I read that a Chinese company is buying the largest US pork producer, Smithfield.
http://www.reuters.com/article/2013/05/29/us-shuanghui-idUSBRE94S0K920130529
So what does this have to do with US railroads? Well, it may be a great market development opportunity. I can't see Smithfield as a smart investment as it now exists. Meat packing is a tough business with low and unpredictable margins. Speculation is that the Chinese company wants to bring more pork in to China, and therein lies the railroad opportunity.
Smithfield's largest plant is in Tar Heel, NC. This plant has the capacity to kill and process 32,000 hogs per day. (That seems to be too big. Newer hog plants haven't been built to that scale. The newer facilities run around 18,000 - 19,000 per day. Just as there are economies of scale, there are diseconomies of scale if you build too big.) Smithfield also has smaller plants in the Midwest. Iowa being the center of pork production in the US.
So, let's just say that the Chinese complete the deal and significantly increase their importation of US pork. (There are few, if any, places in the world where quality pork can be produced as efficiently as it is produced in the US.) What will that mean for the US railroads?
Well, first of all, more hogs mean more grain. It takes 7.7 pounds of grain to produce one pound of pork. The grain has to be moved to the hogs. US farmers can produce more grain. And the US railroads can haul it.
Second, the pork has to be moved to China. Two scenarios come to mind:
1) The Chinese put the pork on a ship at a west coast port. This would provide a westbound refrigerated load for rail movement and create an empty reefer container in California. That's an opportunity, not a problem. California produces almost half of the fresh fruits and vegetables in the US. This produce moves great distances to eastern population centers such as the New York area, Chicago, and in to eastern Canada. The railroads will have an opportunity to move reefer equipment both ways under revenue load.
2) The Chinese put the pork out of Tar Heel on a ship at an east coast port and use the improved Panama Canal to get it to China. This would take some of the production of that huge plant out of the supply chain to equally huge US eastern population centers in the northeast and Florida. Since the folks in those populations aren't going to quit eating pork chops the supply will have to be shifted to Midwestern origins. That's long haul where rail has an economic advantage over trucking.
I smell great opportunity here. If the government doesn't get in the way.
Don't fret about your own access to pork. The US produces pork as efficiently as any place in the world. Maybe more efficiently than any place in the world. The farmers and packers will produce more pork to meet increased demand without breaking a sweat. Currently, about 22% of hogs slaughtered in the US go to export.
If the government let's this one go through we could have another Bonanza that could rival the oil developed in shale. There are a lot of people in China. And they seem to like pork. Of course, that's a big IF.
I'd rather they bought the pork and left the company as U.S. owned (keep the profits HERE!).
Semper Vaporo
Pkgs.
Semper VaporoI'd rather they bought the pork and left the company as U.S. owned (keep the profits HERE!).
"For the deal to move forward, Shuanghui International needs a regulatory go-ahead from Washington officials. A host of scandals has hit China’s poorly regulated food suppliers in recent years, and concerns have been raised about some of Shuanghui’s past practices. Chinese state media reported that pork from a Shuanghui subsidiary had been tainted by the chemical clenbuterol, which can make meat leaner but sickens humans. Shuanghui promised to destroy thousands of tons of its product to allay customer concerns."
--The Washington Post, May 30, 2013.
I just hope the government does what it has to do to keep our pork supply safe.
Grains and thing like peas are mixed into hog feed; but how much is grown locally and can be easily 'trucked' to to the 'farm'? I suspect that the hog operations are close to the processing plant.
Once the hogs are processed, this is an opportunity to ship them via rail. Refrigerated international containers make sense. Larger refrigerated domestic containers(53') might make more sense if the ship is a large 'freezer' and the hogs will need to be unloaded/loaded.
Most livestock growing and processing is quite regional, and there are lots of hog operations in the Midwest - I would not worry about lack of pork chops for Midwesterner's!
Smithfield's daily production capacity in 2010 was about 113,200 hogs/day. Tyson's capacity was 67,600 hogs/day, and Hormel's capacity was 37,000 hogs/day. The Hormel pants in Austin, MN and Fremont, NE.are in the Midwest. The top 5 producers(including Smithfield) produce 38% of the processed pork in the US. There are lots of other small operations that produce the other 62% of the processed pork.
