MIAMI, FLA. — Shane Smith, president and chief executive officer of Smithfield Foods shared his perspectives on the market dynamics affecting the meat industry today, from tariffs to immigration to consumer trends, during a Q&A at the Bank of America Consumer and Retail Conference on March 12.

Smith, who was named CEO in 2021, joined Smithfield nearly 25 years ago, in the wake of the company’s acquisition binge, which spanned from about 1980 through the early 2000s. During that era, each company that was added to the portfolio prior to about 2013 was allowed to run as individual independent operating companies, which he said was not a sustainable game plan.

“We were supporting at one point more than 40 different brands across the US, so not a real cohesive strategy,” he said, recalling how the company maintained multiple enterprise resource planning systems (ERPs) while supporting multiple sales forces before bringing all the brands together as part of its “One Smithfield” initiative.

The strategy allowed Smithfield to operate one ERP system and maintain one sales force while thinning the portfolio down to about a dozen key brands. The net effect nudged the company’s top line from $13.4 billion in 2013 to about $14.2 billion for the 12-month period ending in September.

During that time the company took steps to bolster its bottom line, including shuttering underperforming parts of the business like Farmer John processing plant in Vernon, Calif., in 2023. The pork company divested non-core parts of the business, including selling off its Saratoga Food Specialties seasoning company in 2022. He said about 40% of the SKUs in Smithfield’s packaged meats business were also rationalized to streamline that processing operation, which included breaking off business with unprofitable customers that were identified as those that could not achieve the necessary margin profile.

“That forced some tough conversations with some customers,” Smith said.

He added that in the Fresh Pork segment of Smithfield’s business the company has reduced its annual slaughter level by about 10% to a capacity of about 33 million. Today that level is approximately 29 million.

“That was purposeful,” Smith said, “to create some flexibility in our system that we could be a little bit more nimble and react with the market instead of always trying to run at 100% of capacity.”

Part of that reduction included ceasing slaughtering operations at its hometown plant in Smithfield, Va., in 2021.

Smith pointed out that efforts to streamline the packaged meats business has been an effective strategy, as Smithfield’s Packaged Meats segment profitability went from about a 6% profit margin of about $460 million in 2013, to today representing over $1 billion in profit, a 14% margin.

Smith also addressed some of the impact of the current administration’s actions related to tariffs and how it could affect the company and the industry. He categorized the topic of tariffs as fluid and recognized that it changes daily.

When it comes to Mexico, Smithfield has operations there that produce, process and sell products into that market.

“That business should perform well,” he said.

While Mexico is a large market for importing Smithfield’s hams from the United States, Smith said Smithfield also utilizes a substantial amount of ham internally, to supply its Packaged Meats business.

Looking ahead, Smith said the trade environment includes multiple moving parts and several questions have yet to be answered.

“What is it going to mean to exchange rates; what is it going to mean, for example, if meat is tariffed going in and corn is also tariffed going in, what does that mean to the underlying raising costs,” he said.

Tariffs in China are also a concern for the entire meat industry and Smithfield. Smith said its relationship with parent company Hong Kong’s WH Group, which approved spinning off Smithfield into a listed company prior to its IPO filing for the Nasdaq Global Select Market earlier this year, facilitates shipping its US offal products to China, noting no meat products are shipped there.

“That offal product is typically things that US consumers don’t eat,” Smith said, including stomachs, hearts, head, ears and feet. “China is the best market for that in the world. We’ve built a really strong synergistic relationship with Shuanghui through WH Group, where we actually have boots on the ground selling that product into the local economy or into the local environment on our behalf, trying to get the best price for us,” he said, adding that Smithfield has been operating under a tariff system since 2018.

Smith added that even if there is an additional 10% tariff added to US exports, China would still be the best market in the world for those products because Smithfield has access to about 40 export markets and operates in about 30 on a typical day. This makes its diverse offerings in its “adjacent businesses” more valuable. For example, its Fresh Pork segment includes Smithfield’s pet food, skins and pharmaceuticals businesses.

“It’s really about finding a home for every piece of that,” Smith said. “And with the tariffs coming in, it makes it more complicated as you look around the globe and see how things are moving and how exchange rates are moving. But I believe that what we’ve built is a pretty resilient system.”

Addressing recent headlines, Smith clarified that despite this week’s contentious US-Canada dispute about tariffs, the interruption of some pork product shipments from Smithfield’s Tar Heel, NC, plant to Canada last week was unrelated.

“That was a scenario where we had sent a load of offal products, there was a customer pickup ... and there was a problem when it reached the border,” he said. “And so, we’re working through that process now; we’re bringing that product back, but that wasn’t anything related to the tariff issue.”

On March 14, Smithfield confirmed that Canadian exports from Tar Heel resumed. The FSIS website stated products produced from the facility before March 6 and after March 12 were eligible for export.

Smith was also asked about his perspective on the potential change in immigration status from the Trump administration for legal immigrants who are in the United States on temporary visas.

He said with its 41 locations across 19 states, Smithfield measures its success as an employer of choice by monitoring its turnover in communities with dynamic worker profiles. Companywide, he said turnover has decreased to about 35% compared to a few years ago when it was over 70%. Meanwhile, the company is paying close attention to anything that might signal changes, but to date, Smith said his HR team hasn’t seen a significant impact yet.

“We’re staying very close to it, but it is something that we’ll need some cohesiveness around as an industry as we move forward,” he said.

Smith also discussed Smithfield’s China-based ownership company since 2013, WH Group, and how the current administration’s policies to discourage ownership of US agricultural assets by China could affect the company in the future.

Smith said since the approval of WH’s acquisition in 2013, Smithfield’s operations in the United States have benefitted from the investment of more than $3 billion from WH Group into Smithfield’s US-based infrastructure, which included maintenance, facility expansions to allow for capacity expansion and philanthropic activities in communities where it operates. He said this represents investments in the industry domestically and in the US economy and that 95% of everything the company produces is sourced and sold in the United States.

“If you think about that in the context of our packaged meats business, it’s built for the US economy or US consumer,” he said. “The manufacturing operations are here, the raw material is sourced here, and the product is sold here,” he said, and the same is true for its hog production across the farms it maintains in Missouri, North Carolina and across the Midwest.

“All of that grain is sourced here, the soybean meal and the corn, and the hogs are sold here,” Smith said. “So, we are as American a company today as we have been at any other point in our history.”

One of the trends Smith addressed in discussing the growing demand for animal-based meat among consumers was the positive role meat plays in the diets of GLP-1 users.

“What we see where we are able to see scanner data is that people who use GLP-1s are staying with a protein diet,” he said. “Where we see the impact on that is snacks and sugary drinks and those types of things that they’re not buying. But they’re really focused on maintaining a good level of protein and high-quality protein in their diet. So, we think we’re set up well as we go forward.”

The topic of ultra-processed foods was also discussed, as it is a targeted category of US Secretary of Health and Human Services Robert F. Kennedy Jr. Smith pointed out that when food companies like Smithfield are questioned about how much of their portfolio is ultra-processed, it’s challenging to answer because there is no established definition.

“But the reality is it is something that’s being discussed and is something that we’re paying attention to,” he said.

He added that a few years ago Smithfield categorized health and wellness as part of its sustainability pillar and established goals to reduce sugar and sodium content in its products by more than 10% against baseline levels of 2019, many of which have already been achieved ahead of schedule.

“We’ll continue to focus on the products that we produce, reducing the sugar levels, reducing the sodium levels and making them overall cleaner label type products as we go forward,” Smith said.