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Monday, March 14,2005

McCraine named AZ Cattleman of 2005

by WLJ
Arizona cattleman, Swayze McCraine of Prescott was named 2005 Cattleman of the Year by the Arizona Hereford Association at ceremonies opening the organization’s 31st annual bull sale during Cattlemen’s weekend. McCraine, raised in Baton Rouge, LA, and a Louisiana State University animal science degree graduate, worked for Great Plains Western Corporation a mutli-faceted company with ranches in six states. He became vice president in five years. In 1978 he took over his family’s ranching operation in Mississippi, raising registered Brangus and commercial cattle. Six years later he moved to Prescott to be involved with his wife’s family ranch. In 1986 the Arizona Hereford Association asked McCraine to manage its annual bull sale. He was instrumental in adding a ranch horse sale to the bull sale, and in 1988 he and Richard Smyer of the Prescott Livestock Auction put on the first Prescott All Breed Sale. McCraine’s vision turned it all into Cattlemen’s Weekend 14 years ago. It has become northern Arizona’s largest livestock event. McCraine and his wife Kathy own and operate Camp Wood Cattle Company at Prescott and raise commercial cattle and quarter horses. — WLJ

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Monday, March 14,2005

Moseley leaves USDA

by WLJ
Secretary of Agriculture Mike Johanns announced March 4 that the number two man at the department will be leaving. “Deputy Secretary James Moseley has informed me that he is resigning as Deputy Secretary effective today. He has served American agriculture well throughout an extensive and diverse career and I wish him well in his future endeavors,” Johanns said in a statement. Moseley was asked to join USDA by Ann Veneman and, since her resignation speculation has been running high on Moseley’s future. In January, Moseley said he planned to stay on through the transition, but “my future is uncertain.” During that interview, Moseley praised the selection of Johanns as Secretary of Agriculture, and in announcing Moseley’s departure Johanns was equally complementary. "Jim has accomplished many things for agriculture both domestically and around the world. One of those accomplishments has been to foster a working relationship with the Afghan government and its people to help them rebuild the agricultural infrastructure in Afghanistan. This partnership not only is helping feed and clothe Afghan citizens, but it also is helping spread democracy.” While Moseley’s resignation becomes effective immediately, Johanns has asked him to stay on until June 1 as a special advisor to complete some critical aspects of the Afghan project. He will continue in this capacity until June. — WLJ

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Monday, March 14,2005

Obit

by WLJ
Paul L. Good Paul Good, 89, a renowned livestock auctioneer died March 6. From Van Wert, OH, Good was born Feb. 23, 1916, to George Lewis and Dora Leota Haines Good. He married his highschool sweetheart Alice Marie Poling in 1938; she died May 7, 1989. Good graduated from Ohio State where he was a member of the Collegiate Livestock Judging Team and Meats Team, and started as an auctioneer in seventh grade during a school pageant depicting the Jamestown slave auction. Colonel Good is best known for his robust and quick-witted selling of Angus cattle, presiding over some of the most notable auctions including selling for President Eisenhower, J.C. Penny and Armand Hammer. He played a major part in the Angus expansion in the 1960s, ‘70s and early ‘80s. In 1984 he was inducted into the American Angus Association Heritage Foundation, which recognizes major contributions to the improvement and advancement of the Angus breed. His portrait hangs in the Ohio State University Animal Science Hall of Fame for his contributions and efforts, along with brothers Byron and Don. Survivors include son Arthur L. Good (Joan), Manson, MI, daughters Ann Good (Robert), Fortine, MT, and Ava K. Good, Van Wert, brothers Don Good (Jane), Manhattan, KS, and Fred Good (Judy), Charlotte, MI, five grandchildren, one great grandchild and a great great grandchild. A memorial service will be held in 11 a.m April 2 at Kingsley Methodist Church, Van Wert County, OH. Memorial contributions may be given to the charity of the donor’s choice.

