rights! No!

Why think of all the bad things when life is so good?

Why help with an 'am' when there's always a 'could'?

Let the whales worry about the poisons in the sea

Outside of California, it's foreign policy

I don't want changes, I have no reactions

Your dilemmas are my distractions

I never looked around, never second-guessed

Then I read some Howard Zinn now I'm always depressed

And now I can't sleep from years of apathy

All because I read a little Noam Chomsky

I'm eating vegetation, 'cause of Fast Food Nation

I'm wearing uncomfortable shoes 'cause of globalization

I'm watching Michael Moore expose the awful truth

I'm listening to Public Enemy and Reagan Youth

I see no world peace 'cause of zealous armed forces

I eat no breath-mints 'cause they're from de-hoofed horses

[Guest guest]

Fraggle, where'd this article come from?fraggle <EBbrewpunx wrote: Hog FuturesHow the meat industry thrives, even as costs riseBy Tom Philpott 13 Sep 2007Note: This is the second installment of a two-column series on global trends in agriculture. The first was on U.S. fruit and vegetable farming.When corn prices spiked last fall, things looked dire for industrial meat processors.These enormous companies thrive by confining (or contracting with farmers to confine) livestock into tightly packed quarters

and stuffing them with corn. Pricier corn -- in this case, pushed up by the government-backed surge in ethanol production -- seemed to translate to lower profits for the industrial meat giants. On cue, Big Meat executives like Tyson's Richard Bond complained bitterly about the end of cheap corn.Corn prices? We're swine with it.Photo: iStockphotoI, for one, looked forward to a slowdown in one of the globe's most environmentally destructive industries. (As the U.N.'s Food and Agriculture Organization pointed out last fall, feedlot meat production spews more greenhouse gases even than automobile use.)If nothing else useful came out of the ethanol boom, I thought to myself, at least industrial meat would take a hard hit. But a funny thing has happened on the way to my industrial-meat schadenfreude: the meat titans are shaking off higher corn prices and thriving. And now I'm the one complaining bitterly. Smithfield Foods, the world's largest pork

processor and among the largest beef and poultry producers, recently reported that its earnings for the May to July 2007 quarter more than doubled over the same period a year ago. Its rival Tyson -- the world's largest chicken producer, and a leader in pork and beef -- also reported what analysts hailed as a "stellar" quarter, handily exceeding Wall Street's performance expectations. What happened?No Bones About ItFor one thing, Smithfield and Tyson have managed to raise meat prices, forcing consumers to carry the costs of pricier corn. As the investment site Motley Fool put it, "It's been relatively easy for Tyson to push price increases through to its customers [i.e., large food retailers like Wal-Mart], who in turn have pushed through food inflation to consumers."The second factor propping up the meat giants is that they have entered what seems like the early stages of a long-term export boom: They're swamping Eastern Europe and

parts of Asia with U.S.-raised meat. In the most recent quarter, Tyson increased its export sales by nearly a third. Smithfield, meanwhile, reported a jump in operating profit for its international unit -- and promptly announced a sizable sale of U.S.-grown pork to China. Note the contrast to the plight of large-scale U.S. vegetable farmers, which I laid out in the previous Victual Reality. Like meat processors, vegetable farmers have also seen the price of a key input rise: in their case, labor costs are up because of a crackdown on undocumented workers.But unlike meat processors, vegetable growers can't easily pass higher costs onto the big buyers like Wal-Mart and other food retailing giants. Those buyers can simply reject pricier U.S.-grown goods and buy produce from other countries where labor costs are lower, such as Mexico and China. Meat is a different story. Whereas thousands of U.S. vegetable farmers compete among themselves and foreign

rivals for space in Wal-Mart's produce section, a precious few companies control the meat trade. Just two companies -- Smithfield and Tyson -- process 43 percent of pork consumed in the U.S. Their three largest competitors, Swift, Cargill, and Hormel, have together sewn up another 27 percent of the pork market. When players this big experience higher costs, not even a giant like Wal-Mart can say no to higher prices. Moreover, while U.S. vegetable farmers rightly fear cheap imports from foreign competitors, the opposite holds true with meat. The U.N.'s Food and Agriculture Organization projects that U.S. producers will "dominate" the growing global pork market over the next decade. By 2016, the FAO predicts, nearly one of every three pounds of pork traded globally will originate in the U.S. The FAO also expects the nation's beef and poultry production to thrive in the global market. The lowly state of the U.S. dollar -- widely projected to remain weak over

