I was interested when I got word last week that pork production giant Smithfield (NYSE: SFD ) has vowed to phase out a practice that some consider an unnecessarily cruel element of pork production. Over the course of the next 10 years, Smithfield plans to phase out use of gestational crates or stalls for pregnant sows, opting to give them "group housing" instead.
Gestational crates, or stalls, are two-foot by seven-foot areas where many sows are kept while pregnant; the argument for them is that they keep the sows protected. However, animal welfare advocates say crated sows suffer from leg problems and reduced immunity to illness due to stress, not to mention frustration and boredom; they basically can't move freely for 16 weeks at a time.
This change will take place only in Smithfield's company-owned farms, but the gesture is still impressive. Smithfield said that while this will be a "significant financial commitment," it's "the right thing to do." (The National Pork Producers Council said it still backs gestational stalls as "appropriate" for sows' well-being during pregnancy.) On the other side of the spectrum, the Humane Society lauded the decision and challenged other pork producers to follow Smithfield's lead. (Bear in mind there are some producers that don't use confinement methods and instead let their pigs run free -- one such operation is Niman Ranch.)
Smithfield may say it's the right thing to do, but there appear to be definite pressures. The Wall Street Journal's article on the subject said McDonald's (NYSE: MCD ) and Wal-Mart (NYSE: WMT ) were among Smithfield customers asking for the change. (McDonald's has been working with suppliers on animal welfare standards, but I was unaware of Wal-Mart's interest, other than its recent move to provide organic goods.)
Furthermore, Arizona and Florida citizens voted to outlaw the crates in recent years. (The Humane Society has been active in these efforts.) Meanwhile, the Farm Animal Stewardship Purchasing Act is about to be introduced in Congress; one of its moves would be to prevent the federal government to purchase pork from producers that use the crates.
Last week, I wrote an article musing on "food ethics"; some consumers seem to be directing increased scrutiny to their food choices, given increased interest in organic and animal-friendly choices. Also last week, Starbucks (Nasdaq: SBUX ) said it was responding to consumer demand for dairy without artificial growth hormone, which seems to stem from similar concerns. And of course, for years Whole Foods Market (Nasdaq: WFMI ) has been capitalizing off of consumers' changing attitudes towards food choices; it has also integrated animal welfare standards into what it stocks in its stores.
Seeing a major pork producer make this gesture is noteworthy indeed; it's heartening for those who are concerned with animal welfare, and of course, it will be interesting to see what repercussions such developments will have for many companies. Will such changes prove costly and drive up consumer prices -- or if such moves become standard, will it hinder meat producers' profitability? On the other hand, pressure for big agribusiness concerns to innovate to make methods more humane and profitable may erode the competitive advantages -- and pricing power -- of pioneers who already address that niche. Such trends bear watching by investors who have a stake in what consumers put on their plates. One thing's for sure, though: Some pigs will be getting more personal space.
For related Foolishness, see "Capitalism's Social Side."