Jim
Modeling BNSF and Milwaukee Road in SW Wisconsin
Semper Vaporo I'd rather they bought the pork and left the company as U.S. owned (keep the profits HERE!).
The only way I could see the profits staying here is if only citizens of the US were allowed to hold stock...
"I Often Dream of Trains"-From the Album of the Same Name by Robyn Hitchcock
greyhounds1) The Chinese put the pork on a ship at a west coast port. This would provide a westbound refrigerated load for rail movement and create an empty reefer container in California. That's an opportunity, not a problem. California produces almost half of the fresh fruits and vegetables in the US. This produce moves great distances to eastern population centers such as the New York area, Chicago, and in to eastern Canada. The railroads will have an opportunity to move reefer equipment both ways under revenue load.
Pardon me, but you cannot do that. It is simply NOT KOSHER to transport produce in the same car as Pork.
IIRC, ditto poultry and other meats. cross contamination, you know. Yes, steam clean them, we do that anyway, but still? FDA can be just as bad as the FRA.
ROAR
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Here there be cats. LIONS with CAMERAS
So Kosher Products cant use the same trailers railroad cars as non kosher food? I post the question on ASK the RABBI and get back to you on this.
I don’t see why this should be a problem if the container is cleaned. Is there some reason why the container can’t be cleaned? The entire food processing industry requires cleanliness of equipment, and is successful at providing that cleanliness.
BroadwayLion It is simply NOT KOSHER to transport produce in the same car as Pork.
have a cheeseburger!!
Bonas So Kosher Products cant use the same trailers railroad cars as non kosher food? I post the question on ASK the RABBI and get back to you on this.
I doubt the Kosher hot dogs get separate trucks than the non-kosher ones. They share the same display case in a store - aren't the Kosher rules more about production?
It's been fun. But it isn't much fun anymore. Signing off for now.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.t fun any
BonasSo Kosher Products cant use the same trailers railroad cars as non kosher food? I post the question on ASK the RABBI and get back to you on this.
I, for one, will be waiting for the answer.
zugmannaren't the Kosher rules more about production?
Here is a listing of dietary law that explains things in more detail. Strict observers have two refrigerators in their house, one for meat, the other for dairy.
There is Kosher, and then there is Kosher (or Glatt Kosher if you prefer).
(stirring the pot.)
(And none of it has to do with rail cars, but at least I tried to start something.)
Uh, if the Chinese are buying the pork to ship home I don't think Kosher enters into the equation.
Uh, it's not the Chinese who would have concern for possible compromise to dietary law.
I'm not Jewish and all I really know is what I just read in your link.
However, the information on cleaning is not at all clear. Food preparation items becomes meat or milk accordingly as they are used to prepare these foods. For example, in the instructions, a towel that is used to dry dishes milk products are served in can simply be washed. It can then be used to dry meat dishes. Washing the towel between uses is the key here.
But pork or pork products would never ever enter an observant Jewish household. To make an item kosher after it has been used with pork is inconceivable.
So what does kosher have to do with a back haul of fruits or vegetables in a container that hauled pork?
Why should this business model need to include kosher food?
For some religions, there are dietary LAWS that must be followed to be sure the food is acceptable for their consumption. It is usually associated with the Jewish term Kosher, but Muslim and other religions also have such restrictions. It would be included in the business model if the business wants to not lose a contract due to failing to follow the practice.
I am not Jewish (nor of any religion that has a strict dietary laws to obey), but "my" understanding is that although you could perform a "hygienic" cleansing of the container, it would also require a ritual religious "cleansing" by a Levitical Priest (or religious leader of whatever religion is claiming that the food item is going to be acceptable) and possibly a waiting period (such as until sundown) before the container could be used again.
If any food item is to be considered acceptable (Kosher) then ALL the ingredients must be Kosher and prepared according to the dietary law being in effect. For example, a cake might be prepared according to Kosher rules, but if the food coloring is from shellfish then the cake can no longer be considered Kosher.
There are some disagreements amongst the various sects of the various religions as to what constitutes "acceptable" and it can become a quagmire to wade through. But the business model may need to take some base level into account.
BroadwayLionIt is simply NOT KOSHER to transport produce in the same car as Pork.
I'm sure he didn't mean Kosher Kosher, he was using the old expression that something is simply against the rules. This time being government food handling rules.
