The suspension comes as the U.S. and Canada have engaged in a heated dispute over trade tariffs.

Why it matters: Canada-U.S. agricultural trade hangs in the balance as tariff talks continue

It is the latest blow for America’s farm sector, which has been roiled by concerns that U.S. tariffs will spark retaliation from top importers that reduces demand for American agricultural products.

The U.S. Department of Agriculture said the suspension was in line with standard protocols and unrelated to recent trade activity. The agency and Smithfield, the largest U.S. pork processor, did not specify what triggered Canada’s action.

“Under Canada’s policy, three noncompliance issues within six months trigger a temporary suspension,” USDA said.

Blocking shipments from the plant limits a market for U.S. pork products.

USDA is working with Smithfield to address the issues and develop a corrective action plan that will be communicated to Canadian authorities, according to an agency statement.

“Once reviewed and accepted, Canada may consider reinstating the plant’s export eligibility,” USDA said.

Canada halted imports from the facility on Thursday, according to a USDA website.

“The issue pertains to a limited number of certain offal shipments,” Smithfield spokesman Jim Monroe said.

Smithfield shares were nearly flat on Friday.

U.S. President Donald Trump exempted goods from Canada and Mexico on Thursday under a North American trade pact for a month from the 25 per cent tariffs he imposed earlier this week.

Canada was the fifth-largest export market for U.S. pork last year, according to U.S. government data. Though shipments slipped, they were valued at about $850 million.

U.S. pork has a significant presence in the Canadian retail and foodservice sectors, said Joe Schuele, spokesman for the U.S. Meat Export Federation, an industry group.

Smithfield, whose brands include Eckrich and Nathan’s Famous, returned to a U.S. exchange in January after more than a decade, in a spinoff by Hong Kong-based WH Group 0288.HK.

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The biggest U.S. pork processor also is paying close attention to trade and immigration policy changes under U.S. President Donald Trump as it exports pork and relies on a diverse group of meatpacking workers, Smith said in an interview.

WH Group, the world’s largest pork producer, spun off Smithfield as Trump has threatened tariffs on imports from major pork consumers, including China and Mexico, that could trigger retaliatory duties that hurt U.S. agricultural exports.

Smithfield was valued at $8.1 billion (C$11.7 billion) after its shares ticked up in a muted debut.

Before the listing, the company carved out its European business, ended contracts with some U.S. hog farms and shut a California pork plant in recent years.

“We believe that really the heavy lifting is done,” Smith said. “This next phase will be focused on growth.”

U.S. farmers, who deliver hogs to processing plants, and slaughterhouse workers have been on edge about the risk for further plant closures.

Smithfield closed a plant in Vernon, California, and another in Charlotte, North Carolina, in 2023. It also stopped slaughtering pigs at its hometown plant in Smithfield, Virginia, in 2021.

The company is not alone: Tyson Foods shuttered an Iowa pork plant last year, and has closed U.S. poultry plants with thousands of workers.

“I think the hog supply is relatively well balanced for that shackle space,” Smith said.

Smithfield looks to use more of its fresh pork in its packaged meats business to reduce its exposure to export markets, Smith said. It can also redirect offal products, such as kidneys or stomachs, to U.S. pet food companies from China, a major buyer, he added.

Export sales represented 13 per cent of Smithfield’s total sales for the nine months ended Sept. 29, according to a regulatory filing.

“If there are further tariff escalations that make those markets that we go to with that product not attractive, we always think about it in the terms of the next best sale,” Smith said.

Trump has also kicked off a sweeping immigration crackdown. More than half of all U.S. meatpacking workers are immigrants, compared with about 17 per cent of the entire workforce, according to the Center for Economic and Policy Research, a think tank.

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Hong Kong-based WH Group, the world’s largest pork producer, is spinning off Smithfield into a listed company, as it looks to create a separate fundraising platform for its U.S. and Mexico businesses.

The U.S. IPO market is set for a historic week ahead as liquefied natural gas behemoth Venture Global looks to go public at a $110 billion valuation.

