Losses in the US pig industry have reached such a level that it can no longer avoid a mass shake-out, pig and pork giant Smithfield Foods has said, announcing its third successive quarter in the red.

Larry Pope, chief executive at the Virginia-based group, said that raising hogs looked likely to be an unprofitable business "for the foreseeable future" given the low market prices.

The extent of losses, which for Smithfield have tripled to $17 for every hundredweight of hog produced over the last year, mean the industry "has finally reached an inflection point where liquidation must occur", Mr Pope said.

He added: "The hog production industry will very likely continue to incur losses until an industry-wide liquidation occurs."

Herd cuts 

The comments come almost two years into a pig industry downturn, fuelled at first by high feed prices and later by the global economic downturn and the impact of so-called swine flu on pork demand.

The longevity of the downturn has been blamed on a reluctance by producers, whose prosperity was supported by bumper profits between 2000 and 2007, to cut back significantly on animal numbers.

Smithfield is in the process of cutting its breeding herd by 130,000 sows, sufficient to cut production of market hogs by 2.2m a year by 2011.

In the red 

Nonetheless, losses at the division soared to $162.1m during the three months to August 2 as the market price of hogs fell to $42 per hundredweight from $55 a hundredweight a year before.

Rearing costs eased by only $2 per hundredweight to $59 per hundredweight.

The hit dragged the group $107.7m into the red for the period, despite a tripling to $107.8m in operating profits at the packaged meats division, a record for the first quarter, helped by efficiency gains and lower prices for bought-in meat.