The head of Smithfield Foods Inc. (SFD) said Tuesday the U.S. hog industry is stepping back from near-extinction as production cuts counter a glut of pork.

Larry Pope, president and CEO of the largest U.S. hog and pork products producer, said the industry still remained in danger of bankruptcy after taking multiple hits from high feed costs and demand weakened by its association with the H1N1 virus, popularly known as swine flu.

Smithfield reported a fiscal first-quarter loss amid a welter of special charges to close farms, but Pope said on a conference call that the sector had reached "an inflection point."

He warned that if production didn't continue to fall then "we will only find a pig in a zoo. There won't be any on a farm."

Smithfield, like other meat producers, was caught by the sharp reversal in commodity costs that left it nursing hundreds of millions of dollars in derivatives losses.

The traditional spike in demand during the summer grilling season also vanished amid negative consumer sentiment following the swine flu outbreak.

"I feel like the world has been against us for 12 months, and this thing may be turning," said Pope on a conference call.

Smithfield also suffered a fire at a processing plant in Wisconsin that hit its profitable packaged meats business.

Hog production has been the main drain on Smithfield on its rivals. The H1N1 virus closed the key China export market, though Pope said other international markets such as western Europe and Mexico remained profitable.

The company has cut hog production by 13% over the past six quarters in a bid to curb oversupply in the domestic market.

Smithfield reported a loss of $107.7 million, or 75 cents a share, for the quarter to Aug. 2, compared with a prior-year loss of $13.2 million, or 10 cents a share. Revenue decreased 13% to $2.72 billion.

At its hog-production segment, Smithfield's loss widened as revenue slid 24%. The fresh pork segment swung to a loss as sales tumbled 23% amid lower selling prices, volume and exports.

The company's packaged-meat business saw earnings triple to a quarterly record despite revenue falling 1.6%. Volume fell 9%, but higher prices made up much of that decline while the bottom line was also aided by cost-cutting.

-By Doug Cameron, Dow Jones Newswires; 312-750-4135; doug.cameron@dowjones.com