MASTER TERMS AND CONDITIONS FOR WARRANTS ISSUED BY SMITHFIELD FOODS, INC.

Exhibit 10.7

MASTER TERMS AND CONDITIONS FOR WARRANTS

ISSUED BY SMITHFIELD FOODS, INC.

The purpose of this Master Terms and Conditions for Warrants (this “ Master Confirmation ”), dated as of July 1, 2008, is to set forth certain terms and conditions for warrant transactions that Smithfield Foods, Inc. (“ Issuer ”) shall enter into with Citibank, N.A. (“ Bank ”). Each such transaction (a “ Transaction ”) entered into between Bank and Issuer that is to be subject to this Master Confirmation shall be evidenced by a written confirmation substantially in the form of Exhibit A hereto, with such modifications thereto as to which Issuer and Bank mutually agree (a “ Confirmation ”). This Master Confirmation and each Confirmation together constitute a “Confirmation” as referred to in the Agreement specified below.

This Master Confirmation and a Confirmation evidence a complete binding agreement between you and us as to the terms of the Transaction to which this Master Confirmation and such Confirmation relate. This Master Confirmation and each Confirmation hereunder, shall supplement, form a part of, and be subject to an agreement in the form of the 1992 ISDA Master Agreement (Multicurrency-Cross Border) as if we had executed an agreement in such form on the Trade Date of the first such Transaction (but without any Schedule except for (i) the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Issuer with a “Threshold Amount” of USD 25 million; (ii) Section 5(a)(vi) shall be amended by (x) deleting the words “of not less” in the fifth and tenth lines and inserting the word “greater” in lieu thereof in both places and (y) deleting the words “or becoming capable at such time of being declared” in the seventh line; and (iii) the election of United States dollars as the Termination Currency) between you and us, and such agreement shall be considered the “ Agreement ” hereunder.

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “ Definitions ”) as published by ISDA are incorporated into this Master Confirmation. For the purposes of the Definitions, each reference herein or in any Confirmation hereunder to a Warrant shall be deemed to be a reference to a Call Option or an Option, as context requires.

THE AGREEMENT, THIS MASTER CONFIRMATION AND EACH CONFIRMATION WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE (OTHER THAN TITLE 14 OF THE NEW YORK GENERAL OBLIGATIONS LAW). THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

The Transactions under this Master Confirmation shall be the sole Transactions under the Agreement. If there exists any ISDA Master Agreement between Bank and Issuer or any confirmation or other agreement between Bank and Issuer pursuant to which an ISDA Master Agreement is deemed to exist between Bank and Issuer, then notwithstanding anything to the contrary in such ISDA Master Agreement, such confirmation or agreement or any other agreement to which Bank and Issuer are parties, the Transactions under this Master Confirmation and the Agreement shall not be considered Transactions under, or otherwise governed by, such existing or deemed ISDA Master Agreement.

1. In the event of any inconsistency between this Master Confirmation, on the one hand, and the Definitions or the Agreement, on the other hand, this Master Confirmation will control for the purpose of the Transaction to which a Confirmation relates. In the event of any inconsistency between the Definitions, the Agreement and this Master Confirmation, on the one hand, and a Confirmation, on the other hand, the Confirmation will govern. With respect to a Transaction, capitalized terms used herein that are not otherwise defined shall have the meaning assigned to them in the Confirmation relating to such Transaction.

2. Each party will make each payment specified in this Master Confirmation or a Confirmation as being payable by such party, not later than the due date for value on that date in the place of the account specified below or otherwise specified in writing, in freely transferable funds and in a manner customary for payments in the required currency.

