Key takeaways:
* Ethics experts said the best way to avoid appearances of conflicts of interest is for public officials to sell their business interests. Pillen's most recent financial disclosure, from March, showed he's invested in about 40 companies. He has not said whether he's sold his interests.
* In the years before becoming governor, Pillen vertically integrated his hog business. He owns the farms where hogs are born and he owns part of a facility where those hogs are slaughtered. The structure gives Pillen Family Farms, the company he founded, much more stability and control than other hog producers, experts said.
* Some in the agriculture industry said it's good for Nebraska, a large meat-producing state, to have a governor with a farming background. But others criticized Pillen for the kind of agriculture he represents: Vertical integration has "taken away economic opportunities for literally hundreds of thousands of hog producers," one producer said.
In July, Jim Pillen flew to Vietnam for his first trade mission as Nebraska’s governor. Pillen was there in part to promote the state’s livestock exports, such as pork. As demand for the meat stalls in the U.S., the Southeast Asian country has become an important market.
Including for a business with close ties to Nebraska’s governor.
Pillen helped found Fremont-based meatpacker Wholestone Farms in 2018. His family owns a minority stake in the company. His son, Brock, still sits on Wholestone’s seven-person board, as did Pillen until stepping down earlier this year. Wholestone now slaughters more than a third of the hogs produced by Pillen Family Farms, the company Pillen founded and his children now run. Wholestone shipped to Vietnam nearly 16,000 times between November 2019 and November 2020, shipping records show.
The Vietnam trip, and Pillen’s political and agribusiness ties to a country halfway around the globe, underline a simple truth: He’s more connected to the agriculture industry than any U.S. governor in recent history.
He’s also no regular farmer.
Pillen Family Farms is Nebraska’s largest pork producer — and one of the largest in the nation. The pigs raised at Pillen farms are sold to meatpacking behemoths like Tyson Foods, intertwining Pillen’s company with even bigger players in Big Ag. From humble roots in the 1990s, the Pillen operation has spread from its home base in eastern Nebraska to points across the globe.
It’s a bona fide success story. And its latest chapter, with the main character serving as governor, concerns watchdog groups and conflict-of-interest experts who spoke to Investigate Midwest and the Flatwater Free Press.
As governor, Pillen has control over state regulations, an economic agenda and trade policies that could boost or harm the bottom line of the pork industry — the industry he dominates in Nebraska.
“That doesn’t look good,” John Pelissero, a senior scholar in applied ethics at Santa Clara University, said about Pillen’s trade mission to Vietnam. “The governor needs … to understand how that may appear to members of the public.”
Pillen now oversees the government agency that regulates the waste produced by Pillen Family Farms’ 100-plus Nebraska hog farms, some of which have violated state rules in the past.
He met with the head of that agency, the Nebraska Department of Environment and Energy, two weeks after taking office, an official calendar shows.
As governor, Pillen has pushed for policies that would benefit the state’s pork industry. In June, he asked the U.S. Congress to override California’s Proposition 12, a measure forcing producers to provide more space for pigs in concentrated animal feeding operations, or CAFOs. Industry groups have decried that rule, saying it’s cost prohibitive.
Pillen maintains a stake in dozens of businesses, according to a financial disclosure filed this year. He’s required to disclose if any public policy would benefit them. As of August, he’s filed no such disclosures.
Then there’s the Vietnam trade mission, a market valuable to Nebraska producers of many kinds, and also Pillen’s companies. After returning, Pillen told Brownfield Ag News he’s thinking about making the trip an annual event. Vietnam is a “really really important market for beef and also pork,” the governor said.
“Why is anyone successful in business? Mainly, it’s because of the ambition and drive of the owner.”
AL JUHNKE, executive director of the Nebraska Pork Producers Association
Pillen and industry officials say what’s good for the ag industry is good for the state.
“We in agriculture are driving the future of the state of Nebraska,” Pillen said at an ag conference this year. “If anybody doesn’t believe that and you’re in agriculture, please get up and get the heck out of here. The future is so cotton-pickin’ bright.”
It’s good that a farmer now sits in the governor’s office, said Al Juhnke, executive director of the Nebraska Pork Producers Association, noting that based on his research it’s been a century since a Nebraska farmer held that office.
“He lives and breathes our issues in agriculture,” Juhnke said. “In our case, in pork production, that outweighs any negative there might be. It’s a big positive for us.”
Juhnke previously visited Vietnam on a trade mission with former Gov. Pete Ricketts. Pillen didn’t extend the same invitation. That’s just fine, Juhnke said.
“Even though I myself or one of our farmers was not in the room on that trip, we were represented through him,” he said. “We were very confident he could represent our industry.”
