Smithfield to buy John Morrell in effort to widen market share
Smithfield, Va.-based Smithfield Foods Inc. has agreed to purchase John Morrell & Co. from its parent firm, Cincinnati-based Chiquita Brands International Inc.
The price is $58 million-$33 million in Smithfield common stock shares and $25 million in cash. The deal is expected to be completed by Dec. 31.
John Morrell produces fresh pork and processed meats under seven brand names. It has five plants in the Midwest, slaughters about 30,000 hogs a day, and had sales of $1.4 billion in fiscal year 1994.
"Smithfield's acquisition of John Morrell will create a new national meat processor," noted Joseph W. Luter, Smithfield chairman and CEO. "The combination of the two companies will create synergies in procurement, marketing and sales."
Luter estimated that a Smithfield-John Morrell combination could create sales of more than $3 billion.
Smithfield, a hog producer, pork processor, and fresh pork and processed meats marketer, already has a significant presence in the mid-Atlantic and Southeast regions of the United States. The purchase of John Morrell would allow the company to establish a presence in the Midwest and other parts of the nation.
IBP examination of FDL Foods can't help workers keep jobs
IBP inc. has signed a letter of intent to study the possibility of buying Dubuque, Iowa-based FDL Foods Inc. However, the move did not prevent FDL from laying off 925 workers in its fresh pork operations on Sept. 29.
"It gives IBP an opportunity to study the feasibility of purchasing the company," Gary Mickelson, spokesman for Dakota City, Neb.-based IBP told Meat Marketing & Technology.
IBP officials were not sure how long it would take to make a decision, or whether the laid off workers would be rehired if the company did buy the plant, Mickelson noted.
IBP is interested in the plant's processing operation, a part of the industry where it has limited presence.
"We believe it could be an excellent addition to IBP," Mickelson said. "It will add value to our fresh pork through processing and cooking."
Earlier, Kansas City, Mo.-based Farmland Foods Inc. withdrew from negotiations to buy the plant at the behest of company's board of directors.
FDL Foods, which had sales of $387 million in fiscal year 1994, announced in August that it would close its kill, cutting and by-product areas, as well as the stockyards, if no buyer for the plant was found because its largest customer, Dubuque Foods Inc., was no longer purchasing fresh pork products. Dubuque is still purchasing processed meat products from FDL.
New group gets first CEO
A lifelong cattleman has been named as the first CEO of the National Cattlemen's Beef Association (NCBA).
Charles P. Schroeder, executive vice president and director of development for the University of Nebraska Foundation, was named to be lead the fledgling organization by its transition executive committee.
NCBA is the new organization that is forming out of the merger of the National Cattlemen's Association and the National Live Stock & Meat Board.
Schroeder was selected from a field of more than 200 candidates. At the $350 million University of Nebraska Foundation, he has coordinated fund-raising events for the university's four campuses. Schroeder is also a principal in the Schroeder Cattle Co., a ranching, feeding and farming operation in southwest Nebraska.
He was found to be "a man with a track record for getting results, an effective leader with a sense of direction, and committed to the beef industry," according to the transition team.
Schroeder said of the industry: "A dynamic and profitable beef industry, which concentrates resources around a unified plan, consistently meets consumer needs and increases market share."
Schroeder stressed that his first duties as the new CEO will be to listen, learn and lead a staff and volunteer organization "toward a powerful consensus around the vision statement."
"With that consensus, we can most effectively make the decisions, take the actions necessary to implement the long-range plan, and make a difference on the leverage points spelled out in the plan," he said.
NCBA is scheduled to begin operations Feb. 1, assuming it is approved by NCA at its annual convention in January. That move is considered to be a formality.
The new organization will bring together for the first time membership and check-off efforts under a single plan and budget.
Pork programs going to NPPC
When the National Live Stock & Meat Board voted to merge into the new National Cattlemen's Beef Association, it sounded a death knell for the Pork Industry Group.
