RICHMOND (AP) -- The nation's largest pork producer, Smithfield Foods, dropped a racketeering and extortion lawsuit against labor organizers Monday and agreed to let them hold a union election at the world's largest hog slaughterhouse, both sides said.

In return, the United Food and Commercial Workers union agreed to end a publicity campaign against Smithfield that included calls for product boycotts to support its calls for an organizing election at the slaughterhouse in Tar Heel, N.C.

The agreement was announced by Smithfield and the UFCW in a joint statement as the company's lawsuit was about to go to trial Monday in federal court.

The union began its campaign against Smithfield in June 2006 in an attempt to pressure the company into unionizing the plant, which has about 4,650 employees.

The campaign included calls for product boycotts, negative publicity and other actions that Smithfield claimed amounted to extortion. The company estimated the campaign cost it about $900 million.

Lawyers for the union argued in court papers and in pretrial hearings that using economic pressure to achieve a lawful purpose, such as setting a union election, is not extortion.

In a joint statement, Smithfield and the union said they "have agreed on what both parties believe to be a fair election process" on union representation at the Tar Heel plant.

"The UFCW agrees to end its public campaign against Smithfield," the statement says.

In addition, the company and the union agreed to work together to establish and operate a Feed the Hungry program.

The settlement was sealed, and U.S. District Judge Robert E. Payne ordered the parties to say nothing further about the deal until after the union election. It was unclear when that election would take place.

Attorneys for both sides showed up in court Monday morning and milled around briefly before disappearing into separate conference rooms. They returned about 20 minutes later, shook hands with each other and their clients and began filing out of the courtroom without Payne ever convening court. They declined to answer questions, citing the judge's order.

(Copyright 2008 by The Associated Press.  All Rights Reserved.)

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