ECONOMIC IMPACT OF A NEW PORK
PROCESSING FACILITY LOCATED IN
MOLINE, ILLINOIS
Prepared by
Contact Information
Informa Economics
775 Ridge Lake Boulevard, Suite 400
Memphis, Tennessee 38120-9403
Telephone 901.766.4469
[email protected]
www.informaecon.com
February 2011
ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
TABLE OF CONTENTS
I. EXECUTIVE SUMMARY .............................................................................................................................. 1
II. INTRODUCTION......................................................................................................................................... 3
III. ILLINOIS HOG AND PORK PROCESSING INDUSTRY PROFILE ........................................................................ 4
A.
B.
C.
D.
E.
Hog Industry Overview ............................................................................................................................................... 4
Hog Inventories .......................................................................................................................................................... 6
Illinois Pork Processing Facilities................................................................................................................................ 9
Hog Production Feed Demand ................................................................................................................................. 11
Typical Inputs and Outputs of Pork Processing Plant ............................................................................................... 13
IV. CONTRIBUTION OF MEAT PROCESSING TO ILLINOIS GROSS STATE PRODUCT ............................................ 15
V. ECONOMIC IMPACT ANALYSIS ................................................................................................................. 16
A.
B.
C.
1.
2.
3.
4.
5.
6.
7.
D.
Economic Impact Background .................................................................................................................................. 16
Proposed Pork Processing Facility ........................................................................................................................... 17
Impact Analysis ........................................................................................................................................................ 18
Model Overview ........................................................................................................................................................ 18
Construction ............................................................................................................................................................. 20
Processing Operations ............................................................................................................................................. 20
Impact on Employment ............................................................................................................................................. 22
Impact on Gross Regional Product ........................................................................................................................... 23
Impact on Output ...................................................................................................................................................... 24
Impact on Taxes ....................................................................................................................................................... 24
Change in Commodity Basis .................................................................................................................................... 25
VI. SOCIAL AND ENVIRONMENTAL IMPACT ANALYSIS .................................................................................... 29
A. Odor Issues .............................................................................................................................................................. 29
B. Illegal Immigration Concerns .................................................................................................................................... 30
C. Growth in Large Hog Confinement Operations ......................................................................................................... 32
VII. CONCLUSIONS ....................................................................................................................................... 33
A.
B.
Economic Impact ...................................................................................................................................................... 33
Community Impact .................................................................................................................................................... 34
VIII. APPENDIX.............................................................................................................................................. 35
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
LIST OF EXHIBITS
Exhibit 1: Impact of Pork Processing Plant in East Moline to Illinois’s Economy ............................................ 1
Exhibit 2: Top US Pork Packer, 2010 ............................................................................................................. 4
Exhibit 3: US Capacity Utilization and Packer Margins .................................................................................. 6
Exhibit 4: Hogs and Pigs: Breeding, Market and Total Inventory (1,000 Head) .............................................. 7
Exhibit 5: Illinois Hog Operations by Size ....................................................................................................... 8
Exhibit 6: Pork Processing Facilities............................................................................................................. 10
Exhibit 7: Illinois Corn and Soybean Meal Usage based on Hog Inventory .................................................. 11
Exhibit 8: Soybean Crush Facilities .............................................................................................................. 12
Exhibit 9: Operational Assumptions.............................................................................................................. 13
Exhibit 10: Estimate of Pork Cutout Value ($/cwt) ........................................................................................ 14
Exhibit 11: Economic Linkage to Pork Processing ....................................................................................... 16
Exhibit 12: Hog Inventory, 125 Mile Radius of Moline, Illinois ...................................................................... 18
Exhibit 13: Impact Types ............................................................................................................................... 19
Exhibit 14: Key Impact Areas ........................................................................................................................ 19
Exhibit 15: East Moline Specific Impact Summary ........................................................................................ 21
Exhibit 16: East Moline Employment Impacts ............................................................................................... 22
Exhibit 17: East Moline Gross Regional Product Impacts ............................................................................. 23
Exhibit 18: East Moline Output ..................................................................................................................... 24
Exhibit 19: East Moline State Tax Impact ...................................................................................................... 25
Exhibit 20: Impact of Triumph Plant in St. Joseph, Missouri on Corn Price .................................................. 27
Exhibit 21: Impact of Triumph Plant in St. Joseph, Missouri on Soybean Meal Prices ................................. 27
Exhibit 22: Transportation Savings for Transporting Hogs to East Moline, Illinois ........................................ 28
Exhibit 23: US Pork Packer, Estimated Daily Capacities by Company......................................................... 35
Exhibit 24: US Pork Packers ........................................................................................................................ 36
Exhibit 25: Hogs and Pigs: Breeding, Market and Total Inventory (1,000 Head) .......................................... 37
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
Disclaimer
This report was produced for Illinois Soybean Association (“ISA”). Informa Economics, Inc. (“Informa”) has used the best
and most accurate information available to complete this study. Informa is not in the business of soliciting or
recommending specific investments. The reader of this report should consider the market risks inherent in any financial
investment opportunity. Furthermore, while Informa has extended its best professional efforts in completing this analysis,
the liability of Informa to the extent permitted by law, is limited to the professional fees received in connection with this
project.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
I.
EXECUTIVE SUMMARY

Illinois is the fourth largest hog producing state in the US with approximately 4.4 million hogs in inventory as of
December 1, 2010. The state currently has two pork processing plants located in Monmouth, Illinois and
Beardstown, Illinois. The pork industry contributes $1.7 billion and 7,000 jobs to the Illinois economy.

Triumph Foods has proposed building a new pork processing facility in East Moline, Illinois that will process 20,000
head per day of hogs. The plant is forecast to cost $250 million to construct and will employ 2,700 employees.

The economic impact to Illinois’s economy is measured by the contribution this facility will make to (i) Illinois’s gross
state product (GSP) (ii) permanent employment and (iii) local and state taxes as seen in Exhibit 1.
Exhibit 1: Impact of Pork Processing Plant in East Moline to Illinois’s Economy
Contribution of Pork Processing
Facility to Illinois
Capital Investment
Construction Activity
New Employment - Plant
New Employment - Other
Contribution to Illinois GSP
Increase in Economic Activity (Sales)
Increase of State Tax Collection

$ Million
$250
$196
2,700
2,842
$489
$1,303
$36
Frequency
one time
1.5 years
permanent jobs
permanent jobs
per year
per year
per year
Highlights of the economic contributions to Illinois from the proposed pork processing facility are listed below.
o Job Creation - The pork processing plant will create 5,542 new full-time jobs within Illinois. The plant will
directly employ 2,700 individuals and 1.05 additional jobs are created within the state for every direct job.
o Contribution to Illinois’s GSP - The pork processing plant’s contribution to Illinois’s GSP will be $489 million.
This is limited to Illinois industry – it does not include the economic impact of the overall US economy.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
o Economic Activity or Sales with Illinois - The pork processing facility will generate $841 million in sales
annually for pork and pork by-product sales annually. This in turn generates $462 million in additional economic
activity across other sectors and households for combined economic activity totaling $1.3 billion.
o State and Local Taxes – The pork processing facility will generate approximately $36 million in state and local
taxes annually. A large portion of these taxes are state income tax, property tax, and sales tax.

The proposed facility is meeting significant local opposition. The major concerns of local residents are odor issues
with the facility and hog farms that may surround the facility; illegal immigration and its effect on public services and
crime; and an increase in large hog confinement operations. In addition to these major concerns, there is the
concern with water quality, traffic, and property devaluation.

Social issues regarding additional hog farms are not an issue because there is sufficient hog inventory in Illinois
and surrounding states to support a new processing facility; therefore, no growth in inventory is expected in Illinois.

