WHAT OTHERS SAY: Big Pig's $39 million settlement smells like bacon victory

Friday, October 5, 2012 | 10:41 a.m. CDT

Two weeks ago, Britain's National Pig Association sent out a press release claiming that a "world shortage of pork and bacon next year is now unavoidable." Within a few days, the Internet was up to its hocks in "world bacon crisis" stories.

Shockingly, for a story that caught fire on the Internet, it wasn't true. The price of bacon and other pork products will be going up next year, as will the price of everything else that has corn in it. But there will be plenty to go around.

Depending on what brand you buy, there may be a few cents worth of legal costs included in the price, too. In late August, Premium Standard Farms LLC, a unit of Virginia-based Smithfield Foods Inc., privately settled a long-running set of lawsuits in Jackson County.

The case involved 13 separate lawsuits and 287 separate plaintiffs, all of whom lived near Premium Standard's hog plants in northern Missouri. The company has 63 farms that raise sows and nine confined animal feeding operations (CAFO) plants in seven counties that feed and process the hogs. The firm also contracts with local farmers who raise sows for finishing.

The plaintiffs charged that odors from the operations had damaged or destroyed the value of the properties. They also expressed concern about potential damage to groundwater from wastewater runoff.

Terms of the settlement were not disclosed, but in filings with the Securities and Exchange Commission, Smithfield Foods said it had set aside $39 million to cover litigation costs in Missouri. Set aside a third of that for attorneys' fees and costs, and it works out to about $90,000 for each defendant.

Sounds like a lot, especially considering that many of the plaintiffs are members of the same families. But consider what they're giving up for their $90,000.

If you live downwind from a facility that processes hundreds of thousands of hogs a year, the value of your home is approximately zero. You can still farm the land but good luck selling the house.

Under the terms of a bill passed by the Missouri legislature in 2011 and signed into law by Gov. Jay Nixon, CAFOs are designated as "permanent nuisances," not "continuing nuisances." Being a permanent nuisance actually works to Premium Standard's benefit.

Future plaintiffs will get one shot in court, not multiple shots year after year. Plaintiffs can recover only the fair market value of their property, plus whatever punitive damages a court might award.

In effect, the law granted eminent domain authority to CAFOs and chose Big Pig over small farmers, or at least over the small farmers who don't raise pigs for Premium Standard.

A 2011 study by the University of Missouri Extension Service estimated that Premium Standard and a sister company, Farmland Foods, were responsible for 5,200 jobs in Missouri, either in direct employment or spin-off jobs. The study estimated that Premium Standard and Farmland are worth $1.1 billion a year to the state's economy.

The pork industry's overall economic impact has been important to the state and vital to north-central Missouri. But the industry has had to be dragged kicking and squealing into doing the right thing. Premium Standard has been known to plant a row of trees and call it a "vegetative environmental buffer."

Environmental groups have sued time and again. The federal Environmental Protection Agency sued in 1996. In 1999, Mr. Nixon, as state attorney general, was building a case for inadequate water pollution controls. A consent decree reached in 2002 gave Premium Standard eight years to install odor-reducing technology.

The latest legal settlement also includes an agreement to install "next-generation" odor control equipment required by a consent decree reached with Attorney General Chris Koster in 2010. Premium Standard doesn't move until it has to.

Premium Standard's critics will never be completely satisfied — the nature of factory-farming means it always will be controversial. But as the "world bacon shortage" panic suggested, most consumers want their bacon, regardless of how it's raised.

Hog-farming will always be a dirty, smelly business. It comes down to a question of how dirty and how smelly it is allowed to be. Premium Standard would be well-served by getting out in front on these issues, doing everything it can to reduce odor and water pollution, rather than dragging its feet.

Thanks to the legislature, its exposure to lawsuits by its neighbors will diminish. Its obligation to be a good neighbor will not.

Copyright St. Louis Post-Dispatch. Reprinted with permission.

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