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Smithfield plans to close California plant over costly red tape and regulations

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Smithfield Foods is withdrawing from California by early next year, citing red tape like that from Proposition 12 and the generally high costs of doing business in the state.

Products such as bacon, sausage, hot dogs, dinner sausage, bone-In-hams, and sliced hams, will cease being produced at Smithfield’s Farmer John meat packing plant in Vernon, CA.

Smithfield will cease all harvest and processing operations at Vernon and at the same time “align its hog production system by reducing its sow herd in the Western region.”

A company statement said it would decrease its sow herd in Utah and explore strategies to exit farms in Arizona and California.

Vernon harvests company-owed hogs under the Farmer John and other brands, and those customers will in the future be serviced from the Smithfield facilities in the midwest.

Smithfield said it was heading for the exits “due to the escalating cost of doing business in California.”

Smithfield, owned by Hong Kong’s WH Group Ltd, has an agreement with its unions to close the Vernon facility, including financial and transition assistance to the idled workforce.

Smithfield currently employs 1,800 at Vernon in jobs that average $21 per hour.

Smithfield has 40,000 American jobs at 45 facilities with nearly 500 company-owned farms, including 17 in California.

California’s Prop 12 is currently before the U.S. Supreme Court over whether it can legally dictate housing sizes to non-California pork producers whose products are sold in the Golden State.

California is a small pork-producing state with a large consumer market representing 13 to 15 percent of U.S. demand that can only be met by more out-of-state production.

Outside of California, pork producers are resisting California’s hog housing standards because of the costs. Jim Monroe, vice president for corporate affairs at Smithfield, blames the Vernon closure on “high costs and over-regulation.”

Monroe said the costs of doing business in California “are significantly higher than other states where we operate.”

Prop 12 was a ballot initiative passed in 2018 by California voters that requires farmers to give hens, sows, and veal calves certain space requirements. The state law imposes a sales ban on non-compliant products, including eggs, pork, and veal from out-of-state.

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