WITH some elements of the American public there seems to persist the
conviction that the great packing concerns are seeking the injury of
livestock producers to their own enrichment. How such an idea can be
seriously harbored by thinking men is hard to understand. For the
packing industry to plan for the farmer anything but prosperity is to
endanger or destroy the source of supply of the raw material by which
it lives and grows.
It should be perfectly plain that the packers are selfishly interested
in encouraging the producer. Their selling efforts are directed towards
disposing of the largest possible volume of meat products, at the best
price obtainable in competition with other foods, in order that they
may maintain large volume of livestock purchases at prices that will
encourage both quantity and quality of production.
Between the producer and the consumer, between the buying and the
selling price, the packers operate upon a smaller margin of profit than
any other large industry. On invested capital they have realized an
average of about 9 per cent over a term of years, on volume of sales
about 2 per cent, and on each pound of meat less than one-half of a
cent.
At the same time the risks of the business are greater than in other
lines, both on account of the perishable nature of the product and the
violent fluctuations of food prices, the causes for which cannot always
be foreseen.
The comparative low prices of hogs and pork products at the end of 1919
is a case in point. The packing business entered upon the year in the
belief that the world shortage of food would maintain pork prices at
high levels for a number of years; that European demand would absorb
even a larger surplus of American hogs than the pre-war period. The
earlier months of 1919 confirmed this belief. The foreign demand was
very brisk, exports reached unprecedented volume and prices were
maintained.
Then came the unlooked-for event. Foreign exchange rates fell to so low
a point that Europeans could no longer afford to buy American meats.
The packers extended credit for a time, but the limit of safety was
soon reached, and when the year closed very little American pork was
being exported and no new contracts were being made.
The result was great loss to both producers and packers. Armour and
Company alone packed millions of pounds of pork during the period of
high prices, much of which was still in the course of curing when the
slump in the market came.
But the conditions that caused this decline and loss are exceptional
and only temporary. The great foreign need for American meats still
exists—the greatest need in the world’s history. The ability of Europe
to buy will be restored with the full restoration of peace and the
arrangement of international credits. The result will be a return of
profits and prosperity to both producers and packers of pork.
The facts to keep in mind are these:
First, there must finally be a realignment of prices on all livestock
and meats, to levels below the prevailing high war prices. A fair
balance must be struck between the interests of the consumer and those
of the producer. Prices for meat must be sufficiently attractive to
consumers to insure an adequate volume of sales; on the other hand
prices for livestock must be sufficiently high to encourage production.
Only on this basis can the industry thrive.
Second, the utmost care must be taken in breeding and buying of feeding
stock and the most exacting economy practiced in feeding methods.
Third, the producer must realize that the packer is his natural ally
in maintaining the prosperity of the two inseparable branches of the
livestock industry—production and packing.
It is a reassuring sign that producers and packers are already getting
together on a platform of better understanding of their mutual
interests, both for protection against disturbing agitation and
legislation and for the correction of whatever inequalities or abuses
may exist in the shipping and marketing of livestock.
Armour and Company’s Farm Bureau was established three years ago as a
point of contact with livestock men, through which better methods of
breeding, feeding, shipping and marketing could be promoted.
Being in constant touch with the requirements of the markets, Armour
and Company know the types of meat animals which are most demanded
and which bring the largest profit to the stockman. The Farm Bureau
has available many facts regarding the economical production of these
types, and these facts can be had by addressing the Bureau, care of
Armour and Company, Chicago.