Smithfield and WH Group are each offering 17.4 million shares, priced between $23 and $27 each, to raise up to $939.6 million in the IPO.

The proposed valuation target is roughly double Smithfield’s net asset value of about $5.38 billion as of Sept. 30.

WH Group said last year the IPO was expected to value the Virginia-based company at $5.38 billion or more.

Smithfield, whose rivals include Tyson Foods and Hormel Foods, was founded in 1936 in its namesake town by the Luter family as a small meat-packing company.

A series of acquisitions starting in the 1980s hoisted Smithfield as the largest U.S. pork producer.

The company produces packaged meats and pork products under brands, including John Morrell, Cook’s and Gwaltney.

Smithfield, which carved out its European business last year, traded on the New York Stock Exchange from 1999 until 2013, when it was acquired by WH Group for $4.7 billion — then the biggest Chinese takeover of a U.S. firm.

The company’s customers include retail behemoth Walmart, fast-food giant McDonald’s and food distributor Sysco.

WH Group will maintain control of Smithfield after the offering. The company plans to use the IPO proceeds to beef up infrastructure, automation and capacity expansion.

Morgan Stanley, BofA Securities and Goldman Sachs are the lead underwriters.

Smithfield will list on the Nasdaq under the symbol “SFD.”

— Reporting by Arasu Kannagi Basil in Bengaluru

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Pork producers have been losing money as pig prices and consumer demand have struggled at a time of high costs for labor and other expenses.

Smithfield, owned by Hong Kong’s WH Group 0288.HK, said it will terminate employees who support its dealings with farms that raise hogs under production contracts. Layoffs may total about 70 employees, or up to one third of the 210 workers in Smithfield’s Utah hog production operations.

The contracts are with finishing farms that raise hogs to slaughter weight, Smithfield said in an email to Reuters on Wednesday, adding that it will continue to operate company-owned sow farms in Utah.

Analysts said pork producers need to cut the number of sows, or female pigs used to reproduce, to return to profitability more quickly.

“Our industry and company are experiencing historically challenging hog production market conditions,” Smithfield CEO Shane Smith said in a Tuesday statement.

Smithfield in October said it would shut a pork plant in Charlotte, North Carolina, after previously confirming it would permanently close 35 Missouri hog farm sites. Last year, the company said it would close a California plant and reduce its herd in the Western U.S.

Smithfield needs such cutbacks to remain competitive, Smith said. The company cited an “industry oversupply of pork, weaker consumer demand and high feed prices” as challenges, though futures prices for corn Cv1 used for livestock feed last month fell to their lowest level in nearly three years.

U.S. meat companies also grappled with excess chicken supplies this year, and face dwindling cattle inventories and a law requiring more space for livestock in California.

Tyson Foods TSN.N, the biggest U.S. meat company by sales, has shut chicken plants.

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A preliminary settlement in the antitrust case was filed on Tuesday night with the federal court in Minneapolis, and requires approval by U.S. District Judge John Tunheim.

The accord follows the judge’s Sept. 14 approval of a similar $20 million settlement between consumers and JBS, one of Smithfield’s largest rivals (all figures US$).

Smithfield spokesman Jim Monroe said the company denied liability in agreeing to settle, and that the accord reduces the distraction, risk and cost of protracted litigation.

He also said the accord eliminates a “substantial portion” of Smithfield’s remaining liability in the nationwide case.

The company, based in Smithfield, Virginia, is a unit of Hong Kong-listed WH Group, which calls itself the world’s largest pork company.

Several companies have faced lawsuits in Minneapolis and Chicago also accusing them of inflating beef and chicken prices.

In the pork litigation, Smithfield previously reached settlements of $83 million with so-called “direct” purchasers such as Maplevale Farms and $42 million with commercial purchasers, a group that includes restaurants.

Some of the other defendants are Hormel Foods, Tyson Foods and data provider Agri Stats Inc.

Smithfield agreed to provide co-operation that the plaintiffs’ lawyers said will strengthen their cases against the remaining defendants.

The Biden administration has announced plans to bolster competition in the meat sector, amid concern that some meat packers could dictate prices and add to inflationary pressures.