However, programs previously conducted by the group will remain alive and well. They are being transferred to the National Pork Producers Council.
"[NLS&MB] programs have been successful, but I have confidence in NPPC and the pork industry that they will not let these programs get lost in the transition," said Kent Gansebom, Pork Industry Group chairman.
Pork Industry Group directors will remain in their current positions through the end of the year, then will be placed on NPPC committees.
Teams have been assigned to ensure a smooth transfer, which is expected to be completed by Dec. 31.
'Dirty Dozen'-not the movie-rips hot dogs as carcinogenic
Lee Marvin might not be around anymore, but the "Dirty Dozen" is.
Only this Dirty Dozen did not attack the Germans in World War II like the 1965 movie starring Marvin did. This Dirty Dozen has attacked everyday items, including frankfurters.
A consumer watchdog group said that Oscar Mayer Foods Corp.'s beef frankfurters were one of 12 products that contain a "wide-range of carcinogenic and other toxic ingredients and contaminants to which most [consumers] are exposed daily." Carcinogen is any substance that produces cancer.
The Dirty Dozen, a group that includes Ajax cleanser, Clairol Hair Dye and Lysol disinfectant, was unveiled by the Cancer Prevention Coalition. The coalition urged manufacturers of the Dirty Dozen to reformulate their products with non-toxic alternatives.
The coalition described Oscar Mayer Foods frankfurters as containing at least carcinogenic ingredients. It lists nitrite-free natural hot dogs or tofu franks as safer alternatives.
The products were listed as a result of data on more than 3,500 consumer products analyzed and ranked in a new book, The Safe Shopper's Bible.
"There is no new information, no new science and no support for any of these claims by any credible medical or scientific institutions," said Janet Collins Williams, AMI vice president of scientific and technical affairs. "The public should recognize this effort for what it is: a PR gimmick designed to irresponsibly scare people about perfectly safe products."
Cancer Prevention Coalition spokesman Keith Ashdown said information about hot dogs came from USDA data.
However, at the AMI convention in September, former FSIS Administrator H. Russell Cross said that 0.03 percent of USDA's entire meat sampling program violated chemical residue levels during the department's most recent testing, compared with 6 percent to 7 percent a decade ago.
When informed of Cross' comments by Meat Marketing & Technology, Ashdown said: "I am not aware of that; I would like to see that data.
"We are giving information to the public that they don't already have and they will decide what to do next," he added.
Meanwhile, hot dogs took another hit in the Sept. 29 edition of USA Today, which contained an ad attributed to Public Voice and National Consumers League titled: "Before you take that next bite ... "
The ad, which included a chicken's head in a hot dog bun, said that consumers have a right to know how chickens and turkeys become hot dogs, bologna and nuggets.
The ad urged the Clinton administration to support the "Truth in Food Labeling Campaign," which wants legislation forcing processors to list all ingredients on the label.
Wendy's honors Devault Foods
Devault Foods Co. has been named Ground Meat Supplier of the Year by Wendy's International. The Devault, Pa.-based meat processor becomes the first company to garner the honor twice, winning the award in 1993.
The award is based on Devault's safety and quality standards that "far exceed those enforced by USDA," according to Wendy's. Meat quality inspectors from the Dublin, Ohio-based fast-food giant conducted more than 20 unscheduled on-site audits at Devault, which beat out 14 other ground meat suppliers around the world for the award.
Devault processes more than 1.5 million pounds of meat a week with annual sales of more than $85 million.
Thomas A. Fillippo, president of Devault, pointed to quality as the reason for winning the award.
"We are dedicated to creating a work environment that embraces respect, professionalism, teamwork, and concern for quality," he said. "Quality has been the No. 1 focus of the company from day one."
Spa'am puppet stays in movie; Hormel loses lawsuit to Henson
Citing the U.S. Constitution, a federal judge has ruled that Jim Henson Productions Inc. can name a wild boar Spa'am in an upcoming movie.
