Smithfield Foods reported its first annual loss in three decades, but says it expects performance to improve this year as the struggling hog industry cuts production in order to boost live prices.

For its part, Smithfield, the nation’s largest hog farmer and pork processor, said it is reducing the size of its sow herd by another 3%. Last year, Smithfield cut its sow herd by 10%.

In a conference call with analysts earlier this week reported by the Wall Street Journal, Smithfield CEO and President Larry Pope told analysts that the rest of the hog industry needs to reduce production by 10% in order to raise hog prices above production costs which are threatening producer equity positions.

Pope told analysts that the equity drain out of the hog industry is so large that lenders will put pressure on farmers to cut production. He added that process of liquidation could take the rest of the year to be realized.

Pope said the latest sow herd reduction by Smithfield involves its Dalhart, TX, hog farming operation which supplies live hogs to Seaboard Corp.