— Jonathan Stempel is a Reuters correspondent covering U.S. courts and antitrust regulation from New York.

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U.S. states, cities and hospitals are scrambling to buy freezers that can safely store Pfizer’s COVID-19 vaccine at temperatures of -70 C, significantly below the standard for vaccines.

Moderna’s vaccine can be stored at -20 C.

Smithfield, owned by China’s WH Group, has multiple “ultra-cold” freezers and will work with local authorities to provide assistance as needed, said chief administrative officer Keira Lombardo, without providing details.

The company is “ready and willing to assist health agencies should storage capacity become constrained,” she said in a statement to Reuters.

Thousands of meatpacking workers employed by Smithfield and rivals like Tyson Foods and JBS USA have been infected with COVID-19. Nearly 20 U.S. meat plants were shut in the spring due to outbreaks, tightening supplies, raising prices and making meatpacking one of the industries most impacted by the pandemic in the United States.

Smithfield may be able to keep Moderna’s vaccine in static freezers that store meat before it is exported or sold, said Chris Hodges, a former senior vice-president of business development for the company.

Other “blast” freezers that push cold air onto meat before it is moved into static freezers could potentially get cold enough to hold Pfizer’s version, although it would be very expensive to run them for long periods of time, he said.

“As it becomes more clear that successful vaccines will become available, we have communicated our capabilities and continued willingness to partner with health officials, including with vaccine distribution and storage,” Lombardo said.

Working with health agencies, Smithfield expects it can help distribute vaccines rapidly to food and agricultural workers hit hard by the pandemic, Lombardo said. The company also offered to aid distribution to other essential workers through healthcare offices at its facilities.

Meatpacking workers are considered essential in many states, but not at the top of the list for vaccines, which are expected to be distributed first to healthcare workers and nursing home residents.

Organizations representing food and meat companies have asked U.S. President Donald Trump and President-elect Joe Biden for priority access to vaccines for workers.

Tyson said in an e-mail to Reuters it was closely monitoring the development of vaccines and working with healthcare experts on planning and distribution models for employees.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.

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Tyson Foods was forced to briefly close its Storm Lake, Iowa plant — a month after U.S. President Donald Trump’s April 28 order telling meatpackers to stay open — as worker absences hobbled its slaughter operations.

Nationwide, 30-50 per cent of meatpacking employees were absent last week, said Mark Lauritsen, a vice-president at the United Food and Commercial Workers International Union (UFCW).

More than a dozen meatpacking workers, union leaders and advocates told Reuters that many employees still fear getting sick after losing confidence in management during coronavirus outbreaks in April and May. Absenteeism varies by plant, and exact data is not available, but some workers’ unwillingness to return poses a challenge to an industry still struggling to restore normal meat output.

Daily pork production was down by as much as 45 per cent in late April as some 20 plants closed because of outbreaks. Production has rebounded since plants reopened last month in response to Trump’s order, but remains down from before the pandemic. UFCW, which represents about 80 per cent of U.S. pork and beef production, told Reuters that major pork plants are running at about 75 per cent capacity.

Data from the U.S. Department of Agriculture show that processors slaughtered about 438,000 hogs on Friday, down 12 per cent from the peak before the pandemic.

USDA and the White House declined to comment for this story. Tyson, Smithfield and other meatpackers say they have taken extensive safety measures, at great cost, to protect workers.

Meat companies have prevented the pace of slaughter from falling further by bolstering kill lines with employees from other operations that require more labour, such as butchering and deboning. As a result, meatpackers are producing fewer products that require extra work — such as boneless hams — and throwing away items such as offal that otherwise would be sold, Lauritsen said.

The cure for absenteeism is a safe job at a decent wage, Lauritsen said.

“Right now” he said, “there are employees that don’t see the safe job part.”

Fighting infection, fear

Plants became hotbeds of infection because they house thousands of employees working in close quarters. Outbreaks tightened meat supplies and contributed to a 40.4 per cent surge in prices in May.