The USDA Agricultural Research Service, the University of Illinois and other organizations are researching
methods to reduce odor in both the processing and production facilities. Solutions include deodorizing scrubbers,
catalytic converters and dust control.

Although there have been highly publicized instances of illegal immigration, a study by Iowa State finds that most
are generalizations and are largely inappropriate. The December 2006 US immigration raid of six meat processing
plants operated by Swift & Co. arrested 10% of Swift’s workforce. A Center for Immigration Studies report found
that the plants were able to return to full operation and could operate without the presence of illegal workers.

Large meat packing plants do impact the demographics of a community. In the event there is an influx of
immigrants, it will be for permanent positions and it is expected that their immigration status will be watched
carefully. Growth in immigrant labor may require additional services due to language differences but studies have
shown that no increases in social services are required.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
II. INTRODUCTION
The Illinois Soybean Association (“ISA”) commissioned Informa Economics (“Informa”) to evaluate the economic impact
that a potential pork processing plant in East Moline, Illinois will have on the overall economy of Illinois. Triumph Foods
plans to build a new pork processing facility in East Moline. Other plants in the state include the Cargill plant in
Beardstown (18,000 to 20,000 hogs per day) and the Farmland plant in Monmouth (9,000 to 11,000 hogs per day).
Agricultural developments, particularly in the livestock area, often find opposition from residents and/or local/state policy
makers who may not be fully aware of the economic benefits that agricultural development can bring to residents, farmers
and the overall local economy. In addition, negative aspects of livestock production and/or processing are often
exaggerated. The possibility of the proposed plant has already created opposition groups, which will try to stop
developing plans from moving forward. This study will examine some of the more common complaints.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
III. ILLINOIS HOG AND PORK PROCESSING INDUSTRY PROFILE
Illinois is one of the largest hog producing states in the US and has two major pork processing facilities. The purpose of
this section is to give an overview of the US industry and how Illinois compares.
A. Hog Industry Overview

The top five US Pork Packers account for 73% of all processing as seen in Exhibit 2. Smithfield with 26% of
packer capacity has a processing facility in Monmouth, Illinois. Excel (Cargill) is the fourth largest packer in the US
with 9% of packer capacity. Excel has a facility in Beardstown, Illinois.
Exhibit 2: Top US Pork Packer, 2010
Other
Iowa Packing 12%
1%
Hatfield Quality Meats
2%
Indiana Packers
4%
Smithfield
26%
Triumph
4%
Seaboard
4%
Hormel
9%
Tyson (IBP)
18%
Excel
9%
JBS Swift
11%
Source: Informa Economics
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL

In the packing/processing sector, margins in the past year or two have been excellent and there has been relatively
little change in the configuration of this segment of the supply chain. Some packers have added marginally to their
existing capacity and only one major slaughter operation has closed; that being Morrell’s (Smithfield’s) facility in
Sioux City, Iowa.

Capacity utilization has remained in the range of 90% to 95% of capacity as seen in Exhibit 3. Utilization peaked in
2008 at 99.6% as packers enjoyed high margins. It is likely that utilization will increase if current margins remain
high but will be slow as hog inventories are rebuilt from recent lows.

US hog inventory levels are projected to bottom out during 2011 and then show modest expansion into mid
decade. The breeding herd should expand only slightly during the next 3-4 years with productivity gains
accounting for much of the increase in the total hog inventory. This growth will strain current processing capacity
emphasizing the need for growth in processing capacity.

In the future, the US is expected to play a key and greater role in the pork export market, particularly as its export
competitiveness increase relative to other major exporters such as Canada and the EU. Increase in exports over
the next few years will support the growth of the processing industry.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
Exhibit 3: US Capacity Utilization and Packer Margins
100.0%
16.00
14.00
95.0%
10.00
8.00
6.00
90.0%
4.00
2.00
0.00
85.0%
% Utilization
-2.00
Estimated Packer Margin
-4.00
80.0%
Estimated Margin ($/head)
Estimated Utilization (%)
12.00
-6.00
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Informa Economics
B. Hog Inventories

Illinois is the fourth largest hog producer in the US as seen in Exhibit 4. Iowa is the largest producer with over 19
million head as of December 1, 2010. Historical data for hog inventories can be seen in the Appendix in Exhibit 25.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
Exhibit 4: Hogs and Pigs: Breeding, Market and Total Inventory (1,000 Head)
All Others, 10,797
Iowa, 19,300
Ohio, 2,040
Oklahoma, 2,360
Missouri, 2,950
Nebraska, 3,150
Indiana, 3,550
Illinois, 4,400
North Carolina, 9,300
Minnesota, 7,300
Source: USDA NASS
Note: December 1 Inventory

Dramatic changes in slaughter capacity, feed costs, energy costs and reductions in margins that have occurred in
the past 3-4 years and the economic calamity that these forces created for the hog production sector has resulted
in very little change in industry structure. Certainly, the number of hog producers is down as the industry
downsized in aggregate but not all of the contraction was small hog producers as seen in Exhibit 5.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
Exhibit 5: Illinois Hog Operations by Size
6,000
100,000
90,000
5,100
5,100
5,000
70,000
4,000
4,000
3,600
60,000
3,400
3,100
3,000
2,900
2,900
50,000
40,000
2,000
US Hog Operations by Size
Illinois Hog Operations by Size
80,000
30,000
20,000
1,000
10,000
-
2000
1-99 Head
2001
100-499 Head
2002
500-999 Head
2003
2004
1000-1999 Head
2005
2000-4999 Head
2006
2007
5000+ Head
United States
Source: USDA NASS

Estimated hog production breakevens for the next several years are projected to be at sustainable record high
levels. This is primarily due to sustainably high corn and soybean meal prices along with higher costs across most
production inputs. With such high feed costs, a key to producer profitability will be the level of domestic and export
demand for pork. At present, pork demand appears to be extremely strong and the strength reflected in the futures
market suggests that the market is expecting demand for pork to hold strong or get even better.

If export demand continues to expand (which Informa sees as being likely) and domestic per capita consumption
within the US market does not erode dramatically from current levels, then the US pork production sector can move
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
back into a modest expansion mode. With hog slaughter transitioning into renewed growth, slaughter capacity will
gradually tighten.

