Smithfield Foods ends contracts with 26 US pig farms, citing oversupply

WH

06/12/2023 24:19

By Tom Polansek
       CHICAGO, Dec 5 (Reuters) - Smithfield Foods said on
Tuesday it will end contracts with 26 hog farms in the U.S.
state of Utah, in the latest contraction by the world's largest
pork processor in the face of an industry oversupply.
    Pork producers have been losing money as pig prices and
consumer demand for pork have struggled at a time of high costs
for labor and other expenses.
    Smithfield, owned by Hong Kong's WH Group  0288.HK , said it
will terminate employees who support its dealings with farms
that raise hogs under production contracts. Layoffs may total
about 70 employees, or up to one third of the 210 workers in
Smithfield's Utah hog production operations. 
     "Our industry and company are experiencing historically
challenging hog production market conditions," CEO Shane Smith
said.
    Smithfield in October said it would close a pork processing
plant in Charlotte, North Carolina. The company previously said
it was permanently closing 35 hog farm sites in Missouri and
laying off employees.
    Smithfield needs such cutbacks to remain competitive, Smith
said. A company statement cited an "industry oversupply of pork,
weaker consumer demand and high feed prices" as challenges,
though futures prices for corn  Cv1  used for livestock feed
last month fell to their lowest level in nearly three years.
    U.S. meat companies also grappled with an excess of chicken
this year and tightening supplies of cattle due to drought. 
    Tyson Foods, the biggest U.S. meat company by sales, shut
U.S. chicken plants that employed thousands of workers. Last
month, Tyson said it would also close two plants where hundreds
of workers cut and package meat.

 (Reporting by Tom Polansek; Editing by Leslie Adler)
 ((Thomas.Polansek@thomsonreuters.com))