Now to the point I wanted to get to before this on again off again thread business started. I am not at all sure that the Chinese are any longer capable of pulling something like this off. If you recall about a month or so ago, the stock markets took a one day hit when some agency in China reported estimates of Chinese manufacturing potential for 2013 came in 2/10's of a percent lower than analysts expectations.
Immediately the media asked another analyst for his explanation for the hit. This fellow said that the much vaunted rise in entrepreneurism in China is coming to a sudden halt. The Chinese government does not like what they can't control, and they have begun to insert government functionaries and apparatchiks into the senior management and boards of directors of private companies started by entrepreneurs in the late 1990's and early 2000's.
So, while buying a pork producing factory seems easy enough, the new improved Chinese management system is going to want to have control over the shipping of the pork from the factory to China. Now since buying a Class I railroad is off the table, I suspect that China will insist on using trucks to get the product to port, and Chinese owned interstate trucking companies are bound to raise regulatory eyebrows.
Unless there is yet another change in Chinese business management philosophy I just don't see this deal ever getting off the ground.
Bruce
So shovel the coal, let this rattler roll.
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Firelock76 Uh, if the Chinese are buying the pork to ship home I don't think Kosher enters into the equation.
Except that reusing the cars to transport other food back east may violate Kosher rules. You cannot have meat and dairy in the same equipment. But a cursory Google seems to indicate that this applies in pots and in kitchens, but not in rail cars.
A salmon may eat a shrimp, and the salmon will still be kosher.
Before hiring out on the railroad, I worked at IBP (Pork plant at Perry, IA, now Tyson) for a few years. Before a trailer or container was loaded with meat it gets washed out at the plant. IBP contracted out the hostling of trailers between the drop area and load out doors. The contractor who did this also took care of making sure the trailers were clean and ready to load.
When I worked at Perry they had 2 shifts. The day shift production was all export for Japan. The night shift was IBP product for domestic markets. All the meat for export was cut into the desired pieces and shipped out boxed, most in sealed plastic wrap inside the boxes. There was some product that was wrapped in paper, but I think that was only some of the larger cuts for domestic consumption. The only thing items that weren't shipped that way were items (such as trimmings, pork bellies, hams etc) that were going to other plants for further processing. The boxed items, which is most likely how any export product is going to go, will be less subject to being contaminated by a previous load. I doubt they will be shipping sides of meat hanging from rails in the trailer/container. I wonder if anyone still does it that way. Besides, if a trailer or container isn't clean or hasn't been washed out, they simply won't load it.
When I worked there, the export product went out in K-Line containers. I don't know if they went to a railhead or direct to the west coast by highway. The Japanese company that IBP dealt with had a presence at the plant. They bought the hogs and specified how they wanted them processed. When running the Japanese product, IBP couldn't work their own product. That's why they had the second shift. When I left there, the Japanese were in the process of having the plant modified to run one shift, but keep the same daily production numbers (about 3000 head) and all of it would be for export. The plant is still open under Tyson and I assume still producing only for the export market.
Jeff
AgentKidI am not at all sure that the Chinese are any longer capable of pulling something like this off
Well, they are and they have. They have built from the ground up new grain elevators here in North Dakota. They buy grain directly from the farmers, cutting out ADM et.al. They transport it west by rail, and put it on ships bound for Japan and China.
I am certain that the government (there) does not mean to control enterprises in the USA as directly as they do in China, the really do not give a pig's tail about control of the bottom, it is the top that they want to keep under control.
Another issue is that 1) they still have to feed more people than they can grow for; 2) the populations have been shifting to the cities to cash in on the growth, and btw produce less food; and 3) China is trying to move factories and good jobs out into the hinterlands so that people will be able to remain out there.
China would make a good fit with the USA if it were not for the politics of both. But the Chinese do hold US money, and that is easier to spend in the USA than it is in China. And for all we hear about how much of USA China actually holds, it is a very small fraction of the US debt, most US debt is held by US citizens.
I don't understand why kosher has to be a showstopper here. We are only talking about the backhaul empties from the pork shipment. Can't they be filled with non-kosher food for the backhaul?
And why would China want to buy a pork plant in the U.S.? What would be the financial incentive for them to own the U.S. based plant? Why don't they just buy the pork and not own the plant?
BucyrusAnd why would China want to buy a pork plant in the U.S.? What would be the financial incentive for them to own the U.S. based plant?