As the production sector cycles back into an expanding production base, a key question is “where” will this growth
occur. Recall that a good portion of expanded pork production over the next 5 years will come from increased sow
herd productivity and larger hog carcasses. The moratorium on sow expansion in North Carolina will likely persist
and high feed costs will restrain production expansion in feed deficit areas. It is probable that whatever growth in
numbers there is will tend to occur close to the source of feed and that would suggest that the Western and
Eastern Corn Belt states will post modest growth.
C. Illinois Pork Processing Facilities
There are currently two large-scale pork slaughter facilities in operation in Illinois as seen in Exhibit 6. The Excel (Cargill)
facility in Beardstown, Illinois has a capacity of 20,000 hogs per day. The Farmland facility in Monmouth, Illinois has a
capacity of 10,500 hogs per day. The Meadowbrooks Farms plant in Rantoul, Illinois is closed but had a capacity of 4,200
hogs per day. According to Tim Maiers, an official with the Illinois Pork Producers, the Rantoul plant could open under
new management in 2011.
In addition to the pork slaughter facilities there are eight smaller processing facilities making specialty products. These
facilities range in size from 300 to 2,000 hogs per day capacity.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
Exhibit 6: Pork Processing Facilities
Hormel
Hormel
19000
19000 Hd/day
Hd/day
JBS
JBS Swift
Swift
18500
18500 Hd/day
Hd/day
Smithfield
Smithfield
19000
19000 Hd/day
Hd/day
Smithfield
Smithfield
11200
11200 Hd/day
Hd/day
Tyson
Tyson Foods
Foods (IBP)
(IBP)
15500
15500 Hd/day
Hd/day
Hormel
Hormel
10500
10500 Hd/day
Hd/day
Tyson
Tyson Foods
Foods (IBP)
(IBP)
19350
19350 Hd/day
Hd/day
JBS
JBS Swift
Swift
18500
18500 Hd/day
Hd/day
Tyson
Tyson Foods
Foods (IBP)
(IBP)
10000
10000 Hd/day
Hd/day
Cargill
Cargill (Excel)
(Excel)
18500
18500 Hd/day
Hd/day
Moline
Moline
Smithfield
Smithfield
10500
10500 Hd/day
Hd/day
Pekin
Pekin
Tyson
Tyson Foods
Foods (IBP)
(IBP)
14500
14500 Hd/day
Hd/day
Indiana
Indiana Packing
Packing
16500
16500 Hd/day
Hd/day
Smithfield
Smithfield
10400
10400 Hd/day
Hd/day
Smithfield
Smithfield
10500
10500 Hd/day
Hd/day
Triumph
Triumph
19000
19000 Hd/day
Hd/day
Pork Processing Facility
Cargill
Cargill (Excel)
(Excel)
20000
20000 Hd/day
Hd/day
JBS
JBS Swift
Swift
10000
10000 Hd/day
Hd/day
(Operational Status)
Closed
Open
Facility Capacity
(Head per Day)
20,000 to 33,000
Hog Density
(Hogs per Sq. Mile)
15,000 to 20,000
10,000 to 15,000
5,000 to 10,000
100 to 5,000
500 or Greater
250 to 500
100 to 250
25 to 100
10 to 25
1 to 10
Source: Informa Economics
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
D. Hog Production Feed Demand

The hog and pig inventory in Illinois will consume approximately 112 million bushels of corn per year and just under
560 thousand tons of soybean meal based upon typical inclusion rates as seen in Exhibit 7.
Exhibit 7: Illinois Corn and Soybean Meal Usage based on Hog Inventory
Inventory (head)
Hogs and Pigs1
4,366,667
Annual Feed Consumption
Estimated Corn Consumption (bushels/year)
Estimated Soybean Meal Consumption
(tons/year)
Estimated Acreage Supporting Soybean Meal
Consumption (Acres)
1
112,399,826
558,933
594,104
Average of 2008, 2009 and 2010

The proposed plant will process 20,000 head of hogs per day or 5.4 million head per year. Close to 700 thousand
tons of soybean meal per year is required to support this number of hogs. Although not all of the hogs will come
from Illinois, the demand for soybean meal will be more stable.

Soybean crushing facilities are shown in Exhibit 8.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
Exhibit 8: Soybean Crush Facilities
Source: Informa Economics
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
E. Typical Inputs and Outputs of Pork Processing Plant

Exhibit 9 and Exhibit 10 outline the typical inputs and outputs of a pork processing facility. The concept for
proposed facility is what is typically called a “kill plant.” As such, live market hogs that weigh approximately 285 lbs
will be delivered to the plant. The processed hog will yield various cuts depending on the needs of the plant. In
order to determine a typical value for the output a cutout value is used. A cutout value is the weighted average
value of a set of a defined set of pork cuts.

Inputs, such as electricity, natural gas, supplies, etc are included in the economic analysis presented later.
Exhibit 9: Operational Assumptions
General
Hog/Pork Assumptions
Market Hog Liveweight (Lbs.)
Slaughter Yields (%)
Carcass Yield (% of Live Hog)
Fab Yield (% of Carcass)
Meat Yield (% of Live Hog)
285
75.0%
100.0%
75.0%
Product Yields (%)
Standard
-6.8%
Ham Trmd, Fresh, 20-23#, Wt Avg Price
27.9%
Ham Trmd, Fresh, 23-27#, Wt Avg Price
12.1%
Belly,Skin-on,Trimd,FR,14-16, Wt Avg Price
Loins, Bone-In, Fresh, 1/4 Trm, 21#Dn, Wt Avg Price 16.6%
1.4%
Loin Bnls CtrCut,5-11,Strap-On Wt Avg Price
8.1%
Boston Butt, 5-10#, Fresh, 1/4 Trim, Wt Avg Price
4.0%
Sparerib, Fresh, 3 Bag, 4.25# DN, Wt Avg Price
0.5%
Loin Backrib(boxed), 2# & Up Wt Avg Price
15.3%
Pork Trim, Combo 42% FR, Wt Avg Price
4.0%
Pork Trim, Combo 72% FR, Wt Avg Price
Jowl/Feet/Neck/Tail
5.7%
Byproducts
8.5%
Cut Loss
2.7%
Total: Cutout
100%
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
Exhibit 10: Estimate of Pork Cutout Value ($/cwt)
Base Commodity Price ($/cwt)
Ham Trmd, Fresh, 20-23#, Wt Avg Price
Ham Trmd, Fresh, 23-27#, Wt Avg Price
Belly,Skin-on,Trimd,FR,14-16, Wt Avg Price
Loins, Bone-In, Fresh, 1/4 Trm, 21#Dn, Wt Avg Price
Loin Bnls CtrCut,5-11,Strap-On Wt Avg Price
Boston Butt, 5-10#, Fresh, 1/4 Trim, Wt Avg Price
Sparerib, Fresh, 3 Bag, 4.25# DN, Wt Avg Price
Loin Backrib(boxed), 2# & Up Wt Avg Price
Pork Trim, Combo 42% FR, Wt Avg Price
Pork Trim, Combo 72% FR, Wt Avg Price
Jowl/Feet/Neck/Tail
Cut Loss
Cutout Value ($/cwt)
National Lean Hog Price ($/cwt)
* Weighed average market prices in January
2006
64.69
62.83
85.08
103.65
146.67
82.77
130.79
257.08
29.94
53.12
35.00
0.00
67.52
2007
58.86
57.41
90.08
103.91
151.51
88.76
128.02
253.63
35.01
50.88
35.00
0.00
68.16
2008
63.76
62.58
78.41
106.14
156.36
77.20
114.66
268.36
44.19
57.40
35.00
0.00
68.56
2009
51.61
50.54
73.91
92.72
123.38
70.19
108.10
247.89
26.30
42.78
35.00
0.00
58.54
2010
78.31
76.51
108.83
115.63
153.88
107.33
134.05
252.32
47.48
77.73
35.00
0.00
81.12
64.41
64.35
65.58
56.90
75.31
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
IV. CONTRIBUTION OF MEAT PROCESSING TO ILLINOIS GROSS STATE PRODUCT

Illinois Gross State Product (GSP) was $630 billion in 2009 according to the US Bureau of Economic Analysis
(BEA).

Agriculture, Forestry, Fishing and Hunting contributed $7.0 billion dollars in 2008 to the Illinois GSP according to
BEA. Crop and Animal Production account for $6.6 billion of this total. (2009 data at this level was not available.)

In 2009 there were over $900 million worth of hogs and pigs produced in Illinois according to the National
Agricultural Statistics Service (NASS). This estimate of value is a measure of the value created through swine
production, but does not reflect the total economic impact of the swine industry in the state. Farmers buy inputs
and services and spend receipts on other items, as a result, considerable economic activity occurs. The cash
spent on inputs and labor is subsequently spent by the input suppliers and their employees generating economic
activity several times over. When farmers sell output, in this case hogs and pigs, the economy is affected as value
is added to the primary product. One example of added value is where the worker at a processing plant earns a
wage butchering hogs, then spends the wages in his local community, which contributes to profits and wages of
other enterprises in the economy.

Tim Maiers, Illinois Pork Producers official, states that the pork industry contributes $1.7 billion and 7,000 jobs to
the Illinois economy.

