Premium Standard Farms
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| Premium Standard Farms, Inc | |
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| Type of Company | Public (NASDAQ: PORK) |
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| Founded | 1988 |
| Headquarters | Kansas City, Missouri (Corporate) Princeton, Missouri (Production) Tarboro, North Carolina (Production) Dalhart, Texas (Production) Milan, Missouri (Processing) Clinton, North Carolina (Processing) |
| Key people | John M Meyer, President and CEO Stephen A Lightstone, CFO Calvin R. Held, VP Richard L. Morris, VP |
| Industry | Agriculture, Food processing |
| Products | Fresh & Frozen Pork, Livestock |
| Revenue |  $919.54 million USD (FY 2006) |
| Operating income | $86.27 million USD (FY 2006) |
| Net income | $53.11 million USD (FY 2006) |
| Employees | ~4,300 |
| Slogan | America’s Premium Pork |
| Website | Premium Standard Farms, Inc |
Formed in 1988, Premium Standard Farms, Inc (PSF) (NASDAQ: PORK) was founded with the aim of creating a standardized method for which to produce premium pork. To accomplish this goal, the company decided to pursue full vertical integration –the first in the United States to do so. In 1998, ContiGroup Companies, Inc (formerly known as Continental Grain Company) acquired a majority interest in PSF. Today, Premium Standard Farms is the second largest pork producer and the sixth largest processor in the United States with operations in Missouri, North Carolina, and Texas. The company sells fresh and frozen pork products to domestic retailers, further processors, foodservice providers and export customers from more than 20 countries.
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[edit] Production
The livestock production segment of Premium Standard Farms involves operations in Missouri, North Carolina, and Texas and is located on approximately 100,000 acres (400 km²) in all three states. Its herd size of 221,000 sows can produce about 4.5 million pigs per year; the second largest producer of porcine livestock in the United States. Currently, Smithfield Packing Company holds the number one spot with about 798,000 sows in the United States and abroad.
[edit] Missouri production operations
Based in Princeton, the Missouri production operations employ about 1,250 people across northern Missouri. The company has 63 sow farms and nine grow/finish farms that span Mercer, Putnam, Sullivan, Daviess and Gentry counties. Additionally, local farmers operate finishing farms under contract with PSF. The operations in Missouri account for the bulk of the company’s herd with about 108,000 sows in production.
[edit] North Carolina production operations
Based in Clinton, the North Carolina production operations employ about 300 people in east-central North Carolina. This operation consists of 20,000 sows in nine company-owned farms, more than 40,000 sows through contract farms, and about 200 independent family operated farms. The company also has several marketing agreements to purchase weaned pigs from independent producers. In all, approximately $46 million dollars is spent annually for local contract production. In total, the company’s production operations in Duplin, Greene, Pitt and Sampson counties account for about 80,000 sows.
[edit] Texas production operations
Based in Dalhart, the Texas production operations employ about 300 people in the extreme northwest region of Texas. A sow herd of about 33,000 are produced in Dallam and Hartley counties. Production takes place on a 40,000 acre (160 km²) farm name High Plains Ranch. Additionally, the company purchased the 14,500 acre (59 km²) Perico Farm from National Hog Farms in 1994.
[edit] Processing
The processing end of Premium Standard Farms consists of two processing facilities - one in Milan, Missouri and the other in Clinton, North Carolina. Both facilities utilize similar methodologies and process over 4.6 million hogs per year. The Missouri plant was built in September of 1994 and was the first facility in the United States to use a CO2 anesthetizing system. More than 950 employees in this 300,000 square foot (28,000 m²) facility process over 7,000 pigs per day. The Milan plant produces fresh and frozen pork products for domestic retailers, further processors, food service providers and export customers from more than 20 countries.
The North Carolina plant was purchased by PSF (and parent company Contigroup) from The Lundy Packing Group in August of 2000. After a complete re-tooling of the plant’s cut area, the facility operates with approximately 1,200 people and processes over 9,000 pigs per day. This 800,000 square foot (74,000 m²) facility produces fresh and frozen pork products to domestic and export customers. Additionally, the Clinton plant specializes in producing further processed pork and other ready-to-eat products such as ham and bacon products.
[edit] Brands
Brands associated with Premium Standard Farms include Premium Farms, Fresh & Tender, Fresh & Natural, Premium 97 Heart Healthy, and others. Between 5 and 10% of PSF’s pork product is exported to over 20 countries including Japan, China, Singapore, Mexico, Malaysia, the Philippines and Taiwan.
[edit] Proposed merger with Smithfield Foods
On September 18, 2006, Smithfield Foods announced that it would acquire Premium Standard Farms in a cash and stock deal that would total $810 million including the assumption of about $117 million in debt. The sale of PSF’s open stock still requires approval from the SEC as well as shareholder approval. Smithfield hopes to close the deal by the end of the first quarter in calendar year 2007.
ContiGroup Companies Inc has stated that it is in support of the cash and stock buyout and will vote its 38.8 percent stake in PSF in favor of the deal. Under the proposed agreement, shareholders of PSF stock would have the right to convert their shares into Smithfield stock at a rate of 0.678 Smithfield shares plus $1.25 in cash per PSF share.
[edit] History
- 1988 - Premium Standard Farms founded
- 1989 December - First litter of seven gilts and four barrows born on Wiles farm
- 1994 June - PSF acquired National Hog Farms of Texas
- 1994 September - Construction of first processing plant in Milan, Missouri complete
- 1994 September - 80,000 sow units completed in Missouri
- 1996 - Company emerged from restructuring after market volatility
- 1998 May - PSF merged with ContiGroup’s north Missouri swine operation which added 25,000 sows to the company’s herd.
- 1998 December - PSF is the first pork producer to earn Process Verified accreditation from the United States Department of Agriculture
- 2000 August - PSF purchases the Lundy Packing Company and ContiGroup’s Carolina Farms
- 2003 April – PSF and Johnsonville Sausage form Oldham LLC, a joint venture to produce sausage products
