Smithfield Foods said it was embarking on a fresh round of cuts to its sow herd after blaming a market glut – coupled with a wrong bet on corn prices – for its first annual loss in 34 years.

The pig and pork giant, which had already reduced its herd by 100,000 sows - enough to supply the market with about 2m hogs per year - said it would start "immediately" on a further 3% cut, to help tackle the sector's problem of oversupply.

The latest cut is equivalent to about 30,000 sows, a company spokeswoman said.

"This reduction, combined with the additional cuts by our fellow producers should shrink supply to a point where the industry can return to profitability," Larry Pope, the Smithfield chief executive, said.

"This liquidation is long overdue."

'Not good economics'

In the February-to-April period, live hogs achieved $43 per hundredweight at market but cost $63 per hundredweight to raise - a deficit which reflected Smithfield's decision to lock into corn at $6 per bushel during last year's commodity price boom, roughly 50% above current market prices.

However, Mr Pope also lambasted policies which have encouraged the use of more than 30% of American corn, a major livestock feed, to making ethanol.

"Since this plan was announced, there has already been a sharp run-up in corn prices tied to world oil markets," he said.

"While we fully support the development of alternative fuel sources, the usage of corn, the primary source of feed for all livestock, as fuel is simply not good economics."

Performance slips

The hog production unit raised operating losses more than fivefold to $521.2m in the year to the end of April despite a 14.6% rise to 2.75bn in sales.

The pork division also lost ground, reducing operating profits by 12.15 to $395.2m thanks to a decline in volumes.

Smithfield reported an after-tax loss of $190.3m compared with earnings of $128.9m a year before.

It also announced an $890m cut in debt levels, which have been a concern to investors.

The group's shares closed $0.54, or 4.8%, lower at $10.64 in New York.