Seaboard Corporation

Seaboard Corporation

Type	Public
Traded as	NYSE MKT: SEB
Industry	Agriculture and Shipping Conglomerate
Founder	Otto Bresky
Headquarters	Merriam, Kansas, United States
Area served	Worldwide
Key people	Steven J. Bresky (Director and Chairman of the Board, President and CEO)
Products	pork, commodities, poultry, sugar, produce and electrical power
Net income	$6.670 billion (2013, U.S.)
Number of employees	23,000
Subsidiaries	Seaboard Foods, Seaboard Marine, Seaboard Overseas & Trading Group (SOTG), Tabacal Agroindustria, Transcontinental Capital Corporation, Ltd.(TCCB), Mount Dora Farms, and 50% non-controlling interest in Butterball, LLC
Website	seaboardcorp.com

Seaboard Corporation is a diverse multinational agribusiness and transportation conglomerate with integrated operations in several industries. In the United States, the company mainly engages in pork production and processing and ocean transportation. Internationally, Seaboard is primarily engaged in commodity merchandising, grain processing, sugar production and electrical power generation.

The parent company, Seaboard Corporation based in Merriam, Kansas, operates Seaboard Foods, Seaboard Marine, Seaboard Overseas & Trading Group (SOTG), Tabacal Agroindustria, Transcontinental Capital Corporation, Ltd. (TCCB), Mount Dora Farms, and has 50% non-controlling interest in Butterball, LLC. Its principal operating divisions are Pork, Commodity Trading and Milling, Marine, Sugar and Power.

Seaboard Corporation’s subsidiaries and affiliates employ more than 23,000 people in more than 45 different countries, mostly in the U.S., Latin America and Africa. With net sales of approximately $6.67 billion annually, Seaboard Corporation is #387 on the 2014 Fortune 500 list. Stock is traded on the NYSE MKT under the symbol SEB.

History

Seaboard’s history and roots are deeply tied to grain, dating back nearly 100 years. Otto Bresky purchased his first flour mill in Atchison, Kansas, in 1918. During the next 40 years he would purchase additional flour mills, mostly in Kansas, under the name Rodney Milling.

In 1959 the company went public through a merger with Hathaway Industries, Inc., a publicly traded company. The name changed to Seaboard Allied Milling Corporation, and stock was traded under the symbol SEB.

The newly-formed company began concentrating on milling operations closer to major metropolitan areas along the East Coast and in the Southeast. Beginning in the early 1960s Seaboard built five U.S. mills over the course of a 14-year period. The company’s first investment outside the U.S. was the joint acquisition of a flour mill in Ecuador. Seaboard later constructed mills in Sierra Leone, Guyana, Liberia and Nigeria.

When Otto Bresky retired as Seaboard’s Chairman and member of the Board of Directors in 1973, his son H. Harry Bresky took his place. After serving in WWII, Harry joined his father in the milling business and assumed the title of President in 1967, then later CEO. Seaboard built its current corporate headquarters in Merriam, Kansas in 1980.

In 1982 Seaboard sold its domestic flour milling division to Cargill, Inc. and changed its name to Seaboard Corporation, while continuing its milling operations outside the U.S. Harry and Seaboard took noticeable steps to diversify the company, initially by entering the poultry industry and by further international investments. Even though Seaboard eventually sold these original poultry interests to ConAgra in 2000 for $375 million,^[1] the poultry business proved the efficiency of a vertically integrated business model. This model of integration would continue to be successful in Seaboard’s expansion and growth.^[2]

Seaboard Marine, Ltd. was formed in 1983 to provide containerization services between the U.S. and other international ports. In 1986 Mount Dora Farms, Inc. was established in Latin America to produce fruits and vegetables. The company utilized its marine transportation division to ship its produce from South America to Miami. Today Mount Dora Farms, Seaboard’s produce division, specializes in processing jalapeño peppers in Honduras to ship to the U.S. and European markets.

Also during the decade of the ‘80s, Seaboard purchased two baking companies in Puerto Rico and ventured into shrimp farming in Ecuador and the Honduras. It constructed a new polypropylene bag plant in Nigeria. The Puerto Rico bakeries were sold in 1998, and after a brief entry into salmon farming, Seaboard eventually sold off all seafood investments in the early 2000s.

Transcontinental Capital Corporation, Ltd. formed in 1989 with the purpose of supplying electrical power to the Dominican Republic. The new subsidiary was the first independent power producer in the Dominican Republic.