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Monday, March 14,2005

Letters

by WLJ
Support for AFBF waning Dear Editor: We are very disappointed with the American Farm Bureau Federation for their opposition to the ruling by the U.S. District Court for the District of Montana that imposes a temporary injunction on re-establishing trade with Canada for live cattle younger than 30 months of age. Our fourth generation family ranch has been very active with Farm Bureau for over 60 years and we feel that they have really let the U.S. cattle ranching industry down! The Canadian border needs to be closed until we have ALL our beef export markets are open and the safety of the beef supply from Canada is not questioned for having BSE. Why doesn’t Canada find other countries to send their beef to instead of forcing the U.S. to take their beef with no country-of-origin labeling? The Farm Bureau seems to think that the sooner we open the Canadian border to all beef imports, then the sooner our trading partners such as Japan will follow suit. But in all reality, we imported 22 percent more beef, 1,196,569 metric tons of beef in 2004, of which 355,243 metric tons was Canadian. During this same time, our beef export markets were down 75 percent, to 321,675 metric tons, roughly a $3 billion dollar deficit for beef trade, according to R-CALF. So, I ask Farm Bureau this: How much more imports do we have to take, before our trading partners open their markets due to the Canadian BSE problem? Our overall ag trade surplus has also evaporated from 27.3 billion in 1996, to a projected balance of zero in 2005. What a shame! We hope Farm Bureau will poll their livestock members and start representing the grassroots of their organization. We feel Farm Bureau has been very supportive in protecting our property rights, Farm bill, disaster aid, but they need to support mandatory COOL, reject free trade agreements such as CAFTA, and to support the continued closure of ALL Canadian beef products from entering the U.S. Neil Glennie Tom Glennie Ranch Judith Gap, MT Tunnel vision regarding the border issue You should have been at the Federal Court hearing in Billings. What you don’t realize is: right always prevails over wrong, good overcomes bad, and truth is established by honest court judges. I was there and I was impressed at how knowledgeable Judge Cebull was on the BSE subject. You accuse the judge of having his mind made up before the hearing. If you didn’t have tunnel vision you would also see the importance of delaying the border opening. Pete, you were on the NCBA Canadian Trade Delegation, didn’t you realize they only showed you what they wanted you to see? Did they ask you what feed processing plants you wanted to see or just show you the big Cargill feed processing plant? Don’t you think you should have gone to see cowherds and dairies in Alberta instead of flying over feedlots? You were on a fact finding mission and I don’t believe they showed you the facts. Your U.S. Justice Department lawyer Lisa Olson, stated that there was "virtually no risk" opening the border to young Canadian cattle. There has only been four cows diagnosed as having BSE, even though two have tested positive in 2005. Minimal risk, "virtually no risk." Judge Cebull asked Lisa Olson how that compared to the outbreak of BSE in Great Britain. Lisa said "Oh that was an epidemic." Judge Cebull reminded her that the epidemic started with one cow and several hundred people lost their lives to vCJD. Pete, you made reference to R-CALF’s war chest of $750,000. Then you stated that the U.S. Justice Department has pretty deep pockets. Do you understand that the U.S. Justice Department is using tax payer funds to fight our own livestock producers and consumers, concerning the food imported into the USA? Pete, R-CALF has raised these funds because producers, consumers, and small business in rural America are ready to stand up and fight for their life. I am amazed that you are so blind to what’s really happening in America, that you are willing to take the side of multi-national trading companies and corporate America to launder American agriculture to the rest of the world. By the way, R-CALF’s warchest has been voluntary contributions by producers and consumers who desire to see U.S. Agriculture persevere and produce USA (COOL) products. Let me tell you, these USA citizens have only begun to fight! Tom Connelley Beefman Belle Fourche, SD

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Monday, March 14,2005

McCraine named AZ Cattleman of 2005

by WLJ
Arizona cattleman, Swayze McCraine of Prescott was named 2005 Cattleman of the Year by the Arizona Hereford Association at ceremonies opening the organization’s 31st annual bull sale during Cattlemen’s weekend. McCraine, raised in Baton Rouge, LA, and a Louisiana State University animal science degree graduate, worked for Great Plains Western Corporation a mutli-faceted company with ranches in six states. He became vice president in five years. In 1978 he took over his family’s ranching operation in Mississippi, raising registered Brangus and commercial cattle. Six years later he moved to Prescott to be involved with his wife’s family ranch. In 1986 the Arizona Hereford Association asked McCraine to manage its annual bull sale. He was instrumental in adding a ranch horse sale to the bull sale, and in 1988 he and Richard Smyer of the Prescott Livestock Auction put on the first Prescott All Breed Sale. McCraine’s vision turned it all into Cattlemen’s Weekend 14 years ago. It has become northern Arizona’s largest livestock event. McCraine and his wife Kathy own and operate Camp Wood Cattle Company at Prescott and raise commercial cattle and quarter horses. — WLJ