But Nebraska’s governor owning hog farms while controlling their oversight is an “absolutely present” conflict of interest, said Kathleen Clark, a government ethics expert at Washington University in St. Louis.
Pillen’s stake in the company he built into a pork powerhouse makes it hard to untangle his actions as governor from his business interests, said Anne Schechinger, Midwest director for Environmental Working Group, a national research and advocacy organization.
“I don’t know any other governors that have a bunch of CAFOs,” she said. “Legislation he might pass through about CAFOs will directly benefit him.”
Pillen himself repeatedly declined to speak about this intersection of state and business power for this story. Laura Strimple, the governor’s spokesperson, didn’t respond to specific questions, saying they should be directed to Pillen Family Farms.
Sarah Pillen, the governor’s daughter and now co-CEO of the Pillen business, did not reply to specific questions. In a statement, she said the company helps feed more than 13 million people a year and provides “good paying jobs that help support rural Nebraska areas.”
“Our business has always been guided by our core principles: 1) Do what is right; 2) Do the best you can; and 3) Treat others the way you want to be treated. These commitments will never change,” she said in her statement.
“We’re not for sale. We’re in for the long haul to have multi-generational success.”
jim pillen in 2021
Now 67, Pillen has explained his company’s explosive growth many times. But specifics have been murky. As a private business CEO, Pillen was under no obligation to release financial information. When he’s been sued, he’s often followed the common practice of petitioning the court to keep business records sealed.
Investigate Midwest and the Flatwater Free Press pieced together Pillen’s rise from a small farm on a dirt lot to his leadership of a sprawling, multi-continent enterprise using lawsuit exhibits, court testimony and affidavits from Pillen himself.
“Lots of people have tried to buy us,” Pillen said about Pillen Family Farms at a 2021 conference while running for governor. “We’re not for sale. We’re in for the long haul to have multi-generational success.”
Dirt lot to pork powerhouse
Pillen began with one hog farm in Platte County in the early 1980s. With his father, he raised 60 sows, giving birth to roughly 1,200 hogs a year he sold for slaughter.
Around him, hog farming was changing. Industrial operations were squeezing out smaller, family-owned producers. Nebraska attempted to slow the trend.
In 1982, the state enacted Initiative 300, an anti-corporate farming law. It decreed owners of multiple farms had to maintain full legal liability, just like individual farm families.
The point: Keep farm money in farm communities, said Chuck Hassebrook, former University of Nebraska regent and longtime rural Nebraska advocate who pushed for Initiative 300. “Rural communities are healthier when you have agriculture owned and controlled by the people out there doing the work on the farms,” he said.
Not everyone agreed. Pork production skyrocketed in states that allowed farms to grow, such as Iowa and North Carolina. Farm industry groups told reporters that Nebraska would be left behind if Initiative 300 wasn’t repealed.
One man led the charge against it: Chuck Sand, a hog industry legend. His name, the Omaha World-Herald reported in 1996, was “two words guaranteed to stir things up at a gathering of pig farmers.” By the mid-1990s, he owned one of America’s largest hog operations.
To grow his business, Sand worked to ensure he wasn’t in “direct conflict” with the law, the World-Herald reported. The Nebraska attorney general investigated the setup, and deemed it legal.
Sand created multiple farms, each a separate legal entity. He then shared ownership with various employees. Critically, he did not own 100% of any farm. Once the legal structure was established, Sand provided management services, through a separate company, to the farms.
In 1993, Pillen purchased a 3% stake in Furnas County Farms, a $25 million hog confinement facility Sand owned. Sand and Pillen verbally agreed the former Husker football player — famous for recovering a fumble against archrival Oklahoma — would manage the operation, a departure from Sand’s typical approach.
With a nascent management company, Pillen incorporated Progressive Swine Technologies, the forefather of Pillen Family Farms. He began walking in Sand’s footsteps. When he started other ventures, he shared ownership with at least one partner. Like Sand, Pillen charged his own companies for his management.
Years later, in court records, Pillen explained, “I started certain partnerships due to Initiative 300.”
In 1995, Pillen changed his relationship with Sand. Pillen sold his interest in Furnas County Farms, netting him $270,000 — more than a half a million in today’s dollars. The same day, he and Sand formalized a verbal agreement.
The two agreed not to poach each other’s staff. But, two years into a five-year contract, Sand sued Pillen, accusing him of trying to hire six of his employees.
Pillen’s lawyers called the agreement an “unenforceable restraint on trade.” Even if it was enforceable, they argued, Pillen should be off the hook for liabilities because Sand had also broken the deal.
Ken Morrison, another Pillen business partner, said Pillen stopped working with Sand around this time. Without mentioning the lawsuit, Morrison wrote in a memoir the two “had some differences of opinion.” Morrison died in 2015.