As an example of the impact of a pork processing facility, Triumph Foods estimated its impact on the St. Joseph,
Missouri area at $135.8 million. This includes company payroll, purchases from local vendors, payment of taxes
and fees as well as investments in the community according to a February 12, 2010 press release.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
V. ECONOMIC IMPACT ANALYSIS
A. Economic Impact Background

An economic impact analysis is a method used to estimate the direct and indirect economic effects of a change on
the demand in one industry (e.g., construction of a new pork processing plant) on other industries in the local,
regional, or national economy. For example, hog production averages $900 million per year in Illinois, these funds
(i.e., the economic activity or output) flow through the local economy causing a “multiplier” or “domino effect” in the
economy. Exhibit 11 illustrates the industries that interlinked to the production and processing of pork within
Illinois; a change in pork production has an economic impact across all these industries.
Exhibit 11: Economic Linkage to Pork Processing
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL

Labor, raw materials (e.g., corn, soybean meal, transportation) and supplies are sourced or purchased (i.e., direct
impact), the supporting industries in turn purchase inputs for their business (i.e., indirect impact), then the
employees spend their household incomes (i.e., induced impact), and so on. That is, an initial economic stimulus
triggers a chain of spending; this chain of spending is estimated via economic multipliers, which are estimated by a
complex input-output economic model such as IMPLAN 1.

A multiplier is the difference between the initial impact of a change in final demand (e.g., 2700 new jobs at a pork
processing company) and the total impact of that change (e.g., the additional jobs created in the interlinked
companies such as transportation, utilities, etc.)

Economic impacts of the pork industry in Illinois were estimated utilizing the IMPLAN input-output economic
modeling software customized to capture the economic impact for the state of Illinois. IMPLAN uses historical data
to estimate linkages between industries in the regional economy and determine how changes in one industry affect
other industries within the Illinois economy.
B. Proposed Pork Processing Facility

Triumph Foods has proposed a pork processing facility for East Moline, Illinois that would process approximately
20,000 head of hogs per day according to Pat Lilly, CAO of Triumph.

The plant would employ approximately 2,700 employees, the majority of whom would be production workers. The
plant has a projected payroll of over $100 million dollars per year.

The proposed plant would offer case-ready cuts of pork and include its own rendering plant for by-products.

Construction costs for the facility are estimated to be approximately $250 million.
1
IMPLAN was developed in 1979 by the United States Department of Agriculture, Forest Service in cooperation with the Federal Emergency
Management Agency and the United States Department of the Interior, Bureau of Land Management. The IMPLANPro software was developed in
1996 and is maintained and updated by the Minnesota IMPLAN Group, Inc.
17
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL

Typical plants procure hogs from within approximately 100 to 150 miles radius with some being delivered greater
distances. A 125-mile draw radius was assumed for the facility. There are over 6.9 million hogs in the draw area
as seen in Exhibit 12.
Exhibit 12: Hog Inventory, 125 Mile Radius of Moline, Illinois
Hog Inventory
4,455,658
2,336,840
32,356
158,703
6,983,557
Note: 3 year average of December 1 Inventory
Iowa
Illinois
Missouri
Wisconsin
C. Impact Analysis
1.
MODEL OVERVIEW
Constructing and operating a pork processing plant will have perceived and real socio-economic impacts to states and
local communities. This section of the report will estimate the economic impacts that would result from the construction of
a pork processing plant in East Moline, Illinois.
The analysis utilized an IMPLAN2 model as the base Input Output (I-O) model to estimate economic multipliers3 and the
impacts to Illinois. Input-Output models such as IMPLAN or RIMS4 are used to measure the economic impact of industry
changes, such as opening a new pork processing plant. Investments in the subject industry have a ripple effect that
impacts regional vendors. The economic impact analysis reports the initial impact and the subsequent ripple effects by
reporting the direct, indirect, and induced effects of the scenario. An explanation for the interpretation of each effect can
be viewed in Exhibit 13.
2
The Minnesota IMPLAN Group, Inc (MIG, Inc) is the developer of the IMPLAN® economic impact modeling.
Economic multipliers are ratios that describe the magnitude of inter-industrial linkages that exist in an economy as a product makes its way to
final consumption. For example, for every direct job an industry creates there will be some amount of indirect jobs created in industries that
support the subject industry.
4
Regional Input-Output Modeling System (RIMS) developed by the US Bureau of Economic Analysis.
3
18
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
Exhibit 13: Impact Types
Impact
Direct Impact
Indirect
Induced
Interpretation
Direct impacts are the economic costs or benefits that are immediately identifiable with the subject
industry. In this case, the direct effects represent the employment and the output of the pork
processing plant.
Indirect effects represent the impact on the region made by support industries and vendors who are
affected by the pork processing plant.
Induced effects are representative of the economic activity that results as households have
increased income to spend. In this case, one example of an induced effect would be the economic
activity that is created when plant labor spends their earned dollars in the region.
The economic impacts are reported for five key areas. These areas are employment, gross regional product, output, and
the generation of new state tax revenues. An interpretation for each of the key areas is summarized in Exhibit 14. All
impacts are reported on an annual basis. Since the pork processing plant has a start up period before it reaches
sustained full production, results are reported for the start up period, which are the first two years. These two years
consist of eighteen months of construction, followed by six months of processing at 50% of the planned output level. Year
three is the first full year of production and is representative of the annual impacts, prior to inflation adjustments, for
subsequent years.
Exhibit 14: Key Impact Areas
Impact Area
Employment
Gross Regional
Product
Output
State Taxes
Interpretation
Measured in labor years, one labor year is the equivalent of one person working for a single year
Regional gross output is the regional domestic product for the area
Output is the total revenues that are created for all industries that are affected
State taxes that, in this case, are created as a result of the new business activities and the additional
labor income.
19
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
2.
CONSTRUCTION
The economic impacts that are stimulated from the construction of the new facility are one time benefits, as opposed to
the ongoing operations, that are spread equally over the 18 month construction period. Construction of the East Moline
plant is estimated to last eighteen months. The plant will consist of the building structure and all of the specialized
equipment that is needed within the plant. The I-O model makes use of its industry data to estimate how much of the
plant and equipment comes from the State of Illinois. This analysis focuses on the impact to Illinois only, which means
that materials and equipment purchased in Illinois will have a greater impact than domestic or foreign imports. The local
purchase percentage, or LPP, refers to the percent of input that is purchased in Illinois. The LPP for the East Moline plant
is assumed to be 98.5% for the building and approximately 3% for the specialized equipment that is needed within the
plant.
3.
PROCESSING OPERATIONS
Processing operations are assumed to have a six month period at half capacity. After six months, the East Moline plant is
assumed to be at full capacity, which starts at the beginning of year 3 and continues in subsequent years. This ramp up
assumption is consistent with the answers provided by industry interviewees. Ongoing processing operations had positive
and negative impacts that, when combined, provided a net positive effect to Illinois. The positive impacts are summarized
in Exhibit 15.
20
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
Exhibit 15: East Moline Specific Impact Summary
Impact
Impact
Type
Processing Positive
at the East Economic
Moline
Impact
Plant
Labor
at Positive
the
East Economic
Moline
Impact
Plant
Hog Farm Positive
Incomes
Economic
Impact
Hog
Specific
Trucking
Revenues
Negative
Economic
Impact
Description
The direct impacts for pork processing in East Moline are all of the product
inputs that are used by the plant (i.e. utilities, trucking, etc.). The model was
adjusted not to include hogs, because it has been concluded, after speaking with
interviewees, that existing area hogs would supply the plant.
At full production it was assumed that the East Moline plant would employ 2700.
This employment and its labor income are direct effects, but also have a positive
economic impact on the region.
IMPLAN recognizes that different income
classes have differing spending patterns. Benchmark pay rates were used to
calculate the impacts.
Farmers who live near the new plant will have an economic advantage because
they will have lower transportation expense when shipping their hogs. Distances
to pork processing plants and hog numbers were analyzed by county in Illinois.
Different locations have different levels of savings, with some counties not
realizing any savings at all. Reduced shipping expenses were then estimated
and applied as positive impacts to farm income.
If specific hog farmers are the beneficiaries of reduced shipping costs, then hog
transport companies are the group that is negatively impacted. Although there
are cases where the hog farmer has their own trucks, this model assumes that
all of the impacted hog farmers use hired trucking. The direct negative impact
was estimated as a change to the trucking industry output and is equal to the
savings by the hog farmer. Although the cost to trucking and savings to hog
farmers are the same input number, the two groups have different multipliers,
which provide for impacts that are not equal.
Frequency
Ongoing
Ongoing
Ongoing
Ongoing
However, it should be noted that net effect on trucking revenues are a large
positive impact because of the increased trucking demand by the pork
processing plant.
21
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
4.
IMPACT ON EMPLOYMENT
The column for Year 3+ in Exhibit 16, depicts the annual impacts from the plant in East Moline after the start up period is
complete. The plant is expected to employ 2,700 employees. When the indirect and induced impacts are added, the
annual employment of the region will be positively impacted by employment of 5,542. The one time impacts from
construction are shown for Year 1 and Year 2. There will be 775 labor years in year 1 and 3,302 labor years for year 2.
Exhibit 16: East Moline Employment Impacts
Impacts
One Time Construction Activity
Direct Impacts
Indirect Impacts
Induced Impacts
On-going Pork Processing Operations
Direct Impacts
Indirec Impacts
Induced Impacts
Total Impact
Source: IMPLAN, Informa
Start up Period
Year 1
Year 2
Sustained
Operations
Year 3+
387
139
249
194
69
125
0
0
0
0
0
0
1,350
994
569
2,700
1,989
853
775
3,302
5,542
22
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
5.
IMPACT ON GROSS REGIONAL PRODUCT
Gross regional product for Illinois is basically the GDP for the state. The results shown in Exhibit 17 show the impacts to
the Illinois domestic product for each of the three designated periods. The annual impact that the processing plant can
expect to add to Illinois on an ongoing basis is $489 million. The one time impact from construction is estimated to be $65
million in year 1 and $32.5 million in year 2. The total expenditures on the East Moline plant are assumed to be $250
million, but because much of the specialized equipment for the plant is produced outside of Illinois, only a fraction of the
total expenditures are a realized benefit to the Illinois economy.
Exhibit 17: East Moline Gross Regional Product Impacts
Impacts
Start up Period
Year 1
Year 2
One Time Construction Activity
Direct Impacts
Indirect Impacts
Induced Impacts
$
$
$
On-going Pork Processing Operations
Direct Impacts
Indirect Impacts
Induced Impacts
$
$
$
Total Impact
Sources: IMPLAN, Informa
Sustained
Operations
Year 3+
$
30,284,908
14,631,857
20,169,540
65,086,306
$
$
$
15,142,454
7,315,929
10,084,770
$
$
$
$
87,754,360
97,935,130
34,588,502
$
$
$
175,508,720
195,870,260
117,762,399
$
252,821,144
$
489,141,379
$
$
-
-
23
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
6.
IMPACT ON OUTPUT
Output is defined as the total revenues for the East Moline plant and the additional revenues that are created for the
businesses that are impacted by the new plant. The output impacts are positive for the East Moline plant and the ongoing
output benefits are estimated to be near $1.3 billion per year. Total output from year 1 and 2 is $130.5 million and $716.7
million respectively.
Exhibit 18: East Moline Output
Impacts
7.
Start up Period
Year 1
Year 2
One Time Construction Activity
Direct Impacts
Indirect Impacts
Induced Impacts
$
$
$
On-going Pork Processing Operations
Direct Impacts
Indirect Impacts
Induced Impacts
$
$
$
Total Impact
Sources: IMPLAN, Informa
Sustained
Operations
Year 3+
$
68,844,036
27,335,147
34,334,791
130,513,974
$
$
$
34,422,018
13,667,574
17,167,395
$
$
$
$
420,359,423
172,210,339
58,881,200
$
$
$
$
716,707,949
$ 1,302,901,923
$
$
-
-
840,718,845
344,420,679
117,762,399
IMPACT ON TAXES
New businesses and the business growth from the ripple effects have an impact on tax revenue generation. Once the
pork processing plant is past the start-up phase, it will generate economic impacts that contribute $35.7 million to Illinois
state tax revenues.
24
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
Direct tax impacts from the pork processing plant were estimated using Illinois tax rates of 5% - personal and 7% corporate. The effective tax rate for personal income was then set at 3.8%, which is consistent with historic effective tax
rate paid by the $25,000-50,000 income class group in Illinois. The majority of the payroll for the new plant is assumed to
fall into this income class.
Exhibit 19: East Moline State Tax Impact
Impacts
One Time Construction Activity
$
On-going Pork Processing Operations
$
Total Impact
Sources: IMPLAN, Informa
$
Start up Period
Year 1
Year 2
4,675,739
$
2,337,870
-
4,675,739
Sustained
Operations
Year 3+
$
-
$
13,688,462
$
35,713,775
$
16,026,332
$
35,713,775
D. Change in Commodity Basis