Austin, Minn.-based Hormel Foods Corp. in July sued Henson Productions alleging that the Spa'am character in "Muppet Treasure Island" tarnished Hormel's trademark and falsely disparaged Spam products.
Hormel took umbrage at the puppet portrayal of its product. Spa'am dresses as a savage warrior, including a headdress of a skull and feathers, and a necklace of smaller pig heads. The character plays the role of the high priest of wild boars who worship Miss Piggy as Queen Boom Shaka-La-Ka-La.
In her decision, Judge Kimba Wood ruled that Henson Productions had a First Amendment right to parody the lunch meat. "Hormel cannot use federal trademark laws to enjoin what is obviously a joke at its expense," Wood said in her ruling.
Spa'am acts childish, not evil, and is unlikely to cause the public to confuse the character with Spam, or believe that the joking reference was sponsored by Hormel, she noted.
The ruling clears the way for Los Angeles-based Henson Productions to include Spa'am in marketing, promotional and merchandising campaigns, including 45 million Happy Meals at McDonald's. Hormel will appeal the decision.
Irradiation option remains untenable for industry
Studies by Iowa State University have explored the limits of irradiation on two fronts: one by studying the effects on viruses-smaller, less vulnerable targets than bacterial pathogens; and the other on how willing consumers are to accept irradiated meat products.
Researchers inoculated ground pork with human and animal viruses and irradiated samples at one kiloGrays and three kiloGrays. Results indicated that "irradiation at the presently allowed levels (three kiloGrays) is not enough by itself to markedly decrease viral numbers in ground pork. Ten kiloGrays, while not yet approved, does result in marked decreases of the viruses, but this does not sterilize the product."
As a point of reference: A dose of three-tenths kiloGrays inactivates trichinella in fresh pork and three kiloGrays controls salmonella in poultry. The question becomes: If irradiation at relatively high levels eliminates most, but not all viruses, how does it affect bacterial pathogens?
Researchers inoculated cooked pork chops and cured ham slices with salmonella and listeria, irradiated the meat at low and moderate levels, and measured pathogen survival rates during cold storage at 45 degrees F and again after warming to 77 degrees F to simulate improper refrigeration.
The study found that moderate doses of irradiation-1.8 kiloGrays to two kiloGrays-"reduced numbers to virtually undetectable levels." But later sampling revealed that some cells were injured, not killed, by irradiation and could grow when exposed to product-abusive temperatures.
Refrigeration temperatures remain critical to product safety and shelf life, according to the study, which also found reduced pathogen counts on meat treated with multiple controls-ham cured with salt and nitrate had fewer bacteria after irradiation than uncured samples, for example.
Another heat-related study compared the resistance of five strains of listeria in ground pork to electron beam irradiation and heat. A key finding was that "the heat resistance pattern of these isolates at 55 degrees F did not correspond to that of radiation resistance."
Research showed irradiation controls bacteria with no loss in quality, and that a market exists for irradiated meat. A study conducted in Arkansas by the consortium found consumers were willing to pay between 54 cents and 79 cents more for a meat sandwich irradiated and tested to ensure an absence of food-borne pathogens.
At Iowa State University, consumer attitudes were gauged by an experimental auction to see what people would bid on two pork sandwiches, one irradiated to control trichinella and one not. After 10 rounds of bidding, participants could tour the irradiation facility, hear a description of the process, and study the odds of trichinella infection and its symptoms. They also learned that FDA approved irradiation to control the parasite.
Results showed high acceptance of the irradiated pork sandwich, and participants were willing to bid an average of 45 cents extra before getting more information about irradiation and 97 cents afterward.
In another experiment, consumers reacted positively to irradiation information provided by the American Council on Science and Health and negatively to descriptions from Food & Water Inc., a consumer group that actively advocates against irradiation.
Negative information apparently had a stronger impact. After receiving negative reports, participants who formerly bid for irradiated pork reduced their bids, even if they gained positive information at the same time.
This article is a condensed version of findings by the Food Safety Consortium. It originally appeared in the consortium's newsletter.