SIC 2011
MEAT PACKING PLANTS



This industry includes establishments primarily engaged in the slaughtering (for their own account or on a contract basis for the trade) of cattle, hogs, sheep, lambs, and calves for meat to be sold or to be used on the same premises in canning, cooking, curing, freezing, and in making sausage, lard, and other products. The industry also includes establishments primarily engaged in slaughtering horses for human consumption. Businesses primarily engaged in slaughtering, dressing, and packing poultry, rabbits, and other small game are classified in SIC 2015: Poultry Slaughtering and Processing. Those primarily engaged in slaughtering and processing animals not for human consumption are classified in SIC 2048: Prepared Feeds and Feed Ingredients for Animals and Fowls, Except Dogs and Cats. Businesses primarily involved in manufacturing sausages and meat specialties from purchased meats are classified in SIC 2013: Sausages and Other Prepared Meat Products.

NAICS Code(s)

311611 (Animal (Except Poultry) Slaughtering)

Industry Snapshot

Meat packing is one of the largest agriculture-based industries in the United States. However, in recent years changing consumer eating habits have impacted the beef and pork industries, which are by far the largest sectors in this industry category. As Americans ate less beef, the beef industry retrenched, eliminating smaller and inefficient plants, and expanding their operations to incorporate poultry products. At the same time, the pork industry was striving to reposition pork as "the meat of choice."

Although technically a "red" meat, it was gaining acceptance as an alternative to the other white meat, chicken.

In 2001 the industry shipped $60.6 billion worth of products, up 3 percent from 2000 and up 12 percent from 1998. Rapid and widespread consolidation within the industry has placed hog and beef meat packing under the control of just a handful of larger players. Operating on very thin margins, processing plants are under constant pressure to keep costs low and volume high.

Organization and Structure

The American Meat Institute (AMI) reported that there were more than 1.25 million livestock operations, raising beef cattle, hogs, and sheep destined for human consumption in the United States in the 1990s. The meat packing plants that processed these animals into food and nonfood products ranged in size from those handling small numbers of livestock to operations processing millions of animals a year. According to the United States Department of Agriculture (USDA), federally inspected slaughter and processing plants numbered 930 in 1998.

The dominance of a few major companies is demonstrated by the fact that four packers processed approximately 82 percent of the beef, and three packers processed close to 35 percent of the pork. The USDA reports that in 1998, nearly 35.5 million commercial cattle were slaughtered, representing a 2 percent decrease from 1997. Also in 1998, 101.0 million commercial hogs (an increase of 10 percent) and 3.8 million sheep and lambs (a decrease of 3 percent) were slaughtered.

According to the USDA, the U.S. meat and poultry industry is spread among all 50 states. Industry sources indicate that the Midwestern states raised about 46 percent of the cattle and over 15 percent of the hogs in the 1990s, while south central states raised more than 15 percent of the cattle and nearly 70 percent of the hogs. The top five cattle slaughtering states were Kansas, Nebraska, Texas, Colorado, and Iowa. Iowa, Illinois, Minnesota, North Carolina, and South Dakota led in the slaughter of hogs, according to the USDA. Pennsylvania, which had the largest number of federally inspected plants, representing almost 14 percent of all plants in the United States, ranked only 11th in production.

Background and Development

The colonial farmers of New England, who were the first meat packers in the United States, used salt to preserve meat. As the nation expanded westward, slaughterhouses were built near population centers so meat could reach the table before it spoiled. The livestock herds were driven overland or barged to these early packing plants. So many hogs were slaughtered in Cincinnati, Ohio, that the city was called "Porkopolis."

For sanitary reasons, meat packing operations could only be carried out during the cold winter months, with ice used for refrigeration. The development of mechanical refrigeration and refrigerated railroad cars in the second half of the nineteenth century changed this. From late 1865 until the 1920s, Chicago, a hub city for the railroads, became renowned for its array of stockyards that collected and slaughtered livestock, often under harrowing working conditions.

With the turn of the twentieth century came mechanized disassembly and conveyor procedures in the plants, and the 1950s saw major improvements in plant sanitation and packaging. By the 1980s, the meat packing industry had again dispersed. Slaughterhouses moved closer to the feedlots where the animals were raised. Not having to ship them long distances reduced the stress, weight loss, and injury to the animals that was the inevitable effect of long journeys in crowded cattle cars and trucks.