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Monday, March 14,2005

South Dakota Governor signs beef marketing law

by WLJ
South Dakota Gov. Mike Rounds hopes people across the nation and around the world will soon walk into grocery stores and choose to pay more for steaks that carry his state's seal of approval. When they take those steaks home, they can visit an Internet site and use codes on the labels to find out where the meat came from, even the ranch where a calf was born. Electronic records will track the critters from birth, through feedlots and to meatpacking plants. "We believe consumers will step forward and they will be paying premium prices for this premium product," Rounds said Tuesday. A week after the Legislature passed a bill to start the South Dakota Certified Beef Program, the governor signed the measure into law. The program is the result of an idea Rounds first suggested when he campaigned for governor in 2002. Various businesses and organizations have promoted high quality beef, but South Dakota officials said the state program marks the first time a government has put its seal of approval on beef products. Only meat from South Dakota cattle that are tracked electronically and raised according to certain standards will qualify for an official state trademark or seal, which features an image of Mount Rushmore National Memorial and declares "The World's Best Beef." The purpose of the branded-beef program is to improve cattle prices for South Dakota farmers and ranchers by assuring customers that steaks, roasts and hamburger are of the highest quality and safety. A few years ago, Congress passed a law requiring that meat be labeled according to its country of origin, but the law has never been implemented. After the discovery of BSE in a few cattle from Canada, consumers will demand more information about how and where meat is produced, South Dakota officials believe. "We're going beyond country of origin labeling here. We're going right down to the producer who raised that calf," Rounds said Tuesday. Dwight Scott of Letcher, the first farmer to register for the branded-beef program, said he now signs affidavits assuring buyers his cattle have been raised a certain way. The new program will certify those claims and back them up with records, he said. Cattle in the program must be raised, fed to market weights and slaughtered within South Dakota. Farmers, ranchers and processors who join the program must follow state standards in raising and slaughtering cattle. All cattle in the program will carry electronic identification tags. Rounds also signed into law a second measure that allows the state to start an identification program that will work in conjunction with the South Dakota Certified Beef program and also be used to help stop the spread of livestock diseases. Farmers and ranchers who voluntarily enroll in the Certified Beef program will pay licensing fees, which will be used to finance marketing efforts and monitoring of the livestock. Enrollees will be required to follow state standards in raising their cattle. They must keep careful records that the state can check to ensure adherence to the program. The program initially will market premium beef products, but it eventually will distribute natural beef products from cattle raised without certain hormones or drugs. Rounds said the natural beef products could sell particularly well in Europe. South Dakota has long claimed its beef is as good and as safe as any produced elsewhere in the world, the governor said. "We not only will brag about it, but we're going to prove to consumers out there that what we're talking about is reality today," he said. State Agriculture Secretary Larry Gabriel said the beef branding program should improve agricultural income in South Dakota by switching farmers and ranchers away from producing a raw commodity to selling a branded product, Gabriel said. He has said for years that far too many cattle born in South Dakota are sent to other states to be fed and processed. "I think this is a big step in revolutionizing the way we market our products," said Gabriel, who also raises cattle on a ranch in western South Dakota. The program should increase the number of calves born in South Dakota and the number of cattle fed and slaughtered in the state, officials said. Gabriel, who was preparing Tuesday to leave for a nine-day agricultural trade mission to Japan and South Korea, said 850 farmers and ranchers have expressed interest in the branded-beef program. Emergency rules for the program should be done in a few weeks, he said. Don Ward, owner of Bad River Pack, a small meatpacking plant in Fort Pierre, believes the branded-beef effort is a chance to sell quality beef products across the nation and in other countries. "I don't know how large a premium we'll be able to demand," Ward said. "I do know people are willing to pay for quality in most markets."

