Smithfield Foods Ends Contracts with 26 Hog Farms in Utah Amid Industry Oversupply

Smithfield Foods Ends Contracts with 26 Hog Farms in Utah Amid Industry Oversupply

Smithfield Foods announced on Tuesday its decision to terminate contracts with 26 hog farms located in Utah, marking the latest move by the world’s largest pork processor to downsize in response to an industry-wide surplus.

The pork sector has grappled with financial losses as pig prices remain low while consumer demand for pork faces a challenging landscape, compounded by escalating labor and operational expenses.

Owned by Hong Kong’s WH Group (OTC:WHGLY), Smithfield disclosed plans to sever ties with employees involved in its dealings with hog-raising farms under production contracts. Approximately 70 employees, potentially one-third of the existing 210 workers in Smithfield’s Utah hog production operations, may face layoffs due to this decision.

This announcement follows Smithfield’s earlier declaration in October about the closure of a pork processing plant situated in Charlotte, North Carolina. Prior to this, the company had outlined the permanent closure of 35 hog farm sites in Missouri, leading to employee layoffs.

According to Smithfield, these cutbacks are essential for the company’s competitiveness in the current market landscape. The company highlighted the challenges posed by an “industry oversupply of pork, weaker consumer demand, and high feed prices” as significant factors influencing these decisions. However, it’s worth noting that futures prices for corn, a key component in livestock feed, dropped last month to their lowest levels in nearly three years.

In addition to the pork industry struggles, U.S. meat companies, including Tyson Foods (NYSE:TSN), have encountered their own challenges. Tyson, the largest meat company in the U.S. by sales, closed several U.S. chicken plants, resulting in job losses for thousands of workers. Furthermore, last month, Tyson announced plans to shut down two plants where hundreds of employees were engaged in meat cutting and packaging, signaling the broader challenges faced by the meat industry amidst fluctuating supply and demand dynamics.

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