Hormel Foods Corp. said Thursday it is selling its large pork processing plant in Fremont, Neb., to a company recently created by farmers in southwest Minnesota and South Dakota.
WholeStone Farms LLC, a consortium of 220 hog farmers, said it initiated the deal. The group is seeking ways to capture a greater percentage of the value for the hogs they raise.
Neither Hormel nor WholeStone Farms disclosed the sale price, with Hormel citing a required "quiet period" ahead of the release of a quarterly financial report next week.
For Austin, Minn.-based Hormel, the move is another step away from the meatpacking process. It's also a dramatic step for WholeStone's members who say they are fighting for the survival of their family farms and rural livelihoods.
"In today's market conditions, producers receive 65 percent of the meat value for our hogs," said Luke Minion, chairman of the board of directors and interim chief executive of WholeStone Farms. "We live in rural communities and we aren't able to capture the value of our hogs. That is putting our producers' survival at risk."
Hormel executives plan to explain the deal in greater detail on the earnings call next Thursday. The deal is expected to close by December.
"The strategic decision to transition the Fremont facility to WholeStone Farms reflects the long-term, changing dynamics in the pork industry, and most importantly, is aligned with our vision as a global branded food company," Hormel chief executive Jim Snee said in a statement.
Hormel has owned the Fremont facility since the 1940s. It employs roughly 1,500 people and is one of only two major plants processing the company's meat products like Spam, bacon, pepperoni, pork sausages and lunch meat. WholeStone will sell its Fremont-produced pork exclusively to Hormel for at least three years.
Hormel's other major slaughterhouse is in Austin and is owned by Quality Pork Processors Inc., a Dallas-based company that bought the facility from Hormel in the late 1980s. QPP sells exclusively to Hormel.
Fremont's existing management team and workforce are being offered jobs with the new company. Minion said he expects wages and compensation packages to be similar.
WholeStone is an offshoot of the Pipestone System, a unique management system based out of a livestock veterinarian office in Pipestone, Minn. The Pipestone System sells shares to small hog producers in the Midwest _ from Illinois to the Dakotas _ and consolidates various functions of the hog farming process in order to help those family farmers benefit from economies of scale.
Buying the Fremont plant gives its members access to a facility to slaughter their own hogs.
"And now we also can sell the meat, which is pretty important," Minion said. "From our side, the farmer-producer out here, we think we've got something unique."
WholeStone is incorporated in South Dakota, according to federal filings. Minion said they plan to establish its corporate headquarters in Fremont and locate executive functions there.
