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PSF announces layoffs will continue through the year

Posted by: tdt -


By Nathan French


Rumors have been swirling through town about the closing of one of our areas largest employers, Premium Standard Farms. Premium Standard Farms is a subsidiary of Smithfield Foods. PSF was founded in 1988 with the aim of creating a standardized method to produce premium pork. To accomplish this endeavor, the company decided to pursue full vertical integration, a first for any pork producer in the United States. Premium Standard Farms was the second largest pork producer and the sixth largest processor in the United States until acquired by Smithfield Foods in 2007.

On September 18, 2006, Smithfield Foods announced that it would acquire Premium Standard Farms in a cash and stock deal that would total $810 million including the assumption of about $117 million in debt. The livestock production segment of Premium Standard Farms involves operations in both Missouri and Texas, with total acreage of approximately 100,000 acres. Its herd size of 221,000 sows can produce about 4.5 million pigs per year; the second largest producer of porcine livestock in the United States.

The North Carolina farms were shifted from PSF to Murphy-Brown after the 2007 Smithfield acquisition. The local Texas operations are based thirteen miles outside of Dalhart just outside of Perico. The local production operations, until recently, have employed about 300 people. A sow herd of about 33,000 are produced in Dallam and Hartley counties. Production takes place on a 40,000 acre farm named High Plains Ranch. Additionally, the company purchased the 14,500 acre Perico Farm from National Hog Farms in 1994, which houses the main Dalhart operations. Smithfield Foods acquisition promised a bright future for both Smithfield and PSF in the mission of full vertical integration.

However, poor margins in the U.S. pork industry have put PSF in jeopardy. Murphy-Brown, owned by Smithfield, operates the properties the parent company purchased from Premium Standard Farms in 2007. Murphy-Brown is in the process of closing its operations. Murphy-Brown first cut sow operations when the market declined, but continued declining markets have now affected nursery and finishing operations as well. "The negative market conditions have continued," Michael Rainwater, general manager of Murphy Brown Southwest Division, said in a statement. Those continued negative conditions have played ruin for PSF.

PSF is closing the pork business in our area and will gradually send its employees home. The first permanent layoffs of 140 workers at our local location occurred August 17. On Monday, Texas Workforce Commission also announced that PSF will lay off 117 additional workers beginning October 16. The layoffs are likely to continue through the end of the year as the remaining hogs go to market. The substantial continuing layoffs will leave fewer than 25 people working at the local PSF. Most of those laid off, according to Murphy-Brown, are people who worked directly with the hogs and others included managers, technicians, and security guards. Dalhart City Manager Greg Duggan stated, "While the layoffs at PSF have caused a shock to our community and I hate to see PSF go; Dalhart has several businesses with employee deficits that could help absorb the job losses."

Parent company, Smithfield, cites poor market conditions and the restructuring of its hog operations as the downfall. Dramatic financial losses due to the high cost of corn and fuel and the downfall of pork markets have played a part in the financial ruin. Smithfield released in June that it lost $190 million in the fiscal year (compared to $129 million profit the year before), and that drastic restructuring of its hog operations became a must.

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