Regulations. Under the 1906 Meat Inspection Act, U.S. pre- and postmortem inspection of meat entering inter- state and foreign commerce became mandatory. Meat to be used entirely within a single state may be inspected by that state's agriculture department. The federal program was conducted by the Food Safety and Inspection Service (FSIS) of the USDA. During the late 1980s and throughout the 1990s, unfavorable media criticism of the inspection system spurred an overhaul of FSIS procedures.

Outbreaks of E. coli bacteria and lysteria resulted in several deaths and millions of dollars in meat recalls during the 1990s. This led to increased scrutiny of the federal meat inspection program and fostered the Pathogen Reduction and Hazard Analysis and Critical Control Points (HACCP) rule instituted in 1996. This required the industry to update its inspection methods, which had changed little in the previous 50 years. From 1996 to 1999 new inspection plans were initiated, with all raw meat and poultry products being inspected using methods capable of detecting invisible pathogens by January 2000. The meat industry also continues to promote safe meat handling practices in the home through consumer education programs, labeling, and advertising.

Slaughter. The desirability of stunning animals prior to slaughter was recognized in both Europe and the United States before the end of the nineteenth century. The practice became mandatory in the United States in 1960 with the passage of the Humane Slaughter Act. The Act requires that before being slaughtered, animals must be rendered unconscious by mechanical, electrical, or chemical means in order to cause the animal a minimum of excitement or discomfort. Captive-bolt pistols or pneumatic guns may be used on cattle. Pistols, electric shock, or anesthetization in a carbon dioxide chamber is allowed for sheep and pigs. Compressed-air stunners and gas chambers for smaller animals came into use after World War II. Exceptions to federal requirements are made for ritual slaughters that satisfy the requirements of a particular faith. In kosher inspection, for example, a member of the Jewish faith cuts the throat and bleeds the animal without first stunning it and then examines it for abnormalities before approving it for food use.

After stunning, cattle are suspended by one or both hindlegs, while the carotid arteries and jugular veins are cut. Hides are then removed by an automated process. A straight cut opens the center of the belly to remove the viscera. Next, the carcasses are split down the center of the backbone. Beef carcasses might then be shrouded, a procedure in which the carcasses are cooled for 24 hours after being tightly wrapped in muslin that has been soaked in warm water. The carcass fat is smooth and trim when the shroud is removed. Specialty meat items like the brains, kidneys, tail, tongue, and sweetbreads do not accompany the carcass but are an important income source for packers. The procedures for veal carcasses are similar, except that the hides are left on during chilling. Veal carcasses have very little fat and would shrink during chilling if the hides were removed.

In hog slaughter, the animals are bled after stunning by severing a large vein. The carcasses are then submerged in hot water to loosen the hair. After the removal of the hair, the carcass is eviscerated, split, and chilled.

Grading. While meat inspection is mandatory, grading is a voluntary program. Funded by fees paid by the packers, the service is offered by the USDA's Agricultural and Marketing Service. Grading establishes uniform trading standards and helps to determine the value of various meat cuts. Meat carcasses are graded by both quality and yield.

The quality grades for beef are prime, choice, good, standard, commercial, utility, cutter, and canner. Carcass characteristics that determine the grade include marbling (the streaks of fat in the lean portions), the color and texture of the lean, and maturity. Consumers tend to interpret grading as an indication of taste and tenderness, although it was not designed for this purpose. Growing consumer perceptions that lean meat is healthier have increased the demand for lower-fat grades. The ratio of usable meat to bone and fat determines a carcass' yield grade. Combined with the quality grade, it is used to establish the monetary value of a carcass.

Working Conditions. The slaughterhouses of the United States in the early twentieth century were grim and dangerous places to work. Low wages coupled with unsafe conditions made the stockyards of Chicago and other cities hazardous work sites. But it was not until reports on conditions there grew widespread—thanks in part to Upton Sinclair's novel The Jungle, which depicted in chilling detail the deplorable environment of the stock-yards of Chicago—that the government turned its attention to the industry. Slaughterhouse conditions furthered the cause of fledgling unions, which grew in strength over the ensuing years.

At the end of the twentieth century, automation had not replaced manual labor and the extensive use of sharp knives and other hand tools. Workers were still lifting and lugging heavy carcasses, abattoir floors were slippery, and workers suffered from exposure due to the need for continuous refrigeration systems. Despite American Meat Institute (AMI) and Occupational Safety and Health Administration (OSHA) guidelines, 36 percent of meat packing employees are injured on the job each year. The meat packing industry still has the highest injury rate of any U.S. industry. As long as there is no economical and reliable cutting machinery that can accommodate the physical variety of animal carcasses, processing will continue to be a manual operation.

