WASHINGTON, June 3, 2015 – Followers of an amorphous “food movement” eagerly anticipate the coming end of “factory farms” and modern “big food” production and processing. But consumers and investors aren’t getting the foodies’ message: Five large U.S. meat and poultry processors, just within the past three weeks, have made investments and acquisitions with a total worth of nearly $2 billion.
The companies have announced plans to build a $264-million pork processing plant in Iowa, a $44.8-million sausage factory in North Carolina, and the start of construction this month on a $139 million poultry complex in North Carolina. The past week also saw the $400 million purchase of a U.S.-owned poultry operation in Mexico and the $775 million sale of a leading processor of “natural” meat products such as hot dogs, bacon and delicatessen meat.
Kansas-based Seaboard Foods and producer-owned Triumph Foods of Missouri created a joint venture to complete a new pork processing facility in Sioux City, Iowa, by July 2017. It aims to slaughter about 3 million market hogs annually and employ about 1,100 workers. Seaboard will market and sell the plant’s products, as it currently does for Triumph’s St. Joseph, Missouri, plant. Together, the integrated companies are the second largest hog producer behind Smithfield Foods.
Virginia-based Smithfield, a subsidiary of China’s WH Group Ltd., said May 27 that it has created a joint venture with Kansas City Sausage LLC to build a $44.8 million, 90,000-square-foot, sausage plant in Sampson County, North Carolina. The project is expected to create 177 new jobs and produce 50 million pounds of pork sausage annually, killing 700-1,000 sows a day.
Mississippi-based poultry producer Sanderson Farms said last week that it expects to obtain permits to allow construction to start this month on a new $139 million hatchery, processing plant and waste water treatment facility in St. Pauls, North Carolina, its second in the state. The new operation is to have the capacity to process about 500 million pounds of chicken annually.
Additionally, Pilgrim’s Pride and Tyson Foods just announced that Mexican regulators have approved Pilgrim’s Pride purchase of Tyson de México’s three packing plants and related facilities in a deal valued at $400 million. Pilgrim’s, a subsidiary of Brazil’s JBS, ranks second to Tyson, of Springdale, Arkansas, in chicken production. Tyson said that it will supply its customers in Mexico with U.S.-produced chicken through a co-packaging arrangement with Pilgrim’s Pride.
In the largest investment of the five, Hormel Foods of Minnesota, the maker of Spam and the second largest U.S. turkey processor (Jennie-O), will spend $775 million to acquire Applegate Farms, which claims to be the No. 1 “natural” and organic prepared meats brand. Applegate, with 2015 annual sales expected to be about $340 million, will operate autonomously as a standalone subsidiary and remain in Bridgewater, New Jersey. “A growing number of consumers are choosing natural and organic products,” said Hormel CEO Jeffrey M. Ettinger. “This deal will allow us to expand the breadth of our protein offerings to provide consumers more choice.”
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