SECURITY AGREEMENT

Exhibit 10.2

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (this “ Security Agreement ”) is entered into as of May 16, 2008 by and between The Smithfield Packing Company, Incorporated, a Delaware corporation (the “ Grantor ”), in favor of CITIBANK, N.A. (the “ Lender ”).

PRELIMINARY STATEMENT

WHEREAS, the Grantor, Smithfield Foods, Inc. (“ Smithfield ”) and the Lender have entered into that certain Uncommitted Line of Credit Agreement of even date herewith (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”);

WHEREAS, subject to the terms set forth in this Security Agreement, the Grantor has agreed to grant a security interest in the Collateral (as defined below) to the Lender, as security for the Secured Obligations (as defined below); and

WHEREAS, the Lender has required, as a condition, among others, to the making of the initial Advance under the Credit Agreement, that the Grantor execute and deliver this Security Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.1. Terms Defined in Credit Agreement . All capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement.

1.2. Terms Defined in New York UCC . Terms defined in the New York UCC which are not otherwise defined in this Security Agreement are used herein as defined in the New York UCC.

1.3. Definitions of Certain Terms Used Herein . As used in this Security Agreement, in addition to the terms defined in the Preliminary Statement, the following terms shall have the following meanings:

“ Article ” means a numbered article of this Security Agreement, unless another document is specifically referenced.

“ Borrowers ” means the Grantor and Smithfield.

“ Collateral ” means all Equipment located at the Facility or used in connection with the business operations and activities at the Facility, in which the Grantor now has or hereafter acquires any right or interest, and the proceeds, insurance proceeds and products thereof, together with all books and records, customer lists, credit files, computer files, programs, printouts and other computer materials and records related thereto.

“ Equipment ” means all equipment, machinery, fixtures and vehicles.

“ Event of Default ” means a default by any Borrower in the payment, performance or observance of any term, covenant or condition contained in the Credit Agreement or any other Loan Document.

“ Exhibit ” refers to a specific exhibit to this Security Agreement, unless another document is specifically referenced.

“ Facility ” means the Grantor’s manufacturing facility known as the Tar Heel Plant and located in Bladen County, North Carolina.

“ New York UCC ” means the New York Uniform Commercial Code as in effect from time to time .

“ Section ” means a numbered section of this Security Agreement, unless another document is specifically referenced.

“ Secured Obligations ” means all Advances to, and debts, liabilities, obligations, covenants and duties of, the Borrowers arising under any Loan Document or otherwise with respect to any Advance now existing or hereafter arising.

The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms.

ARTICLE II

GRANT OF SECURITY INTEREST

2.1. Grantor Pledge . The Grantor hereby pledges, assigns and grants to the Lender, a security interest in all of such Grantor’s right, title and interest, whether now owned or hereafter acquired, in and to the Collateral to secure the prompt and complete payment and performance of the Secured Obligations.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

The Grantor represents and warrants, that:

3.1. Title, Validity and Enforceability . The Grantor has good and valid rights in or the power to transfer the Collateral and title to the Collateral with respect to which it has purported to grant a security interest hereunder, free and clear of all liens except for liens

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permitted under Section 4.1.6 hereof, and has full corporate power and authority to grant to the Lender the security interest in the Collateral pursuant hereto. The execution and delivery by the Grantor of this Security Agreement has been duly authorized by proper corporate proceedings, and this Security Agreement constitutes a legal, valid and binding obligation of the Grantor and creates a security interest which is enforceable against the Grantor in all Collateral it now owns or hereafter acquires. When financing statements have been filed in the appropriate offices against Grantor in the locations listed on Exhibit A , the Lender will have a fully perfected first priority security interest in the Collateral in which a security interest may be perfected by filing, subject only to liens permitted under Section 4.1.6 hereof.

3.2. Principal Location . The Grantor’s mailing address and the location of its place of business (if it has only one) or its chief executive office (if it has more than one place of business), is disclosed in Exhibit B .

3.3. Property Locations . The Collateral (other than mobile goods) is located solely at the locations described in Exhibit B or is in transit to or from such locations, which locations are owned by the Grantor.

