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Pork Powerhouses® 2018: Ramping Up

The 40 largest pork producers in the U.S. keep growing despite trade wars, lawsuits, disease threats, and falling markets.

A plague of locusts is about the only thing that hasn’t afflicted the swine industry this year, but if you were wondering whether the largest producers are selling sows and closing farms in light of the challenges, don’t hold your breath.

The exclusive Pork Powerhouses® ranking of the 40 largest pig producers in the U.S. shows that 192,980 sows were added in the past year. That brings the total to more than 4.2 million sows, or two thirds of the breeding herd in the U.S. (Download the table with specific sow numbers here.)

What these biggest companies do affects every pork producer in the country, as well as farmers who provide billions of bushels of grain and oilseeds to feed the pigs, so let’s take a look at who is moving and shaking and what issues are of highest concern. Keep in mind that every sow number in the report was provided directly to me by the company itself. I have been collecting sow numbers for this annual report in Successful Farming magazine every year since 1994.

Takeaways

Of the top 40 producers, 22 added sows, 13 stayed the same, and five decreased. One thing unusual this year is that no new companies entered the list and no companies fell off the list since last year. That has never happened in 24 years. The ranking shuffled around a notch or two this year for some farms, but the players remained the same.

If I had to predict, that won’t be the case by next summer. Take a look back to 1998, right after the period of fastest expansion in the industry and right before the bottom fell out of the hog market. The Pork Powerhouses list that year included 50 names, 35 of which no longer exist today. The physical farms are still in production for the most part, but they are owned by someone else.

“This is an interesting time to be in agriculture,” says Jimmy Tosh, owner of Tosh Farms, Henry, Tennessee (#30 on the list with 32,400 sows). “I am afraid these markets, both grain and meat, we have spent a lifetime cultivating will be hard to regain.” Tosh added a 7,500-sow unit this year while liquidating two older 600-sow units. “We have only stocked the 7,500 at a little more than 50% because of the tariffs and market situation,” he says. “We also need to catch up on weaned barn construction.” 

Myrl Mortenson, president of The Hanor Company (#12 with 100,000 sows), sums up the situation. “This hog business is going to be a three- to four-year slugfest. We will see how well it turns out.” Hanor, now based in Enid, Oklahoma, built two new 6,000-sow farms in the past year.

Biggest growth

The eight companies adding the most sows this year, in order, are Smithfield Foods (adding 40,000), Iowa Select Farms (28,000), The Hanor Company (20,000), AMVC Management Services (18,000), Tyson Foods (16,000), Seaboard Foods (15,000), Pipestone System (11,000), and Reicks View Family (10,000).

The increase for Smithfield (#1 with 950,000 sows), based in Smithfield, Virginia, and owned by the Chinese company WH Group, is due to adding more sows in inventory across the board to make sure the company’s processing plants have pigs, as well as expansion associated with the January 2017 acquisition of Clougherty Packing (Farmer John). Smithfield added about 13,000 sows in Mexico this past year, for 148,000 total. Sow numbers in Poland and Romania for Smithfield are steady to a bit less than last year, totaling about 147,000 sows. Worldwide, Smithfield has more than 1.2 million sows.

Smithfield leaders would not comment on the record this year due to legal issues. Three nuisance lawsuit verdicts, for nearly $100 million total, went against Smithfield Foods in eastern North Carolina between May and August this year. “These lawsuits are an outrageous attack on animal agriculture, rural North Carolina, and thousands of independent family farmers who own and operate contract farms,” said Keira Lombardo, senior vice president of corporate affairs, in a statement.

In August, Smithfield Foods parent WH Group reported worse-than-expected results for the first half of the year, saying its U.S. operation suffered from trade tensions between the U.S. and China.

Trade concerns were a constant theme for all the Pork Powerhouses this year. Pig farmers have borne the brunt of trade retaliation, says National Pork Producers Council (NPPC) president Jim Heimerl, owner of Heimerl Farms (#40 with 21,000 sows), Johnstown, Ohio.

According to an estimate from Iowa State University economists, an initial 25% Chinese tariff on U.S. pork was the main cause of hog futures dropping by $18 per pig from March through May. In June, Mexico imposed a 10% tariff on U.S. pork, and in July, it increased the duty to 20%. China imposed another 25% tariff. “We can’t afford to take another hit,” says Heimerl. “If we do, a lot of farmers could go out of business, and consumers will pay a lot more for food.”

