Citing financial conditions that were the most challenging in three decades, Smithfield Foods has announced it will postpone plans to phase out gestation stalls.
The change in plans was announced in the company's 2009 annual report.
In late January 2007, the world's largest producer and pork processor announced plans to replace gestation stalls at its 187 company-owned sow farms with group housing or pens (See: “Smithfield to Phase Out Stalls,” pages 32-33, Feb. 15, 2007 issue of National Hog Farmer).
To date, Smithfield has already completed the sow housing conversion at three farms, but no longer expects to meet its 10-year commitment of completing the sow housing conversion by 2017.
That decision stemmed from the fact the Smithfield, VA,-based company recently posted a fiscal year 2009 loss of $190 million. The conversion from sow stalls to group pen housing would cost the company an estimated $300 million.
“We remain committed to implementing the program as soon as economic conditions improve,” the company said in its report.
Smithfield President and Chief Executive Officer C. Larry Pope reports the swine industry is currently downsizing in order to return to profitability.
“I strongly believe that the hog production industry has reached an inflection point where, due to deep and extended losses, liquidation is now a recognized reality by all in the industry. To date, Smithfield has already reduced the size of its U.S. herd by two million market hogs annually, and we are initiating a further reduction of 3% of our U.S. sow herd, effective immediately. This reduction, combined with the additional cuts by our fellow producers should shrink supply to a point where the industry can return to profitability. This liquidation is long overdue,” he reported in the company's annual report.