3. Confirmations and General Terms :

This Master Confirmation and the Agreement, together with the Confirmation relating to a Transaction, shall constitute the written agreement between Issuer and Bank with respect to such Transaction. Each Transaction to which a Confirmation relates is a Warrant Transaction, which shall be considered a Share Option Transaction for purposes of the Definitions, and shall have the following terms:

2

4. Procedure for Exercise and Valuation :

In respect of any Component:

3

5. Settlement Terms :

In respect of any Component:

4

6. Dividends :

In respect of any Component:

7. Share Adjustments :

8. Extraordinary Events :

5

6

9. Additional Disruption Events :

10. Acknowledgements :

11. Representations, Warranties and Agreements :

(a) In connection with this Master Confirmation, each Confirmation, each Transaction to which a Confirmation relates and any other documentation relating to the Agreement, each party to this Master Confirmation represents and warrants to, and agrees with, the other party that:

(i) it is an “accredited investor” as defined in Section 2(a)(15)(ii) of the Securities Act; and

(ii) it is an “eligible contract participant” as defined in Section 1(a)(12) of the Commodity Exchange Act, as amended (the “ CEA ”), and this Master Confirmation and each Transaction hereunder have been subject to individual negotiation by the parties and have not been executed or traded on a “trading facility” as defined in Section 1a(33) of the CEA.

(b) Issuer hereby repeats the representations and warranties of Issuer set forth in Section 1 of the Underwriting Agreement (the “ Underwriting Agreement ”) as of the Trade Date between Issuer and Citigroup Global Markets Inc., Goldman, Sachs & Co. and J.P. Morgan Securities Inc. (as representative of the Underwriters (as defined in the Underwriting Agreement), and, in addition, represents and warrants to, and agrees with, Buyer on the Trade Date of each Transaction that:

(i) it understands that no obligations of Bank to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any Affiliate of Bank or any governmental agency;

7

(ii) IT UNDERSTANDS THAT SUCH TRANSACTION IS SUBJECT TO COMPLEX RISKS THAT MAY ARISE WITHOUT WARNING AND MAY AT TIMES BE VOLATILE AND THAT LOSSES MAY OCCUR QUICKLY AND IN UNANTICIPATED MAGNITUDE AND IS WILLING TO ACCEPT SUCH TERMS AND CONDITIONS AND ASSUME (FINANCIALLY AND OTHERWISE) SUCH RISKS;

(iii) (A) none of Issuer and its executive officers (as defined in Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)) and directors is aware of any material non-public information regarding Issuer or the Shares and (B) each of its filings under the Securities Act, the Exchange Act, or other applicable securities laws that are required to be filed have been filed and that, as of the respective dates thereof and as of the date of this representation, there is no misstatement of material fact contained therein or omission of a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading;

(iv) it is not entering into any Transaction to create, and is not engaging in any other securities or derivatives transactions to create, actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or to manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) in either case in violation of Section 9 of the Exchange Act;

(v) it has not and will not directly or indirectly violate in any material respect any applicable law (including, without limitation, the Securities Act and the Exchange Act) in connection with any Transaction under this Master Confirmation;

(vi) [reserved]

(vii) the Shares issuable upon exercise of all Warrants (the “ Warrant Shares ”) have been duly authorized and, when delivered pursuant to the terms of such Transaction, shall be validly issued, fully-paid and non-assessable, and such issuance of the Warrant Shares shall not be subject to any preemptive or similar rights;

(viii) it is not, and after giving effect to the transactions contemplated hereby will not be required to register as, an “investment company” as such term is defined in the Investment Company Act of 1940, as amended;

(ix) without limiting the generality of Section 13.1 of the Definitions, Issuer acknowledges that neither Bank nor any of its affiliates is making any representations or warranties or taking a position or expressing any view with respect to the treatment of the Transaction under any accounting standards, including without limitation FASB Statements 128, 133, as amended, 149 or 150, EITF Issue No. 00-19, Issue No. 01-6 or Issue No. 03-6 (or any successor issue statements) or under the FASB’s Liabilities & Equity Project;

(x) prior to the Trade Date of such Transaction, Issuer shall deliver to Bank a resolution of Issuer’s board of directors authorizing such Transaction and such other certificate or certificates as Bank shall reasonably request;

8

(xi) on the Trade Date and the Premium Payment Date of such Transaction (A) Issuer has the ability to pay its debts as they become due in the usual course of business and (B) Issuer’s total assets are not less than the sum of its total liabilities plus the amount that would be needed, if Issuer were to be dissolved on such date, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to holders of Shares;

(xii) during the period starting on the first Expiration Date and ending on the last Expiration Date (the “ Settlement Period ”) of such Transaction, (A) the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“ Regulation M ”) and (B) Issuer shall not engage in any “distribution,” as such term is defined in Regulation M, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day immediately following such Settlement Period;

