December 9, 2023

Smithfield Foods terminates contracts with 26 swine farms, citing oversupply

In response to the ongoing challenges posed by industry oversupply, Smithfield Foods, the world's largest pork processor, has terminated its contracts with 26 swine farms in Utah, United States, Yahoo! Finance reported.

Pork producers have been grappling with financial losses due to a combination of low swine prices, subdued consumer demand for pork, and escalating labour and operational costs. The decision by Smithfield, owned by Hong Kong's WH Group, is seen as a response to the need for industry-wide adjustments to maintain competitiveness.

Shane Smith, CEO of Smithfield Foods, acknowledged the historically challenging market conditions for swine production facing both the industry and the company. The termination of contracts is expected to impact employees supporting dealings with the affected farms, potentially leading to layoffs. Up to 70 employees, or one-third of the workforce in Smithfield's Utah swine production operations, may be affected.

This move follows Smithfield's earlier announcement in October about the closure of a pork processing plant in Charlotte, North Carolina. The company had also previously communicated the permanent closure of 35 swine farm sites in Missouri, accompanied by employee layoffs.

The oversupply issue is not exclusive to the pork industry, as US meat companies, including Tyson Foods, have faced challenges with excess chicken production and tightening cattle supplies due to drought. Tyson Foods, the largest US meat company by sales, responded by closing US chicken plants, affecting thousands of workers. Last month, Tyson also announced the closure of two meat processing plants, impacting hundreds of employees involved in cutting and packaging operations.

-      Yahoo! Finance