In the early 1990s, the industry's rate of cumulative trauma disorders (CTDs) was higher than all other manufacturing industries. The illness usually took the form of carpal tunnel syndrome, in which repeated, rapid, and forceful motions pinch and compress the nerve that runs through the wrist to the hand. Lower back and various tendon disorders were also reported. Underreporting of injury and illness still remains a chronic problem, as the majority of the meat packing workforce is comprised of illegal aliens.

Two of the nation's largest meat packers, IBP, Inc. and John Morrell, were cited in 1987 by OSHA for underreporting or failing to record injuries and illnesses. Both companies contested the OSHA fines, which were greatly reduced. More importantly, OSHA recognized that the CTDs plaguing meat industry workers needed new solutions. In 1990 OSHA issued its first ergonomic guidelines after consultation with the AMI and labor groups. The guidelines emphasized worker training in proper techniques, strengthened by refresher courses, and the importance of reporting CTD symptoms early to prevent permanent injury. Medical management by trained health care providers was another program component.

OSHA offered special incentives to meat packers who entered into voluntary agreements with the agency to lessen their ergonomic hazards. While they would still be subject to OSHA inspections, they would not be cited or penalized on ergonomic grounds. Opinions on OSHA's voluntary guidelines were mixed, and industry critics did not always agree. Phillip L. Immesote, president of the United Food and Commercial Workers Union, testified at a hearing of the House Employment and Housing Subcommittee that OSHA was about to repeat earlier disastrous experiences with "a new program of exemptions and voluntary compliance in the nation's packing houses."

By the end of the 1990s, injuries were slightly lower in the major plants, though the industry was still plagued by the problem. In November 1999 OSHA proposed new guidelines to address repetitive stress injuries in the workplace. These guidelines again focused heavily on ergonomic accommodations. While not specifically aimed at the meat packing industry, they could have an impact. Industry opposition to the guidelines was high, and it remains to be seen if the guidelines will be enacted by Congress.

Per capita meat consumption (red meat and poultry) increased from 209.3 pounds in retail weight in 1996 to 220.6 pounds in 1999. Red meat consumption remained stable throughout the 1990s, ranging between 65 and 68 pounds per year, down from a high of 79.2 pounds in 1985. The USDA has forecast larger meat supplies at lower wholesale prices, with resulting competition for consumer dollars at the retail level.

Beef. Meat processors have sought to improve their business outlook by expanding into the fast-growing poultry market. The number of major meat producers also engaged in production of poultry products rose dramatically throughout the 1990s. The beef industry has also been heavily advertising beef as a healthy, easy-to-pre-pare dinner meat, as in their "Beef Made Easy" campaign, which features low-fat, easy-to-prepare menu options. The beef industry has also been trying to market beef as a brand, rather than a generic meat, in order to boost demand.

Enhanced genetics, the introduction of new feed additives and growth stimulants, and nutritional advances all played a part in the improvements in cattle growth rate during the last quarter of the twentieth century. Consumer demand for lean beef, as well as environmental concerns, are expected to continue to have an impact on the beef industry into the twenty-first century.

Pork. Nationwide, the number of hog enterprises dwindled toward the end of the 1990s, as did the number of slaughtering facilities. Many of the smaller operations dropped out, while the larger outfits expanded. For pigs laughtering operations, this reduction and consolidation of sources adversely impacted the industry in 1998 and 1999, despite a 10 percent increase in production.

According to the Statistical Abstract of the United States: 1997, Iowa had the largest number of hogs and pigs on farms, with 13,400. North Carolina and Illinois were the next two largest, with 8,200 and 4,800 hogs and pigs respectively.

In the mid-1990s, the National Pork Producers Council announced a comprehensive plan to promote pork as the meat of choice both domestically and worldwide. The plan was the joint output of the National Pork Board, the National Live Stock and Meat Board's pork section, and hundreds of producers. Goals included building demand for pork by creating new products and expanding current uses; ensuring that pork met or surpassed consumer expectations of safety, quality, and value; and positioning the industry as socially responsible.

Whether the potential for larger herds and increased production could be parlayed into industry growth was dependent on other factors, such as cost competitiveness, exports, and the continued popularity of pork products. During the late 1990s the industry experienced record-high production, consumption, exports, and record low prices for live hogs. Pork producers were the most severely impacted, suffering $2.5 billion in losses in 1998 and $1 billion in losses in 1999. The pork industry continued to consolidate and move South and West, away from the traditional Midwest hog states. Efforts were being made to align production and packing facilities to avoid the problems suffered in the late 1990s due to a lack of capacity at slaughter facilities during peak production times. Nationally and internationally, demand for pork continued to rise at record rates.

