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Diving overview:
- Smithfield Foods said Monday it will spend up to $1.3 billion over the next three years to build a new packaged meat and pork complex processing plant in Sioux Falls, South Dakota.
- The pork giant said in a statement that the highly automated facility will be “the most modern in the country” and will help deliver “significant efficiency gains” to the company’s fresh pork and high-value packaged meat businesses.
- The building will replace the pork giant’s existing manufacturing facility in the city, which is more than 100 years old. The plant is scheduled to begin production in late 2028.
Dive Insights:
Smithfield is reorganizing its U.S. manufacturing operations as meatpackers face rising costs for live animals and look for new ways to cut costs.
After a period of low prices, hog costs will begin rising in 2025 and are expected to continue rising this year as demand for protein increases meat sales, according to USDA forecasts. Record-low livestock supplies have pushed beef prices to record highs, forcing more consumers to seek alternatives like pork and chicken.
Smithfield is primarily a pork producer, but it is also expanding its presence in the beef space as the company looks to offer more packaged meats such as salami and roast beef. The company recently purchased Nathan’s Famous beef hot dogs for $450 million, further exposing it to the volatile livestock market.
To reduce costs, Smithfield has sought to simplify its supply chain and reduce costs through manufacturing efficiencies. The pork giant recently announced plans to close its dry sausage plant in Massachusetts and move production to another facility.
The pork giant’s current Sioux Falls plant employs 3,200 people and began operating in 1909 under John Morrell & Company, a processor acquired by Smithfield in 1995. The $1.3 billion investment reflects Smithfield’s strategy to grow packaged meats, which have become one of the company’s most profitable segments.
“Smithfield’s investment supports our long-term strategy to continue to grow and optimize our value-added packaged meat and fresh pork operations to deliver innovation, convenience and value to our customers.”
Other meatpacking companies have invested in automation to cut costs. Cargill announced last year that it had invested $90 million in computer vision technology at its Fort Morgan, Colorado, plant. This allows manufacturers to process more meat per cow.
