Editor's Blog: 2014: Another stunning 'news' year
Dec. 31, 2014
by Bryan Salvage
KANSAS CITY, Mo. – It’s hard to believe another year has flown by. But as always, it was packed with major news stories and some breath-taking surprises. Before jumping into the New Year, here are several of the top stories Meatpoultry.com covered during 2014.
Jan. 1, 2014, marked the 20th anniversary of the North American Free-Trade Agreement (NAFTA). This agreement came into force Jan. 1, 1994, creating the world's largest free-trade zone at that time between the United States, Canada and Mexico — but reviews of the trade accord's success have remained mixed for 20 years.
Meanwhile, the never-ending spat between these three trading partners over Country-of-Origin Labeling (COOL) came to another head this year — and the battle promises to carry on into next year. On July 29, the US Court of Appeals for the District of Columbia upheld new government rules requiring Country-of-Origin Labeling on packaged steaks, ribs and other cuts of meat to tell consumers where the animals were born, raised and slaughtered. The American Meat Institute (AMI) and allied associations voiced disappointment with the decision denying a request for a preliminary injunction to block implementation of the US Department of Agriculture’s (USDA’s) May 2013 final rule on COOL. And then in late August, a World Trade Organization (WTO) dispute resolution panel ruled against the mandatory COOL rule. Mexico and Canada have led opposition to COOL along with the US beef industry.
Groups representing US, Canadian and Mexican meat-industry interests have fought COOL in the courts, while trade officials turned to the WTO. Along the way, Canada and Mexico threatened to impose retaliatory tariffs on American goods if the US refuses to withdraw COOL. The US previously lost an appeal of a WTO challenge brought by Canada and Mexico in 2012. In late December 2014, Canada’s Agriculture Minister Gerry Ritz proclaimed Canada is prepared to implement retaliatory tariffs as early as next summer if the US doesn't change its COOL laws.
In early February, Petaluma, Calif.-based Rancho Feeding Corporation recalled approximately 8,742,700 lbs. of meat products that were processed from diseased and “unsound” animals without federal inspection, FSIS claimed. No illnesses were reported in connection with the products. By mid-February, the impact of the recall spread — nearly 1,000 retailers were affected by the recall. In late February, Marin Sun Farms in Point Reyes Station, Calif., indicated it planned to buy this business. Marin Sun Farms specializes in pasture-raised beef, poultry, pork and lamb. Late in March, Marin Sun Farms successfully acquired the slaughterhouse formerly owned by Rancho Feeding Corp. USDA approved an opening date of April 7.
Jaws dropped in mid-February when Bolingbrook, Ill.-based Quantum Foods filed for Chapter 11 bankruptcy protection and announced it was in final negotiations for a sale of its assets to CTI Foods Holding Co. LLC. Quantum custom manufactured and processed value-added protein products, such as portion-controlled, ready-to-cook and value-added fully cooked foods made from beef, poultry and pork. In late March, Raging Bull Acquisition Company LLC, a subsidiary of Oaktree Capital Management LP, said it had agreed to buy Quantum Foods, LLC for $54 million. But by early in May, this deal disintegrated. In a stunning turn of events, West Liberty, Iowa-based West Liberty Foods LLC (WLF) announced on June 23 that it had closed on a purchase of most of Quantum Foods' assets in a transaction valued at $12.7 million. WLF expected to begin meat-processing operations at the Bolingbrook facility within 30 days.
Meanwhile, American Meat Institute (AMI) General Members voted in mid-April to proceed with a merger with the North American Meat Association (NAMA). This vote was the final step needed to begin the merger, which is planned to occur Jan. 1, 2015. AMI's board approved the merger on April 2, while NAMA's board gave its nod on March 22. The merged super-organization will be called the North American Meat Institute (NAMI). NAMI represents companies that process 95 percent of red meat and 70 percent of turkey products in the US and their suppliers throughout America.
Late in May, Pilgrim’s Pride Corp., which is majority-owned by JBS SA, Sáo Paulo, Brazil, submitted an all-cash offer of $45 per share to acquire Chicago-based Hillshire Brands Co. If completed, the transaction would have been valued at approximately $6.4 billion. The acquisition also would have been contingent on Hillshire Brands terminating its earlier agreement to acquire New Jersey-based the Pinnacle Foods Group, which was announced May 12.
Two days after Pilgrim’s Pride submitted an offer to acquire Hillshire, Springdale, Ark.-based Tyson Foods Inc. presented its own proposal valued at $6.8 billion. Tyson’s proposal was based on an offer of $50 per share. Both offers were based on terminating Hillshire’s plan to acquire Pinnacle Foods Group. By early July, Pinnacle Foods had stepped aside, Pilgrim’s Pride had been outbid and Tyson Foods was in the process of acquiring Hillshire Brands. Both companies entered into a previously announced agreement in which Tyson would acquire all outstanding shares of Hillshire Brands for $63 per share. The all-cash transaction was valued at approximately $8.55 billion. By late August, Tyson Foods Inc. had completed its merger with Hillshire Brands Co. Although Sean Connolly, former president and CEO of Hillshire, eventually left Hillshire to “pursue other interests”, he agreed to consult for Tyson Foods during the integration process.
Although no one can foresee what will happen in the US meat and poultry industry in 2015, you can bet it will be another year punctuated with the unexpected. Here’s hoping that you and your company experience nothing but good news in the New Year.