Smithfield Foods Acquires 15.2
Percent Interest in Spanish Pork Processor
February 4, 2004
Smithfield Foods, Inc. today announced the purchase of 8,008,294 shares
of Campofrio Alimentacion, S.A., for approximately $87.8 million. The
shares, representing 15.2 percent of Campofrio's outstanding share
capital, were acquired in a privately-negotiated transaction from a
single shareholder. Campofrio is the largest meat processor in Spain
and one of Europe's largest diversified meat processors, with estimated
annual sales of about euro 1 billion ($1.25 billion). The company has
not yet reported its 2003 annual results.
Primarily a processor of pork and further processed pork products,
Campofrio is the market leader in Spain and has operations in Portugal,
Russia, Poland, Romania and France, and exports to over 40 countries.
Smithfield acquired the Campofrio shares at a discount of approximately
14.83 percent to yesterday's closing price on the Spanish Stock
Exchange. About 26 percent of the company's shares are traded on the
Spanish Stock Exchange. Most of the remaining shares are owned by the
founding Ballve family and its affiliates.
"This transaction provides a strategic partner to develop synergies
with our operations in France and Poland to exploit many attractive
opportunities in Europe and Eastern Europe," said Joseph W. Luter, III,
Smithfield's chairman and chief executive officer. "As there is
limited overlap among our operations, this opens new markets to Smithfield.
We are attracted to Campofrio because the company is well-managed and has
Additionally, Campofrio recently completed a major restructuring and, in
our opinion, has considerable potential to increase profitability in 2004
Spain is the second-largest pork producing country in the European Union
and the market is growing. Spain has the highest annual per capita
consumption of meat protein in Europe, with pork representing more than 50
Hog production and pork processing costs in Spain are very competitive.
With annualized sales of $9 billion, Smithfield Foods is the leading
processor and marketer of fresh pork and processed meats in the United
States, as well as the largest producer of hogs. For more information,
please visit www.smithfieldfoods.com.
This news release may contain "forward-looking" information
within the meaning of the federal securities laws. The forward-looking
information may include statements concerning the company's outlook for the
future, as well as other statements of beliefs, future plans and strategies
or anticipated events, and similar expressions concerning matters that are
not historical facts. The forward-looking information and statements are
subject to risks and uncertainties that could cause actual results to differ
materially from those expressed in, or implied by, the statements. These
risks and uncertainties include availability and prices of livestock, raw
materials and supplies, livestock costs, livestock disease, food
safety, product pricing, the competitive environment and related market
conditions, ability to make and successfully integrate acquisitions,
operating efficiencies, access to capital, the cost of compliance with
environmental and health standards, adverse results from ongoing litigation
and actions of domestic and foreign governments.
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Smithfield's Invasion of
December 30, 2003
Fields covered with faeces, children vomiting at school, plastic
bins stuffed full of dead pigs. Robert Kennedy and Tracy Worcester
experience firsthand the reality of life in Smithfield’s Poland.
Ignoring Smithfield’s ‘no entry’ sign, we
clambered over wire barriers and wrenched open the ventilation shaft of one
of three vast concrete and corrugated iron sheds. The noise was deafening.
Five thousand squealing pigs were crammed into strawless compartments inside
the recently opened pig factory near the town of Szczecinek in the
northwestern Polish province Zachodnio-Pomorskie.
Back outside, effluent from cement cesspits had over-flowed – sending a
small stream of brown, stinking liquid into the lake below, which had then
frozen over. In a large plastic bin we found 20 dead pigs. When we’d
looked the night before, it had been empty.
It seems that the entire operation is illegal. During the communist era, the
state farm had employed 44 locals. Officials told us that Prima (a Polish
company now owned by Smithfield) had only been given a permit to renovate
the derelict farm on condition it guaranteed 15 local jobs. Instead, no
locals were employed and 5,000 pigs arrived in the dead of night. Villagers
only grasped what had happened when the company began illegally dumping
liquid faeces on the snow-covered fields.
People were angry and frightened, but village and township officials told us
they were powerless to defend their community as the local government had
taken Prima’s side.
‘If you had informed us of Smithfield’s record six months earlier,’
they told us, ‘we would have refused all permits and prevented Prima from
gaining a foothold.’ Now they could only ask for our help in challenging
the company on environmental grounds.