the next decade -- explains part of the power of the U.S. meat-exporting machine. A weaker dollar makes our exports cheaper, and thus more competitive, overseas. But an even more important factor, I think, is that our huge and highly consolidated meat giants have managed to establish classic "Third World" labor and environmental conditions right here in the United States.Have You Seen the Little Piggies? In Iowa, the nation's leading pork-producing state, confined-hog operations churn out 50 million tons of excrement each year, the great bulk of which festers in massive lagoons, belching putrid fumes into surrounding communities and leaking into groundwater. In Hardin County, where I visited this summer, 18,000 residents live amid more than a million confined hogs and hundreds of manure lagoons. The county's once-teeming creeks and waterways have become dead zones, and an eye-stinging stench hangs in the air. It reminds you who benefits from the

arrangement -- not the remaining residents or the hogs, but rather the confinement owners and the companies they work for under contract: Smithfield and its few meat-packing peers. In North Carolina, the No. 2 hog-producing state, similar conditions hold sway. And there, just as in the "Third World," the poor pay dearest for highly profitable environmental banditry. According to a University of North Carolina study, "There are 18.9 times as many hog operations in the highest quintile of poverty as compared to the lowest." People of color get it worst of all: "The excess of hog operations is greatest in areas with both high poverty and high percentage non-whites."Labor conditions, too, resemble those that might hold sway under a miserable dictatorship run by blinkered elites in thrall to foreign investors. In 2005, Human Rights Watch issued a blistering report on labor issues in U.S. slaughterhouses. "Meat-packing is the most dangerous factory job in

America," the report declared. "Dangerous conditions are cheaper for companies -- and the government does next to nothing." The report also documents meat-packers' heroic efforts to squash unions. Indeed, in its anti-unionism, the meat industry takes a hint from practices used during the 1980s-era heyday of death squads in Central America. Speaking of a Smithfield plant in North Carolina, one Salvadoran worker told Human Rights Watch that, "The company has armed police walking around the plant to intimidate us ... It's especially frightening for those of us from Central America. Where we come from, the police shoot trade unionists." Thus, it turns out, it will take much more than pricy corn to cut down the U.S. industrial-meat behemoth. Global demand for meat is rising, and U.S. producers are well positioned to dominate the market. But why let the U.S. become manure lagoon to the world?Without access to exploitable labor and comically lax

environmental codes, the industrial-meat complex would surely wither away -- and the world would be a better place. What can ordinary citizens do? Rejecting industrial meat is a necessary but insufficient step. Efforts to organize meat-packing workers deserve broad public support, as does the movement to force the industry to take responsibility for the extraordinary environmental costs now being borne by people who live near its feedlots.Grist contributing writer Tom Philpott farms and cooks at Maverick Farms, a sustainable-agriculture nonprofit and small farm in the Blue Ridge Mountains of North Carolina. I never thought about the universe, it made me feel smallNever thought about the problems of this planet at allGlobal warming, radio-active sitesImperialistic wrongs and animal rights! No!Why think of all the bad things when life is so good?Why help with an 'am' when there's always a 'could'?Let the whales worry about the

poisons in the seaOutside of California, it's foreign policyI don't want changes, I have no reactionsYour dilemmas are my distractionsI never looked around, never second-guessedThen I read some Howard Zinn now I'm always depressedAnd now I can't sleep from years of apathyAll because I read a little Noam ChomskyI'm eating vegetation, 'cause of Fast Food NationI'm wearing uncomfortable shoes 'cause of globalizationI'm watching Michael Moore expose the awful truthI'm listening to Public Enemy and Reagan YouthI see no world peace 'cause of zealous armed forcesI eat no breath-mints 'cause they're from de-hoofed horses

Shape in your own image. Join our Network Research Panel today!