Smithfield barn under construction

These sow barns under construction in Oklahoma by Smithfield Foods are replacing old barns destroyed by fire.

New plants

The second-largest producer, Seaboard Foods (#2 with 340,000 sows), has added 123,000 sows in the past three years, but the majority, about 100,000 sows, has been by acquisition, says Stephen Summerlin, senior vice president of operations. The company has been expanding rapidly to supply the new Seaboard Triumph Foods processing plant that opened last fall in Sioux City, Iowa. That plant will add a second shift in mid-October, says Mark Campbell, president and CEO of Seaboard Triumph. The company is owned equally by Seaboard Foods and Triumph Foods. At full two-shift capacity, the facility will process 21,000 market hogs daily.

Triumph Foods is owned by five independent pork producers, all large enough to make the Pork Powerhouses ranking. The largest, Christensen Farms (#9 with 142,500), Sleepy Eye, Minnesota, did not grow in the past year. The second largest, Allied Producers’ Cooperative (#11 with 102,500 sows), headquartered in Westside, Iowa, grew by 8,500 sows.

The cooperative’s sow number in the ranking does not include its largest member, Livingston Enterprises (#31 with 32,200 sows), Fairbury, Nebraska, which is large enough to be listed separately on the Pork Powerhouses list. Other large members of Allied include the Kramer family in Seneca, Kansas, with 15,000 sows; brothers Jerry and Stephen Cox in northern Kansas with 12,000 sows; and Grandview Farms in Eldridge, Iowa, with 11,500 sows.

Tom Dittmer owns Grandview Farms and is anxiously waiting for the second shift of the new Seaboard Triumph plant. “We need to get that up and going,” he says. “The industry will kill 2.6 million hogs for six weeks straight this fall. No if, ands, or buts about it – we have to get that going. The weak point is finding help. That’s a problem across the country. We can’t find workers, and it’s not just agriculture.”

Prestage Farms (#6 with 182,300 sows), Clinton, North Carolina, added 7,300 sows. The company has been ramping up to fill a new pork processing plant it is building near Eagle Grove, Iowa. The time line for the plant opening has been delayed slightly. Initial “shake down” production begins in December, with commercial processing beginning in January, says Jere Null, COO of Prestage Foods of Iowa. 

Clemens Food Group (#15 with 66,330 sows), a 123-year old pork processor in Hatfield, Pennsylvania, opened a new pork plant in Coldwater, Michigan, last year. Clemens partnered with 12 Midwest producers to supply hogs to the plant, including six on the Pork Powerhouses ranking. The company would like to double-shift the Michigan plant in three to five years, says CEO Doug Clemens, and is looking for additional production partners “who share our principles of ethics, integrity, and stewardship.”

New packing plants coming on line or adding a second shift means a reshuffling of where pigs go as long-term contracts expire. Established packers like Tyson, JBS, and Smithfield lost some pigs to other packers, and are adding sows to make up some of the production.

Tyson Foods (#14 with 80,000 sows) added 16,000 sows this year, and those are new farms, says Jeremy Dickinson, vice president and general manager.

Iowa Select Farms (#4 with 235,000 sows), Iowa Falls, Iowa, supplies JBS and Tyson. The company added 28,000 sows in the past year. “Two years ago, we had 165,000 sows, so we’ve been steadily growing,” says Jen Sorenson, communications director. “We are growing in northern, southern, and western Iowa, in areas that are more biosecure with not as many other pigs around.” Iowa Select has 45 sow farms and contracts with hundreds of farmers for finishing. “As we grow our sow base, we are also growing our finisher base,” she says. “It offers a great opportunity to farmers who want to diversify their operation and to farmers who need the fertility.”

Pipestone makes a move

In August, Hormel Foods (#39 on the ranking with 23,500 sows), Austin, Minnesota, sold its old pork processing plant in Fremont, Nebraska, to WholeStone Farms, which is owned by some of the same farmers who own Pipestone System (#3 with 251,000 sows), Pipestone, Minnesota. The transaction is expected to be completed in December and includes a multiyear agreement to supply pork to Hormel.

“The strategic decision to transition the Fremont facility to WholeStone Farms reflects the long-term, changing dynamics in the pork industry,” says Jim Snee, president and CEO at Hormel Foods. Hormel had 63,000 sows in 2007 and is 40,000 less than that today, as it sells off production assets and transitions to a branded food company.