Current Conditions

In recent years the meat packing industry has under-gone changes in its character and become extremely consolidated. Significant losses occurred during the early 1980s, with more than 30 plants shutting down. In the aftermath, several new industry leaders emerged, including Tyson, ConAgra, and Cargill. These companies moved meat packing plants away from urban areas, which were home to well-organized unions, to rural communities. Traditionally, animals were slaughtered in urban plants, and animal quarters were shipped to skilled butchers who prepared the meat for market. During the 1980s and 1990s, slaughtering was automated and restructured to focus on the entire process within one plant, using rapidly moving disassembly lines. Meat was then packaged, boxed, and shipped directly to the customer.

Rapid consolidation put control of 80 percent of the beef slaughter industry and 60 percent of the hog slaughter industry into the hands of Tyson, ConAgra, and Cargill. The top five beef companies (Tyson, Excel, Swift, Farmland, and Smithfield) control 89 percent of steer and heifer slaughter. Despite the large revenues of these companies (Cargill's sales topped $50 billion in 2002), the profit margin remains precariously thin, with expected profit levels running around 2 percent. As a result, meat processing companies look to cut costs and maintain the lowest possible operating expenses.

As a result of the need to keep expenses low, the meat packing industry has been a long-time opponent of workers' unions and pays well below the national average. Employing recent immigrants has become standard practice. According to David Bacon in The American Prospect, "Today, Spanish is the language on the floor of almost every plant. Most workers come from Mexico, with smaller numbers from Central America. Refugees from Bosnia, Vietnam, and even the Sudan are a growing presence in some areas, but the vast majority of meat-packing workers are Latinos." During the late 1990s and early 2000s, the meat packing industry received negative publicity for its employment of illegal aliens, as well as its dangerous and low-paying working conditions.

Industry Leaders

Industry sources report that IBP Fresh Meats, Inc.; ConAgra, Inc.; and Cargill Inc. are the top three beef slaughterers, while IBP, ConAgra, and John Morrell operated the country's top three pork slaughter operations.

Tyson Foods Family. Competition for the number one spot in the meat packing industry was strong, but South Dakota-based Tyson (formerly IBP, Inc.) held on with sales of $13 billion in 2002. These posted earnings continued the company's growth pattern. IBP came under the ownership of Tyson Foods Family. Tyson touts itself as the world's largest producer of fresh beef, chicken, and pork.

With the acquisition of Foodbrands America, Inc. in early 1997, IBP enjoyed an increased workforce. Foreign exports accounted for a small percentage of sales, most of them to the Far East (Japan, Korea, and Taiwan). IBP continues to concentrate on beef and pork slaughter and processing, leaving the diversification into poultry products to competitors like ConAgra, Inc., and Cargill Meat Sector in Minneapolis. During the late 1990s, IBP also continued to grow its value-added meat products (deli meats, pizza toppings, frozen appetizers, etc.) and acquired Russer Foods, H&M Food Systems, and Thorn Apple Valley, all smaller players in the meat market.

By relocating its slaughterhouses in 1961 to where the beef was, near Nebraska's and Iowa's cattle farms, IBP changed the meat packing industry. At the company's plant in Dakota City, Nebraska, animal carcasses were carried over 20 miles of conveyor systems. Within 48 hours, a 650-pound carcass could be broken, cut, and packed into 65- to 80-pound boxes for shipment to super-markets. Pork became an important part of IBP's success starting in 1976, and by the late 1980s the company planned six plants in Iowa and Nebraska, all within a 100-mile radius of the nation's largest hog-producing area. Tyson, as IBP has now become, continues to shift plants and production to areas that offer the most strategic advantage to the meat markets. In early 2003 the company had operations in the United States and eight foreign countries.

Cargill. Founded in 1865, Cargill is the largest private company in the United States. It built its reputation in commodity trading, but by 1993 was one of the country's largest suppliers of raw foods and ingredients, with sales reaching $11 to $13 billion from diversified activities ranging from corn and flour milling to oilseed processing.

In 1993, although Cargill still regarded itself primarily as an ingredient supplier, it had become the nation's third largest meat packer. Cargill had acquired Excel Corp., a leading name in boxed beef and pork, in 1979. When Cargill formed its Meat Sector in the early 1990s, it included the Excel Corp. and Cargill Meat Products (which further processed beef and pork). In 1993 Cargill announced that it would sell its meat processing business in Japan, although it continues to export beef to Japan. Excel distributed most of its products under private label. Cargill handles approximately 20 percent of cattle slaughter in the country. In 1997 it acquired the North American salt assets of Akzo Salt Inc. and became the second largest salt production company in the nation. Sales in 2002 were $50.1 billion. It is the second largest U.S. meat packing company.