The last pork processing plant to open in the US was the Triumph plant in St. Joseph, Missouri. Informa studied
the impact that its opening had on pork prices and inventory, corn prices and soybean meal prices.

Exhibit 20 and Exhibit 21 are price histories for corn and soybean meal. Informa looked at the 52 weeks before
and after the opening of the Triumph plant. Price differences between regions were compared as well as straight
prices. The same was performed for hog prices and inventories. No correlation was found. As a follow-up,
Informa interviewed hog producers and extension staff in multiple states. The general consensus was that hog
inventories would not grow and that there would be no price impact as over 80% of all hogs are produced under
contract. In addition, the inventory is adequate to handle any additional packer capacity as Illinois currently exports
hogs.
25
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL

A series of studies performed by Clement Ward and Jonathan Hornung at Oklahoma State looked at the impact of
opening a pork packing plant and the closing of a beef packer. 5 One of the studies looked at the opening of a pork
packing plant in Manitoba. They found a positive impact of $5.70 ($C6.80) to $8.50 ($C10.18) per 100 kg when
comparing to Ontario, Saskatchewan and Iowa/southern Minnesota. The impact was seen to last for approximately
6 months after opening.

A later study by Ward and Hornung researched price perceptions. 6 Nearly 75% of pork producers did not perceive
the added plant increased hog prices in the region supporting the conclusion that any price increase was shortterm.

Without an increase in hog inventories or prices, it is reasonable then to assume that there are no changes in corn
or soybean meal prices. However, what is known is that adding a pork processing facility adds stability and
competitiveness to regional hog production. While in turn, added stability and competitiveness to the industries
that support it including farmers and soybean crushers in the state.