“Our business has always been guided by our core principles: 1) Do what is right; 2) Do the best you can; and 3) Treat others the way you want to be treated.”
SARAH PILLEN, of pillen family farms
After the split, Sand and Pillen’s fortunes diverged. In the early 2000s, Sand’s Furnas County Farms fell into bankruptcy. The company is no longer active, according to business records. Sand died in 2012. The son listed on business records could not be reached for comment.
Others have had long-term business relationships with Pillen. Brett Bonwell used to own part of a Pillen company. Pillen employed him in 1998, and Bonwell served as CEO of DNA Genetics, Pillen’s pig semen company, until recently. Dave Domina, a well-known Democrat who ran for U.S. Senate and represented Pillen against accusations of endangering the environment, said his former client is “conscientious” and “pleasant to talk to.”
“I just remember thinking he was professional,” Domina said.
By 1998, Pillen owned one of the largest hog operations in America. Five years after incorporating Progressive Swine Technologies, he appeared on Successful Farming’s “Pork Powerhouses” list, a ranking of the top 25 producers. He was 22nd. The company is now 15th.
Two factors undoubtedly helped Pillen’s rise: his location and the times. Most of the state’s corn and soybeans — hog feed — is located in the state’s eastern third, where his early operations were based. Economies of scale became the guiding principle of hog production. Fewer farms grew more pigs.
Getting bigger meant Pillen had more leverage in negotiating prices with the handful of meatpacking companies that control the market, said Austin Frerick, a Yale fellow and Iowa native who studies the hog industry. “Most areas there’s one or two (companies) that dominate,” he said. Small farms often took what they could get.
Beyond structural benefits, Pillen’s focus was clear, said Juhnke, the Nebraska Pork Producers’ director. “Why is anyone successful in business? Mainly,” he said, “it’s because of the ambition and drive of the owner.”
In 2007, a judge ruled Initiative 300 unconstitutional. Pillen planned his next move — consolidation.
Investing in ‘future operations’
Pillen entered public life in 2012. As he campaigned for University of Nebraska regent, he transformed his business.
At the inception of Pillen’s management company, Deb Rasby handled its finances. He’d hired her away from Sand in the early 1990s, giving her ownership stakes in Progressive Swine Technologies and several other businesses. When Pillen bought out his partners, he lowballed Rasby, she claimed in court documents.
Rasby declined to be interviewed. “I respect my mom’s words of wisdom, ‘If you don’t have something good to say about someone don’t say anything at all,’” she wrote. “I’m living a happy life now.”
Hundreds of pages of court filings and exhibits tell the story.
Around 2011, Rasby decided to retire. She was counting on continued payouts from her 10% stake in Progressive Swine, according to her lawsuit against Pillen.
The next year, the payments stopped. When she didn’t receive a check for the second consecutive month, she emailed her former boss.
Pillen had told her a couple days earlier she’d get the payments, she wrote. According to Rasby, the plan was for her to stop by the office and collect. If she didn’t get the payments, she said, “this means you are not a man of your word.”
“Deb,” Pillen replied. “Please don’t plan on coming by the office.”
Months later, Pillen sent Rasby an explanation.
In an April 2012 letter, he said his plan was to liquidate Progressive Swine Technologies because it “no longer meets our business objectives.” Cash distributions were ending, he added. Along with providing a cushion from economic fluctuations, the “cash from operations will be reinvested in the companies to fund future operations,” he wrote.
He offered to buy Rasby out for about $1.9 million. She protested, claiming her stake was worth twice that.
Eventually, she sold to Pillen for $2.3 million. Rasby then sued, claiming Pillen defrauded her. Years later, an appeals court decided there was no evidence to support the claim.
With Rasby bought out, Pillen owned many of his operations outright. He shed the name Progressive Swine and rechristened it Pillen Family Farms.
By this time, Pillen was a millionaire. The size of Pillen’s wealth is difficult to determine because his companies are all private. But hints exist.
“I don’t know any other governors that have a bunch of CAFOs. Legislation he might pass through about CAFOs will directly benefit him.”
Anne Schechinger, Midwest director for Environmental Working Group
Around 2012, he was receiving about $2.7 million in annual payment distributions because of his ownership stakes in his companies, court records show. He had been drawing a salary of $110,000. Around this time, he gave himself a raise — to $1 million a year.
After consolidating his hog farms, Pillen brought another business under his umbrella.
In the early 2000s, he and a couple of partners had purchased the North American distributor of Danbred, a Danish company. Danbred provided the semen that producers bought to inseminate their sows, which then gave birth to the hogs slaughtered and turned into bacon.
