Dive Brief:
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Smithfield Foods is shuttering 35 hog farm operations in Missouri to cut costs as the industry deals with tough market dynamics.
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Around 92 workers will lose their jobs as a result of the closures, according to a Worker Adjustment and Retraining Notification Act notice filed with the state last week. A Smithfield spokesperson verified the number of affected operations to Agriculture Dive on Thursday.
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Pork producers have struggled this year with high input costs, low hog values and weak demand, evaporating their returns. Smithfield, owned by Hong Kong’s WH Group, experienced “significant losses due to unfavorable market conditions” in the first quarter.
Dive Insight:
WH Group’s pork segment attributed recent losses to its U.S. division, which experienced challenges from elevated hog-raising costs and soft consumer demand. While the company’s businesses in China and Europe improved, its pork segment reported an operating loss of $170 million compared to a profit of $45 million a year ago.
The layoffs are scheduled for Oct. 8, affecting hog farm sites in Sullivan County, according to the WARN Act notice filed Aug. 4. Reuters reported that the farms set for closures include 13 sites in Newtown, 12 in Lucerne, and 10 in Princeton. Employees were offered the opportunity to relocate to another company facility if a position is available.
The company’s changes will not affect slaughterhouses and are “specific to our hog production operations” in the state, Jim Monroe, vice president of corporate affairs at Smithfield, wrote in an email. Employees were notified in May.
Smithfield’s confirmed closures come around the same time Tyson Foods said it plans to shutter four chicken plants in Arkansas, Indiana and Missouri after reporting back-to-back earnings declines.
As challenges persist for the U.S. meat industry, Wan Long, chairman of WH Group, told investors in April that the company would focus on its industrial value chain and make adjustments to its product mix “while managing prices and controlling costs.”
WH Group is scheduled to report second quarter earnings Aug. 14.