SMITHFIELD, Va. – Smithfield Foods Inc. announced on Tuesday a loss of $28.5 million for the first quarter of fiscal 2009.

The loss comes despite an increase of sales to $3.1 billion versus $2.6 billion a year ago.

The company said that much of the loss came from volatile commodity prices.

"We continue to be challenged by high input costs across all the businesses. Certainly a portion of this increase is the result of the current ethanol policy in place," said C. Larry Pope, Smithfield president and CEO. "The current government mandate puts the company in a position of having to compete with foreign oil for feed for our livestock. This mandate has resulted in more than 30 percent of the corn crop being diverted from animal feed to ethanol production, resulting in a sharp run-up in corn prices tied to world oil markets.”

Hog and turkey production faced losses because of feed prices. The company said frain prices have moderated and live hog prices have risen significantly from the first quarter level. But both markets are highly volatile and the outlook for hog production for the remainder of the calendar year is still unfavorable, according to Smithfield.

Source: Smithfield Foods Inc.