Smithfield Foods' officials report that the company will  said it will cut its U.S. sow herd by 4 percent to 5 percent. The total estimate is 40,000 to 50,000 sows. In the end, that will mean reducing market hog numbers by 800,000 to 1 million a year, say officials. Smithfield's current annual production is 18 million market hogs.

The reductions will begin immediately.

"Given the economics for raising hogs today, we cannot continue on the current path; something has to change," says C. Larry Pope, Smithfield's president and chief executive officer. "Grain costs continue at record levels, with the potential of escalating, given the current U.S. government policy favoring corn for ethanol. Today the economics are very challenging, and we believe that these increased costs will translate eventually into still higher food costs for the American consumer. In the meantime, Smithfield is taking immediate action to improve the efficiencies of our live-production operations."

With sales of $12 billion, Smithfield is the United States' No. 1 pork producer, processor and marketer of fresh pork and packaged meats.