December 30, 2016


Pork giant Smithfield skips middlemen in grain supply chain (Michael Hirtzer, 12/30/16, Reuters)

Smithfield Food Inc [SFII.UL], the world's biggest pork producer, is buying grain elevators and purchasing grain directly from farmers, a move that hits grain handlers already reeling from multiyear lows in corn and soybean prices.

The Virginia-based company bought two Ohio grain elevators in September. For the first time, it can ship grain directly from Ohio to feed the pigs that Smithfield slaughters at its Tar Heel, North Carolina, packing plant - the world's largest, processing about 32,000 hogs daily.

Smithfield now buys 65 percent of its animal feed directly from farmers, up from the 10 percent of feed it directly bought in 2010.

The direct buying strategy aims to lower feed costs and could provide a model for other large meat companies that still largely rely on commercial grain handlers, such as Chicago-based Archer Daniels Midland Co. Grain can account for up to 60 percent of Smithfield's costs. The company's expenses in 2015 totaled $4.67 billion.

Posted by at December 30, 2016 8:33 AM