1990 marked Seaboard Corporation’s entry into pork production and processing. The company’s pork division, Seaboard Foods, acquired a pork processing plant in Albert Lea, Minnesota. As it had done with poultry, Seaboard quickly began to invest in processing pork, constructing its first feeder pig facility and feed mill in Northeast Colorado in 1991. In 1992 Seaboard began construction on a state of the art pork processing facility in Guymon, Oklahoma. To support the Guymon facility, Seaboard constructed feed mills in Oklahoma, Texas and Kansas. Guymon eventually opened in 1996. The $110 million plant had the capacity to process over four million hogs annually, employing more than 1,000 workers, utilizing two shifts. The Minnesota pork processing plant closed in 1994.^[3]

That same year, in 1996, Seaboard acquired an interest in Tabacal Agroindustria, an Argentine company engaged in sugar cane production and refining and citrus production. Two years later, in 1998, Seaboard Corporation purchased a controlling interest in a winery in Bulgaria.

Seaboard added Daily’s® Premium Meats, a bacon processor with two processing plants in Salt Lake City, Utah and Missoula, Montana to its integrated operations in 2005. Seaboard also has an exclusive agreement to market Triumph Foods pork products utilizing a processing plant in St. Joseph, Missouri.

H. Harry Bresky retired in July 2006, but remained Chairman of the Board until his death in March 2007. Steven J. Bresky, his son, now serves as Seaboard Corporation’s President and CEO and its Director and Chairman of the Board.^[4]

Seaboard once again entered the poultry business with the acquisition of half ownership in Butterball, LLC in 2010.

With continued expansion in commodities trading, alcohol distillery operations and specialty crops processing abroad, Seaboard exceeded $4 billion in revenue by 2010. In 2011 Seaboard Corporation made the Fortune 500 for the first time in company history.

Divisions

Pork

Seaboard was a pioneer in the vertical integration of the U.S. pork industry. Seaboard Foods, its Pork Division, is able to efficiently control pork production across the entire life cycle of the hog. Seaboard’s hog production facilities in Oklahoma, Kansas, Colorado and Texas consist of genetic and commercial breeding, farrowing, nursery and finishing buildings. They produce over 4 million hogs annually. Hogs processed at Seaboard’s main plant in Guymon, Oklahoma are primarily Seaboard raised hogs. At full capacity, the facility processes approximately 20,000 hogs per day, selling to further processors, food service operators, grocery stores, distributors and retail outlets. The Pork segment is mainly a U.S. business, with some export to Japan, Mexico, Russia, Korea and other foreign markets. In 2013 Seaboard was ranked #2 in pork production and #4 in processing in the U.S. (including Triumph Foods volume).

Since 2008 Seaboard Foods has been producing biodiesel from the animal by-products of Guymon’s processing plant. High Plains Bioenergy, a wholly owned subsidiary of Seaboard Foods, produces more than 30 million gallons annually. High Plains Bioenergy is located next to the Guymon, Oklahoma processing plant and also has the capabilities to produce vegetable oil.

In 2009 Seaboard Foods opened its newest division, Seaboard Foods de México, to produce fresh boneless hams, using mostly bone-in hams from Guymon’s U.S. facility.

Commodity Trading & Milling

Managed under the name Seaboard Overseas and Trading Group (SOTG), the Commodity Trading and Milling segment sources, transports and markets wheat, corn, soybean meal and other commodities. These commodities are purchased worldwide, with primary destinations in Africa, South America and the Caribbean.

SOTG operates facilities in 23 countries. With ten trade offices in nine countries, Seaboard traded more than 8 million tons of agricultural products into approximately 100 countries in 2013.

Marine

The Marine segment provides cargo shipping services mostly between the United States and 26 countries in the Caribbean Basin, Central and South America. Seaboard Marine’s primary office is in Miami, but also operates out of the Port of Houston, Brooklyn, New York and New Orleans. The Division’s fleet consists of 30 vessels and over 60,000 dry, refrigerated, specialized containers and related equipment. It uses a network of offices and agents with full service capabilities to allow truck or rail transport to and from various U.S. ports.

Sugar

Tabacal Agroindustria in Argentina has an annual capacity to produce approximately 250,000 metric tons of sugar and approximately 15 million gallons of alcohol. The mill is located in the Salta Province of Argentina, with administrative offices in Buenos Aries.

This segment also owns a 51 megawatt cogeneration power plant. The plant is fueled by the burning of sugarcane by-products during harvest season. It also sells dehydrated alcohol to certain oil companies under an Argentine government bio-ethanol program.

Power

Seaboard’s Transcontinental Capital Corporation (TCC) electric power generating facility is in the Dominican Republic. Using a system of diesel engines mounted on floating barges, TCC generates a combined rated capacity of approximately 178 megawatts. As an independent power producer, Seaboard generates electricity for the local power grid, selling mainly to government-owned distribution companies.