(xiii) during the Settlement Period of such Transaction, neither Issuer nor any “affiliate” or “affiliated purchaser” (each as defined in Rule 10b-18 of the Exchange Act (“Rule 10b-18”)) shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares; and

(xiv) Issuer agrees that it (A) will not during the Settlement Period of such Transaction make, or permit to be made, any public announcement (as defined in Rule 165(f) under the Securities Act) of any Merger Transaction or potential Merger Transaction unless such public announcement is made prior to the opening or after the close of the regular trading session on the Exchange for the Shares; (B) shall promptly (but in any event prior to the next opening of the regular trading session on the Exchange) notify Bank following any such announcement that such announcement has been made; and (C) shall promptly (but in any event prior to the next opening of the regular trading session on the Exchange) provide Bank with written notice specifying (i) Issuer’s average daily Rule 10b-18 Purchases (as defined in Rule 10b-18) during the three full calendar months immediately preceding the announcement date that were not effected through Bank or its affiliates and (ii) the number of Shares purchased pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act for the three full calendar months preceding the announcement date. Such written notices shall be deemed to be a certification by Issuer to Bank that such information is true and correct. In addition, Issuer shall promptly notify Bank of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders. “ Merger Transaction ” means any merger, acquisition or similar transaction involving a recapitalization as contemplated by Rule 10b-18(a)(13)(iv) under the Exchange Act.

(xv) Issuer shall not from the day immediately following the Trade Date of any Transaction to and including the third Exchange Business Day immediately following such Trade Date, engage in any distribution; as such term is used in Regulation M under the Exchange Act, of any securities of Issuer other than (A) a distribution meeting the requirements of the exception set forth in Rules 101(b)(10) and 102(b)(7) of Regulation M, (B) any distribution of Issuer’s 4.00% convertible senior notes due 2013 (the “Convertible Notes”) or (C) any private offering and sale of Issuer’s common stock that is being made concurrently with the offering of the Convertible Notes for the Transaction with a Trade Date of even date herewith.

(c) Issuer shall deliver to Bank (i) an incumbency certificate, dated as of the Effective Date of such Transaction, of Issuer in customary form and (ii) an opinion of counsel, dated as of the Effective Date of such Transaction and reasonably acceptable to Bank in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement and Section 11(b)(vii) hereof with respect to such Transaction.

9

12. Miscellaneous :

(a) Early Termination . The parties agree that Second Method and Loss will apply to each Transaction under this Master Confirmation as such terms are defined under the 1992 ISDA Master Agreement (Multicurrency-Cross Border).

(b) Alternative Calculations and Issuer Payment on Early Termination and on Certain Extraordinary Events . If Issuer owes Buyer any amount in connection with a Transaction hereunder pursuant to Section 12.7 or 12.9 of the Definitions (except in the case of an Extraordinary Event in which the consideration or proceeds to be paid to holders of Shares as a result of such event consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (except in the case of an Event of Default in which Issuer is the Defaulting Party or a Termination Event in which Issuer is the Affected Party, other than an (x) Event of Default of the type described in Section 5(a)(iii), (v), (vi) or (vii) of the Agreement or (y) a Termination Event of the type described in Section 5(b) of the Agreement that in the case of either (x) or (y) resulted from an event or events outside Issuer’s control) (a “ Issuer Payment Obligation ”), Issuer shall have the right, in its sole discretion, to satisfy any such Issuer Payment Obligation by delivery of Termination Delivery Units (as defined below) by giving irrevocable telephonic notice to Buyer, confirmed in writing within one Scheduled Trading Day, between the hours of 9:00 a.m. and 4:00 p.m. New York time on the Merger Date, the Tender Offer Date, the Announcement Date (in the case of Nationalization, Insolvency or Delisting), the Early Termination Date or the date of cancellation or termination, as applicable (“ Notice of Issuer Termination Delivery ”); provided that (i) if Issuer does not validly elect to satisfy its Issuer Payment Obligation in Termination Delivery Units by prompt notice to Issuer, Buyer shall have the right to require Issuer to satisfy its Issuer Payment