Mega-merger proposed by top two U.S. hog producers

By Melissa Elliott

The U.S. Department of Agriculture has urged the Justice Department to take a close look at a proposed merger between Smithfield Foods and Murphy Family Farms—both massive pork producers that are number one and number two in production numbers respectively.

This merger will bring the number of Smithfield’s sows to 700,000—four times as many as its closest competitor, Continental Grain.

In another announcement in late September Smithfield said that it will also acquire Tyson Foods hog production operations. Tyson owns 110,000 sows.

In a letter to U.S. Attorney General Janet Reno, Agriculture Secretary Dan Glickman pointed out that the American hog industry has experienced dramatic changes in the production and marketing of live hogs, “marked by the spread of industrial hog operations.”

In 1988, 3.1 percent of the hog operations had inventories of more than 1,000 hogs. Ten years later 36.1 percent of operations had more than 1,000 hogs.

Smithfield’s acquisition of Murphy and Tyson would mean that Smithfield would control as much as 17 percent of the nation’s sows.

Smithfild acquired Carroll Farms in May. All of these consolidations occur at the same time as a dramatic decline in the spot market for live hogs dropping from 90 percent in 1993 to about 40 percent in 1999 according to the USDA.