Anyone connected to the pork industry, and any investors looking to make some bacon (sorry for going hog wild with the pork pun) may pay attention to a major change that could be in the works.
It apparently isn’t a certainty.
Smithfield Foods Inc., the largest pork processor and hog producer in the United States, is working to take part of its operations public as the company looks for better days ahead for the pork industry.
RELATED: Robert Carman, commercial lender at Farm Credit Services of America, laid out the challenges that hog producers face but also why he was optimistic about how the industry could recover soon. Watch that interview with American Farmland Owner here.
Bloomberg reported that Smithfield has selected the financial institutions to handle an initial public offering that could net $1 billion. Read that story here.
The pork industry has been strained. Too many hogs and not enough pork-loving consumers led to a glut in supply and diminished profits for producers. Smithfield has trimmed parts of its operations as it dealt with insufficient consumer demand for pork.
Smithfield announced in October that it was closing its pork-processing plant in Charlotte, North Carolina. The plan included transferring production 150 miles away to another one of its facilities in Tar Heel.
The Tar Heel plant is the largest pork-processing facility in the world, according to The Charlotte Observer. The newspaper has additional details about what took place at the Charlotte facility, which you can read here.
Smithfield made a similar consolation announcement about its facility in Altoona, Iowa. The ham boning plant will close, eliminating 314 positions there. The company said that it would consolidate with other locations in Monmouth, Illinois; Sioux Falls, South Dakota; and Crete, Nebraska.
KCRG-TV has details about the announcement, as well as where the company’s other operations remain in Iowa. See that here.
Lower grain prices, an obvious challenge for those whose livelihood depends on better returns, could provide some relief for hog producers. National Hog Farmer looked at that impact, along with higher pork exports, and improving profits. Read that report here.
Smithfield is a subsidiary of its Chinese parent company, WH Group Ltd, which is the world’s largest pork producer. The IPO would spin off the company’s businesses in the United States and Mexico.
American politicians, both members of Congress and some state lawmakers, have been trying to limit Chinese ownership of agricultural land in this country. They see China as a national threat to U.S. agricultural production, and don’t want that country to have any control over food here.
That adds a political dynamic to Smithfield’s business considerations as company officials decide whether to do the IPO.
RELATED: Harrison Pittman, the director of The National Agricultural Law Center at the University of Arkansas at Little Rock explains why politicians have focused so much attention on Chinese ownership of American farmland and whether that additional scrutiny is merited. Watch that interview from American Farmland Owner here.
