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Cargill's Wichita, Kan.-based pork business has completed a transaction to acquire a 21,500-acre hog production site near Dalhart, Texas, from the Premium Standard Farms LLC subsidiary of Smithfield Foods, Inc. for approximately $33 million.
The facilities, which have been idle since spring 2010, will be used to produce pigs that will be transferred to Midwest grow-out facilities after they are weaned. These pigs will then become a portion of the animals Cargill Pork harvests annually at its two meat processing facilities in Beardstown, Ill., and Ottumwa, Iowa.
"In considering this site, we carefully examined factors that are important to us for long-term viability, such as environmental stewardship and animal welfare practices," said Dirk Jones, president of Cargill Pork. "Evaluation of a strategic decision such as this requires that we consider what is right, and best, for the community, the animals, the environment, our customers and our business."
C. Larry Pope, president and CEO of Smithfield Foods, noted, "The sale of this hog production facility is a further extension of our strategy to reduce exposure to commodity businesses and shed non-core assets."
In addition to sow inventory that will be introduced to the property, Cargill Pork plans to make additional investments to improve and expand existing assets on the property, as well as add infrastructure as required. The first group of animals from the site is expected to be harvested in 2012, with the number increasing annually for several years. The site will employ approximately 272 people.
Jeff Worstell, VP of livestock production with Cargill Pork, added that the acquisition will allow the company to have better control over the health and quality of animals raised for its premium pork programs, while also helping it better control costs and ensuring a high level of bio-security.