OMAHA (DTN) -- Smithfield Foods continues to shed some of its sow herd and hog production by announcing Monday that Murphy Family Ventures will re-establish its swine operations and assume ownership of 150,000 sows in North Carolina.

The move comes as Smithfield Foods' parent company, Chinese-based WH Group, also announced in a letter from the board of directors last month that Smithfield would spin off as much as 20% of the company's shares. Under the proposal, which requires approval by the Securities and Exchange Commission, the shares would be sold on the New York Stock Exchange, according to a letter from the WH board.

This new subsidiary would oversee operations in the United States and Mexico. The letter cites that Smithfield's underlying offering of stock is estimated at $5.38 billion in value. WH Group's shareholders, who are a small group in control of the shares, are set to vote on the plan on Dec. 6.

Opening up some U.S. stock ownership in Smithfield could alleviate some of the political criticism of the company as lawmakers on the state and federal level have pushed back more on Chinese ownership of U.S. agricultural production.

Smithfield had announced plans to cut its ownership of U.S. hog production by as much as 20%. The shift in ownership of 150,000 sows would likely achieve much of that goal.

Murphy Family Ventures and Smithfield signed an agreement to establish a farming business owned by Murphy that would have the capacity to deliver 3.2 million hogs annually to Smithfield's processing operations. The Murphy family business goes back to Wendell Murphy who started a feeding operation in North Carolina in the early 1960s and then became an influential politician in the state as well.

Under the deal, the Murphy family would have majority ownership and assume ownership of 150,000 sows currently owned by Smithfield in North Carolina. In turn, Smithfield will provide production services, including supplying feed and transportation for the hogs.

"The Murphy family has enjoyed the past 24 years as a contract growing partner with Smithfield and we look forward to restoring our heritage as an independent producer," said Dell Murphy, president and CEO of Murphy Family Ventures. "This agreement represents a generational transfer of independently owned swine production capabilities in North Carolina."

Shane Smith, president and CEO of Smithfield Foods, said Smithfield has evolved over the past decade into a consumer-packaged goods company focused on fresh pork and other packaged meats.

"With this agreement, we continue this transformation while ensuring a supply of hogs from a family farming operation with a long history in and a strong commitment to best practices in American pork production," Smith said.

Smithfield Foods is the country's largest owner of sows but has made moves in recent years to cut some of its ownership in states such as Missouri and Utah. Last year Smithfield closed 35 hog farms in Missouri, for instance, that had been operated by its subsidiary, Murphy-Brown LLC.

Earlier this year, Smithfield also closed a ham-boning facility in Iowa to consolidate production at other locations.

Smithfield sold a former 1,372-acre Premium Standard Farms property in Missouri this past August for $5.64 million as well, DTN reported.

Last month Smithfield also agreed to pay $2 million over child-labor violations in Minnesota.

To see more Smithfield stories, go to:

-- "Smithfield Sells Shuttered 1,370-Acre Hog Farm in Missouri at Auction for $5.6 Million," https://www.dtnpf.com/…

-- "Smithfield Reaches $2M Settlement With Minnesota Over Child Labor Violations at Packing Plant," https://www.dtnpf.com/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

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