020249 Seaboard Says Farm Bill Could Kill Pork Project

Chicago - Meat company Seaboard Farms said that a $450 million pork- production project could be canceled if Washington approves a farm bill banning meatpackers from raising livestock, as the U.S. Senate version proposes.

“We would be forced to rethink all of our expansion plans as well as our existing operations,” said Seaboard Farms spokesman Gary Reckrodt, referring to the ban. “It has the potential to put that (expansion) in jeopardy.”

Seaboard Farms Inc., a unit of Seaboard Corp., is an agribusiness and transportation company based in Merriam, Kansas.

Also, Smithfield Foods Inc., the nation's largest hog and pork producer, said passage of the packer ban would jeopardize advances in food safety and quality, but would not be a significant threat to that company.

Seaboard Farms' expansion project includes a $150 million pork plant to be built near Dumas, Texas, and $300 million worth of new hog production facilities near there. The plant would double Seaboard's pork production capacity and make it about the fifth-largest U.S. pork producer, according to industry estimates.

On Wednesday, the U.S. Senate passed a $45 billion farm bill that includes a provision that would ban beef and pork packing companies from raising cattle and hogs. It is this provision that has Seaboard concerned.

Seaboard currently produces about 3 million of the 4.5 million hogs it processes each year, and most of the remaining 1.5 million are produced under contract with the company.

A House-passed farm bill does not include a ban on packers raising livestock. The two farm bills will now go to a conference committee of House and Senate negotiators, where a compromise version of the two bills will be drafted. The committee can retain or strike the packer ban language.

The packer ban is commonly called the Johnson amendment after its author, Sen. Tim Johnson, a South Dakota Democrat.

The National Pork Producers Council, the National Cattlemen's Beef Association, and the American Meat Institute oppose the Johnson amendment amid claims that it would depress cattle and hog prices when packers liquidate their livestock and it could limit producers' livestock marketing options.

Smithfield Foods has threatened to suspend investments in South Dakota, Johnson's state, if the senator's amendment becomes law.

“This amendment, if enacted, would do more to harm the American farmer than its sponsors could ever imagine,” Richard Poulson, executive vice president at Smithfield Foods, said last week. “The only packing plants that have been successfully built and operated in recent years are those that have been built by packers who own part of their livestock.”

Livestock producers who support the ban say it would give cattle and hog producers greater leverage in negotiating sales because meat packers would have to buy more livestock in the cash markets.

Plans for Seaboard's new pork plant were announced earlier this month. The facility would be capable of processing 16,000 hogs a day, the same as the company's Guymon, Oklahoma, plant, which opened in 1996.

“We would hope to be able to break ground within 10 to 12 months from now and then it would take two years from that point to flip the switch,” said Reckrodt.

The $300 million for the hog operations would include $200 million from Seaboard and the balance from investors, said Reckrodt. The hog operations would largely be in the Texas panhandle.

RETURN TO HOME PAGE

E-mail: sflanagan@sprintmail.com