In 2008, Smithfield Foods, Inc., a vertically-integrated hog producer and meat processor, which in 2007 acquired Continental Grain, and Premium Standard Farms, controlled over 34 percent of the sows owned by the twenty largest pork producers in the United States.1
Smithfield’s closest competitor has just a little more than one-third the number of sows that Smithfield owns. Between 1994 and 2007 the top twenty producers have increased the number of sows that they own by almost 310 percent from 1,010,000 to 3,125,000 sows, which constitutes over one-half of this country’s breeding herd. From 1980 to 2000 the four largest swine producers increased their total share of the hogs slaughtered in the country from approximately thirty-four percent to approximately fifty-eight percent.2
Many of these large hog producers also own feed mills and slaughterhouses, thereby controlling the entire breadth of the swine market, from breeding to slaughter to delivery of finished product to the local grocery meat counter and everything in-between. The slaughterhouses no longer employ trained union personnel. They are now using a nonunion, low-paid, often illegal immigrant labor force.
This ever-increasing concentration limits competition and the ability of the family-farmer to profitably raise pigs. The larger consolidated firms are often able to leverage costs and capture economic gains on a national and global scale, as well as through various stages of integrated operations. The smaller, independent growers, are disadvantaged because they cannot leverage their costs. In addition, since rural economies have historically relied in large part upon a vibrant and independent agriculture, increasing concentration in the food and agriculture sector is one of the reasons rural areas are struggling economically. The loss of the independent farmer means that other businesses that rely on that farmer, such as feed mills, small trucking companies, farm and home stores, etc. are hurt as well.
An example of the power wielded by the vertically-integrated hog producers: in the fourth-quarter of 1998 the price for hogs dropped to below Depression-level prices. However, the price charged for the finished pork product at the grocery store fell less than two percent from the previous quarter, enabling at least one meatpacker to generate profits four-times greater than for the same quarter in 1997. At the same time, small farmers found that they could not get enough from the sale of their hogs to pay for the cost of delivering them to market. The farmer’s share of the pork retail dollar fell as low as 12 percent in December 1998, a seventy-five percent decline from their share of the market in 1970, a time prior to the emergence of concentration in the pork industry.3
Many small producers must now resort to operating as contract-growers for the large producers. The contractor maintains ownership of the live animals, dictates to the grower the feed, the medicine, the structure in which the hogs will be raised, etc. All that the grower owns is the hog manure and any pigs that die on their watch.
1 Annual Report. “Pork Powerhouses – 2008”. Accessed April 29, 2009 at http://www.thepigsite.com/swinenews/18994/pork-commentary-pork-powerhouse.
3 Testimony of Richard J. Dove, Waterkeeper Alliance Senate Committee on Government Affairs, March 13, 2002.