A few miles north we visited Prima’s factory farm at Nielep, where 30,000
pigs are confined. We were met at the compound gate by a tall man in a
surgical face mask. Removing the mask, he identified himself as the manager
and demanded that we kept away. Responding to our questions about animal
welfare, he claimed that although there was no bedding for the pigs, the
factory had all the appropriate permits and required number of employees.
However, he refused to say exactly how many pigs were impounded, how many
died each day or what mix of chemicals were pumped into them. Admitting that
he had been taken to Smithfield installations in North Carolina for
training, he mouthed the standard company line: ‘Our local and national
opponents are selfishly concerned with animal welfare instead of feeding the
In a nearby village, a meeting had been convened for local farmers and
authorities to hear Tom Garrett of the animal rights advocacy group the
Animal Welfare Institute (AWI) describe Smithfield’s record in the US.
People sat in stunned silence as they tried to grasp the impending
destruction of their livelihoods and community.
When Garrett had finished, the audience erupted. Many demanded that the
local authorities in Poland take control of the country’s former state
farms and give tenancies to former employees rather than foreign
transnationals. Desperate and angry, one old lady confirmed what we had
already seen: ‘The company has been spreading effluent over snow-covered
fields,’ she explained. ‘People have developed rashes and stomach
upsets.’ The stench from the effluent had caused vomiting, which
threatened the closure of the local schooland the destruction of local
businesses. To raucous applause, a local politician declared: ‘Smithfield
must be kicked out.’
This same cry is now being heard all over Poland, with locals signing
petitions and farmers forming blockades to get Smithfield out. Across the
provincial border from Zachodnio-Pomorskie is Wieckowice, a beautiful
village of brick and wooden homes, shrines and long stone barns in the
region of Wielkopolska. There we found several dozen local activists
carrying signs outside a former state farm owned by Smithfield’s Polish
subsidiary Animex. The facility has permits for only 500 cows and 500 pigs.
It has been reported that it houses 17,000 pigs. The farm is 40 yards from
an elementary school where residents say their children get sick and vomit
because of the pig odours.
Among the protesters was Irena Kowalak, a dignified woman who served as
village mayor for 35 years. She told us she had resigned recently because of
intimidation by Smithfield. Andrzej
Nowakowski is the governor of Wielkopolska. Nowakowski said that the local
population was unanimously and adamantly opposed to Smithfield and that he
refused to give the company permits when it bought the farm two years ago.
But six months later Poland’s environment ministry overrode him.
Nonetheless, thanks to the governor, Smithfield has not been able to get
permits for liquid manure. So the farm uses straw bedding and has not yet
devised a plan for disposing of its waste. Fields of wheat surround the pig
barns, but they are never harvested because Smithfield is not interested in
agriculture. To Smithfield, these fields are a place to dump the notorious
wastes of industrial meat production.
A convoy of indignant Wieckowice residents took us out to see the giant pile
of pig manure. On the side of a 1,000-acre wheat field was a mountain of pig
waste 150 metres long, four metres high and 50 metres wide. ‘Seventeen
thousand pigs for six months,’ a young man said, nodding at the pile.
Local authorities have been ordering Smithfield to move the illegal pile for
six months, but the company has refused. The night before our visit
Smithfield covered its pile with a giant black tarpaulin, which was already
inflated and writhing with the internal pressure of methane gas.
Half a mile downhill from the pile, villagers had created a public beach on
a 1,500-acre lake where umbrellas shaded dozens of families swimming and
playing on a steamy 90º day. Manure residues festered on the shores of a
nearby bay into which Smithfield’s waste pile drains. An old man with
twinkling blue eyes stuck his hand into the water, smelled his fingers and
offered us a whiff. ‘Smithfield Foods,’ he announced.
Governor Nowakowski told us that there is another Smithfield factory, in
Sedziny, that has 4,500 pigs but a permit for only 1,000 cows. He said his
assistants were now inspecting the facility. ‘But,’ he explained, ‘the
legislation is very difficult for the local government to enforce [without
state support].’ Unfortunately, the federal government is not supporting
the Wielkopolska authorities.