The world’s biggest meat companies have spent tens of millions of dollars to protect workers by erecting physical barriers, taking workers’ temperatures, providing protective gear and staggering break times. They have not been able to eliminate infections, however.

“They have changed a lot of things that I think are great,” said Alejandro Murgioa-Ortiz, a community organizer who works with meatpacking workers in Iowa and Nebraska. But workers remain wary, he said, because “there’s still so many risks.”

Infections have risen steadily in rural counties that are home to large meatpacking plants since Trump ordered them to stay open. At least 15 meatpacking counties now report a higher infection rate, on a per capita basis, than New York City, the virus’s epicentre — though that is likely a reflection of the extensive testing of workers and local residents along with elevated infection rates.

In Kansas, 2,896 meat workers have tested positive, accounting for nearly one third of all cases in the state, according to the state health department.

Exposed again

At the Smithfield pork plant at Sioux Falls, South Dakota, about 1,200 employees — about a third of the workforce — were absent as of June 1, including some who quit, said BJ Motley, president of the UFCW local. The plant closed from about April 15 to May 7 as more than 850 workers tested positive for the virus.

Smithfield, owned by China’s WH Group, said it has implemented aggressive measures to protect employees.

“Absenteeism remains a challenge, but we are managing,” the company said in a statement to Reuters. Smithfield declined to disclose its levels of absenteeism.

Sandra Sibert — a 47-year old who works on the plant’s ham bone table and caught the virus — said it is not easy to stay six feet apart in the locker room and cafeteria. Sibert said she grew worried after the plant reopened when a female employee with an infected husband was allowed to work while awaiting her test results.

“I worry about everybody,” Sibert said.

Absences shut plant

Tyson’s Columbus Junction, Iowa plant closed on April 6, when surrounding Louisa County had just six known cases and no deaths. When it reopened on April 21, the county had recorded 215 cases and two deaths. As of May 29, there were 352 known cases and 11 deaths.

Tyson, the top U.S. meat supplier, declined to say how many employees are missing work, but said absenteeism had declined to its lowest percentage since before the pandemic at its Columbus Junction plant and another Iowa plant, in Waterloo.

Tyson had to halt operations at its pork plant in Storm Lake, Iowa in late May — a month after the president’s order to reopen — partly because of “team member absences related to quarantine and other factors,” the company said in a statement. The plant restarted limited operations on June 3.

The company said that 591 workers, or 26 per cent of its workforce, had tested positive. Surrounding Buena Vista county, where many workers live, has one of the nation’s highest infection rates, with 1,257 cases, a fivefold increase over the past two weeks.

Tyson warned in an earnings report last month that worker shortages were expected to contribute to more production slowdowns and plant shutdowns. The company said in a statement that it is continually working to improve safety and social-distancing protocols.

In Kansas, more than 2,900 workers were absent in late April and early May from five plants run by Tyson, Cargill and National Beef Packing Co., according to reports by the U.S. Centers for Disease Control and Prevention.

National Beef said it has focused on protecting its employees while running plants to produce meat for consumers.

Worker-safety measures still sometimes came up short, according to CDC officials. They noted in a report, for instance, that “many people” at a National Beef plant in Dodge City, Kansas, were not wearing masks that covered their noses, and that some only wore face shields that would do little to slow the spread of the disease.

— Reporting for Reuters by Tom Polansek in Chicago and Andy Sullivan in Washington, D.C.

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The closure of the plant and other slaughterhouses due to coronavirus cases among employees has led to temporary shortages of U.S. meat products and left farmers without markets for their hogs, forcing some to euthanize livestock.

Smithfield, owned by China’s WH Group Ltd., reopened the ground seasoned pork and night cleanup departments at the plant in Sioux Falls, about three weeks after saying the facility would shut indefinitely, a spokeswoman for the United Food and Commercial Workers said.

About 250 of the plant’s 3,700 workers went back to work, she said. The company plans to gradually restart more operations and has not resumed slaughtering hogs, according to the union.

The company said in an emailed statement it had not resumed operations at the facility, which accounted for about five per cent of U.S. pork production.