Same as I mentioned about the grain elevator above. They get to buy directly from the farmer rather then from Archer Daniels Midland et. al. Cut them guys out and you save a ton of money. Besides they *have* US dollars, and these are easier to spend here than in China.
It is called "Vertical Integration"... you buy the processing plant and you don't have to pay the stock holders any profits, you keep them. Eliminate the middle man and his profits and you reap the benefits.
For me, I do not want foreign ownership of American business/employment. Whether it is stockholders or private ownership, I want the profits to stay here. Of course, I should be just as concerned about American investment in foreign countries... but ... well... ummm.... ... ...
As for back-hauling 'non-Kosher'... to the non-Jewish/non-Muslim/etc. it seems to be a non-issue, but I would ask you if you would mind buying milk from a company that used the same tank trucks to back-haul sewage... hey you can steam clean it and it may be germ free, but the "idea" is somehow objectionable to many people... we tend to want some intermediary step to move the disgusting part a couple of steps away through some "natural" process and "time". Regardless, to those of certain religions, there is a REQUIREMENT that must be met and that settles the argument.
BucyrusAnd why would China want to buy a pork plant in the U.S.? What would be the financial incentive for them to own the U.S. based plant? Why don't they just buy the pork and not own the plant?
It does strike me, Bucyrus, that the Chinese may not have a lot of interest in shipping any more pork to China than we currently export. After all, raising pigs is not unknown to the Chinese. They have been raising their own pigs since before we were a country.
Right now the Smithfield Company has a hugh market for pork and pork products in the US. To abandon that market and its profits makes no sense. It certainly is possible that this Chinese company is simply looking for a place to invest its capital and in an uncertain world diversification makes sense.
So this whole transaction, if it goes through, may not have any new implications for either rail or truck transportation. To the extent that the Smithfield Company uses railroads and trucks now that will continue. To the extent that the Smithfield Company exports pork and pork products that will continue. But there will be no real change other than the natural growth of the business.
John
There are cars stenciled Kosher approved, I just saw a food service tank car last day or so stenciled as such, and here is a link to a company that washes and makes a tank car kosher approved…
http://www.tankcarcleaning.com/services/tankcarcleaning.html
More specifically see
http://oukosher.org/kosher/displaycertified
I have also seen a tank car for tallow use stenciled “Not for Kosher Use” although I can’t remember which of the big shippers it was leased to, it did specify beef tallow only.
Where there is a market….!
23 17 46 11
Semper VaporoAs for back-hauling 'non-Kosher'... to the non-Jewish/non-Muslim/etc. it seems to be a non-issue, but I would ask you if you would mind buying milk from a company that used the same tank trucks to back-haul sewage... hey you can steam clean it and it may be germ free, but the "idea" is somehow objectionable to many people... we tend to want some intermediary step to move the disgusting part a couple of steps away through some "natural" process and "time". Regardless, to those of certain religions, there is a REQUIREMENT that must be met and that settles the argument.
I understand what you are saying. If I believed a product was not clean I would not buy it or eat it. Likewise if I had a religeous requirement to not eat a certain food, I would not eat it. But if I had food to ship and my shipping did not meet the requirements of certain people, I would find other people to ship for.
In addition to being the largest pork processor, Smithfield is also one of the largest hog producers. An article in the paper a couple days ago when the story broke asked some agricultural experts if this was good news for Iowa hog producers. While mostly noncommittal, kind of a wait and see attitude, one did mention about Smithfield's hog operations. It was mentioned that China restricts pork imports because of a feed additive that's commonly used in the US. Smithfield has been moving away from using the additive. This expert thought because of Smithfield being able to supply most of the hogs they process, it wouldn't mean as much to the independent producer.
It kind of lets the Chinese say they are importing more American pork while still being in control from farm to market.
This whole Kosher thing is a non issue.
It's not as if a trailer that hauls a load of pork is forever banned from hauling a load of cheese. When I started with the railroad we still hauled TOFC meat. We had Rabbis on call to keep the meat Kosher. If needed, we'd call the Rabbi and he would come out and perform the needed actions.
I'm sure the same thing could be done with a rail container that hauled a load of pork to the west coast. Clean it out and call a Rabbi.
I do not think too many produce receivers would be concerned about previous loads in the container. As long as it was hygienically clean when loaded with their product. But if a receiver was so concerned, I'm sure a solution could be found.
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