Hormel Foods announced Sept. 3 that it plans to close its Rochelle, IL, hog slaughter plant Nov. 8.
Plans are to permanently transform the facility to a value-added processing plant producing cured and smoked meats.
Branded, value-added products comprised 78% of Hormel’s total sales in fiscal year 2001, reports Joel W. Johnson, president and chief executive officer for the Austin, MN-based company. "The size and design of the Rochelle slaughter department makes it cost-prohibitive to operate in a competitive environment, despite an excellent workforce and management team," according to a company press release.
The Illinois packing plant processes about 4,500 hogs/day.
"This announcement by Hormel could not have come at a worse time for pork producers who are struggling to survive with depressed hog prices," says Mark Gebben, Casey, IL, pork producer and president of the Illinois Pork Producers Association (IPPA).
"Hormel’s decision will be devastating to many pork producers who have been loyal suppliers to the Rochelle facility and will affect both contract and open market hog purchases."
"The Rochelle plant represents 1% of the current daily slaughter capacity. Typically, a 1% change in capacity utilization causes a $1 decrease in hog prices," explains Steve Meyer, director of economics, National Pork Board (NPB).
"The key will be the number of hogs coming to market at the time that the Rochelle plant shuts down," he says. "If we can get back to more normal slaughter levels, the impact on hog prices could be limited. But if we maintain large weekly kills, the impact could be much greater."
NPB and IPPA are calling on Hormel to postpone closure until 2003 to allow for the glut of market hogs to work its way through the system during the fourth quarter of 2002.
"This is a very critical time for pork producers and the pork industry," stresses Gebben. "We will try to do everything we can to help pork producers to get through this challenging time."