Smithfield made coronavirus testing optional for employees to go back to work, South Dakota health secretary Kim Malsam-Rysdony said on the webcast of a news conference. State and union officials are urging employees to be tested.

South Dakota will hold a mass testing event for Smithfield employees and their dependents, Governor Kristi Noem said on the webcast.

“One of the most effective things that we can do is test Smithfield employees to make sure they are COVID negative before they’re going back into work,” Noem said. “We do encourage every single one of them to participate.”

The U.S Centers for Disease Control and Prevention (CDC) did a walk-through of the plant on Monday morning, Noem said.

The CDC has said 19 states reported COVID-19 cases in 115 meat and poultry processing facilities. Among about 130,000 workers at the facilities, about 5,000 cases and 20 deaths occurred. COVID-19 is the respiratory disease caused by the novel coronavirus.

“As testing becomes more widely available, consideration should be given to its role in rapidly identifying and addressing COVID-19 in this occupational setting,” the CDC said.

— Reporting for Reuters by Tom Polansek in Chicago.

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The news of some of the company’s 1,700 employees at the plant testing positive comes a day after a worker advocacy group sued Smithfield over working conditions at a Missouri plant, where the group said employees have been forced to work “shoulder to shoulder” during the pandemic.

More than 5,000 U.S. meat and food-processing workers have been infected with or exposed to the new coronavirus, and 13 have died, the country’s largest meatpacking union said on Thursday.

To contain the virus spread, other companies such as Tyson Foods have also shuttered some pork plants, but the closures are adding to stress for farmers who are losing markets for their pigs.

Smithfield, owned by China’s WH Group, said the Monmouth plant represents about three per cent of U.S. fresh pork supplies.

— Reporting for Reuters by Uday Sampath in Bangalore.

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The closures are limiting the amount of meat the U.S. can produce during the outbreak and adding stress on farmers who are losing markets for their pigs.

Lockdowns that aim to stop the spread of the coronavirus have also prevented farmers around the globe from delivering food products to consumers. Millions of laborers cannot get to fields for harvesting and planting, and there are too few truckers to keep goods moving.

Tyson Foods, the largest U.S. meat supplier, said it will indefinitely suspend operations at its largest pork plant at Waterloo, Iowa, after operating at reduced capacity.

Plant employees tested positive for the virus, and others stayed home out of fear of becoming infected. The facility slaughters about 19,500 hogs a day, or about five per cent of total U.S. pork production, according to industry data.

Tyson also plans to close a pork processing facility at Logansport, Indiana, while its more than 2,200 workers undergo testing for COVID-19.

“Consumers will see an impact at the grocery store as production slows,” Tyson Fresh Meats Group president Steve Stouffer said.

“It means the loss of a vital market outlet for farmers and further contributes to the disruption of the nation’s pork supply.”

When the Logansport facility closes, slaughterhouses that account for 19 per cent of pork production in the United States will be shut.

Brazilian-owned JBS and WH Group’s Smithfield Foods have also each indefinitely closed massive pork plants in Minnesota and South Dakota, respectively.

Reduced meat output comes as demand has increased at grocery stores, while restaurant dining rooms are closed due to the virus.

Tyson said 2,800 workers at the Iowa plant would be compensated during the closure and invited to the facility later this week for coronavirus testing. The outcome of the tests and other factors will determine when the facility will reopen, according to the company.

Other U.S. meat and poultry plants are operating at reduced capacity. Tyson is running a pork plant in Columbus Junction, Iowa, with limited operations after idling it for two weeks.

Iowa farmer Randy Francis delivers 300-500 pigs a week to the Waterloo plant for slaughter that are backing up in his barns. He hopes to truck the animals to other plants, but they are already overloaded with other hogs displaced by the shutdowns.

The pigs will put on more weight than normal due to the delays, Francis said. That could make their meat fattier or tougher to chew when they are eventually slaughtered, he said.

“It’s definitely scary times,” Francis said.

— Reporting for Reuters by Tom Polansek in Chicago and Praveen Paramasivam and Uday Sampath in Bangalore.

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