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March 06, 2001

Smithfield Sued for Letting Pig Manure Out of the Poke

Environmental group says litigation is needed to stop hog producers from polluting waterways. -- A coalition of environmental and family farming groups has filed three lawsuits against Smithfield Foods (ticker: SFD), the world's largest hog producer and pork processor. The lawsuits allege Smithfield has violated environmental laws by allowing hog waste to contaminate North Carolina rivers and streams.

The coalition is being led by the Water Keeper Alliance, an environmental group headed by Robert Kennedy Jr., son of the assassinated senator. Participants in the coalition include the Sierra Club, the National Farmers' Union and the Animal Welfare Institute.

The coalition says that the federal government is not enforcing its own regulations, mostly because the Environmental Protection Agency does not have enough resources due to budget cuts. "This collapse of environmental enforcement has allowed corporate hog factories to proliferate with huge pollution-based profits," Kennedy said when the intention to sue was announced in December. "The failure of government has forced us to find champions outside the regulatory community," he added.

The coalition has recruited a powerful team of attorneys to take the case. They are not run-of-the-mill barristers; some of them have experience in suing, successfully, the asbestos and tobacco industries.

North Carolina's hog population has exploded over the past 15 years, growing faster there than any other state in the U.S. Since 1987 the number of hogs in the state has risen from 2.6 million to 10 million, a 285 percent increase. The majority of this increase is due to the proliferation of factory-style hog farms, where hogs are packed in football field-sized warehouses. One warehouse can house 800 to 1,000 hogs.

The lawsuits target how the manure is treated and disposed. Hogs produce three times more waste than humans. In North Carolina, hogs produce 19 million tons of feces and urine a year, or over 50,000 tons every single day. This manure is usually collected it in open-air pits, called lagoons, where it is treated. Environmental groups say the treatment is minimal compared to the process used for human waste. Once the waste has been treated, it is sprayed on land as fertilizer.

Worker error and heavy rainstorms have caused spillage from the waste lagoons into waterways. According to the lawsuits, the spills have resulted in fish kills and poisoned rivers, underground aquifiers and soil.

Much could be at stake for Smithfield, which has responded strongly to the suits. Smithfield's annual hog production is approximately 12 million animals, and its sales in the previous fiscal year totaled $5.2 billion.

Richard J. Poulson, Smithfield vice president, said "[These lawsuits] are about the social agenda of a group of unelected, unaccountable trial lawyers who want to override the legal and regulatory framework, substitute their own personal desires and financial interests for the wishes of the people, and enrich themselves at the hands of the pork industry and ultimately the American consumer."

Poulson also said every one of Smithfield's hog farms uses state-of-the-art waste disposal technologies, and is subject to a zero-tolerance standard for waste discharge. He also said that in North Carolina in 2000, there were 14 accidental discharges of treated water that reached state waters, totaling approximately 125,000 gallons.

Factory-style hog facilities have generated controversies other than water pollution. The National Farmers' Union says that the factories are driving family farms out of business, and the Animal Welfare Institute claims that the treatment of hogs is "nothing short of barbaric." Residents living near hog facilities have complained about the foul stench and worry about the value of their properties falling.

If the lawsuits are successful, Smithfield may have to pay substantial amounts of money for cleanup as well as injury and punititive damages. That would be a hard way to learn that superior environmental and social business practices are the best strategy for increasing company value over the long term.

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