It should be noted that due to its location, the Triumph plant will likely source a large number of hogs from Iowa
also.
5
Ward, Clement E. and Jonathan T. Hornung. “Market Adjustment Insights: Primary and Secondary Data.” Department of Agricultural Economics,
Oklahoma State University, 2004.
6
Ward, Clement E. and Jonathan T. Hornung. “Positive Market Effects from a Meatpacking Plant Opening: Perceptions and Reality.” Current
Agriculture, Food & Resources Issues, Canadian Agricultural Economics Society, 2005.
26
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
Exhibit 20: Impact of Triumph Plant in St. Joseph,
Missouri on Corn Price
Exhibit 21: Impact of Triumph Plant in St. Joseph,
Missouri on Soybean Meal Prices
8.00
450.00
400.00
7.00
Triumph plant start-up
January 2006
Triumph plant start-up
January 2006
350.00
High Protein Soybean Meal
6.00
Corn Price
5.00
4.00
3.00
2.00
300.00
250.00
200.00
150.00
100.00
50.00
1.00
-
00 00 00 01 01 01 02 02 02 03 03 03 04 04 04 05 05 05 06 06 06 07 07 07 08 08 08 09 09 09 10 10 10
n- y- p- n- y- p- n- y- p- n- y- p- n- y- p- n- y- p- n- y- p- n- y- p- n- y- p- n- y- p- n- y- pJa Ma Se Ja Ma Se Ja Ma Se Ja Ma Se Ja Ma Se Ja Ma Se Ja Ma Se Ja Ma Se Ja Ma Se Ja Ma Se Ja Ma Se
Average All
Average St Joseph
NCI
00 00 00 01 01 01 02 02 02 03 03 03 04 04 04 05 05 05 06 06 06 07 07 07 08 08 08 09 09 09 10 10 10
n- y- p- n- y- p- n- y- p- n- y- p- n- y- p- n- y- p- n- y- p- n- y- p- n- y- p- n- y- p- n- y- pJa Ma Se Ja M a Se Ja M a Se Ja M a Se Ja Ma Se Ja Ma Se Ja Ma Se Ja Ma Se Ja Ma Se Ja M a Se Ja M a Se
Central IL
E Kansas
Iowa
S Minnesota

While prices for hogs are not expected to change, hog farmers supplying the Pekin plant can benefit from
potentially lower freight cost.

Interviews with pork producers determined that rates were $3.00 to $5.00 per loaded mile for hog transport with an
average of $3.50 per loaded mile. Informa looked at hog inventories that were closer to East Moline in order to
determine a freight savings of $1.2 million when it is assumed that all of the hogs will go to the closer packing plant
as seen in Exhibit 22. The $1.2 million represents additional income to hog producers.

While prices for hogs are not expected to increase, hog farmers supplying the East Moline plant can benefit from
potentially lower freight.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
Exhibit 22: Transportation Savings for Transporting Hogs to East Moline, Illinois
County
Boone
Bureau
Carroll
Cook
De Kalb
Du Page
Grundy
Henry
Jo Daviess
Kane
Kankakee
Kendall
La Salle
Lee
Marshall
Mchenry
Ogle
Putnam
Rock Island
Stephenson
Warren
Whiteside
Will
Winnebago
Total

State
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
Mileage to East
Moline
116.9
58.5
55.5
161
100
134.7
114.2
18.7
71
120.4
167.4
129.4
92.5
69
84.3
150.7
77.9
79.9
7.8
97.6
62.2
37.9
133.5
118.3
Mileage to
Monmouth
169.3
100
108
212.6
152.5
187.2
155.8
62.3
125.7
172.8
187.3
171
134.1
121.4
89.1
203.2
130.4
92.6
47.3
150
*
90.3
175
170.7
Mileage to
Beardstown
240.2
133.8
179
233.1
223.3
210.6
174.4
133.3
196.6
243.7
186.6
193.9
175.6
192.3
108
260.6
201.3
133.4
118.2
221
71.2
161.3
195.8
241.6
Number of
Hogs within
125 miles East
Moline
12,956
75,200
43,160
8
215,144
130
6,687
176,523
23,201
30,054
2,122
26,037
17,299
64,879
9,366
16,891
51,840
6,471
39,170
91,873
50,453
69,901
5,815
16,827
1,052,007
East Moline
Moline
Mileage
Transportation
Savings
Savings
52 $
16,284
42 $
74,854
53 $
54,349
52 $
10
53 $
270,917
53 $
164
42 $
6,672
44 $
184,602
55 $
30,440
52 $
37,773
19 $
977
42 $
25,980
42 $
17,261
52 $
81,542
5 $
1,078
53 $
21,270
53 $
65,279
13 $
1,971
40 $
37,111
52 $
115,469
9 $
10,891
52 $
87,854
42 $
5,788
52 $
21,149
$
1,169,683
Freight gain will increase hog producers income by $1.2 million.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
VI. SOCIAL AND ENVIRONMENTAL IMPACT ANALYSIS
A. Odor Issues

Opponents of the plant tout the odor issues because of the confinement of live hogs and the waste that they
generate. Odor from the processing is also a concern.

Odors and methods of controlling them are concerns for neighboring areas and urban dwellers and created
complaints and lawsuits. Air quality for those who work in the buildings and for the hogs is also a concern.

Gases created from the wastes that are of concern are carbon dioxide (asphyxiant), ammonia (irritant), hydrogen
sulfide (poison), methane (asphyxiant) and carbon monoxide (poison).

Several methods are used for odor control at the farm level.
o Regular removal of manure.
o Venting portals in pits.
o Maintenance of water levels in manure pits.
o Biofilters.
o Extreme care in agitating pits to avoid the concentrated release of gases.

High energy ultraviolet light causing chemical reactions that reduce odor are being researched at Iowa State
University. The USDA Agricultural Research Service is studying swine diet in order to reduce odor.

The Department of Agricultural Engineering at the University of Illinois is also researching swine odor. Research
areas include the effective measurement of odor, nutrition, dust control, deodorizing scrubbers and catalytic
converters.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
B. Illegal Immigration Concerns

Opponents of pork slaughter facilities fear that a pork slaughter facility will attract illegal immigrants. The argument
is made that migrant workers are typically hired for what are considered low wage and dangerous jobs because
they are less likely to raise concerns. Opponents argue that these employees are more easily exploited.

Opponents state that these undocumented workers strain social services, including medical and educational
facilities. There are also fears of increased violent crime due to these workers.

On December 12, 2006, US immigration officials conducted raids at six meat processing plants operated by Swift &
Co., in six states: Iowa, Minnesota, Nebraska, Texas, Colorado, and Utah. Immigration officials dubbed the raids,
the largest single worksite enforcement action in US history, Operation Wagon Train. The raids resulted in 1,297
arrests, a number equal to about 10 percent of Swift’s workforce at the plants. But because the raids were
confined to the first shift, the actual share of the workforce that was illegal was much higher. While all those
arrested faced illegal immigration charges, several hundred were also charged with illegally assuming the identity
of U.S. citizens by using fraudulently acquired Social Security numbers. A Center for Immigration Studies (CIS)
report7 stated that a large share of the second shift, which is usually the same size as the first shift, did not show up
for work. Assuming that there were another 1,300 illegal immigrants employed in the second shift, some 3,000
workers at these plants were illegal immigrants (400 + 1,300 + 1,300). This is equal to 23% of workers at these six
facilities.

According to CIS, one of the most important findings of this analysis is that these six Swift plants could operate
without the presence of illegal workers. New employment screening adopted by the company, the raids
themselves, and continuing efforts by Swift to employ legal workers, dramatically reduced the illegal share of
workers at all of these facilities. Yet, all the facilities continued to operate and all returned to full production within a
few months. Moreover, this recovery was accomplished during the first half of 2007 when national unemployment
figures were still low and the current recession had not begun. Therefore, the problem of having illegal immigrants
in the workforce is real, but it can effectively be dealt with.
7
Kammer, Jerry. “The 2006 Swift Raids Assessing the Impact of Immigration Enforcement Actions at Six Facilities.” Backgrounder, Center for
Immigration Studies, 2009.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL

A 2008 study by Georgeanne Artz, Rebecca Jackson and Peter Orazem at Iowa State University looked at the
impact of meatpacking plants on rural economies.8 The study found that most generalizations from studies of
extreme cases, such as the raid on Swift plants, are largely inappropriate. Large meatpacking plants do change
the demographics of their communities. Meatpacking plants are associated with increases in foreign born and
Hispanic populations. The most significant impact is the increase of students with limited English proficiency. The
impacts are offset by gains though.

