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Smithfield Foods Facing Second Hog-Nuisance Trial

06/03/2018

Following the May award of over $3 million to plaintiffs living in the vicinity of a farm with a herd contracted to Smithfield Foods, the Company will face a second trial in Federal court in Raleigh, NC during the first week of June.  At issue is a complaint by a bellwether couple who purchased a home in a rural area near Beulaville, NC in 1989 while the hog farm was under construction. The plaintiffs complained of odor, health effects and deprivation of enjoyment of their property as a result of a waste disposal lagoon. 

 

Intensive hog production in eastern North Carolina commenced in the late 1980’s as hogs replaced tobacco. The state population increased from 2 million hogs in 1990 to 9 million in 2018.  Lagoons to store waste and spraying of supernatant liquid on fields was common practice by 1997 since this system was approved by a compliant legislature.  Environmental activists have advocated against the system based on the deleterious effect of excessive application of nitrogen and phosphorus to soil with runoff leading to pollution of waterways.

 

Following the devastation including flooding from lagoons during hurricane Floyd, a moratorium was placed on new farms using the system in 1997 but all existing hog farms were grandfathered-in under the legislation.

 

During the 1990s the University of North Carolina conducted trials to develop alternatives to lagoons including bioreactors which were shown to be technically feasible. The industry was not motivated to spend capital on these installations since they offered no financial advantage.

 

Ken Sullivan, the CEO of Smithfield Foods, a subsidiary of the WH Group of China, claims that “It is wrong to penalize owners for things like noise and smell which go hand in hand with running a farm.”  Sounding a discordant note, Sullivan stated, “Today it’s hog farms-- what about chicken farms?  The turkey guys? Grain farmers?”  He added, “We have to decide as a society how food is produced.”  For the record, chickens and turkeys do not produce quantities of manure comparable to hogs and neither of these industry groups now use open lagoons.  The intent of the hog industry to drag chicken and turkey producers in North Carolina into the legal mess appears to be desperation tactic.

 

It is clear that jurors resident in urban areas where cases are tried have little sympathy for either the contractors operating intensive hog production farms or the integrators that own the herds.  Sullivan hinted that if forced to use alternative manure systems requiring capital expenditure, the company may withdrawal from North Carolina.  He stated, “It’s an existential threat to us in North Carolina.”  Noting that Smithfield derives a narrow margin in the state compared to Midwest operations where grain is cheaper he opined, “If the lawsuits succeed we will have to revisit whether we can continue doing business in North Carolina.”