Even though eating properly handled and cooked pork products is safe, some Americans and international consumers will still avoid pork, due to the H1N1 flu.

That would typically hurt protein food producers, but Tyson Foods (NYSE: TSN) has alternatives, namely chicken, which is a major reason I'm reiterating my Buy rating for Tyson Foods, first recommended on May 11, 2009, at a price of $12.35.

Vice President-elect Joe "Give em' Hell" Biden says that the economic stimulus plan the new administration will put into law shortly after taking office won't include no stinkin' earmarks. The Wall Street Journal quotes (subscription required) Biden as saying that "There will be no earmarks in this economic recovery plan. I know it's the Christmas season, but President-elect Obama and I are absolutely determined that this economic recovery package will not become a Christmas tree."

I'll believe it when I see it. The $700 billion TARP bill was rejected by Congress once, only to be passed once it was brought to a new vote stuffed with pork: provisions tax savings for a manufacturer of "certain wooden arrows designed for use by children" and a convoluted change to tax policy on rum.

Obama and company have indicated that there is a rush to get a new stimulus plan passed and self-serving Congressmen and women will take advantage of that by larding the bill up with earmarks and then defying their colleagues and the President to prevent it from being made law. It won't happen.

I will be shocked -- shocked -- if the next stimulus plan makes it through with no earmarks.

Much has been written about the add-ons or 'pork' in the rescue package passed by the U.S. Congress and signed President Bush.

The add-ons, which increased the bill's projected cost by $130-$165 billion, depending on the analysis, have been viewed as another example of "special interest lobbying," "sneaky ways to get pet projects passed," "ripping off the taxpayer" and/or as simply un-American.

Well, the truth is, add-ons in the United States have taken place in every Congress since the nation was founded. Further, no one really knows who made the first legislative "deal," but to say that senators in ancient Rome or officials in Greece, did not trade votes for projects or patronage would be a stretch.

"Democracy is the worst system ...

Of course, it's much more ethical -- some would call it virtuous -- to propose a bill, then get a large majority to render a decision on the program/policy/law solely on its merits, driven by whether the bill is in the nation's interest.

And likewise, add-ons/pork can increase federal spending by substantial amounts, which makes it harder for the federal government -- or any government, for that matter -- to live within its means.

Rising commodities prices led both Smithfield Foods Inc. (NYSE: SFD), the nation's largest pork producer and processor, and poultry producer Sanderson Farms Inc. (NASDAQ: SAFM) to report quarterly losses on Tuesday.

Smithfield Foods said it lost $12.6 million, or 9 cents per share, in its fiscal first quarter due in part to a $20.1 million write-down in the value of commodity contracts. The Smithfield, Va.-based company had reported a profit of $54.6 million, or 41 cents per share, a year ago.

Revenues rose 20% to $3.14 billion in the quarter. Analysts surveyed by Thomson Reuters had forecast a loss of 4 cents per share on $2.87 billion in sales.

In addition to hurting from high costs for such ingredients as grain and fuel, Smithfield also faces an oversupply of meat on the market, which is keeping prices for pork lower. To help push prices up, meat producers such as Smithfield have announced intentions to cut supply.

Shares of Smithfield fell 88 cents, or 3.7%, to $22.71 in morning trading. That's up from a 52-week low of $16.61 in early July, but shares have fallen about 21% since the beginning of the year.

The bill approved by the senate last week was ostensibly aimed at providing relief to the sagging real estate market. We can debate the pros and cons of such a plan, but I don't think there's much argument about how dumb some of the stuff that ended up in this bill is: tax breaks for automakers, airlines, and alternative energy producers.

What do tax breaks for car companies have to do with the Foreclosure Prevention Act? I can't even imagine. Perhaps lower car prices will help out evicted home owners reduced to shacking up in their Kia Rios.

The New York Times reports that the pork tossed into the housing bill "shows how legislation with a populist imperative offers a chance for lobbyists to press their clients' interests."

With the markets still in a choppy/consolidation mode (or perhaps worse), it's best to consider including a few defensive stocks in your portfolio, and with the aforementioned in mind Smithfield Foods is worth an evaluation.

Smithfield Foods (NYSE: SFD) is the world's largest pork processor and hog producer. The company's products include fresh pork and processed meats sold under the Packerland, John Morrell, Lykes, Patrick Cudahy, and Smithfield Premium names.

Analysts expect Smithfield's F2008 revenue to increase 15-25% after a modest increase in F2007.

Meanwhile, beef margins are expected to widen, offsetting likely narrower hog margins. An improved product mix, including an expansion of value-added products, also has gladdened analysts' hearts.

Casual restaurant and pork products producer Bob Evans Farms, Inc. (NASDAQ: BOBE) beat Wall Street estimates of $0.39 per share and posted another profitable quarter, despite rising labor and food commodities costs. This is the fifth consecutive quarter of same store sales increases, though admittedly some of those increases have been small. CEO Steve Davis is justifiably proud of the cost control measures and productivity programs he has instituted across the board. The company has cut payroll and advertising expenses deeply.

Net income for 2Q 2008 was $15.5 million or diluted EPS of $0.45, up 21.6% from a year ago and beating Wall Street estimates by 6 cents. Net sales in the restaurant segment rose 2.9% to $356 million. But the growth driver for Bob Evans right now is its much smaller food products segment that produces pork products for sale in grocery stores. Thus segment posted net sales increase of 5.5% to $71 million, and a 79% operating income increase.

