Dive Brief:

• Pork giant Smithfield Foods is offloading 150,000 hogs to North Carolina-based Murphy Family Ventures in a deal that will allow the contract grower to become an independent producer again.
• Murphy Family Ventures will continue to supply hogs to Smithfield's fresh pork operations under the agreement, according to a news release. The producer will have the capacity for 3.2 million hogs annually for Smithfield, which will provide feed and transportation services.
• The transaction, set to close at the end of the year, re-establishes Murphy Family Ventures as an independent pork company. Smithfield acquired Murphy Family Farms in 2000 and merged it with Brown's of Carolina Inc. as it worked to build up a massive livestock production business.

Dive Insight:

Smithfield, the largest pork producer in the U.S., has aggressively slashed its hog footprint after weathering a prolonged downturn in hog prices that dragged down earnings for parent company WH Group.

The deal with Murphy Family Ventures dismantles one of Smithfield's biggest acquisitions that helped establish the pork company as the largest in the nation. After Smithfield acquired Murphy Family Farms in 2000, the Agriculture Department pushed for the Justice Department's antitrust division to review the deal, saying the company has become "absurdly big," according to a New York Times article from the time.

The agreement also will allow Murphy to once again be an independent, family-owned pork producer. Murphy Family Ventures, established by the family in 2004, provides services to help smaller businesses in agriculture and additionally invests in a variety of other businesses.

"The Murphy family has enjoyed the past 24 years as a contract growing partner with Smithfield and we look forward to restoring our heritage as an independent producer," said Dell Murphy, president and CEO of Murphy Family Ventures. "This agreement represents a generational transfer of independently owned swine production capabilities in North Carolina."

As parent WH Group looks to spin off Smithfield's U.S. and Mexico operations through a listing on the New York Stock Exchange, China-based company has restructured Smithfield's vast pork holdings. Smithfield has moved to cut 20% of hogs production over a two-year period, multiple news outlets reported, as the pork producer looks to optimize production and boost margins.

"Smithfield has evolved over the last 10 years into a more streamlined consumer packaged goods company focused on value-added fresh pork and packaged meats delivered from a portfolio of popular brands recognized for quality and taste," Shane Smith, president and CEO. "With this agreement, we continue this transformation."

Smithfield operates over 43 processing facilities and more than 300 company-owned farms, according to its website. The pork producer also contracts with more than 1,900 farms to raise hogs for processing, according to its latest sustainability impact report.