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Overview

History of North Carolina Hog Farming

The hog farming industry arose in the eastern portion of North Carolina during the early 1980s and experienced unprecedented growth during the 1990s. The hog farming industry seemed to be a logical step for the farmers of the state, who were facing declining revenues from North Carolina's famed tobacco crops.

Several factors led to the explosion of the hog farming industry in North Carolina. The most important of these was the construction of the world's largest meat processing plant in 1992, located in Bladen County, NC. Today the plant employs thousands of people and processes about 8 million hogs per year. North Carolina hog production is based on a contracted system that utilizes independent farmers who specialize in specific stages that breaks hog production down into three areas that include the sow unit, the nursery unit, and the finishing unit.

The development of megafarms in the 1980s resulted in North Carolina having 211 farm locations with over 1,000 sows due to a systems approach that standardized buildings, equipment, and hog management with the objective of minimizing operating costs.
Lenient environmental regulations and local zoning exemptions provided large-scale hog farms the opportunity to construct several megafarms throughout eastern North Carolina. After several environmental disasters affected the region, legislation was enacted to curb the hog farming explosion in eastern North Carolina and promote cleaner living conditions for the residents and wildlife in the area.

Timeline of NC Hog Farmining Industry

1980 - North Carolina hog farms range between 10,000 and 25,000 hogs in size.

1985 - North Carolina ranks 7th nationally in hog production.

1991 - NC Senator Wendell Murphy co-sponsors legislation that exempts large-scale hog farms from local zoning regulations.

1992 - Smithfiled Foods, Inc opens the world's largest meat processing plant in Bladen County, NC.

1994 - NC hog population has triples to 10 million, compared to a 5% increase nationally.

1995 - North Carolina Senate passes Bill 1080, the Swine Farm Siting Act, requiring new swine houses or lagoons to be located at least 1500 feet from an occupied residence, at least 2500 feet from any school, hospital, or church; and at least 100 feet from any property boundary.

1996 - President Clinton signs the Freedom to Farm Act in an attempt to cut Federal-farming subsidies.

1997 - The Clean Water Responsibility Act, part of Bill 515, places a moratorium on the construction of farms with more than 250 hogs or the expansion of existing large farms in the State of North Carolina.

1999 - Hurricane Floyd hits North Carolina, flooding hog waste lagoons and contaminating the water supply.

2003 - NC Gov. Mike Easley successfully calls for a four-year extension of the moratorium on the construction of hog farms in eastern North Carolina.

Major Industry Players

Over the last two decades, the hog farming industry has seen a tremendous shift towards consolidation. In 1985, the top four pork-producing companies in the United States accounted for 32% of the market. By 1998, industry consolidation had resulted in the top four pork-producing companies controlling 62% of the market.

Leading the way in the hog farming industry are vast corporations that utilize vertical integration to maintain quality and oversee all aspects in production. The leading pork packing companies own thousands of sows themselves, have contracts with other hog farmers to raise even more sows, and have direct contracts with most of the other hog packers. As a result of the consolidation within the hog farming industry, five major vertically integrated pork-producing companies have emerged as industry leaders.

Top 5 American Pork Producers

Company Name Market Share Percentage
   
Smithfield 26%
Tyson/IBP 17%
Swift(ConAgra) 11%
Cargill/Excel 8%
Hormel 8%


Smithfield Foods, a Fortune 500 company, is the top pork producer in the United States as well as in the entire world. Through the acquisition of such competitors as Farmland Foods, Murphy Farms, and Carroll's Foods, Smithfield has unprecedented ability to produce over 11 million hogs annually. In addition to its production capabilities, Smithfield operates the world's largest processing plant in Bladen County, NC, which has the capability of slaughtering over 40,000 hogs of the 80,000 hogs Smithfield slaughters every day.

Tyson Foods, the leading chicken producer in the United States, entered the pork-producing industry in a big way when it purchased the country's number two pork producer IBP, in 2001. The acquisition of IBP made Tyson the leading meat producer in the world.

 

Swift & Company, a division of ConAgra Foods, is the nation's third largest pork producing company with an 11% market share. The majority of the company's operations are centered in the Midwest, where its successful Armour brand is produced.

The Excel Corporation, a subsidiary of Cargill Foods, has an 8% share of the market. Excel has been in the pork-producing industry since 1987 and produces over 2 million hogs per year.

Hormel Foods, the fifth leading pork producer in the United States, is based in Austin, MN and has over 15,500 employees.

 

Top Hog Farming Companies in North Carolina

North Carolina is the second leading hog producer in the United States, behind Iowa, with a hog population of over 10 million. The industry has seen a hog population explosion since 1992, when North Carolina's hog population totaled about 2 million. The majority of the hog industry in the state is located in the Southeastern region of North Carolina, particularly in the counties of Duplin, Sampson, Bladen, and Robeson.

The hog industry in the state of North Carolina is dominated by three major companies, one of which is the leading pork producing company in the world. The three leading pork-producing companies in North Carolina are Smithfield Foods, Prestage Farms, and Premium Standard Farms.

Smithfield Foods, the world leader in pork production and a Fortune 500 company, dominates the North Carolina hog farming industry. The Virginia-based company produces over 11 million hogs annually with the majority of those sows being raised and processed in the state of North Carolina. Through its strategy of vertical integration, Smithfield is has been able to contract North Carolina hog farmers to raise its sows until they are ready to be processed in its meat packaging facility located in Bladen County, NC, which is the largest of its kind in the world.

Prestage Farms, based in Clinton, NC, was founded in 1983 and produces over 123,000 sows that result in about 450 million pounds of pork annually. The company employs over 1,000 people and has over 700 contracts with farmers to raise their sows. All of the sows produced by Prestage Farms are sold to Smithfield Foods.

Premium Standard Farms, a Missouri based company, produces about 1.9 million hogs per year in North Carolina in farms are primarily located in Duplin, Greene, Pitt and Sampson counties. The company has over 200 contracts with North Carolina farmers to raise their hogs. An 800,000 square foot processing plant located in Clinton, NC, processes over 9.1 million hogs annually for Premium Standard Farms and employs approximately 1,200 people.

Information courtesy of:

Article on North Carolina Hog Farming by Chris Hunt and Kelly Zering http://www.ag.uiuc.edu/archives/experts/swine/1215.html

The Fayetteville Observer -- http://www.fayettevillenc.com/
Major newspaper in the heart of North Carolina's hog farming region.

Oligopoly Watch --http://www.oligopolywatch.com/2003/12/28.html
An article on the consolidation occuring within the hog farming industry.



© 2004. last updated: April 28, 2004
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