Poor earnings lead Smithfield to delay its hog housing plan

Smithfield Foods Inc. said Wednesday that financial losses will force it to delay a project that won the company rare praise from animal rights groups.

Smithfield announced in January 2007 that it would replace "gestation stalls" for pregnant sows with roomier "group housing" over the next decade at all of its farms. PETA said the gestation crates lead to higher rates of mortality and increased risk of disease and distress for the pigs.

But in its annual report, released Wednesday, Smithfield said it wouldn't meet the 2017 deadline because of "significant operating losses incurred by our hog production segment." The transition to group pens will cost about $300 million, the report said.

Last week, Smithfield reported its first annual loss, of $190 million, since 1975. Its hog-production business alone lost $171 million in the fourth quarter of fiscal 2009, ended May 3.

Bruce Friedrich, vice president for policy for PETA, said Wednesday: "It's not surprising that when times get tough they jettisoned a plan that was barely a plan in the first place."

Two years ago, Friedrich praised the move as "a fantastic step for farmed animal welfare." But he sought specifics on the phaseout and its expansion to Smithfield suppliers. The company, he said Wednesday, did not comply.

In its report, Smithfield said it has converted to "group housing" at three farms in North Carolina, Colorado and Utah. "We remain committed to implementing the program as soon as economic conditions improve," it said.

Smithfield did not provide a revised deadline. Spokeswoman Keira Ullrich did not respond to an e-mail Wednesday.

In March, PETA, which owns stock in Smithfield, submitted a proposed shareholder resolution seeking a more detailed timetable for the phaseout of the crates. Friedrich said he expects the resolution to be voted on at the company's shareholders meeting this summer.

Philip Walzer, (757) 222-3864, phil.walzer@pilotonline.com