Kansas City, Mo. ? Bankrupt Farmland Industries Inc. on Tuesday announced an agreement to sell its pork unit — its remaining major business — to Smithfield Foods for $363.5 million, ending the Kansas City, Mo.-based cooperative’s effort to rebuild.

The 74-year-old Farmland, the nation’s largest agricultural cooperative, previously had suggested that it might reorganize around the pork unit, Farmland Foods, as it sold its other core businesses. President and Chief Executive Bob Terry said selling Farmland Foods ended the rebuilding efforts but offered the best value to creditors.

With annual sales of about $1.8 billion, Farmland Foods is the sixth-largest pork producer in the nation.

The deal with Smithfield is subject to court approval. Farmland also must hold an auction at which other companies could outbid Smithfield.

In May, Farmland sold its crop production business to Wichita-based Koch Nitrogen Co. for $293 million. It also has agreed to sell its interest in its beef processing business to its partner, U.S. Premium Beef, for $232 million.

Terry said the company would consider offers for its remaining assets, including a refinery in Coffeyville.

Under the deal, Smithfield Foods would continue to operate all Farmland plants and maintain production levels at the plants. In addition, Smithfield would retain all Farmland Foods’ employees, including the management team, and honor Farmland contracts with unions and hog producers. Koch recently cut 57 jobs at three fertilizer plants it acquired from Farmland. Unlike the Smithfield agreement, Koch was not contractually obligated to hire all the Farmland employees, Terry said.

Terry said creditors have indicated their support of the agreement.

“We’re very aware that our bondholder creditors are 15,000-plus small investors, many of whom are elderly and very reliant on this investment for the personal finances. And so they are more inclined to support and to want as much cash up front as they could get. This solution, this path with Farmland Foods, is the one that will give them the most immediate cash,” Terry said.

Farmland filed for Chapter 11 bankruptcy protection in May 2002 after rejecting an offer from Smithfield, Va.-based Smithfield Foods, the country’s largest pork producer and processor, to buy its pork and beef operations. Since then, Smithfield had continued to say it doubted Farmland would survive and that it expected to be able to buy those businesses.

Terry said the deal with Smithfield announced Tuesday had “significantly better value” than anything Farmland could have received earlier.

Smithfield president and chief operating officer C. Larry Pope said the deal would increase Smithfield’s share in the pork market, which is measured by how many hogs a company slaughters, from 20 percent to 27 percent, Pope said.

“From a Smithfield standpoint, what’s important here is the Farmland brand name, which is really well-respected in the Midwest,” he said.

U.S. Bankruptcy Judge Jerry Venters must approve the bid and auction procedures for Farmland Foods and set a time to qualify other potential bidders. In preparation for an auction, Farmland will begin providing information to other potential participants. Farmland anticipates completing the sale later this fall.

Farmland spokeswoman Sherlyn Manson said the company plans to file an amended reorganization plan by the end of the month.

Shares of Smithfield Foods were up 54 cents to close at $23.14 in trading Tuesday on the New York Stock Exchange.