Nowakowski is not the only local politician begging for federal help. Zofia
Wilczynska is a deputy in the Sejm, the lower houes of Poland’s national
parliament. Wilczynska has complained to the federal government that a
Smithfield operation in Polczyn Zdroj is endangering the northern Polish
town’s 400-year-old health spa. Right over by Poland’s northeastern
border with the Russian Federation enclave of Kaliningrad (former East
Prussia) another health spa, in Goldap, is also threatened by pollution and
odours from a Smithfield site.
The day after our visit to Wieckowice, a member of a parliamentary
agriculture committee told us that the Polish government had recently
conducted an investigation of 16 Smithfield farms (14 owned by the
corporation and two owned by front groups it controlled). The agricultural
ministry found that every one of the farms had broken Poland’s veterinary,
health and construction laws. Yet when Smithfield lacks proper permits, or
is caught breaking the law, it is fined, laughably, just a few hundred
Sometimes Smithfield just buys officials off. A hundred miles north of
Wieckowice, the mayor of the Western Pomeranian village Wierzchowo gave
Smithfield permits for two enormous farms after the company paid his wife
approximately $4,000 to perform the environmental impact assessment.
Local communities devastated
The economic impacts of Smithfield’s production methods are devastating
local communities and markets. When Smithfield took over Animex, the
latter’s three principal farms near Goldap employed 60 employees.
Following the farms’ conversion to automated pig factories, only seven of
these workers remain.
Smithfield says it wants to produce 6 million pigs in Poland each year.
Polish peasants currently rear 20 million pigs per year, and a quarter of
them will have to lose their livelihoods to make way for Smithfield. The
corporation is already squeezing the small farms. In Western Pomerania we
found that the region’s small slaughterhouses had already been closed, and
that the remaining Smithfield-owned slaughterhouse would not slaughter pigs
from small farms. The same will soon apply to the rest of Poland. Once
Smithfield controls the slaughterhouses and has eliminated local markets, it
will be able to control prices and, ultimately, the farms.
Avoiding the monoculture in Poland
Instead of reinventing itself to mimic the failed systems in Europe and the
US, Poland should celebrate its assets and sell them to the world. Polish
meat tastes much better than factory meat. Polish sausage is world famous.
Consumers like knowing that their meat is from animals that were humanely
raised in ways that are good for the environment, supportive of family
farms, and free of dangerous hormones, antibiotics and chemicals. But all
these things make quality meat more expensive than factory meat. And when
the consumer sees free-range pork that does not look much different to a
Smithfield cut, they will choose the cheaper product. The answer is
When Europe opens its markets to Poland, the Poles should establish a market
for their produce by using branding to draw attention to their traditional
values. The AWI has offered the Polish government to help brand the
country’s pork internationally. The institute specialises in helping small
farmers by finding consumers who are willing to pay a premium for produce
that is healthy and raised humanely and without the use of antibiotics and
Anybody who pays a premium for Polish meat will be getting a good deal. Some
of the meat and sausage that we gorged on in Poland was among the best
we’ve tasted. Pork of the kind produced by traditional Polish farms is
widely recognised to be tastier and juicier than confinement pork of the
sort produced by Smithfield.
If Poland is going to flourish rather than flounder, the nation needs to
recognise its enormous strengths and start believing in itself. The words
‘produced in Poland’ should become a standard for high quality. This is
no easy challenge. But the easy way out, signing a contract with Smithfield,
is not the solution.
A LAST BASTION OF TRADITION IN POLAND
Poland is an oasis of traditional farming in a world dominated by
agribusiness multinationals. Around 2 million Poles, about 18 per cent of
the country’s population, are farmers or members of farming families.
That’s as many as the rest of central Europe put together.
The Polish landscape is not yet marked by the vast monocultures of row crops
that are typical of the US. Currently, Poland is a country of picturesque
farm villages, with farms that average five hectares and modest homes of
wood, timber and fieldstone. Typically, each farmer has a horse, a couple of
cows and some pigs and chickens. Animals are raised free range and humanely.
And Polish farmers rotate a variety of crops in the traditional way that
fosters healthy soils.
Many Polish farmhouses still have occupied stork nests on their roofs. The
country hosts 25 per cent of the world’s white stork population – some
50,000 pairs. – more than the whole of western Europe combined. Elsewhere
in the continent the bird has been exterminated by modern agriculture
practices: liquid manure and pesticides effectively wipe out the fish,
frogs, crabs and insects that storks eat. In Denmark, for example, there are
only six pairs left.
