The victims of this trend have been mostly smaller, independent livestock operators who have been reduced to the role of residual suppliers to a mostly closed market.
Some states have erected barriers to packer ownership of so-called captive supplies. But this week those laws were dealt a serious blow.
Smithfield Farms, the nation's largest hog producer argued the law interfered with interstate commerce and imposed a "taking without just compensation." They also raised objections over an exemption that allowed packer ownership if more than 60% of the owners were farmers.
Attorneys for the State of Iowa countered the 1975 law did not discriminate against packers no matter where they were based. The state attorneys contended the purpose of the law was to preserve free and private enterprise, prevent monopoly and protect consumers. They further argued the measure prevented unfair competition from packers who owned a large percentage of the livestock they processed. Iowa's Attorneys General Tom Miller is expected to appeal the decision.
Iowa Senators Tom Harkin and Charles Grassley were quick to condemn the ruling. Harkin, a leader for federal legislation banning packing ownership decried the ruling as being one against the independent producer. He called the law a measure that helped preserve a free and open marketplace.
Smithfield is the nation's leader in vertical integration with $8-billion in annual sales. Recent data shows the company processes 20 million hogs every year and has control over a live inventory of 12 million animals.
By comparison, USDA figures show Iowa producers taking care of 15.4 million hogs or about one quarter of the total for the United States.