by Bryan Salvage, editor
It's hard to believe that another year is rapidly coming to a close. As always, the year was an ever-changing mixed bag of events that, for better or worse, continues to shape the red meat industry.
Within this issue, Meat Marketing & Technology editors present their annual "State of the Industry" report. This expanded feature will provide readers with an in-depth look at how the year has fared for the beef, pork, lamb and veal segments, according to industry insiders.
Before turning to this special feature, here's a look at some of the top news of the year for the red meat industry:
-- The General Agreement on Tariffs and Trade was signed by President Bill Clinton on Dec. 24, 1994.
-- The Mexican peso crashed late last year, putting the brakes on escalating U.S. red meat export potential. Tough financial times continue for Mexico.
-- USDA's long-awaited proposal on rules intended to introduce science into the meat inspection system appeared in the Federal Register on Feb. 1. Mandatory Hazard Analysis and Critical Control Point programs, anti-microbial rinses, microbial testing and consistent temperature controls are called for.
The 276-page regulation is aimed at 6,200 federally inspected meat and poultry plants and 2,900 state-inspected plants. Industry was outraged because it believed it wasn't involved in the rule-making process and it loudly protested. But a compromise was reached so industry could voice its concerns. Inspection reform is due before the end of the year.
-- Dan Glickman, former representative from the state of Kansas who served nine terms, replaced Mike Espy as USDA Secretary, sworn in on March 30.
-- South Korea agreed to make changes in its regulations governing U.S. beef and pork imports.
-- After years of languishing, case-ready fresh red meat is beginning to take off, industry insiders say.
-- John Nielson, former president and chief operating officer of John Morrell & Co., became president and COO of Smithfield Foods Inc. Later in the year, Smithfield purchased Morrell.
-- Cargill's U.S. broiler operations were sold to Tyson Foods for an undisclosed sum of money. Tyson was to make a cash payment and transfer its pork processing operation in Marshall, Mo., to Cargill.
-- Manchester, N.H.-based Jac Pac Foods became the first meat processor in the United States to be awarded ISO 9000 certification.
-- William Fielding resigned as president of Minneapolis-based Cargill Inc.'s meat sector and became president of ConAgra Red Meat Cos.
-- Livestock producers complained that meatpackers are holding too much power over livestock prices and called for federal investigation of these allegations.
The bottom line
As is the case every year, 1995 was terrific for some packers and processors, but very tough for others-particularly smaller, regional, family-owned companies.
Some major companies-including meat monsters IBP inc. and ConAgra Inc.-received praise from industry analysts for their continuing financial achievements.
But other companies, such as 77-year-old Kern Valley Packing Co. of Bakersfield, Calif., were forced to cease operations. Growing financial pressures caused by increasing out-of-state competition, tighter inspections and higher labor costs were reportedly among the major factors leading to Kern's exit. I'm sure this also applies to every other company that fell by the wayside during the year.
Despite the variety of growth opportunities (exports, further value-added products, products for niche markets) being touted by industry insiders, the red meat industry will likely remain a narrow-margin business at best ... and competition will intensify.
In looking to the future, do you see the glass as half full or half empty regarding survival and continuing growth for smaller companies? Give me a buzz or drop me a line. I'd like to hear your opinion-and so would our readers.