Seaboard's Brenneman tells it like it is

by Joel Crews
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KANSAS CITY, MO. — At a lunch meeting sponsored by Meat&Poultry Sept. 24, Rod Brenneman, Seaboard Foods president and chief executive officer, addressed meat-industry suppliers based in the Kansas City area. Mr. Brenneman, who has served as chairman of the American Meat Institute for the past 11 months, discussed the progress made on his initiatives as a leader with the trade association followed by some sobering remarks about the challenges facing the pork industry.

Throughout his tenure as chairman, Mr. Brenneman said there have been challenges facing the meat industry, some of them as a result of the Obama administration’s position on issues, such as reforming the nation’s ethanol policy and corn production mandates. As a supporter of alternative fuel initiatives, Mr. Obama’s public support of policies that may raise the current ethanol-to-gasoline blend to 15 percent nationwide, could also lead to another food vs. fuel crisis, which led to widespread financial fallout throughout the meat and poultry industry.

Brenneman addressed some of the challenges to the meat industry, including the worldwide economic downturn, the H1N1 outbreak, the over-supply of meat on the market and re-establishing trade with export markets.

Contributing to the excess supply of pork in the market is the improved production of hogs over the past year. "Productivity is back," said Mr. Brenneman, thanks, in part, to the development of effective vaccines and improved feed. "Unfortunately, during a time when we’re dealing with some of the worst prices, we also have an over-abundance of supply," he added.

"We need to right-size the industry," as is evidenced by companies like Smithfield and Tyson cutting swine herds by 5 percent or more, he said. "I personally think we need to see a 10-percent liquidation," said Mr. Brenneman, to bolster live prices to the point that producers are no longer losing money. And even at a 10 percent decrease, "that’s not getting to wild profitability for producers; that’s just getting to what I think is a good, sustainable level for the long term."

Increasing international trade, including pork exports to China, was made worse by this year’s H1N1 outbreak, which Mr. Brenneman said has served as a convenient reason for some countries to keep their borders closed. "H1N1 served as an excuse, albeit an invalid excuse, for some," he said. Meanwhile, trade negotiators can not be hamstrung by protectionist trade policies with export partners, as there are enough hurdles facing U.S. exporters, he added.

In an effort to prevent the introduction of H1N1 into swine herds, companies like Seaboard have taken steps to minimize risks at their production facilities by limiting access and tightening bio-security policies. This trend will likely continue and grow as flu season reaches its peak.

"In terms of visitors, it’s virtually a lockdown at our company," Brenneman said.

To read the complete story, see Meat&Poultry’s upcoming October issue, Page 105.

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