The purchase of the Fremont plant “aligns with our vision to create and capture value in the pork supply chain for the 220 independent producers who own WholeStone Farms,” says Luke Minion, chairman of the board of directors of WholeStone Farms. Minion is also CEO of Pipestone System. The sow growth for Pipestone this year is mostly new growth – two new 5,000-sow farms.

Another veterinary-managed system, AMVC Management Services (#10 with 135,500 sows), Audubon, Iowa, added 18,000 sows this year. That includes 5,000 in new growth. “The rest of our growth is farms already in existence but new management for AMVC,” says Daryl Olsen, an owner and senior veterinarian.

Feed companies are also represented on the Pork Powerhouses ranking. Standard Nutrition (#22 with 54,000 sows), headquartered in Omaha, Nebraska, acquired Kerber Milling in February, and is now basing the swine segment of its business, called Standard Nutrition Services, LLC, at Kerber’s Emmetsburg, Iowa, office. A 5,200-sow farm in Nebraska opened in the past year, with a 5,000-sow project in South Dakota in the final stages of planning, says Pat Joyce, president of Standard Nutrition Services.

In Canada, the five largest pork producers added 29,000 sows in the past year. Olymel, based in Saint-Hyacinthe, Quebec, added 22,000 of those, for 106,000 total. “The increases, similar to last year, were the result of expansion, acquisitions, and partnerships,” says Casey Smit, vice president of production.

Other large producers

Companies that just fell off the Top 40 list include:

  • Ernest Smith Farms / Garland Farm Supply, Garland, North Carolina: 20,000 sows
  • N.G. Purvis Farms, Robbins, North Carolina: 20,000 sows (4,000 more than last year) 
  • Dykhuis Farms, Holland, Michigan: 19,000 sows 
  • New Horizon Farms, Pipestone, Minnesota: 16,500 sows 
  • Hitch Pork Producers, Guymon, Oklahoma: 15,500 sows 
  • Belstra Milling Company, DeMotte, Indiana: 14,000 sows, with a new 5,000-sow farm opening soon 
  • In Canada: Sunterra/Sunhaven Farms, Acme, Alberta: 32,000 sows

Uncertainty

The largest drop in sows on the Pork Powerhouses list this year is The Maschhoffs (#5 with 204,000 sows), with 14,000 fewer sows than one year ago. “That is down some from previous years, as we continue to focus on improved production efficiency,” explains chairman of the board Ken Maschhoff. “We built a brand new sow farm this year and exited others. We continue to make investments in infrastructure such as truck washes, genetic centers, and feed mill improvements. Our current heavy focus is on adding team members and geneticists around our state-of-the-art proprietary genetics program.”

“Uncertainty” is how one North Carolina producer described the theme for Pork Powerhouses this year. He ticked off every concern he saw at the moment: Low prices with too many pigs coming to market before new packing plants get rolling full speed, trade wars and tariffs, African swine fever abroad, continued PRRS and PED at home, nuisance lawsuits that could spill over to other farms, flooded farms from hurricane Florence. Should he go on? Oh, yes, the largest concern of all: Labor. In fact, when I asked these largest producers what was their number one concern in 2018, it wasn’t any of the front-page issues. It was labor.

“We have sow farms near the new Prestage plant,” says Sorenson. “We are very concerned about labor and housing and making sure our farms are fully staffed."

Predictions

Here are a few predictions from the Pork Powerhouses for the next six months to a year:

  1. The uncertainty in the industry will slow growth in 2019. Producers are now burning up equity.
  2. One or two old packing plants will shut down once the new Seaboard Triumph and Prestage plants double-shift.
  3. The spread of African swine fever (ASF) in China could mean China needs to import more pork, which would benefit the U.S..
  4. If ASF reaches the U.S., probably through feed ingredients, the result could be total disaster for the pork industry.
  5. Many owners and leaders of these large companies are close to retirement age. It is a time of transition, but it’s not that easy to sell large operations. Who’s going to buy them? More Asian companies could purchase U.S. pork producers. One sniffing around is Charoen Pokphand Foods, Bangkok, Thailand.
  6. Filling jobs in the pig business will get even more difficult.
  7. Nuisance lawsuits, like those filed against Smithfield Foods in North Carolina, will increase and spread to other states.

“We are all just working hard and trying to survive the trade wars, and hoping the second-shift opening at the Seaboard Triumph plant happens soon, as well as the new Prestage plant,” says Mike Brandherm, general manager of Hitch Pork Producers.

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Email: betsy.freese@meredith.com

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