Smithfield Foods has signed an agreement to sell thousands of hogs to HD3 Farms, allowing one of the largest wean-to-finish growers in the United States to act as an independent pork producer.
As part of the deal, Smithfield and VisionAg, an affiliate of HD3 Farms, plan to form a new company called VisionAg Hog Production, LLC, with Smithfield owning a minority stake in the venture.
VisionAg Hog Production will take ownership of 28,000 sows from Smithfield, as well as the market hogs they produce, according to a release. The new company is expected to produce 600,000 hogs per year for Smithfield’s fresh pork business.
The agreement is part of a larger effort to reorganize Smithfield’s hog production as parent company WH Group looks to spin off its U.S. and Mexico operations. Last month, Smithfield signed a separate deal that offloaded 150,000 hogs to contractor Murphy Family Ventures of North Carolina.
Processors have recently moved to slow production as pork prices decline faster than hog prices, according to a report from the U.S. Department of Agriculture. Strong production levels earlier this year have depressed pork prices, while rising livestock costs have hampered exports.
HD3 Farms has been a contractor with Smithfield for more than 20 years. It has 250,000 wean-to-finish and finish spaces on farms across North Carolina.
Smithfield will supply feed, transportation and other hog production services as part of the agreement. The deal is set to close in early 2025.