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Monday, March 14,2005

Stay moves feds higher

by WLJ
The Canadian border situation played a role in advancing cattle trade last week, with both fed and feeder cattle markets turning sharply higher last week. Fed cattle moved up $3-4 live, to $94, and dressed cattle were $6-8 higher, hitting $150 in the Northern Plains. Nebraska feeders moved 64,000 head on Wednesday. Southern Plains feeders were slower to trade and started trading Thursday afternoon at $92-93.50 and moved 90,000 head. Feeders were pricing cattle at $94-95. There was a great deal of anticipation that the Canadian border would be open to cattle trade on March 7, packers were clearly waiting for a fresh supply of fed cattle and meat traders were also expecting to see some better buys on boxed beef. Canadian feeders were starting to get over their initial market impact, fed cattle were trading at $92 Canadian two weeks ago. Just after the injunction was announced fed markets quickly moved down to $80. Feeder cattle took a similar hit and the heavier the cattle the bigger the hit. There was speculation that this injunction may take as long as nine months to get the legal process started. The boxed beef markets turned stronger as Choice product advanced to $153.06 at the close of business Wednesday, and Select was trading at $147.58 on good volume. Meat buyers looking to fill Easter holiday beef specials were expecting the market to move lower but were caught on the wrong side of the market and had to pay more for boxed beef, which advanced several dollars last week. Higher boxed beef values gave packers the opportunity to enjoy a few days of positive margins with their average breakeven at $91 against an average buy for Wednesday’s slaughter at $89.49; they were earning $18.55 per head, however, that was expected to be short-lived. Estimated slaughter for the week ending March 4 was 598,000 head, up 24,000 head from the prior week. This was also reflecting a seasonal increase in beef demand. Slaughter through Thursday of last week was running 4,000 head larger than the week earlier, which should push weekly slaughter over 600,000 head for the first time in several weeks. As a result of the border remaining closed, several packers have announced slaughter reductions. Excel announced slaughter reductions in seven of its slaughter plants. Swift also indicated some reduced slaughter levels. Andy Gottschalk at Hedgersedge said that he “ fully expects other packers to reduce their weekly slaughter levels. The demand base for March is estimated to be 548,000 head a week” Gottschalk also said the judge’s ruling disallowing the resumption of Canadian live cattle imports served as catalyst to the higher fed cattle prices achieved last week. He said the net of this action will be to reduce annual domestic beef production approximately 400 million pounds. The reduction in annual domestic beef production resulting from the judge’s ruling will add approximately $2 to the average annual fed cattle prices. It is now likely that fed cattle prices should not trade under $87 through mid-May. Wayne Purcell, ag economist at Virginia Tech, said, “The courts are in charge in the cattle markets right now, and it is hard to offer advice in this type of environment. I have been bullish on cattle, live cattle and feeder cattle futures, and perhaps we can just look to what has happened and stay off short hedges on the live cattle contracts starting with June and beyond and stay on long hedges in the feeder cattle, both the March and the August.” With the federal court action blocking the scheduled opening of the Canadian border on March 7, it may be months before the border issue is resolved, Purcell added. “If by that time we have seen beef shipments to Japan starting again, we could see fed cattle prices in the summer months near $100 again, perhaps even higher. But if the Canadian border is opened and there is a reserve of cattle ready to come into the U. S., then we could see prices pushed down again. It is a difficult time to be trying to read these cattle markets.” USDA lowered its beef production forecast partially because of the court injunction keeping the border closed. USDA is expecting beef production to move down to 25.69 billion pounds. Also weather related feedlot performance has reduced slaughter levels and carcass weights. Jim Robb, chief economist at the Livestock Marketing Information Center (LMIC), said he anticipates beef imports to increase to four billion pounds this year, roughly a 20 percent increase. Robb said that he expects markets to be volatile for the next several months. Ron Plain, economist from the University of Missouri, said BSE continues to dominate beef trade. Plain said, “The U.S. exported $3.9 billion of beef and beef variety meats in 2003 but only $808 million worth in 2004. In 2003, 9.6 percent of U.S. beef production was exported, but only 1.9 percent of 2004 production. U.S. beef imports increased from the equivalent of 11.6 percent of 2003 beef production to 15 percent of last year's production.” Calves, yearlings rally $2-5 Feeder and stocker steer and heifer prices trended anywhere between $2-5 stronger last week, as demand was called very good for moderate to light offerings of calves and yearlings nationwide. On the calf side, Southern auction barn managers indicated that weather in the Southwest and southern portions of the Far West continue to be abnormally wet and spurring thoughts of extended spring grazing of calves and yearlings. Similar grazing prospects are being touted in the eastern half of the central Plains in the Midwest, with several auction barn reports from those states reporting not nearly enough cattle to meet demand. Texas and Oklahoma auction barns said that supplies were short last week due to wet weather making it difficult for producers to get into their cattle, load them and ship them to town. Northern Plains and Intermountain West auction facilities are reporting “very few” calves and stocker cattle being offered for sale, and those that are being sold are moving to buyers in the Southwest or Missouri and further east. Heavier, more feedlot-ready prospects, were also seen bringing stronger money last week as cattle feeders are starting to need more U.S. cattle to make up for what they were anticipating buying from Canada. Auction managers and sale reports from Colorado, Nebraska, the Dakotas and Montana especially indicated that cattle feeders in those areas were starting to feel short of cattle for spring entry into feedlots. Market analysts credited the delay in Canadian feeder cattle entering the U.S. for 50-60 percent of last week’s price rally on yearlings and other placement-ready cattle. Stocker cattle prices weren’t affected by that ruling, according to analysts, because USDA had not planned on allowing feeder calves to go anywhere but feedlots. Feeder cattle futures rallied last week, and that also helped cash prices for heavier yearlings and calves. The March and April contracts both got back over the $106 per cwt mark last week, while May found itself eclipsing $105. Thursday’s market was a little softer. However, analysts said that was the result of southern state fed cattle trade being slow to get started. In addition, cattle feeders in more northern areas of the country were starting to report $25-50 per head profits, which helped them justify spending a little more on feeder cattle. Southern cattle feeders were still struggling to meet breakevens, market analysts said, and that was slowing demand on heavier, more-placement ready cattle. The CME feeder cattle index, for 700-850 pound steers, was at $103.16 last Tuesday, compared to $101.60 the previous Wednesday. Slaughter cows & bulls The prices paid for slaughter cows and bulls last week followed a similar trend as most auction barns across the country reported $2-4 gains on all classes of slaughter cows and bulls. The cow beef cutout was stronger at $111.41 up $6 from the prior week and the 90 percent lean was $152.09. Retailers are expecting demand to pick up on ground beef products, particularly with the “grilling season” starting over the next couple weeks. There is also expected to be a seasonal increase in fast food demand, especially for burgers, as colleges and universities start to send students off for spring break and a larger number of families plan vacations over the next few weeks. — WLJ

