HOGGING THE PROFITS - Foodopoly: The Battle Over the Future of Food and Farming in America - page 105

1970s, “Iowa had tens of thousands of independent hog producers.” But now, he said, “that market has
been ruined. . . . It basically no longer exists.” Peterson explained:
Out in the countryside you had them calling you on days they needed hogs. And I remember times when I was
planting corn or whatever and, my gosh, I don't want to really sell hogs today, you know. But then the packers
start calling, and you play them against each other. And lo and behold, there comes a time when you shut the
planter off and you make an extra $5 or $10 a hog. You load up a load of hogs. And I tell you what, one thing
we've been trying to do for years that I stand for, if we want to solve this problem: ban packers from owning
livestock. 13
The pork industry, along with the rest of the meat industry, went into high gear lobbying vociferously
against the rule. They used all of the economic and political power they had in Washington, D.C., to pres-
sure the Obama administration into capitulating, including running strident ads in cities that Secretary of
Agriculture Tom Vilsack visited, saying that the rule would kill jobs. 14
A number of meat-related trade associations, including the National Pork Producers Council, which is
heavily influenced by packers like Smithfield, hired an agribusiness-friendly economics consulting firm to
report on the “economic impacts analysis” for use in their lobbying campaign. Their analysis supported the
assertion that the pork industry would experience $69 million in upfront impacts, $79 million in ongoing
impacts, and $259 million in indirect costs. The reason given for these losses: if GIPSA required changes
in marketing agreements and contracts. 15
Unfortunately, the industry won this round. And Smithfield was one of the big winners.
As the largest of the four corporations that together control 66 percent of the U.S. hog market, Smith-
field is politically and economically powerful. 16 It is also the largest hog producer and processor in the
world, and each year it slaughters approximately 26 million hogs; company-owned farms produce 16 mil-
lion of the animals it slaughters. 17 Smithfield now owns more hogs than the next eight largest pork pro-
ducers combined (among them Tyson Foods, the giant poultry multinational; JBS/Swift, the largest beef
packing corporation; and Excel, a processor of beef, pork, and prepared meats). 18
The company's roots are in the small town of Smithfield, Virginia, where in 1936 Joseph W. Luter and
his son Joseph W. Luter Jr. opened the first packing plant. Joseph Luter III sold the firm in 1969 to develop
a ski resort in Virginia, but Smithfield was failing by the mid-1970s and management lured Luter to rejoin
the company. 19
Under Luter, the company went through what in corporate speak is called “a thorough business reor-
ganization,” 20 which consisted of buying out other investors' shares, firing managers, and embarking on a
high-speed growth plan centered on gobbling up other meat companies. In 1978, Smithfield purchased a
plant in Kinston, North Carolina, and by 1981, when it bought out local rival and longtime pork compet-
itor Gwaltney of Smithfield, it had doubled in size. Next Smithfield expanded into the Midwest, when it
bought the Wisconsin-based company Patrick Cudahy. Baltimore-based Esskay was purchased two years
later. But the real turning point came in 1987, when Luter launched a fifty-fifty partnership with the then
fifth-largest pork producer, Carroll's Foods. Now, Smithfield was not just slaughtering hogs but also rais-
ing them.
By the 1990s, Smithfield had become truly vertically integrated, controlling the hogs from birth all the
way through processing, and even controlling their genes. Luter made an exclusive deal with the British
firm National Pig Development Company to develop a “genetically perfect” pig that was lean and easy to
process. 21 Today Smithfield owns several specific genetic lines of hogs. The company is known as Smith-
field Premium Genetics, and it markets the genetically manipulated products under the label Smithfield
Lean Generation Pork.