The chief threat to Smithfield Foods' fiscal health is not the recession but soaring grain prices, its chief executive officer said Tuesday.
"Profits are not down because of the recession," C. Larry Pope, Smithfield's president and CEO, said in an interview. "We'd be doing just fine" if corn prices hadn't skyrocketed, he said.
In a lunchtime speech at The Founders Inn and Spa, Pope said Smithfield, the world's leading pork processor and producer, was "somewhat insulated" from the recession.
"You're not going to get a mattress or a new car, but you're going to want to have lunch or dinner tomorrow," he said.
The economic crunch has had mixed effects, he said. Consumers are switching to less-expensive labels. Yet that boosted hot dog sales, in the dumps for many years, to near-record levels in November. "You can buy a package of hot dogs and a package of hot dog buns and feed the kids a couple of times a week to save money," Pope said.
Pope spoke to nearly 175 people as part of Regent University's Executive Leadership Series. He joined Smithfield Foods as controller in 1980 and succeeded Joseph W. Luter III as CEO in 2006.
Although he downplayed the effect of the recession, Pope said: "This is the most tenuous period and the scariest time in my entire professional career."
"A year ago," he said, "everybody wanted to know how much profit you made. As of six months ago, all anybody cared about was: Do you have enough money in the bank? Do you have enough credit to pay your bills? Are you going to survive?"
In its last quarterly earnings report, in December, Smithfield said profit had dropped 76 percent from a year earlier. Its shares closed Tuesday at $10.65 each on the New York Stock Exchange, down 60 percent from the same time last year.
In the speech, Pope voiced skepticism of the $800-billion-plus stimulus packages approved by Congress. "I certainly hope the people in Washington get it right," he said.
Afterward, Pope said: "What we're doing is a welfare and a wealth-transfer system. But don't sell it as a jobs-stimulus bill." Many of the features, such as expanding health care and unemployment benefits, won't create jobs, he said.
During his half-hour speech, he also reiterated his sharp opposition to the Employee Free Choice Act, known as the card-check bill, which would allow workers to be represented by unions if a majority sign cards. "It's a complete travesty for the country that anything like card check should see the light of day," he said. "It's a crazy process."
If the bill is reintroduced, Congress will pass it, Pope predicted. But he said President Barack Obama, who was a co-sponsor as a senator, might be less inclined to push it. "I think President Obama is coming back to the center," Pope said. "He has too big fish to fry now."