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America’s Largest Pork Company to Close California Plant, Scale Back Operations Over High Costs

Published: June 13, 2022
The Smithfield Foods pork processing plant in South Dakota, as seen on April 20, 2020 in Sioux Falls, South Dakota. Smithfield recently announced that it will be closing its facility located in Vernon, California and will be scaling back operations in Utah and Arizona. (Image: KEREM YUCEL/AFP via Getty Images)

On June 10, Smithfield Foods — America’s largest pork producer — announced via a press release that it will be closing its Vernon, California plant in early 2023 and will scale back operations in both Utah and Arizona citing surging operating costs and regulatory hurdles.

Smithfield “will cease all harvest and processing operations in Vernon, California in early 2023 and, at the same time, align its hog production system by reducing its sow herd in its Western region,” the company said in its Friday news release adding that, “Smithfield is taking these steps due to the escalating cost of doing business in California.” 

Jim Monroe, a Smithfield Foods spokesperson told the Wall Street Journal that “it’s increasingly challenging to operate efficiently there [California],” and that the company is “striving to keep costs down and keep food affordable.”

Challenging regulatory environment

The spokesperson cited Proposition 12 as a primary reason for the closure and operating changes. Proposition 12, which was passed into law in 2018, mandates that food processing companies that confine pigs and sows must have adequate space made available for animals to lie down and move around. 

To the dismay of food producers the regulation made it unlawful to confine livestock in smaller stalls. At the time, producers said the regulation would push up production costs which would inevitably mean consumers would pay more. 

The company says it has already started the process of closing the plant and has come to a consensus with primary stakeholders.

“Smithfield is providing transition assistance to all impacted employees, including relocation options to other company facilities and farms as well as retention incentives to ensure business continuity until early next year, “ the press release reads.

According to the company it employs more than 40,000 workers at 46 facilities across the nation and on nearly 500 company owned farms. 

The company said it has already reached an agreement with the United Food and Commercial Workers International Union, the International Brotherhood of Teamsters and the International Union of Operating Engineers concerning the closure of its Vernon facility.  

Brady Stewart, Smithfield’s Chief Operating Officer said in the press release, “We are grateful to our team members in the Western region for their dedication and invaluable contributions to our mission. We are committed to providing financial and other transition assistance to employees impacted by this difficult decision.”

Bad timing

The announcement comes as Americans grapple with historic inflation and soaring gas prices which is driving up the cost of living for many and the closure of the Vernon plant is expected to only add to America’s woes. 

Steve Meyer, writing for National Hog Farmer, believes the closure of the Vernon facility is “more concerning,” than “alarming.”

“As of 2019…the plant could harvest 7,300 head per day. That represents 1.5% of total U.S. slaughter capacity,” Meyer wrote.

Meyer believes Proposition 12 played a pivotal role in Smithfield’s decision. “The vagueness and timing of Smithfield’s statement leads me to believe that the last straw [was] Proposition 12,” Meyers said. 

The plant closure is yet another factor adding to the threats facing America’s food security in addition to a looming worldwide fertilizer shortage that is expected to cause the cost of animal feed to surge.

Qu Dongyu, the Director-General of the United Nations Food and Agriculture Organization recently warned that, “We are deeply concerned about the combined impacts of overlapping crises jeopardizing people’s ability to produce and access foods, pushing millions more into extreme levels of acute food insecurity.”

“We are in a race against time to help farmers in the most affected countries, including by rapidly increasing potential food production and boosting their resilience in the face of challenges,” he said.