Research has shown that the presence of a meatpacking facility lowers wage growth, but boosts employment
growth. Most counties with meatpacking plants experience falling poverty rates.9 Only in counties with an
unusually large share of local employment did poverty incidence rise, but these counties did not experience an
atypical increase in the costs of social services according to the Iowa State study.

Iowa State research found that there is no significant difference in growth of violent or property crime in counties
with or without meatpacking.10 The study found no significant difference between meatpacking and other types of
manufacturing.

Finally, company officials emphasized that jobs in the pork processing facility where permanent jobs with the
expectation of continued employment. The positions were not short-term and would promote making the area the
worker’s home.

Demographics of a community do change with the introduction of meat packing but immigration issues are closely
watched and there is no evidence of increased spending on social services.
8
Artz, Georgeanne M., Rebecca Jackson and Peter Orazem. “Is it a Jungle Out There?: Meat Packing, Immigrants and Rural Communities. Iowa
State University. 2008.
9
Artz, Georgeanne M., Peter F. Orazem and Daniel M. Otto. 2007. Measuring the Impact of Meat Packing and Processing Facilities in the
Nonmetropolitan Midwest: A Difference-in- Differences Approach. American Journal of Agricultural Economics 89(3): 557-570.
10
Artz, Georgeanne M., Peter Orazem and Daniel Otto. “meat Packing and Processing Facilities in the Non-Metropolitan Midwest: Blessing or
Curse?” Iowa State University. 2005.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
C. Growth in Large Hog Confinement Operations

Opponents of pork slaughter facilities and pork production argue that the processing facilities will encourage the
growth of large hog confinement operations which due to their size will create more odor and waste disposal
problems. As evidence, US hog operations have declined from 666,550 in 1980 to 87,470 in 2000 and further to
only 71,450 in 2009. During the same period, Illinois hog farm numbers declined from 30,000 in 1980 to 5,100 in
2000 to only 2,900 in 2007. This decline is argued as proof that hog production operations are increasing in size.

It is true that overall farm numbers have declined, but this does not indicate that there is a similar growth in large
hog operations. The number of Illinois hog farms declined by 2,200 farms from 2000 through 2007. The declines
were in all categories except for hog operations over 5,000. This growth would suggest that large farms are
growing in size. In 2000 there were 110 farms with hog operations over 5,000 compared to 210 in 2007. During
that same period, Illinois hog inventory grew by only 200 thousand hogs from 4.15 million in 2000 to 4.35 million
hogs in 2007. Hog inventory in 2010 was estimated at 4.40 million hogs. While farm numbers declined by 57%,
hog numbers increased less than 5%. The decline in farm numbers with the relatively small increase in hog
inventory suggests a consolidation of ownership as opposed to larger facilities.

As previously discussed, hog inventory is not expected to increase in Illinois as most hogs are already under
contract. In addition there is strong local opposition to the growth in hog confinement size.
o In August 2010, Grandview Farms’ plan for adding two additional buildings and the expansion of two
buildings was the subject of a public hearing of the Scott County Board of Supervisors. The expansion
would increase capacity from 9,465 head to 12,487 head. The annual number of hogs through the operation
would grow from 80,000 to about 150,000. The proposal was approved as it met all of the guidelines
required. Grandview Farms is seen as a leading producer that is respected for its style of production but still
faced strong opposition. Such opposition serves as a deterrent to growth.
o No other expansion plans have been filed as of February 2011.
o It is politically difficult to add hog production.

The combination of existing and projected hog exports along with a large hog inventory in Illinois and surrounding
states and the political difficulties faced to increase production will limit growth of hog production in Illinois.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
VII. CONCLUSIONS
A. Economic Impact
o Construction – the construction will add a one time total impact to employment of 1,163 over the eighteen
month construction period. During the eighteen months, its total impact will also add $98 million to Illinois Gross
State Product (GSP).
o Job Creation - The pork processing plant will create 5,542 new full-time jobs within Illinois. The plant will
directly employ 2,700 individuals and 1.05 additional jobs are created within the state for every direct job.
o Contribution to Illinois’s Gross State Product (GSP or their Regional Gross Product for Illinois) - The
pork processing plant’s contribution to Illinois’s GSP will be $489 million. This is limited to Illinois industry – it
does not include the economic impact of the overall US economy.
o Economic Activity or Sales with Illinois - The pork processing facility will generate $841 million in sales
annually for pork and pork by-product sales annually. This in turn generates $462 million in additional economic
activity across other sectors and households for combined economic activity totaling $1.3 billion.
o State and Local Taxes – The pork processing facility will generate approximately $36 million in state and local
taxes annually. A large portion of these taxes are state income tax, property tax, and sales tax.
o Farm Impact- The plant will increase farm incomes for hog farmers who supply the plant and realize lower
transportation costs. The plant isn’t expected to change the price of hogs or soybeans in the impact region, but
is expected to add stability to hog farmers and their feed suppliers.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
B. Community Impact

The proposed facility is meeting significant local opposition. The major concerns of local residents are odor issues
with the facility and hog farms that may surround the facility; illegal immigration and its effect on public services and
crime; and an increase in large hog confinement operations. In addition to these major concerns, there is the
concern with water quality, traffic, and property devaluation.

Social issues regarding additional hog farms are not an issue because there is sufficient hog inventory in Illinois
and surrounding states to support a new processing facility; therefore, no growth in inventory is expected in Illinois.

The USDA Agricultural Research Service, the University of Illinois and other organizations are researching
methods to reduce odor in both the processing and production facilities. Solutions include deodorizing scrubbers,
catalytic converters and dust control. Odor is an ongoing issue being researched.

Although there have been highly publicized instances of illegal immigration, a study by Iowa State finds that most
are generalizations and are largely inappropriate. The December 2006 US immigration raid of six meat processing
plants operated by Swift & Co. arrested 10% of Swift’s workforce. A Center for Immigration Studies report found
that the plants were able to return to full operation and could operate without the presence of illegal workers.

