Meat + Poultry - February 2006 - 8

Commentary

Pork's tipping point
Anyone interested in understanding
the future of North American meat and
poultry exports should pay less attention
to bovine spongiform encephalopathy
and avian influenza and more attention
to bricks and mortar. Specifically, the
bricks and mortar used to expand the
continent's pork processing capacity.
This past July, Maple Leaf Foods,
Toronto, announced it was investing
C$110 million to build a new pork plant
in Saskatoon. The new facility will replace another, older Saskatoon-based
plant. However, the new plant will have

part of Smithfield's overall plan to
spend $354 million to expand the processed meats facilities at nine locations
within the next 16 months.
The start of 2006 also saw the startup of Triumph Foods' new $130 million plant, which will be able to process
40,000 hogs per week when it reaches
full capacity. In addition, Premium
Standard Farms announced this past
month it will expand the capacity of
its Milan, Mo., plant 35 percent, from
7,400 hogs per day to 10,000.
Added together, the financial invest-

The financial investment being made in
the expansion of the North American pork
industry exceeds half a billion dollars.
the capacity to double production once
a second shift is started.
During the months of August and
September, Smithfield Foods, Inc.,
Smithfield, Va., announced numerous
plant expansion endeavors. The major projects include expansion of its
John Morrell subsidiary's Sioux Falls,
S.D., plant to the tune of $100 million.
In Sioux Center, Iowa, the company's
Farmland Foods division will invest
$81 million to expand its production
capacity. The announced projects are

ment being made in the expansion of the
North American pork industry exceeds
half a billion dollars. From a domestic
perspective, these initiatives defy logic.
Per capita consumption of pork in the
United States and Canada has remained
relatively flat for the past decade, hovering between a low of 47.9 pounds
per capita and a high of 52.7 pounds
in the United States. New product introductions have boosted consumption
slightly, but there is no evidence American or Canadian consumers are on the

verge of a mammoth pork binge.
According to the U.S. Dept. of Agriculture's Economic Research Service,
when all of the 2005 trade data are finalized, it is likely the United States will
rank as the second-largest pork exporter
in the world, after the exporters of the
European Union-25. Moreover, in each
month of 2005 for which data are available, U.S. pork exports routinely exceeded same-month 2004 totals by double-digit percentages. Suffice it to say:
in 2005 U.S. exporters shipped lots of
pork, with Japan accounting for about
40 percent of exports.
The recent reclosure of the Japanese
market to U.S. beef exports combined
with the continued spread of the avian influenza H5N1 virus around the
world and the numerous bans placed
on Brazilian meat and poultry exports
due to outbreaks of foot-and-mouth
disease improves pork's outlook
around the world and represents a rare
opportunity for North American pork
processors. With their primary competition hobbled for the near term and
possibly further into the future, pork
packers are intent on expanding their
global market share. The only thing
standing in their way is the capacity to
supply the demand.
- By Keith Nunes, Executive Editor
knunes@sosland.com

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February 2006

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Meat + Poultry - February 2006

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