In 2013, Pillen took ownership and began selling his own product. He renamed the company DNA Genetics and named Bonwell, a former business partner, its CEO. Once Pillen had control, he invested $5 million, according to an industry website.
DNA Genetics now has facilities in Nebraska, Indiana, South Dakota, Iowa and Wisconsin. It focuses on the Duroc, sometimes called the pork industry’s “Angus” because it’s the most popular and lucrative breed. DNA Genetics has sold in Europe and South America.
The company now claims influence over “2 out of 5” strips of bacon in the U.S. and Canada.
Once he owned the farms and the genetic material, Pillen turned his attention to “long term sustainability” — vertical integration.
For decades, Pillen had sold to Tyson or Smithfield Foods, which is owned by a Chinese company. In control of most of America’s pork market, Tyson and Smithfield can dictate prices they pay pork producers. But owning a meatpacking plant could change the equation: Pillen could send his hogs elsewhere, and possibly demand more money from Tyson and Smithfield.
RELATED: Pillen’s Rise, Story 1: What you need to know
In 2018, Wholestone Farms bought a former Hormel meatpacking plant in Fremont. While 200 producers contribute hogs to Wholestone, Pillen was a founding member. When the company was incorporated, the Pillen family was the only family or company that occupied more than one seat, according to Securities and Exchange Commission records.
In recent years, Tyson’s plant in Madison slaughtered about 900,000 of Pillen’s hogs a year — half his production, Pillen said at a 2021 agricultural conference. But Wholestone slaughters about 750,000 of his hogs a year, more than a third of his production, he said. The rest is sold to Smithfield’s plant in Crete.
The hogs slaughtered at Wholestone’s Fremont facility have been shipped to Mexico, Costa Rica and Vietnam, according to records from Panjiva, a company that tracks global shipping.
While beneficial to Pillen, vertical integration limits competition, said Bill Bullard, the CEO of R-CALF USA, an organization that promotes policies for independent cattle producers.
“The growth and development of the industrialized model that he represents has really taken away economic opportunities for literally hundreds of thousands of hog producers in the United States,” he said.
In 2021, three years after achieving vertical integration, Pillen announced his bid for governor. As he pitched himself to Nebraska voters, a controversial campaign unfurled in South Dakota. Wholestone was at the center.
Continued growth
Soon after Wholestone announced its plans to build its second meatpacking plant in Sioux Falls, city residents pushed back.
The proposed facility would process millions of pigs a year — so massive it would require its own wastewater treatment plant, according to court records. It would directly compete with Smithfield, which has operated in Sioux Falls for decades.
Pillen’s sprawling swine enterprise
Few options existed for South Dakota producers. Pillen, who has owned hog farms in the state for years, was among them. His involvement in pushing for the second plant is unclear, but he remained on Wholestone’s board through the end of 2022, his financial disclosures show.
Worried the plant would foul the area’s water supply, a group named Smart Growth Sioux Falls gathered enough signatures to place a question on the November ballot: Should new meat processing plants be allowed inside city limits?
As election day approached, according to local coverage and a lawsuit, Wholestone submitted plans to the city to build a small butcher shop on the site where it planned to build its meatpacking plant.
Smart Growth accused Wholestone of attempting an end-run around a potential ban. If passed, the ban would apply only to new construction. Conceivably, Wholestone could expand the butcher shop into a larger facility. Luke Minion, Wholestone’s chairman, told a local outlet, SiouxFalls.Business, the butcher shop was “very legally appropriate.” He did not return requests for comment.
To counter Smart Growth’s campaigning, Wholestone created a political action committee named Sioux Falls Open for Business. Wholestone poured tens of thousands of dollars into the committee. Company executives also donated — including Brock Pillen, Pillen’s son and Pillen Family Farms new co-CEO. He gave $550, the same as other executives.
On Nov. 8, 2022, 52% of Sioux Falls voters rejected the ban. Wholestone abandoned the butcher shop.
Construction on the actual plant could start in 2025, according to local news reports.
An empire, complete?
In 2021, three months after declaring his bid for governor, Pillen stepped onto a stage in Des Moines, Iowa. Clad in a suit jacket and blue jeans, for 40 minutes he described to the conference audience the intricacies of his vertically integrated pork empire.
He owned the semen of the most valuable pork breed. He owned the farms that raised the most valuable hogs. And he partly owned a growing business that slaughtered those hogs. The lesson?
“There’s been enough consolidation,” he said. “Family businesses have to stay successful.”
Sara Gentzler of Flatwater Free Press, Stefanie Monge of Silicon Prairie News and Mónica Cordero of Investigate Midwest contributed to this story.
This is the first story in a series. Read the second story here.
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