Bob Evans has repurchased two million shares thus far in FY 2008, with plans for an additional one million share buyback. FY 2008 guidance remains as previously forecast -- diluted EPS in the $1.77-$1.84 range. Patient investors are finally getting to share in the pork.

Agrium (NYSE: AGU) volatility is flat as AGU at record high on strong fertilizer demand. AGU, an agricultural retailer and fertilizer producer, closed at $54.38. AGU over all option implied volatility of 39 is near its 26-week average of 38 according to Track Data, suggesting nondirectional risk.

Terra Industries (NYSE: TRA) volatility is flat; TRA is near record on demand for nitrogen. TRA, an international producer of nitrogen products for industry and agriculture, closed at $31.26. TRA is expected to report EPS on 10/25. TRA over all option implied volatility of 52 is near its 26-week average of 50 according to Track Data, suggesting nondirectional risk.

Option update provided by Stock Specialist Paul Foster of theflyonthewall.com.

In the battle of the fast food restaurants, it's hardly ever about taste or service or quality: it's all about perception (and as my former car salesman boss says, perception is reality). So when I saw the news this week about how CKE Restaurants (NYSE: CKR) restaurants, Hardee's and Carl's Jr., have agreed to start purchasing a very small percentage of their pork and eggs from cage-free animals, I was wowed at the headlines. "Cage-free eggs!" an email from a colleague read.



Why is this the funnest news all month? Because of the very famous pin-up girls involved in the dispute. Paris Hilton is, after all, famous for her extremely sexy Carl's Jr. ads (I'd venture to say they are the pinnacle of her sordid career). Alicia Silverstone has made headlines with her racy PETA ads that were pulled off the air thanks to their nearly-naked nature. So in the cage match between Paris Hilton and Alicia Silverstone, I could have called it: smart Alicia whooped Paris' lingerie-clad booty with a (slightly happier) hen.

While stocks boomed yesterday on the Fed's 50 basis point rate cut, Smithfield Foods Inc's (NYSE: SFD) stock dropped as analysts wrote that improved pork production in China could lead to excess production being sent to the U.S. market.

Due to this increase in supply, pork prices have declined more than 11% recently, according to a China news report. The recovery of pork production could be a sign that the swine flu, which set the industry back for years, is finally under control in this part of the world.

In August, Smithfield announced it would sell 60 million pounds of pork to China, but it appears the Chinese do not need it all. It looks like we have an ugly supply and demand imbalance building in the pig business.

Tyson Foods Inc. (NYSE:TSN) shares are up after the chicken, beef, and pork processor reported better-than-expected second-quarter results. The company posted $0.31 EPS, well above the $0.25 First Call estimate and well above a loss posted in Q2 2006. Revenues rose almost $600 million to $6.96 billion, also above the $6.74 billion estimate.

To top it off, the company also raised annual EPS guidance from $0.65 to $0.90 to $0.82 to $0.92. It appears the cost cutting and containment measures are working. The company has closed some processing plants, installed spending caps, and you haven't even heard press on major labor violations in a long time. The company's operating income improved in all operations including its prepared foods unit.

The company is also in the midst of a 'quasi-healthier' launch with its "Raised Without Antibiotics and Any'tizers(tm)" and is also in a renewable fuels venture based on leftover animal fat products that would otherwise end up in landfills.

The other good news here is that it has all the distribution channels in place, and it still has major brand recognition. The reason this is important is that the company noted a higher feedcost being offset by it raising its own sales prices.

Tyson has greatly improved its position from its woes a few years ago. Shares are up 50% from yearly lows and closer to recent highs. At $21.60, that's much closer to the $24.32 high over the last 52-weeks. This one sounds good enough, I think I'm having some chicken for lunch.

Jon Ogg is a partner at 24/7 Wall St.; he does not own securities in the companies he covers.

I was captivated when I read in yesterday's Wall Street Journal [subscription] that the Chinese government, in response to a growing pork shortage brought about by the country's growing prosperity, was considering tapping into its STRATEGIC PORK RESERVE. Really. Apparently, it has stockpiled frozen pork as well as pigs on the hoof against the day meat prices skyrocket.

After I quit giggling over the image, I began to wonder if our government was doing enough to protect us from similar shortfalls. I know, of course, about our huge strategic petroleum reserve, sufficient to fuel every SUV in the country for a dozen trips to Wal-Mart (NYSE: WMT). But petroleum isn't our only essential resource. Do we have a strategic beer reserve? A strategic disposable diaper reserve? And how about our supply of Starbucks (NASDAQ: SBUX) coffee? Can you imagine the riots if our supply of French roast is cut off for even a day? Don't threaten my freakin' coffee!

Of course, we aren't alone in the world in our dependence on life's essentials. One would think that Norway would have a substantial Strategic Herring Reserve. And where would Italy be without a Strategic Olive Oil and Garlic Supply? I'd guess Monaco has thousands of extra cases of Taittinger put aside, while the Saudis stockpile extra wives. Closer to home, you'd think Canada would stockpile pucks, Mexico tortillas.

If you want to take a flyer that the Chinese pork shortage might force them to shop internationally, you might look at leading U.S. pork producer Smithfield Foods (NYSE: SFD), which is taking over another large producer, Premium Standard.

I have no recommendations for plays in a puck shortage.