Focus on the future to improve the meatpacking industry
By Alan Guebert, Farm and Food File
via Farm and Dairy - February 18, 2021
Forty years ago, two editors at Successful Farming magazine, Gene Johnston and Dean Houghton, won most major ag journalism awards with a story titled Who will kill the hogs?
The piece (not available online) tracked a new, potent shift just beginning to hit the 600,000 hog farmers in the U.S.: Local meatpackers were being squeezed for hogs and markets by other, aggressive packers that were buying competitors to shutter them and build new, huge, highly-efficient slaughtering plants.
The story was a clanging bell that a sector-rattling shakeout was underway and few had any idea of who would be left standing when the bloodletting was over.
We, of course, now know; what’s left is a handful of massive packers and not enough hog farmers to fill a university basketball arena.
In truth, we knew this within 10 years of the magazine story. By the early 1990s, major stockyards like Omaha, Kansas City and Chicago were faltering as packers moved to buy hogs “direct” from growers rather than the more costly stockyard “commission houses.”
That new strategy was made easier since 400,000 hog farmers had exited the business in just the previous decade.
In the mid-1990s, this column and other publications pointed to how the now-powerful packers had integrated hog production into their business model to lock-in ready supplies and consistent quality in their 24/7/365 search for efficiency and profit.
By the early 2000s, with the takeover of pork now complete, the packers began to buy each other. For example, in 2001, Tyson Foods, principally a poultry integrator, bought the big beef packer IBP for $ $3.2 billion.
Again, none of this occurred in the dark. Every step in the long process happened in plain view of government regulators who either blessed these unions outright or ordered minor conditions for the deals to be approved.
Obama administration ...
Focus on future ...