Meat-processing giant announces restructuring of live swine operations

Monday, August 19th 2002, 12:00 am
By: News On 6

SPRINGDALE, Ark. (AP) _ Meat-processing giant Tyson Foods Inc. said Sunday it plans to close its company-owned and leased hog farms and end contracts with 132 contract hog producers in Arkansas and eastern Oklahoma in a restructuring of its live-swine operation.

The move will result in elimination of about 200 jobs with the company, the company said in a news release.

``We've been running this division at an operating loss,'' Tyson chairman and chief executive officer John Tyson said in the release. ``Therefore, it is now time to do what we must to try and ensure the long-term viability of the remaining part of this business.''

Tyson, the world's largest processor and marketer of beef, chicken and pork, created the live-swine group after the acquisition of meatpacker IBP in September 2001.

After a review of the operation, Tyson said, ``we found it necessary to make changes within our live swine operation. Restructuring this group was a difficult business decision because it affects team members and contract hog producers, but it was one that had to be made based on our analysis.''

The company said 159 farms would be affected altogether.

``However, many are diversified farming operations, which have other farming activities,'' the release said. ``The producers will also have the option to contract with other pork-production companies, or the opportunity to become independent producers.''

The phase-out of the operations will begin this week, and should be complete in the second quarter of the company's fiscal year in March 2003, Tyson said.

The release said the restructuring will reduce fourth-quarter pre-tax earnings by $20 million to $30 million, but ``it is expected to have a positive impact on the future earnings potential for the company's pork operations.''

Tyson said transportation costs were a big factor in the decision to carry out the restructuring. Competing companies, the release said, have finishing operations nearer to packing facilities, avoiding higher transportation costs for both finished hogs and grain.

The company said it would retain hog-breeding operations in the Holdenville, Okla., and a limited number of farms in northwest Arkansas to provide young pigs to finishing operations in the Midwest. Transportation costs for the young pigs, weighing only about 11 pounds, are not as high as with finished hogs, Tyson said.

The company will also retain some contracts with hog-finishing operations in north-central Missouri, closer to Midwest processing operations and grain supplies.