000386 Farmland to Sell Iowa Pork Plant to Smithfield

Kansas City, MO - Farmland Industries said it plans to sell its Dubuque, Iowa, pork processing plant to Smithfield Foods Inc., the largest U.S. pork producer.

The all-cash transaction, due to close on or about May 15 at the conclusion of a 60-day option period, will further strengthen Virginia-based Smithfield's market-leading share of the pork industry, which has drawn fire from Iowa officials.

Terms of the deal were not disclosed.

Smithfield's aggressive acquisitions in the pork industry have made it a lightning rod of critics who say rising corporate concentration of ownership in U.S. agriculture is driving family farmers out of business.

Last month, Iowa Attorney General Tom Miller filed a lawsuit to challenge Smithfield's January takeover of Murphy Farms Inc, the second-biggest pork producer and an operator of Iowa hog farms.

Iowa's corporate farming law was enacted in 1977 and bans pork and beef processors from owning, controlling or operating feedlots in the state.

Eric Tabor, Miller's chief of staff, said Smithfield's latest move did not appear to be a violation of the Iowa law.

“We have been assured that none of the hogs involved with the former Murphy Family Farms, now Stoecker Farms, will be slaughtered at the Farmland plant if Smithfield does indeed acquire it,” Tabor said.

Smithfield said it will use the 60-day option period to evaluate the plant to determine what modifications and renovations are required.

“If the option is exercised, Smithfield expects to expand the processed meat business at the plant,” the company said in a statement.

Farmland officials said the Dubuque facility has a daily hog slaughter capacity of 8,000 animals.

That would bring Smithfield's total hog capacity to more than 90,000 hogs a day, or a quarter of the total daily U.S. hog slaughter of about 360,000 animals.

Farmland, the large farmer-owned cooperative, owns three other pork plants besides the Dubuque facility. The plant's age made it a costly candidate for modernization and expansion efforts, Farmland said.

Refrigerated Foods Group President Bill Fielding called the sale of the plant “the first step in an overall plan to strengthen our pork operations.”

The plan calls for launching an expansion and modernization of a Farmland processing plant in Crete, Nebraska. Its other plants are in Monmouth, Illinois, and Denison, Iowa.

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