Other

With a 50% acquisition of Butterball, LLC, Seaboard added a Turkey segment to its portfolio in 2010. Butterball is the largest vertically integrated producer, processor and marketer of branded and non-branded turkey and other products. Butterball produces approximately one billion pounds of turkey each year.

Through Mount Dora Farms, Seaboard processes jalapeño peppers at its plant in Honduras.

Corporate Affairs

Each of Seaboard Corporation’s segments is separately managed, and each was started or acquired independent of the other segments. Most of the sales and costs of Seaboard’s segments are significantly influenced by worldwide fluctuations in commodity prices and changes in foreign and political conditions.

In its most recent 3rd Quarter 2014 Earnings Report, Seaboard Corporation posted net sales of over $4.9 million. Net earnings per common share were $107.09. Average number of shares outstanding was 1,195.006.^[5]

As of September 27, 2014, Seaboard Foods Pork segment sold to Triumph Foods LLC a 50% interest in Daily’s® Premium Meats, its processed meats division.^[6]

In recent years, Seaboard Corporation has invested in several entities abroad to strengthen and expand its trading and milling businesses. At home, effective December 31, 2012, Seaboard increased its ownership to 85% in PS International, LLC, a specialty grain trading business in Chapel Hill, North Carolina.^[7]

“Consistent with the last several years, we continue to apply our solid cash flows back into the Company with investments in capital equipment, acquisitions and share repurchases,” wrote Steven J. Bresky, President and CEO, in his 2013 Letter to Stockholders. “As we look historically at their (subsidiaries) financial performance, they (divisions) have all experienced quite volatile year to year fluctuations and we don’t see this pattern changing over time. Assessing performance over a three to five year horizon is a better indicator of our commodity based businesses’ success.” ^[8]

From year-end 2009 to December 31, 2013, Seaboard’s net sales nearly doubled from 3.6 billion to 6.6 billion. In a five year comparison of basic earnings per common share of stock, Seaboard grew from $74.74 in 2009 to $171.92 (which is down from 2010, 2011 and 2012).^[9] Total Return to Investors (5 year, annualized) was 18.8%, and 26.1% (10 year, annualized).

Seaboard had 127 shareholders as of January 24, 2014.^[10] One share of Seaboard (SEB), currently sells for around $3,800. Its unusually large price tag is attributed to the company never undergoing a stock split.^[11]

Governance

The current members of the board of directors of Seaboard Corporation (as of 2014) are Steven J. Bresky, David A. Adamsen, Douglas W. Baena and Edward I. Shifman, Jr.

Sustainability & Stewardship

In 2008, Seaboard Foods released its first “Sustainability & Stewardship” Report outlining its commitments to: Quality, Customers, Employees, Environment, Animal Care and Community.

Terry Holton, President & CEO of Seaboard Foods in his introduction letter explained: “To be the best, we must make a positive impact, produce safe and wholesome products our customers want, create a safe workplace for our employees, protect and reduce our impact on the environment, treat animals humanely and make the communities in which we operate a better place.”

Seaboard Foods began producing biodiesel from the animal by-products at its Guymon, Oklahoma processing plant in 2008. Since then, Seaboard Foods has implemented numerous initiatives and contributed to community endeavors, including:

• High Plains Bioenergy, a subsidiary of Seaboard Foods, opened its first public compressed natural gas (CNG) filling station in Guymon, Oklahoma on August 21, 2014.
• Seaboard Foods added trucks and several pickups to its fleet that use compressed natural gas (CNG).
• As part of Seaboard Foods' continuous improvement program, a dedicated audit team inspects 109 environmental, health and safety-related items at its farms twice a year.
• Seaboard Foods has a zero-tolerance policy for improper animal handling. The company was the first large-scale pork producer to voluntarily agree to animal welfare audits.
• An annual survey gages overall customer satisfaction with products and services.
• Seaboard Foods donated more than 12,000 pounds of pork and refrigeration trailers to tornado relief efforts following the Moore, Oklahoma tornado in 2013.
• Implemented regional community college scholarship programs for students pursuing technical careers.

