Cutting Ties and Jobs
Smithfield Foods made a significant announcement, revealing its decision to sever contracts with 26 hog farms in Utah. This strategic move, undertaken by the world's largest pork processor, is a direct response to the ongoing challenge of oversupply within the pork industry.
Pork producers find themselves in dire straits, grappling with financial losses amid a confluence of factors—depressed pig prices, weakened consumer demand for pork, and the relentless surge in labor and operational costs.
Owned by Hong Kong's WH Group, Smithfield disclosed that this measure will result in the termination of contracts with 26 hog farms in Utah and, consequently, the layoff of approximately 70 employees. This workforce reduction equates to about one-third of the 210 individuals employed in Smithfield's Utah hog production operations.
Shane Smith, the CEO of Smithfield, shed light on the decision, stating, "Our industry and company are navigating historically challenging hog production market conditions."
This move follows closely on the heels of Smithfield's October announcement regarding the closure of a pork processing plant in Charlotte, North Carolina, and the permanent shutdown of 35 hog farm sites in Missouri, leading to employee layoffs.
The challenges faced by Smithfield are not isolated, as the industry at large contends with an oversupply of pork, subdued consumer demand, and the persistently high cost of livestock feed. Interestingly, despite a recent dip in corn futures prices — used in livestock feed — Smithfield maintains that these industry-wide issues necessitate such proactive cutbacks to sustain competitiveness.
Beyond Smithfield, U.S. meat companies, Tyson Foods in particular, have encountered their own set of challenges. Tyson Foods, the leading U.S. meat company by sales, responded to these challenges by shuttering U.S. chicken plants that employed thousands of workers. More recently, Tyson Foods announced the closure of two plants where hundreds of workers are engaged in the cutting and packaging of meat.