Farmers face impacts of Smithfield plant closure
SIOUX FALLS, S.D. (AP) — Mike Ver Steeg grew up on the family farm where his dad raised pigs and sold them to the John Morrell & Co. plant in Sioux Falls.
Ver Steeg, 47, now runs Prestige Pork in Inwood, Iowa, with the help of his own son.
Like his dad did, Ver Steeg sells his hogs to the plant in Sioux Falls, now owned by the Virginia-based processing company Smithfield Foods.
Smithfield's indefinite closure of its Sioux Falls plant forced Ver Steeg to start looking for alternatives and to consider the future of his farm. The shutdown removes an important link in the supply chain that connects farmers and consumers. It raises questions about the long-term future of the pork industry and local farms and food security, but it also raises an immediate, more pressing need: What to do with all the pigs?
Ver Steeg has another processor he sells to, but he is still relying on Smithfield for answers.
"Hopefully they can get a few loads here and there to some of their other plants is what I was told," Ver Steeg told the Argus Leader. "But that's not a guaranteed thing."
Losing Smithfield means losing a major buyer of hogs.
The company's Sioux Falls campus processes as many as 20,000 pigs a day, about 5 million a year. Smithfield announced the facilities would close indefinitely, and as of April 14 more than 400 people who worked at the plant had tested positive for the coronavirus.
The demand created by Smithfield's plant was important to area hog farmers who need to sell their herd within a specific weight range and also need to make room for the next group of feeder pigs.
"For every pig harvested, there's one born," said Shane Odegaard, a hog farmer near Lake Preston. "There's pigs in the pipeline that are being harvested continuously that are ready to be marketed."
Odegaard and his family met for three hours, discussing options for their pigs during breakfast. They have 900 market ready, with no place to go and 1,300 more about to reach market weight later this month.
Other farms in South Dakota and the region will likely face more serious decisions in the weeks and months to come.
"The repercussions of this will be long-term, just to rebound," Odegaard said. "I'm afraid there will be family operations that may not be able to survive through this financially."
Farm closures are a real possibility, with the Smithfield closure capping a difficult series of weeks for hog farmers in the region, said Glenn Muller, executive director of South Dakota Pork Producers. His group represents hundreds of pork producers across the state. About 550 independent operations depend on Smithfield to harvest their livestock, Muller said.
Hog futures have plummeted
The onset of the coronavirus pandemic and resulting state of emergency had already left a mark on the industry, with hog futures initially climbing to as high as $75.80 on March 12, then plummeting by more than $30, according to NASDAQ.
Restaurants, normally a key buyer of bacon and other pork cuts, are closed across the country, resulting in an abundance of supply of pork in cold storage and hogs waiting to be harvested by processors. The pipeline is already so tight that it's hard for farmers affected by Smithfield's closure to find another processor, Muller said.
"We've totally disrupted our food chain," he said.
The closure will have potentially devastating consequences for family farms in South Dakota in the short term, including euthanizing pigs. Re-opening Smithfield as soon as possible will be an important part of any solution intended to help farmers, Muller said.
"Anybody in business that has to take their end product and destroy it for no value, you can't sustain that for a period of time," Muller said.
Long-term, not only are farm closures possible, the viability of the United States' pork supply is in danger.
The events at Smithfield are enough to show how fragile food security has became during decades of centralization of food processors, said Doug Sombke, president of the South Dakota Farmers Union.
While there might be an abundance of pork now, disruption caused by Smithfield closure will continue to ripple throughout the industry, Sombke said.
"The amount of food we have in reserve is not good enough," Sombke said.