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Monday, March 14,2005

Senators to meet with Japanese envoy

by WLJ
Two U.S. senators were scheduled to meet Japan’s envoy separately last Friday and the following Monday to directly press Japan to lift the 15-month-long import ban on U.S. beef. Sen. Wayne Allard, R-CO, and Senate Finance Committee Chairman, Charles Grassley, R-IA, were scheduled to meet Japanese Ambassador to the U.S. Ryozo Kato. Allard initiated a joint letter of 20 bipartisan senators sent last month to Kato, threatening to pursue retaliatory economic actions if Japan fails to quickly resume beef imports. On March 4, 59 members of the House of Representatives submitted a resolution urging the Office of the U.S. Trade Representative to “immediately” impose economic sanctions on Japan for failing to lift the ban despite an agreement reached last October to resume imports of beef from animals up to 20 months of age. Japan was the largest importer of U.S. beef before it imposed the ban in December 2003. The Japanese government has repeatedly said it is waiting for an outcome of the ongoing deliberations by the Food Safety Commission over whether to stop the current domestic blanket testing of slaughtered cattle and exclude animals aged 20 months or younger. The independent commission’s go-ahead will pave the way for Japan to partially resume imports as agreed to with the U.S. back in October. In addition to senators meeting with Kato, U.S. Secretary of State Condoleezza Rice is expected to discuss the issue when she is over in Tokyo the week of March 14, federal officials said. It is expected that Rice may have a brief meeting with Japan Prime Minister Junichiro Koizumi to discuss the issue.

