On Friday, the food processing company Smithfield Foods announced their plans to shut down a facility in Vernon, California and begin to shut down operations in California, Utah, and Arizona.
Smithfield “will cease all harvest and processing operations in Vernon, California in early 2023 and, at the same time, align its hog production system by reducing its sow herd in its Western region,” said in a press release.
“Smithfield is taking these steps due to the escalating cost of doing business in California,” the company said.
Jim Monroe, a Smithfield Foods’ spokesperson, told the Wall Street Journal, “It’s increasingly challenging to operate efficiently there. We’re striving to keep costs down and keep food affordable.”
The company is the largest pork processor in America and is partly owned by the Hong-Kong company WH Group. Losing some of its production capability is likely to hurt the country’s food production capabilities even further.
Part of the problem is the war in Ukraine, which has contributed to sending grain prices skyrocketing world-wide due the country’s major contribution to wheat exports.
In response, the price of grain for livestock feed has gone up dramatically. Faced with supply chain and labor shortages and record inflation, the company was forced to stop producing in California because of the costs.
The spokesperson for Smithfield highlighted the state’s high utility costs as one of the reasons forcing them to leave. He quoted them as costing three and-a-half times that of other plants across the country.
Adding insult to injury, the Golden state mandated in 2018 with Proposition 12 that food processing plants must give adequate roaming area for pigs – which raises food and production costs.
The company said it is also looking to exit other farms in Arizona and California whilst scaling back its herd in Utah, too.
“Smithfield is providing transition assistance to all impacted employees, including relocation options to other company facilities and farms as well as retention incentives to ensure business continuity until early next year,” the company said.
The company made the decision in conjunction with the United Food and Commercial Workers International Union, the International Brotherhood of Teamsters, and the International Union of Operating Engineers.
“We are grateful to our team members in the Western region for their dedication and invaluable contributions to our mission. We are committed to providing financial and other transition assistance to employees impacted by this difficult decision,” Smithfield Chief Operating Officer Brady Stewart said.
Food prices nationwide have continued to rise and the shutting down of this facility will likely not help the situation. Adding insult to injury, there are incoming fertilizer shortages which the US could soon be facing.
An example of the damage to the community that losing a major company like Smithfield can do can be seen when the company pulled out of Beaver County, Utah.
This is just another problem in the long line of problems facing the Biden administration: food insecurity. We are looking at high gas prices, high food prices, and now we are looking at having food shortages for certain goods. Can the economy get any worse under Biden? Guess we’re about to find out.