Smithfield-Shuanghui Deal: Good or Bad for the U.S.?

Should Smithfield Foods be acquired by Shuanghui International Holdings? We offer two different points of view on the topic.

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Bad for Farmers, Worse for Food Safety

Free-trade deals with global partners encourage a race-to-the bottom in food safety standards.

By Wenonah Hauter, Food & Water Watch

The purchase of Smithfield Foods by Chinese company Shuanghui International Holdings Ltd. is bad news for U.S. farmers and consumers, the environment and food safety. This merger tightens the grip of multinational agribusinesses and Wall Street on America's kitchens, as Shuanghui is partially owned by U.S. investment bank Goldman Sachs.

In the short term, the proposed deal is expected to shift Smithfield pork production toward exports to feed the Chinese market, which would likely significantly increase retail pork prices for American consumers. It would make many U.S. hog producers dependent on a foreign firm for hog contracts and prices. Longer term, Shuanghui would probably eventually want to export pork to the U.S., which would expose U.S. consumers to food safety scandals like the ones that have plagued the Chinese food system for years.

The globalized food system poses real food safety risks, and free-trade deals with global partners encourage a race-to-the bottom in food safety standards, leaving U.S. consumers at the mercy of inadequate foreign food safety systems like China's. We should all be leery of deals like this that further consolidate our food system; especially when they involve companies with a history of food safety problems and countries with abysmal track records for food and worker safety.

As I explained on New York Times' "Room For Debate" [an online "debate" coordinated by the news organization], the purchase of Smithfield isn't just about exporting pork – it's indicative of the American government's fervor for exporting our consolidated, industrialized food system:

Shuanghui International became China's monolithic meat company by adopting the U.S. factory farm model pioneered by companies like Smithfield. The merger is likely to increase the size, intensity and pollution of hog production in China. Furthermore, Smithfield's anticipated increased exports to China would effectively convert U.S. factory farms into export platforms; Smithfield would ship out the pork, and we'd keep the hog manure.

In addition to the environmental consequences of the deal, it's bad for consumers. Transnational deals in the food industry usually add to American imports, and a rising flood of imported food swamps U.S. import inspectors. In the long term, Shuanghui may offshore hog operations to China, and the U.S. could be importing pork. In 2011, Shuanghui recalled thousands of tons of meat after reports that it was laced with the banned veterinary drug clenbuterol, which is linked to serious human health risks.

Deals like this serve no one but the executives and bankers who stand to profit; everyone else is left with the manure.

Another debater -- Thea Lee, who is the deputy chief of staff at the AFL-CIO -- brought up another excellent point:

If Chinese consumers want to consume American pork, they can presumably purchase it on the open market… As we evaluate this and other similar investments, we had better have a good sense of how those other motives will impact good jobs, food safety and regulatory balance in this country. Unfortunately, under current law, even if we determine that this or similar investments would have a negative impact on the U.S. economy – or any subset of workers – there is very little we can do to stop it.

Already, Smithfield's market dominance is troubling. It is the largest processor in the world – it owns twice as many hogs as the next largest hog producer, slaughtering 26 million hogs a year. Smithfield is one of a small handful of companies pulling the strings when it comes to food policy in the U.S. and globally. This power has led to an unfair marketplace for family farmers and abhorrent labor practices for workers. In the mid-2000s, Smithfield increased production of hogs at its flagship Tar Heel, N.C., plant by 30,000 hogs a day, corresponding to a doubling of workplace injuries as line speeds increased.

And its environmental record? Atrocious. Smithfield owns 860,000 sows that produce millions of piglets that are raised on thousands of contract factory farms. And the manure from the millions of Smithfield hogs on industrial farms permeates the air and water of rural communities. Just last month, 600 North Carolina neighbors sued Smithfield because the water pollution, stench and flies had compromised their quality of life and made it difficult to enjoy and use their homes.

The bottom line is further consolidation of our food system, which is bad for consumers and farmers. When a handful of companies -- whether it's Shuanghui, Tyson or Pepsi -- controls the food we eat, Wall Street and highly paid food industry executives win. Consumers, farmers, small and midsized businesses and the environment all lose.

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