Dive Brief:
- Smithfield Foods said Monday it will close a North Carolina pork plant to increase efficiency and "better utilize existing capacity."
- Production at the meat giant's Charlotte plant will be moved to its facility in Tar Heel. The move will affect 107 employees, who will be provided financial assistance and options to transfer to other Smithfield locations.
- The plant's last day of production will be in December, a release said. Smithfield employs more than 10,000 people in North Carolina, which is approximately a quarter of its U.S. workforce.
Dive Insight:
Smithfield's plant closure is the latest in an industry-wide contraction responding to sagging demand, dismal market prices and elevated production costs.
Wholesale pork demand usually peaks in the summer, but high retail prices have muted sales in the U.S. Meanwhile, higher exchange rates kept export profits below expectations.
Hog prices have remained lower than 2022 levels and "below most producers' cost of production," according to a report from the U.S. Department of Agriculture late last month.
Low prices for hogs and wholesale pork don't "paint an optimistic picture for the balance of 2023," the USDA said. Slaughter activity usually picks up into the fall and winter, causing a seasonal decline in prices.
Prices for live equivalent 51-52% lean hogs averaged $71.51 per head in August, 16.5% below last year. The value of the wholesale pork carcass cutout, meanwhile, declined nearly 10% from last year.
Smithfield said in August it would shutter 35 hog farms in Missouri in response to the tough market dynamics. Tyson has also moved to curtail production, closing plants and announcing layoffs.