[Guest guest]

i magically fraggled it up

nah..Grist

 

"Tracy H." Sep 13, 2007 11:37 AM Re: meat industry flyin high in profits

 

 

 

Fraggle, where'd this article come from?fraggle <EBbrewpunx (AT) earthlink (DOT) net> wrote:

 

Hog FuturesHow the meat industry thrives, even as costs riseBy Tom Philpott 13 Sep 2007Note: This is the second installment of a two-column series on global trends in agriculture. The first was on U.S. fruit and vegetable farming.When corn prices spiked last fall, things looked dire for industrial meat processors.These enormous companies thrive by confining (or contracting with farmers to confine) livestock into tightly packed quarters and stuffing them with corn. Pricier corn -- in this case, pushed up by the government-backed surge in ethanol production -- seemed to translate to lower profits for the industrial meat giants. On cue, Big Meat executives like Tyson's Richard Bond complained bitterly about the end of cheap corn.Corn prices? We're swine with it.Photo: iStockphotoI, for one, looked forward to a slowdown in one of the globe's most environmentally destructive industries. (As the U.N.'s Food and Agriculture Organization pointed out last fall, feedlot meat production spews more greenhouse gases even than automobile use.)If nothing else useful came out of the ethanol boom, I thought to myself, at least industrial meat would take a hard hit. But a funny thing has happened on the way to my industrial-meat schadenfreude: the meat titans are shaking off higher corn prices and thriving. And now I'm the one complaining bitterly. Smithfield Foods, the world's largest pork processor and among the largest beef and poultry producers, recently reported that its earnings for the May to July 2007 quarter more than doubled over the same period a year ago. Its rival Tyson -- the world's largest chicken producer, and a leader in pork and beef -- also reported what analysts hailed as a "stellar" quarter, handily exceeding Wall Street's performance expectations. What happened?No Bones About ItFor one thing, Smithfield and Tyson have managed to raise meat prices, forcing consumers to carry the costs of pricier corn. As the investment site Motley Fool put it, "It's been relatively easy for Tyson to push price increases through to its customers [i.e., large food retailers like Wal-Mart], who in turn have pushed through food inflation to consumers."The second factor propping up the meat giants is that they have entered what seems like the early stages of a long-term export boom: They're swamping Eastern Europe and parts of Asia with U.S.-raised meat. In the most recent quarter, Tyson increased its export sales by nearly a third. Smithfield, meanwhile, reported a jump in operating profit for its international unit -- and promptly announced a sizable sale of U.S.-grown pork to China. Note the contrast to the plight of large-scale U.S. vegetable farmers, which I laid out in the previous Victual Reality. Like meat processors, vegetable farmers have also seen the price of a key input rise: in their case, labor costs are up because of a crackdown on undocumented workers.But unlike meat processors, vegetable growers can't easily pass higher costs onto the big buyers like Wal-Mart and other food retailing giants. Those buyers can simply reject pricier U.S.-grown goods and buy produce from other countries where labor costs are lower, such as Mexico and China. Meat is a different story. Whereas thousands of U.S. vegetable farmers compete among themselves and foreign rivals for space in Wal-Mart's produce section, a precious few companies control the meat trade. Just two companies -- Smithfield and Tyson -- process 43 percent of pork consumed in the U.S. Their three largest competitors, Swift, Cargill, and Hormel, have together sewn up another 27 percent of the pork market. When players this big experience higher costs, not even a giant like Wal-Mart can say no to higher prices. Moreover, while U.S. vegetable farmers rightly fear cheap imports from foreign competitors, the opposite holds true with meat. The U.N.'s Food and Agriculture Organization projects that U.S. producers will "dominate" the growing global pork market over the next decade. By 2016, the FAO predicts, nearly one of every three pounds of pork traded globally will originate in the U.S. The FAO also expects the nation's beef and poultry production to thrive in the global market. The lowly state of the U.S. dollar -- widely projected to remain weak over the next decade -- explains part of the power of the U.S. meat-exporting machine. A weaker dollar makes our exports cheaper, and thus more competitive, overseas. But an even more important factor, I think, is that our huge and highly consolidated meat giants have managed to establish classic "Third World" labor and environmental conditions right here in the United States.Have You Seen the Little Piggies? In Iowa, the nation's leading pork-producing state, confined-hog operations churn out 