Large meat packing plants do impact the demographics of a community. In the event there is an influx of
immigrants, it will be for permanent positions and it is expected that their immigration status will be watched
carefully. Growth in immigrant labor may require additional services due to language differences but studies have
shown that no increases in social services are required.
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
VIII. APPENDIX
Exhibit 23: US Pork Packer, Estimated Daily Capacities by Company
End of
1996
81,800
78,400
38,500
38,000
29,000
8,000
End of
1997
78,000
66,200
38,500
38,000
29,000
14,000
End of
1998
78,000
66,200
39,400
38,000
30,000
16,000
End of
1999
78,000
66,200
39,400
38,000
32,500
16,000
End of
2000
78,000
66,200
39,400
38,000
32,500
16,000
End of
2001
78,000
66,200
39,400
35,600
30,500
16,000
13,000
10,000
5,500
6,000
8,400
6,100
28,800
12,000
15,000
5,800
12,000
10,000
6,000
6,000
8,400
6,100
28,800
12,000
15,000
12,000
10,000
6,000
6,000
8,000
6,800
31,000
12,000
12,000
10,000
6,000
6,000
8,000
6,800
31,000
12,000
12,000
10,000
6,000
16,000
8,000
6,800
25,500
12,000
10,000
6,000
16,000
8,000
6,800
25,500
End of
End of
End of
End of
End of
End of
End of
End of
End of
2002
2003
2004
2005
2006
2007
2008
2009
2010
79,500 106,000 107,000 107,000 107,000 112,300 118,700 126,300 112,300
66,200
69,500
69,500
74,300
74,300
74,300
74,300
74,550
76,100
42,000
44,000
44,000
44,000
44,000
47,900
47,900
47,900
47,000
35,600
35,600
36,000
36,000
36,000
36,000
36,000
38,500
38,500
30,500
30,500
35,300
35,300
36,800
36,800
36,800
37,000
37,000
16,000
16,000
18,700
17,500
17,500
18,000
18,700
19,200
19,200
16,000
18,000
18,700
19,000
19,000
12,000
12,000
12,500
14,000
14,000
16,000
16,000
16,500
16,500
10,000
10,000
10,600
10,600
10,600
10,600
10,600
10,600
10,600
5,000
2,500
2,500
2,500
2,500
2,500
2,500
2,850
2,850
16,000
17,100
17,100
17,500
17,500
8,000
8,000
6,200
6,200
6,200
6,800
6,800
28,600
384,000
Total of Major Packers
Estimated Industry Total 413,000
368,000
395,000
359,000
384,000
362,000
390,000
354,000
386,000
350,000
384,000
356,000
390,000
Company
Smithfield
Tyson (IBP)
Swift
Excel /j
Hormel h/
Seaboard d/
Triumph
Indiana Packers
Hatfield Quality Meats
Pine Ridge
Premium Standard Farms c/
Sara Lee (Bryan) l/
Clougherty Packing
Farmland i/k/
Lundy
Thorn Apple Valley/g
Dakota Pork Industries /f
Premium Pork Products
Worthington Packing e/
Fisher Packing
John Morrell a/
Tyson b/
358,000
392,000
a/ Sold to Smithfield in late 95
h/ Rochelle, IL to single shift June 01 l/ Changing ownership late 2003
b/ Sold Marshall, MO to Excel fall of 95
i/ Dubuque, IA sold and closed June 00
c/ Opened Milan, MO fall of 94, bought Lundy in 00
j/ Marshall, MO closed July 01
359,000
403,000
365,000
409,000
382,000
425,995
379,000
428,335
380,200
429,535
392,400
441,735
379,050
428,385
l)Closed March 2007
k/ Sale to Smithfield Nov 2003.
Source: Informa Economics
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
Exhibit 24: US Pork Packers
Status
Type
Open
Open
Open
Closed
Open
Open
Open
Open
Open
BG
Smithfield
BG
Gwaltney, Inc.
BG
Morrell
BG
Morrell
BG
Farmland
BG
Farmland
BG
Farmland
BG
Premium Standard Farms
BG
Lundy's
COMPANY TOTAL
BG
Tyson
BG
Tyson
BG
Tyson
BG
Tyson
BG
Tyson
BG
Tyson
COMPANY TOTAL
BG
Swift
BG
Swift
BG
Armour
COMPANY TOTAL
BG
Excel
BG
Excel
COMPANY TOTAL
BG
Quality Pork Packers
BG
Hormel
BG
Farmer John
COMPANY TOTAL
BG
Seaboard
BG
Triumph
BG
Indiana Packers
BG
Hatfield Packing
BG
Iowa Packing
BG
J.H. Routh Packing
BG
Meadowbrook
BG
Sioux-Preme Packing
SINGLE PLANT GROUP
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Open
Closed
Open
Plant
City
State
Bladen County
Smithfield
Sioux Falls
Sioux City
Crete
Denison
Monmouth
Milan
Clinton
NC
VA
SD
IA
NE
IA
IL
MO
NC
Waterloo
Storm Lake
Logansport
Columbus Junction
Madison
Perry
IA
IA
IN
IA
NE
IA
Worthington
Marshalltown
Louisville
MN
IA
KY
Beardstown
Ottumwa
IL
IA
Austin
Freemont
Vernon
MN
NE
CA
Guymon
St. Joseph
Delphi
Hatfield
Des Moines
Sandusky
Rantoul
Sioux Center
OK
MO
IN
PA
IA
OH
IL
IA
Daily Total --->
Avg Daily Sow Kill --->
Total Hog slaughter
Daily
Capacity
Corporate
Ownership
Annual
Capacity
33,000 Smithfield
8,923,200
9,500 Smithfield
2,568,800
19,000 Smithfield
5,137,600
Smithfield
0
10,500 Smithfield
2,782,500
9,300 Smithfield
2,514,720
10,500 Smithfield
2,839,200
10,500 Smithfield
2,730,000
10,000 Smithfield
2,704,000
112,300
30,200,020
19,350 Tyson
5,534,100
15,500 Tyson
4,030,000
14,500 Tyson
3,920,800
10,000 Tyson
2,600,000
7,800 Tyson
2,028,000
7,400 Tyson
1,924,000
74,550
20,036,900
18,700 Fribio, Brazil
5,026,837
18,700 Fribio, Brazil
5,074,892
10,000 Fribio, Brazil
2,704,000
47,400
12,805,729
20,000 Cargill
5,207,704
18,500 Cargill
4,617,600
38,500
9,825,304
19,000 Hormel
5,137,600
10,500 Hormel
2,839,200
7,500 Hormel
1,838,720
37,000
9,815,520
19,200 Seaboard
5,191,680
19,000 Triumph
5,156,600
16,500 Central Soya/Mitsubishi 4,461,600
10,600 Hatfield
2,756,000
2,850 Pine Ridge
770,640
4,200
1,135,680
0
4,200
1,260,000
76,550
20,732,200
384,300
Annual
103,415,673
15,125
4,050,000
399,425
107,465,673
Days/Yr
270.4
270.4
270.4
270.4
265.0
270.4
270.4
260.0
270.4
286.0
260.0
270.4
260.0
260.0
260.0
268.8
271.4
270.4
260.4
249.6
270.4
270.4
270.4
270.4
271.4
270.4
260.0
270.4
270.4
270.4
300.0
Source: Informa Economics
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ECONOMIC IMPACT OF A NEW PORK PROCESSING FACILITY IN MOLINE, IL
Exhibit 25: Hogs and Pigs: Breeding, Market and Total Inventory (1,000 Head)
CO
IL
IN
IA
KS
MI
MN
MO
NE
NC
OH
OK
PA
SD
TX
UT
All Others
US
2000
840
4,150
3,350
15,100
1,520
950
5,800
2,900
3,050
9,300
1,490
2,310
1,030
1,320
920
550
4,558
59,138
2001
800
4,250
3,200
15,400
1,570
960
5,800
3,000
2,900
9,800
1,430
2,480
1,060
1,290
900
610
4,354
59,804
2002
790
4,050
3,150
15,300
1,530
860
5,900
2,950
2,900
9,600
1,440
2,490
1,080
1,290
930
670
4,013
58,943
2003
750
4,000
3,100
15,900
1,650
950
6,500
2,950
2,900
10,000
1,520
2,380
1,110
1,280
930
660
3,864
60,444
2004
800
4,000
3,150
16,100
1,720
940
6,500
2,900
2,850
9,800
1,450
2,400
1,080
1,330
980
690
3,811
60,501
2005
850
4,000
3,250
16,600
1,790
960
6,600
2,700
2,850
9,800
1,560
2,370
1,100
1,490
930
690
3,909
61,449
2006
830
4,200
3,300
17,200
1,840
1,000
6,800
2,750
3,000
9,500
1,680
2,330
1,070
1,330
930
680
3,709
62,149
2007
860
4,350
3,700
19,400
1,880
1,030
7,700
3,150
3,350
10,200
1,830
2,350
1,170
1,460
1,160
790
3,797
68,177
2008
730
4,350
3,550
19,900
1,740
1,030
7,500
3,150
3,350
9,700
1,940
2,400
1,120
1,280
1,120
740
3,548
67,148
2009
720
4,350
3,650
19,300
1,810
1,080
7,400
3,100
3,150
9,700
2,020
2,310
1,180
1,170
770
730
3,367
65,807
2010
720
4,400
3,550
19,300
1,840
1,070
7,300
2,950
3,150
9,300
2,040
2,360
1,130
1,220
680
770
3,367
65,147
Source: USDA NASS
Note: December 1 Inventory
37
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