3.4. No Other Names . Except for the name Gwaltney of Smithfield, Ltd., the Grantor has not conducted business under any name in the past five (5) years except the name in which it has executed this Security Agreement, which is the exact name as it appears in the Grantor’s organizational documents, as amended, as filed with the Grantor’s jurisdiction of organization as of the date hereof.

3.5. No Financing Statements . No financing statement describing all or any portion of the Collateral which has not lapsed or been terminated naming the Grantor as debtor has been filed in any jurisdiction where filing of a financing statement would be appropriate to perfect the liens of the Lender under the Loan Documents except financing statements naming the Lender as the secured party.

3.6. Federal Employer Identification Number; Jurisdiction of Organization Number; Jurisdiction of Organization . The Grantor’s federal employer identification number, jurisdiction of organization and type of organization and jurisdiction of organization number are listed on Exhibit B .

ARTICLE IV

COVENANTS

From the date of this Security Agreement and thereafter until this Security Agreement is terminated pursuant to the terms hereof, the Grantor agrees that:

4.1. General .

4.1.1 Inspection . The Grantor will permit the Lender, upon reasonable prior notice, at any reasonable time and from time to time, (i) to inspect the Collateral, (ii) to examine and make copies of the records of the Grantor relating to the

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Collateral and (iii) to discuss the Collateral and the related records of the Grantor with, and to be advised as to the same by, the Grantor’s officers and employees.

4.1.2 Taxes . The Grantor will pay, before the same shall become delinquent, all taxes, assessments and governmental charges and levies upon the Collateral, except those which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been set aside in accordance with generally accepted accounting principles and with respect to which no lien has attached and become enforceable against the Grantor’s other creditors.

4.1.3 Records and Reports; Notification . The Grantor shall keep and maintain materially complete, accurate and proper books and records with respect to the Collateral and furnish to the Lender such reports relating to the Collateral as the Lender shall from time to time reasonably request.

4.1.4 Financing Statements and Other Actions; Defense of Title . The Grantor hereby authorizes the Lender to file, and if requested by the Lender will execute and deliver to the Lender, all financing statements describing the Collateral and other documents and take such other actions as may from time to time reasonably be requested by the Lender in order to maintain a first priority perfected security interest in the Collateral. Such financing statements may describe the Collateral in the same manner as described herein or may contain an indication or description of collateral that describes such property in any other manner as the Lender may determine, in its sole discretion, is necessary, advisable or prudent to ensure the perfection of the security interest in the Collateral granted to the Lender herein. The Grantor will take any and all actions reasonably necessary to defend title to the Collateral owned by the Grantor against all persons and to defend the security interest of the Lender in such Collateral and the priority thereof against any lien not expressly permitted hereunder or by the Loan Documents.

4.1.5 Disposition of Collateral . Grantor will not sell, lease or otherwise dispose of the Collateral owned by the Grantor except for the disposition in the ordinary course of business of Equipment that becomes obsolete or worn out so long as the same is replaced in the ordinary course of the Grantor’s business, unless in the Grantor’s reasonable business judgment such equipment does not need to be replaced.

4.1.6 Liens . The Grantor will not create, incur, or suffer to exist any lien on the Collateral except the following liens ( provided , that nothing herein shall be deemed to constitute an agreement to subordinate any of the liens of the Lender under the Loan Documents to any liens otherwise permitted under this Section 4.1.6) :

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4.1.7 Change in Corporate Existence, Type or Jurisdiction of Organization, Location, Name . The Grantor will:

unless, in each such case, the Grantor shall have given the Lender written notice of such event within 20 days after such occurrence or event.

4.1.8 Other Financing Statements . The Grantor will not suffer to exist or authorize the filing of any financing statement naming it as debtor covering all or any portion of the Collateral, except any financing statement authorized under Section 4.1.4 hereof.

4.2. Equipment . The Grantor will do all things reasonably necessary to maintain, preserve, protect and keep the Equipment in good repair, working order and condition (ordinary wear and tear excepted) and make all reasonably necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times.

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ARTICLE V

DEFAULT

5.1. Acceleration and Remedies . Upon the occurrence and during th