California’s Sky-High Costs Force Smithfield Foods to Shut Down Hog Plant in Golden State

Smithfield Foods, Inc. announced it is shutting down a hog plant in California because of the exorbitant costs of doing business in the Golden State.

Smithfield Foods, Inc. – bought by China-based pork juggernaut the WH Group in 2013 – made the announcement in a press release Friday, stating it is halting “all harvest and processing operations” at its Vernon, California, facility early next year. Compared to plants in other states, utility cost in California “is 3.5 times higher per head to produce pork,” the Wall Street Journal reported a company spokesman as saying. 

“It’s increasingly challenging to operate efficiently there,” Smithfield spokesman Jim Monroe told the publication. “We’re striving to keep costs down and keep food affordable.”

Smithfield is further looking into exiting its California and Arizona farms and intends to scale back its sow herd in Utah, per the release.

“Smithfield is taking these steps due to the escalating cost of doing business in California,” the release noted. 

Some 1,800 employees work at the Vernon plant, according to the Journal, and Smithfield said it is “providing transition assistance to all impacted employees.” Employees are being presented with options to relocate to new facilities “as well as retention incentives to ensure business continuity until early next year,” Smithfield stated. 

Smithfield and a number of labor unions came to an agreement in recent days as part of the plan to shutter the plant. 

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

Earlier this month, Breitbart News reported that rising farm inflation has driven up costs of production for farmers:

April Prices Paid Index for Commodities and Services, Interest, Taxes, and Farm Wage Rates rose 1.0 percent from March 2022 and 14 percent from April 2021. Higher prices in April for complete feeds, other services, nitrogen, and feed grains more than offset lower prices for feeder pigs, LP gas, gasoline, and supplements.

The higher expenses have, in turn, impacted the costs paid for the farm goods, with April’s “index of prices received for agricultural production” up 5.1 percent compared to March and 28 percent higher than April 2021. Moreover, the livestock index increased a whopping 40 percent year-over-year, while poultry and eggs jumped 94 percent between April 2021 into April 2022.