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Monday, March 7,2005

Bank sues Tyson board

by WLJ
Amalgamated Bank, trustee of a mutual fund owning nearly 89,000 shares of Tyson Foods, filed suit on Feb. 16 against the Springdale-based company charging directors benefitted fiscally at the expense of shareholders. The lawsuit—which was filed in Delaware and seeks class action status—lists the world's largest meat processor and most current and some former members of its board of directors as defendants, including Chairman and CEO John Tyson. One of the charges of the complaint is that the company tied giving stock options to executives and board members to events that the company believed would increase the value of shares, such as an improved earnings outlook. Tyson spokesman Gary Mickelson said as of Wednesday afternoon the company had not been formally served the complaint and "was unable to respond." Jay Eisenhofer, attorney with Grant & Eisenhofer, the firm representing union-owned Amalgamated Bank, said in a release he predicts greater scrutiny regarding certain stock options. "There is no doubt in my mind that timed options represent the next big wave in corporate governance reform," he said. Other allegations listed in the suit by Amalgamated Bank, trustee of LongView MidCap 400 Index Fund, include: • Certain present and former members of Tyson's board favored personal interest of the Tyson family, who held a controlling stock interest in Tyson; • The defendants entered into wasteful and excessive consulting contracts with Tyson family members, some of which can continue posthumously; and • The defendants allowed family members to "run roughshod" over the company's finances by causing the company to enter into unjustified related-party transactions with interests of family members. The firm is calling for Tyson to compensate financial injuries suffered by the company as a direct result of the breaches of management duties by the individual defendants. Amalgamated Bank also criticized Tyson's dual-stock corporate structure, which gives former Senior Chairman Don Tyson more than 80 percent of voting power on items such as shareholder proposals, executive compensation and board members. In proxy statements filed with the federal Securities and Exchange Commission, the company's board has defended the dual-class system, saying it is in the best interest of the company. Many analysts and Martha Carter, senior vice president and director of U.S. research for Institutional Investor Services, a provider of corporate governance services, are critical of the structure. "Dual-class systems—where one class has super-majority voting rights—disenfranchises the class with lower voting rights and is not consistent with good corporate governance practices," Carter said. "If the allegations are true, the management of the company is putting their own interest ahead of their shareholders." The company said in its most recent proxy statement it has chosen not to comply with certain New York Stock Exchange corporate governance rules, taking advantage of a provision allowing family-controlled companies to do so. Last year, it did increase its number of board members independent of the company to five out of 10 total seats, a move analysts called for. Standard & Poor's in July upped the company's short-term credit rating after a review of its management practices, and S&P analyst Jayne Ross said in a report, "Tyson is making strides in improving some issues" concerning corporate governance. In December, Tyson said it would pay $1.5 million to end an investigation by the SEC regarding perks given to top officers, including Don Tyson. The company said it will pay the civil penalty without admitting or denying wrongdoing. Don Tyson agreed to pay $200,000 to the SEC under the same conditions. Amalgamated Bank filed suit Wednesday against technology firm Cisco Systems under charges similar to those levied against Tyson. — WLJ

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Monday, March 7,2005

Beef operations break even

by WLJ
Smithfield, VA-headquartered pork and beef processor Smithfield Foods Inc. announced that net income for its fiscal 2005 third quarter was $97.5 million—versus income last year of $42.1 million. Sales were $3.1 billion compared with $2.7 billion last year. The substantial increase in earnings is attributable to the continued success of Smithfield’s vertically integrated pork operations, enabling the company to realize improved profitability during this period of increased livestock cost, the company said in a news release. In the quarter, the company’s hog production operations benefitted from a 48 percent increase in live hog market prices year over year. Raising costs remained about the same as last year, but down about $1.50 per hundredweight from the second quarter. Despite the sharply higher livestock prices, fresh pork margins remained solid as the result of continued strong export and domestic pork demand. The company’s beef segment operated at near breakeven levels due to the continuing difficult market conditions in the beef and cattle industries. Pork exports continued strong in the quarter, running 26 percent ahead of the same period last year and increasing 23 percent year-to-date, after adjusting for the additional week last year. Price increases in fresh pork, however, were not sufficient to fully recover the much higher raw material costs. Processed meats margins also were down from a year ago on considerably higher input costs. The company continued to drive volume, however, in value-added, pre-cooked categories, including bacon, entrees and ribs, which grew at double-digit rates. Smithfield’s beef segment earnings were at a break-even level in spite of weak demand, closed export markets, tight cattle supplies and high cattle costs. Beef volume was down four percent compared with a year ago, after adjusting for the additional week a year ago. Last year’s third quarter was adversely impacted by $11 million in pre-tax costs and inefficiencies in the beef segment related to the reported case of bovine spongiform encephalopathy in Washington state. “Through our vertical integration strategy, our pork processing and hog production operations combined to produce a record quarter from operations, even though we had no earnings contribution from our beef business,” Joseph Luter, III, Smithfield chairman and CEO ,said. “I am confident that this combination of businesses should produce improved fourth quarter results over a year ago, despite a relatively strong fourth quarter in fiscal 2004.” Luter said the company recently announced an important transaction that will strengthen substantially the latest addition to its business model, cattle feeding. Smithfield has signed an agreement in principle to form a 50/50 stand-alone joint venture cattle feeding business with ContiBeef LLC, a subsidiary of ContiGroup Companies, Inc. “This will be a significant transaction that further supports our growth in the beef and cattle industries,” Luter said. “The financing for the venture will come from equity investments by ContiGroup Companies and ourselves and a non-recourse bank credit facility. More importantly, we will be partnering with management, whom we believe, are the best operators in the cattle feeding industry to run the business.” “I continue to be optimistic about our future,” Luter said. “It appears that the pork export market will remain at high levels, which will drive the domestic pork market and live hog markets. The futures markets confirm the positive live hog market outlook. Additionally, the U.S. hog breeding herd remains stable. We are positioned for consistent, future growth.” — WLJ

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