Smithfield reports earnings
Smithfield Foods reported a dismal set of quarterly earnings last week along with 2009 fiscal year earnings, emphasizing the downturn in the pork industry.
The company reported its first net loss in 30 years: $190.3 million in the red for fiscal 2009, or $1.35 per share, on revenues of $10.45 billion. That compares with net income of $128.9 million, or 96 cents per share, on revenues of $9.6 billion for fiscal 2008. But the company’s fourth-quarter losses, at 55 cents per share, were slightly better than analysts had expected.
The consensus estimate was a loss of 60 cents per share. Animal production was the only segment of the company to lose money for the quarter. “Anything that breathed lost money,” Smithfield CFO Robert “Bo” Manly said during a conference call with analysts.
Meat industry impact
The meat industry, from packers to retailers, accounts for a total economic impact of $832.4 billion a year to the U.S. economy, equal to 5.8 percent of the nation’s gross domestic product, according to new research by the American Meat Institute. The analysis also revealed the meat and poultry industry directly employs 1.8 million people, paying $45.5 billion in wages and benefits. An estimated 524,000 people have jobs in production and packing, importing operations, sales, packaging and direct distribution of meat and poultry products. Wholesaling directly employs an estimated 63,000 people across all states, and 1,227,600 employees’ retail jobs depend on the sale of meat and poultry products to the public. The meat and poultry industry, directly and indirectly, provides nearly 6.2 million jobs, generating almost $200 billion in wages and benefits.
Food prices to moderate in 2009
Consumers will pay more for their food in 2009 than in past years, but the higher tab will be less than the jump seen at cash registers last year, a USDA economist said last week. “Prices on average at grocery stores and restaurants are predicted to increase above the historical average, but nowhere near where they were in 2008,” said Ephraim Leibtag, an economist in the food markets branch of USDA’s food economics division. The consumer price index for food is expected to rise between 3 percent and 4 percent in 2009, compared with a typical annual increase of 2 percent to 3 percent over the past decade, Leibtag said. It rose 5.5 percent in 2008. The cost of food consumed away from home is expected to rise 3.5 percent to 4.5 percent in 2009, while both beef and pork prices are projected to rise 1.5 percent to 2.5 percent, and the price of poultry is expected to increase 2 percent to 3 percent.
Company adds food industry staff
Jennie Hodgen, Ph.D., and Bob Giblin, APR, have joined Intervet/Schering-Plough Animal Health in two newly created positions established to develop the animal health company’s relationships within the food chain. Hodgen joins the animal health company as technical service specialist—meat science, and Giblin serves as manager of food industry communications.
They will support the meat industry by deepening collaboration, partnerships and communications with retail grocery, restaurant and foodservice-management companies, meat distributors and suppliers, and foodindustry organizations, policymakers and key influencers.
Beef exports fall in stagnant economy
Despite the prolonged slowdown in global economic activity, beef exports held up reasonably well in the month of April. Beef, plus beef variety meat exports declined 1.4 percent in volume and by 6 percent in value compared to last year. For the first four months of the year, beef export volume has increased 2 percent to 277,019 metric tons (610.7 million pounds), but declined slightly in value to $937 million, according to the U.S. Meat Export Federation. The beef industry is working with trade officials to gain access for U.S. beef in Taiwan that includes bone-in cuts and variety meat. The industry is also seeking relief from the 21-month age limit for cattle from which beef is eligible for export to Japan. Beef exports from four states—Illinois, Texas, Washington and Wisconsin—have also been suspended temporarily by Russia.
Farms exempt from food inspections
The House Energy and Commerce Committee last Wednesday passed the Food Safety Enhancement Act of 2009 with an amendment sought by producer groups which will exempt most producers and processors of meat, poultry and eggs. The bill, H.R. 2749, is aimed primarily at expanding the jurisdiction of the Food and Drug Administration (FDA). The amendment will allow operations already covered by the Federal Meat Inspection Act, the Poultry Products Inspection Act, and the Egg Products Inspection Act to avoid on-site inspections by FDA. The bill, passed by the committee unanimously, would give FDA authority to order food recalls, increase inspections to every six to 12 months at high-risk facilities, impose new penalties on violators, and require foreign and domestic food companies to follow food safety standards at facilities covered by the act.