JBS buys 'certain assets' of major Iowa hog producer TriOak Foods

Iowa hog farming will become more concentrated as one of the world's biggest pork processors moves to buy one of the state's biggest swine suppliers.

JBS USA announced Friday that the company will buy "certain assets" of TriOak Foods, a pork producer headquartered in southeast Iowa. The move allows JBS to narrow a gap in the competition among the world's top meatpackers.

Oakville-based TriOak Foods owns sows and contracts with farmers to raise the pigs they produce. The company, in turn, has maintained a contract since 2017 to sell those fattened hogs to JBS. TriOak Foods also makes and sells feed, operates grain elevators and sells fertilizer.

JBS spokesperson Nikki Richardson declined to answer a question from the Des Moines Register about which assets the company will buy from TriOak Foods. TriOak CEO Randy Pflum and board chair Bob McCulley ― whose parents launched the company in 1951 ― did not respond to emails seeking comment.

In a joint news release with JBS, Pflum said in a statement, "The future will be very promising for both of our organizations as a result of this partnership."

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"Today's announcement is aligned with our company's strategy to consistently provide the highest quality pork to our customers," added Matthew Turner, JBS USA's head of live pork operations.

According to the news release, TriOak supplies hogs to JBS plants in Marshalltown, Ottumwa and Beardstown, Illinois.

The marriage brings together two of the most powerful players in the hog industry. According to Successful Farming's 2021 Pork Powerhouses report, TriOak Foods owned 70,000 sows last year, the 17th most in the country and the fourth most in Iowa, that nation's leading pork producer.

Before the deal, JBS USA, a division of a Brazil-based parent company, owned 170,000 sows ― ranking eight in the United States. JBS is far behind fellow meatpacking giant Smithfield Foods, which owns a U.S.-leading 930,000 sows. The Seaboard Corp. ranks second with 335,000 sows.

Iowa State University agriculture economist Dermot Hayes, who consults for the National Pork Producers Council lobbying group, said deals between companies like JBS and TriOak Foods helps meatpackers become more efficient.

The meatpacker owns the pigs but pays contract farmers to raise them. Company officials then have a firmer grasp on how many pigs will arrive at their plants in future months, allowing them to plan how many workers they need. The officials also don't have to make last-minute purchases on the spot market, where prices can swing unpredictably.

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Hayes said that in addition, the arrangements can allow companies to control the genetics of the pigs they own. For example, a company will likely want to breed pigs with some traits of the Duroc or Berkshire breeds, which produce marbled, dark meat that is particularly prized in the Japanese market. At the same time, Hayes said, a pure Duroc or Berkshire pig doesn't grow as fat as a meatpacker would like.

The solution? Companies will breed pigs with some traits from the higher-quality varieties with another pig that grows fatter.

"You can decide to run the plant more efficiently by killing bigger hogs," Hayes said.

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JBS' acquisition comes three months after Seaboard made a big splash, buying hog operations from major Midwest producer The Maschhoffs for $58 million. Seaboard operates a couple pork plants in partnership with another major producer, Triumph Foods, including an operation in Sioux City. Prestage Farms, the sixth-largest hog producer, operates a plant in Eagle Grove.

TriOak Foods began as Oakville Feed & Produce in 1951. Owners John and Betty McCulley started the business when they bought their first grain elevator for $50,000. The McCulleys also sold produce and feed supplements before expanding into contract hog farming.

According to Successful Farming, the operation's size has doubled since 2007, when the company owned 35,000 sows. Pflum told the publication in 2019 that TriOak operated in five states and had largely gown by buying other pork producers.

"We are not vertically integrated, and that is a concern," he said at the time. "The industry has consolidated and integrated slower than we expected the past 20 years. But I think the pace will be accelerating."

Tyler Jett covers jobs and the economy for the Des Moines Register. Reach him at tjett@registermedia.com, 515-284-8215, or on Twitter at @LetsJett.