Following the lead of Seaboard Foods, Butterball, LLC has implemented significant additions and changes to its animal care and well-being program. The company is also well-known for its free Turkey Talk-Line, where customers can ask preparation questions and receive safety tips, and for its commitment to armed forces and their families.^[12]

Seaboard Corporation and The Seaboard Foundation are focused on making a difference around the world by supporting a broad range of worthy causes in the local communities in which they operate. The Foundation provides funding for education, improving public health, eliminating hunger, sustainable agriculture and food production. Corporation and Foundation beneficiaries^[13] include:

• CCLD Medical Center – new maternity ward (Bas-Congo)
• Ronald McDonald House
• Special Olympics
• Habitat for Humanity
• Food for the Poor (FFTP) – Caribbean and Latin America
• Doobay’s Medical Centre – Guyana

Awards

Seaboard Foods received the 2014 Achievement Award from NGVAmerica for Outstanding CNG Fleet & Station Program. NGVAmerica is the national organization driving the use of natural gas as a clean, domestic, safe and abundant transportation fuel.^[14]

For seven consecutive years, Seaboard Marine has been recognized by the Jamaican Exporters Association (JEA) for its growth and development of Jamaica’s export sector. The JEA is a non-government members association.^[15]

In August 2014, Seaboard Marine was also awarded a Logistics Management magazine 2014 Quest for Quality Award in Ocean Carriers. This was its third consecutive year to receive the recognition. Logistic Management’s over 7,000 readers chose top performers in various transportation sectors. The annual survey is viewed as one of the transportation industry’s more reliable measures of customer satisfaction and performance excellence.^[16]

Historical Controversies

In 1998, Pulitzer Prize investigative journalists Donald Barlett and James Steele published a Time Magazine investigative article, "The Empire of the Pigs," which chronicled "how an extremely resourceful corporation plays the welfare game, maximizing the benefits to itself, often to the detriment of those who provide them." Barlett and Steele described a history of corporate welfare from 1990 to 1997 describing Seaboard Corporation as "the beneficiary of at least $150 million in economic incentives from federal, state and local governments to build and staff poultry- and hog-processing plants in the U.S.; insure its operations in foreign countries, and sell its products." Their research also alleged that Seaboard Corp. had a history of worker abuse and environmental damage during this same period as stock prices rose dramatically from $116 to $387 per share.^[17] Rick Hoffman, CEO of the company's Seaboard Farms subsidiary, responded by telling the Associated Press that, "There were no programs that Seaboard solicited by the state that did not already exist for other new businesses." He also declared that much of the money Time claimed was earmarked for Seaboard did not in fact benefit the company.

In 1996, Seaboard bought the sugar plantation and refinery, San Martin de Tabacal in Salta, Argentina, immediately firing 6,000 workers many of whom were members of the Ava Guaraní and Kolla indigenous communities. These indigenous communities have maintained an ongoing claim to their ancestral lands which they have lived on and farmed for centuries. In 2003, they were violently removed at gunpoint re-invigorating a campaign to have Seaboard Corp./San Martin de Tabacal return their land. Their ongoing campaign quickly gained the support of Nobel Peace Prize winner Adolfo Pérez Esquivel and protests by international activists.^[18] In August, 2007 a judge ordered Seaboard to cease all tree and earth removal pending a court decision on land ownership.^[19]

Seaboard and Cruelty to Animals

Female pigs in gestation crates

In January 2012, an undercover exposé of Seaboard pig operations ^[20] revealed numerous severe animal welfare concerns including:^[21]

· Pigs in gestation crates had untreated sores and abscesses.

· An employee was witnessed repeatedly abusing pigs by smacking their genitals, pulling their hair, jabbing their eyes, and hitting them with gate rods to move them between crates.

· Several of the gestation crates overflowed with feces and urine, which bubbled up from below the slatted floors from a system clog, covering the pigs with waste.

· Pigs bit at the bars of their crates and tried to push their crate doors up – both indications of frustration.

· Dead pigs were found in gestation crates and pens.

· A pregnant pig with a severely torn and bleeding vulva was not seen by a veterinarian; she was forced to give birth rather than being euthanized. The farm manager informed the investigator they would not euthanize the pig because she had piglets to deliver (euthanizing the pig would cost Seaboard the piglets). Asked if giving birth would be painful, the manager replied that pigs “can handle some pain.”

· Some pigs were held in filthy pens in which urine and feces were allowed to build up for a week before being pressure-washed, sending feces into adjoining gestation crates and troughs from which the pigs ate and drank.

· Piglets with splayed legs had their hind legs duct-taped to their bodies.

· When the manager saw the investigator’s face as the tape was being painfully ripped from the piglets, he assured the investigator that using the duct tape was “not abuse” and said that pigs can “take a lot of pain.”

Following the investigation, Seaboard faced Federal Trade Commission (FTC) and Securities and Exchange Commission (SEC) complaints alleging false statements in defense of the abuses caught on film.^[22]

References

External links

• Seaboard homepage
• Hoovers
• Reuters
• SEC Filings
• Tabacal Agroindustria homepage
• LMM Farine SA