Smithfield Makes Fortune’s Most Admired Companies List, World Gapes at Irony
Global pork titan Smithfield has ranked second among food production companies on Fortune magazine’s 2013 list of “Most Admired Companies”. Before we untangle how terribly strange and ironic this is, just what does “Most Admired” mean, and how was this list generated?
According to Fortune’s web site, the most admired companies list is the “definitive report card of corporate reputations”. The magazine asked executives at the world’s biggest companies to rank their peers in nine areas—everything from “investment value to social responsibility”. So the list is derived only from the opinions of an exclusive slice of the corporate world—not the public.
So let’s take this list with a grain of salt, and let’s take a look at what’s to “admire”. It makes piles of money, as the largest of the four companies that process 66% of all the hogs in the U.S. It owns more hogs than the next eight largest pork producers combined. It slaughters 26 million hogs a year. It’s the largest pork processor in the world, and economically and politically powerful. They are one of a small handful of companies pulling the strings when it comes to food policy in the U.S. and globally.
How did Smithfield become so big? Because the Department of Justice rarely finds the courage to say no to a merger. In the 70s, the company embarked on an aggressive strategy to buy out its competition. After buying up competition locally in Virginia, it honed in on the Midwest. The real turning point came in 1987, when it embarked on a partnership with Carroll’s Foods. For the first time, Smithfield was vertically integrated: they not only slaughtered the hogs; they raised them. In 1999, Smithfield bought the company outright.
As Smithfield continued to gobble up the competition, family farmers fought their quest for monopolization and the unfair contracts that accompanied their market dominance, and labor unions exposed their abhorrent labor practices from fast processing lines causing injury to intimidation (to prevent them from reporting injuries) and firings. Workers at Smithfield plants face a dangerous life on the job, even for the meatpacking industry. In the mid-2000s, Smithfield increased production of hogs at its flagship Tar Heel, North Carolina plant by 30,000 hogs a day, corresponding to a doubling of workplace injuries as line speeds increased.
And its environmental record? Atrocious. In 1997 the company received one of the largest Clean Water Act fines in U.S. history for failing to install decent pollution equipment and treat its waste. Pollutants from its operations flowed into the Chesapeake Bay and its tributaries for more than five years. The company was fined $12.6 million, which amounted to 0.035 percent of its annual sales—a mere drop in the bucket.
Smithfield has a legacy of family farm destruction, labor abuses and environmental devastation. What’s to admire about that? Either the world’s top executives are completely out of touch or this list is a shameless exercise in worshipping the bottom line, at all costs.
Maybe, it’s both.