A hog-farming operation affiliated with Smithfield Foods will return to its roots as an independent company, reducing the world’s largest pork producer’s production footprint by 17%.

Smithfield Foods and Murphy Family Ventures announced on Dec. 2 they would reestablish a Murphy-owned farming business with capacity to produce approximately 3.2 million hogs annually for Smithfield’s pork operations. According to a Smithfield news release, the farming business will be majority-owned by the Murphy family and gain ownership of 150,000 sows – and the market hogs they produce – currently owned by Smithfield.

Smithfield will have a minority stake in the new entity.

Smithfield Foods Vice President of Corporate Affairs Jim Monroe said Smithfield remains in the hog-farming business, having produced approximately 15.8 million hogs in 2023. The agreement with Murphy, he said, would reduce Smithfield’s production by an equivalent 3.2 million, or 17%, “while assuring the supply of those hogs to our fresh pork operations.”

Monroe said the production decrease is on par with reductions over the past two years. Production has gone down roughly 20% over that time span in response to supply and demand, he said.

“While this agreement reduces the volume of Smithfield hog production, we remain the largest hog production company in the U.S.,” Monroe said.

The original Murphy farms, founded by Wendell Murphy in 1962, “have a storied history and a long-standing, excellent reputation for pork production excellence,” Monroe said. “They have been a contract grower for Smithfield in recent years and, with this agreement, now return to independent pork production.”

Smithfield acquired Murphy Farms Inc. in 2000 and merged its hog-farming operations with Brown’s of Carolina Inc. in 2001 to form Murphy Brown, which it rebranded as Smithfield Hog Production Division in 2015.

“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, in Smithfield’s news release. “This agreement represents a generational transfer of independently owned swine production capabilities in North Carolina.”

“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,” said Shane Smith, president and CEO of Smithfield Foods, in the company’s news release. “With this agreement, we continue this transformation while ensuring a supply of hogs from a family farming operation with a long history in and a strong commitment to best practices in American pork production.”

Smithfield expects to close the transaction by the end of the year.

The Murphy agreement comes amid plans to take Smithfield Foods public for the first time in a decade of Chinese ownership by Hong Kong-based WH Group, which purchased Smithfield Foods in 2013 though the global meatpacking giant remains headquartered in Smithfield where it was founded in 1936.  

WH Group, in a July proposal to the Hong Kong Stock Exchange, proposed spinning off Smithfield’s United States and Mexico operations as a public listing dubbed “Smithfield U.S. and Mexico” that would be traded on either the New York Stock Exchange or Nasdaq in the U.S. According to a Nov. 18 letter from WH Group Chairman Wan Long to shareholders soliciting their support ahead of a Dec. 6 vote on the spinoff, WH Group would offer up to 20% of its Smithfield shares valued collectively at $5.38 billion as of September, pending the U.S. Security Exchange Commission’s approval, which Smithfield solicited on Oct. 4.

The Murphy agreement also comes amid concern among Republican politicians over Chinese-owned farmland in the United States. As required under legislation Gov. Glenn Youngkin signed in 2023, which bars China and other designated “foreign adversaries” from owning Virginia farmland, the state’s Department of Agriculture and Consumer Services released a report that year listing 13,389 acres, or 96% of the state’s 13,890 acres of Chinese-held land, as being under the ownership of Murphy, though Monroe disputed the total, contending Smithfield owns less than 4,000 acres statewide. The new law shouldn’t affect Smithfield since WH Group is itself a publicly traded company with investors from around the world, including the United States, and Smithfield isn’t owned or controlled by a foreign government, Monroe said last year.

In a March 8 letter this year to the House Agriculture Committee, 10 current and former House Republicans alleged Chinese Communist Party “infiltration” of the American pork industry through Smithfield, a claim the company has repeatedly denied since the WH Group purchase.

Editor’s note: This story and headline was updated at 9:14 a.m. on Dec. 6 to correct that Murphy Family Ventures will own 150,000 sows, not 150, and with additional details by Smithfield Vice President of Corporate Affairs Jim Monroe.