50 million tons of excrement each year, the great bulk of which festers in massive lagoons, belching putrid fumes into surrounding communities and leaking into groundwater. In Hardin County, where I visited this summer, 18,000 residents live amid more than a million confined hogs and hundreds of manure lagoons. The county's once-teeming creeks and waterways have become dead zones, and an eye-stinging stench hangs in the air. It reminds you who benefits from the arrangement -- not the remaining residents or the hogs, but rather the confinement owners and the companies they work for under contract: Smithfield and its few meat-packing peers. In North Carolina, the No. 2 hog-producing state, similar conditions hold sway. And there, just as in the "Third World," the poor pay dearest for highly profitable environmental banditry. According to a University of North Carolina study, "There are 18.9 times as many hog operations in the highest quintile of poverty as compared to the lowest." People of color get it worst of all: "The excess of hog operations is greatest in areas with both high poverty and high percentage non-whites."Labor conditions, too, resemble those that might hold sway under a miserable dictatorship run by blinkered elites in thrall to foreign investors. In 2005, Human Rights Watch issued a blistering report on labor issues in U.S. slaughterhouses. "Meat-packing is the most dangerous factory job in America," the report declared. "Dangerous conditions are cheaper for companies -- and the government does next to nothing." The report also documents meat-packers' heroic efforts to squash unions. Indeed, in its anti-unionism, the meat industry takes a hint from practices used during the 1980s-era heyday of death squads in Central America. Speaking of a Smithfield plant in North Carolina, one Salvadoran worker told Human Rights Watch that, "The company has armed police walking around the plant to intimidate us ... It's especially frightening for those of us from Central America. Where we come from, the police shoot trade unionists." Thus, it turns out, it will take much more than pricy corn to cut down the U.S. industrial-meat behemoth. Global demand for meat is rising, and U.S. producers are well positioned to dominate the market. But why let the U.S. become manure lagoon to the world?Without access to exploitable labor and comically lax environmental codes, the industrial-meat complex would surely wither away -- and the world would be a better place. What can ordinary citizens do? Rejecting industrial meat is a necessary but insufficient step. Efforts to organize meat-packing workers deserve broad public support, as does the movement to force the industry to take responsibility for the extraordinary environmental costs now being borne by people who live near its feedlots.Grist contributing writer Tom Philpott farms and cooks at Maverick Farms, a sustainable-agriculture nonprofit and small farm in the Blue Ridge Mountains of North Carolina. I never thought about the universe, it made me feel smallNever thought about the problems of this planet at allGlobal warming, radio-active sitesImperialistic wrongs and animal rights! No!Why think of all the bad things when life is so good?Why help with an 'am' when there's always a 'could'?Let the whales worry about the poisons in the seaOutside of California, it's foreign policyI don't want changes, I have no reactionsYour dilemmas are my distractionsI never looked around, never second-guessedThen I read some Howard Zinn now I'm always depressedAnd now I can't sleep from years of apathyAll because I read a little Noam ChomskyI'm eating vegetation, 'cause of Fast Food NationI'm wearing uncomfortable shoes 'cause of globalizationI'm watching Michael Moore expose the awful truthI'm listening to Public Enemy and Reagan YouthI see no world peace 'cause of zealous armed forcesI eat no breath-mints 'cause they're from de-hoofed horses

 

 

Shape in your own image. Join our Network Research Panel today!

 

 

 

I never thought about the universe, it made me feel small

Never thought about the problems of this planet at all

Global warming, radio-active sites

Imperialistic wrongs and animal rights! No!

Why think of all the bad things when life is so good?

Why help with an 'am' when there's always a 'could'?

Let the whales worry about the poisons in the sea

Outside of California, it's foreign policy

I don't want changes, I have no reactions

Your dilemmas are my distractions

I never looked around, never second-guessed

Then I read some Howard Zinn now I'm always depressed

And now I can't sleep from years of apathy

All because I read a little Noam Chomsky

I'm eating vegetation, 'cause of Fast Food Nation

I'm wearing uncomfortable shoes 'cause of globalization

I'm watching Michael Moore expose the awful truth

I'm listening to Public Enemy and Reagan Youth

I see no world peace 'cause of zealous armed forces

I eat no breath-mints 'cause they're from de-hoofed horses