ConAgra, Inc. Originally known as Nebraska Consolidated Mills, ConAgra's expansion to its present status as a leading food producer began in earnest with its development of Duncan Hines cake mix in the 1950s. The company became a multifaceted food provider in the 1960s and 1970s, establishing a number of poultry processing plants to complement its growing flour mill business. In 1971 the company changed its name to ConAgra and continued its expansion into a variety of manufacturing industries. The company's purchases in recent years have included United Agri Products (1978), Banquet Frozen Foods (1980), Armour Food Company (1983), Beatrice (1990), and Van Camp (1995), as well as purchasing assets and numerous other related businesses. ConAgra offers over 50 brands, including Hunt's, Wesson, Armour, and Butterball, and operates more than 200 retail outlets. In fiscal 2002 sales totaled $27.6 billion, and the company had 89,000 employees.

Workforce

According to the U.S. Department of Labor, Bureau of Labor Statistics, there were nearly 520,000 people employed in the meat packing industry in 2001. In the food industry as a whole, meat packing and processing is the largest employer. In 2001 meat trimmers and cutters earned a mean annual salary of $17,960, and meat packers and slaughterers earned a mean annual salary of $20,000.

Meat packing is also a highly labor-intensive industry, and a large majority of the total employees (84 percent) were production workers, compared to 72 percent in all food preparation sectors and 67 percent in all manufacturing industries.

Because of the industry's low wages, employee turnover remains high. The industry employs a large number of immigrants, which may contribute to the turnover, along with the demanding working conditions. Although no large-scale labor disturbances have occurred recently, there have been isolated strikes at plants, such as the 1999 strike against IBC in Pasco, Washington.

America and the World

The domestic meat industry continues to thrive, with annual red meat consumption estimated at 123.9 pounds per person in 1998. The industry has been fighting hard to maintain meat's image as a safe and nutritious food choice and has recently instituted inspections that can detect invisible pathogens. The industry has also begun to explore irradiation as a way to increase safety and shelf life. Ad campaigns, including "Beef Made Easy" and "Pork. The other white meat.", are part of the industry's attempt to brand its products in order to increase demand. At the same time, it is also focusing on new technologies for creating leaner meats in response to consumer demand.

International Trade. The United States enjoyed a favorable trade balance in red meat products, with exports of meat and related products valued at approximately $4.44 billion in 1998. However, the weakened Asian markets continued to impact exports. In 1997 the United States became the largest pork exporter in the world, exporting 474,000 metric tons in carcass weight. The major destinations for beef exports were Japan, Mexico, Canada, Republic of Korea, and Hong Kong. Japan, Canada, and Mexico were the top importers of U.S. pork. Trade with the European Union was still restricted due to bans on meat treated with hormones.

For the late 1990s and into 2000, the USDA predicted a slight decline in meat trade, improving as the Asian economies continue to recover, and improved meat inspections reassure markets of meat safety. Although the United States had a favorable trade balance, it still imported $3.21 billion in beef and related products in 1998, and was the world's third largest importer of pork, at 287,000 metric tons.

The top five countries from which the United States imported red meat were: Australia, Canada, New Zealand, Denmark, and Argentina. Pork imports came primarily from Canada and Denmark.

Further Reading

Bacon, David. "The Kill-Floor Rebellion." The American Prospect, 1 July 2002, 20-23.

"Big Brains, No Cattle." The Economist (US), 4 January 2003.

"Meat Packing Industry 'Not Like It Used to Be.' " Business Wire, 3 December 2002.

"Meat Packing Takeout Multiples Cool." Mergers & Acquisitions, 12 August 2002.

National Pork Board. U.S. Pork. Available from http://www.uspork.org .

Olsson, Karen. "The Shame of Meatpacking." The Nation, 16 September 2002, 11.

Paul, Catherine J. Morrison. "Cost Economics and Market Power: The Case of the U.S. Meat Packing Industry." Review of Economics and Statistics, August 2001, 531.

Tank, Al. Perspective of the U.S. Pork Industry. Available from http://www.nppc.org .

United States Department of Agriculture. Foreign Agricultural Service. Available from http://www.fas.usda.gov .

United States Department of Labor. Bureau of Labor Statistics. Available from http://stats.bls.gov .

"Workers Strike over Labor Contract at Pasco, Wash., Meat Plant." Omaha World-Herald, 11 June 1999.



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