CARLYLE, Ill. — Despite some concerns, Ken Maschhoff is bullish on pigs. The co-founder and head of The Maschhoffs, one of the world’s largest pork production companies said he believes the industry has a solid footing. But he is also aware of outside forces that could shake things up.
“We’re in a tremendously good position because we have the world’s best product, and one that consumers around the globe want,” he said. “It’s pure economics. Fundamentally, I still believe in the industry. I still believe in owning pork assets long-term. But this short-term geopolitical stuff is scary.”
According to an industry report, The Maschhoffs — whose headquarters sits on the site of the family farm in Clinton County — is the world’s largest privately held pork producer. It has grown exponentially from a local farm to a network of “Production Partners” who produce 5 million pigs each year, with annual revenue of about $1 billion.
The growth in exports is among factors making pork production a good investment, but Maschhoff sees a vulnerability.
“Even though we have customers wanting more of our product, we’re very concerned,” he said. “As recently as 1992 we imported pork to this country. Now we’re exporting 27 percent, and after we get all these packing plants running, we’re going to be over 30 percent.”
The trade war could change that. Other factors — including a stagnating Chinese economy — pose challenges. Because of those concerns, the company — headed by brothers Ken and Dave and their wives, Julie and Karen, respectively — has in recent years made a concerted effort to diversify.
“Most of our diversification — whether through stock market, hedge fund or ownership of other businesses like an asphalt company in Las Vegas — has zero correlation with pork,” Maschhoff said. “I consider that true diversification. It’s not like owning a livestock construction or pig confinement business. If we get foot-and-mouth disease, you have every pork producer in the country trying to figure out how not to go bankrupt.”
The company made a move several years ago to diversify inside agriculture but outside pork when it purchased GNP, a vertically integrated poultry company.
“GNP was a great move for us at the time because it was diversification not just within agriculture, but also within protein,” Maschhoff said. “There were a lot of times, historically, where pork was down for some reason.”
The Minnesota-based company was a leader in the emerging all-natural premium chicken market. When The Maschhoffs purchased the company, it held about 65 percent of the market. A few years later, when it was sold off, it held only 12 to 15 percent.
In the past, Maschhoff has considered vertical integration in its pork business by moving into processing and distribution. But he is satisfied that there is ample shackle space for the company’s hogs.
“So we knew the plants were going to get built — a few more than we needed, even,” he said. “So it occurred to us that we didn’t have to invest because others were investing.”
Maschhoff sees biosecurity as a major threat facing the industry. Though he is confident that individual producers are better prepared than ever to prevent disease outbreaks, he isn’t satisfied with the firewall.
As a former president of the National Pork Producers Council and current chairman of the association’s trade committee, Maschhoff sees gaps in security.
“It scares me how lax things are. When you come back into the United States from traveling abroad, you just check a box saying that you’ve been on a farm,” he said. “The process in U.S. customs scares the heck out of me. I do have very big concerns even though we haven’t had foot-and mouth disease in this country since 1929. That would be crippling to our industry.
“The majority of our vitamins and mineral packages for livestock — poultry, pork and cattle — come from China. And we know China has African swine fever. That would affect the pork industry only. But foot-and-mouth disease would affect poultry, pork, beef and other livestock.”