Poland has large stands of timber as well as the last sanctuaries of
European bison and Europe’s last clean-flowing unregulated rivers. It has
purer soils than anywhere else in Europe. Its land is uncontaminated by
pesticide and fertiliser residue and almost entirely free of the heavy
metals caused by industrial smokestack pollution throughout the rest of
SMITHFIELD’S TASTELESS ENTERPRISE
Millions of years of natural selection have endowed pigs with back fat to
regulate their body temperature. But Smithfield gets more money from meat
than from fat, so the company has bred its own strain of super-lean pigs
with almost no back fat. They are highly-strung and unable to survive normal
Food professionals say this extreme leanness has dramatically diminished the
quality of US pork. Food magazine Saveur described the pigs of modern
confinement agriculture as being so skinny that they look ‘like
dachshunds’. While applauding traditional farming methods of the kind used
in Poland, The New York Times Magazine stated: ‘The pork industry has
managed to engineer a pig with almost no fat at all. And this is why most
modern recipes for pork involve some kind of liquid – putting the meat in
a marinade before cooking, basting it while cooking or braising it in broth.
If you simply grill a mass-market pork chop, it becomes inedibly dry.’ The
Times went on to say that free-range pork ‘is rich when sliced and sautéed,
fine textured and robust in flavour. It needs nothing more than seasoning
with salt’. The dryness and poor taste of confinement pork have become so
bad that many major pork companies are now ‘enhancing’ their pork:
adding water, flavoured liquids, or even stock to their tray-pack and
prepared meats, and using red food colouring to improve its drab appearance.
FINANCING THE SLAUGHTER
Financial institutions like the European Bank for Reconstruction and
Development (EBRD) use EU taxpayers’ money to subsidise companies like
Smithfield. The result? Small farmers disappear, food quality deteriorates,
animal welfare suffers. Although it claims to be ‘environmentally
sensitive’, the EBRD has joined with the Polish banks BRE and Rabobank
Polska to provide a $100m loan to Smithfield’s Polish subsidiary Animex.
The EBRD’s ‘project summary’ states: ‘Follow-up investigations of [EBRD]
environmental staff and discussion with Smithfield management responsible
for such issues demonstrated that the [Animex] facilities comply with the
national requirements for environment, health and safety.’ Yet the
evidence suggests that the EBRD is consciously and deliberately backing a
corporate takeover of Polish agriculture. The bank’s press releases and
‘transition impact’ statements are full of talk about ‘restructuring
Poland’s agribusiness and food industry’. The EBRD refers, for example,
to the ‘restructuring of the meat-processing sector’ and ‘the
consolidation of the agribusiness sector’.
The reality is that Poland, like the rest of the modern world, is about to
bury an ancient culture based on community living, family and land
stewardship for the benefit of future generations. As Tom Garrett of the
Animal Welfare Institute has lamented: 'There is no salvation to be found in
industrial agriculture owned and controlled by foreign multinational
corporations. There is only damage.'
For more information about the EBRD’s involvement in Poland:
HOW TO BYPASS SMITHFIELD PRODUCTS
As Smithfield buys local companies to front their operations, it is
difficult to trace its products. The surest way of avoiding them is not to
buy from supermarkets but to buy organic or locally produced pork from local
butchers or farmers’ markets instead. To find information about local
producers, visit: www.localfood.org.uk or www.bigbarn.org.uk.
In the UK Smithfield’s pork products are marketed under the brand name PEK.
However, it is more than likely that Smithfield meat is also ending up in
mass-produced products like pizzas. So, while not buying PEK-branded
products is good, not buying anything containing non-organic pork is better.
Contribute to or join the AWI (www.awionline.org/membership); it is the only
humane organisation fighting the cruelty of pig factory farming in Poland.
But the International Coalition to Protect the Polish Countryside is also
doing important work. See its website at www.icppc.sfo.pl.
Robert Kennedy Jr is the president of the Waterkeeper Alliance, an
international grassroots coalition dedicated to protecting water systems
from pollution; Tracy Worcester is the associate director of the
International Society for Ecology and Culture (www.isec.org.uk ), a
non-profit organisation that aims to protect cultural and biological
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