On Thursday, November 7th, 2013, the CRMER risk fellows traveled to Kansas City, Missouri to meet with several executives from Smithfield Foods. The exceptional group of experts that we had the opportunity to visit with included: Dhamu Thamodaran – Executive Vice President and Chief Commodity Hedging Officer, George Richter – President and COO of the Pork Group, Tim Schellpeper – President and COO of the Fresh Group, Mike Brown – President and COO of the Packaged Foods Group, and Jason Richter – President of the International Sales Group.
Smithfield Foods began as a small packing plant in 1936 and has expanded over the years to become the largest pork producer and processor in the United States. They currently operate in 12 countries under 12 well-recognized brand names including Smithfield, Farmland, Eckrich, Armour, John Morrell, and others. As a vertically-integrated company, they are committed to practicing good animal welfare and raising healthy pigs, protecting the environment, ensuring food safety, and addressing global hunger needs.
Dhamu first gave us an overview of the company, their worldwide market share, and brand portfolio. He discussed the markets that they hedge to reduce their risk exposure. He also told us about some of the tools that they use to analyze the markets and the information that they consider to be necessary to make educated risk management decisions. He shared his experience of the evolution of risk management in the past several decades and the group tossed around their ideas about the future of risk management and the pork industry.
Following Dhamu’s presentation, each remaining member of the management team gave a brief overview of how volatility in the commodity markets affects their segment of the business. They also discussed other major risks that they encounter every day. Our conversation was both interesting and unique to other company visits because Smithfield Foods is the first company we have met with that sells its products directly to consumers. With this comes more challenges, like brand risk and food safety risk. We also discussed the benefits and challenges of their recent merger with Shaunghui International Holdings Limited, a Chinese company.
We know that this group’s time is very valuable, so we thank them for spending a few hours with us and being open to all of our questions. They were all very personable and willing to help us learn about the risks that Smithfield Foods faces in the United States and internationally as an industry-leading livestock producer, processor, and marketer. The K-State CRMER fellows and faculty look forward to communication and collaboration with Smithfield Foods heading into the future.
-Claire Luensmann and Marcus Brix