Smithfield Ham on the Capital Grill
The Senate Agriculture Committee today (July 10) did a little grilling of the world's largest pork processor, worrying the takeover of Smithfield Foods by a Chinese firm would compromise food safety, mean the loss of American jobs and possibly lead to higher pork prices in America.
The pending deal, announced in May, with Shuanghui International, China's largest meat producer, would be worth about $7.1 billion including assumption of debt. That would make it the largest takeover of any U.S. company by a Chinese firm.
"Smithfield might be the first acquisition of a major food and agricultural company, but I doubt it will be the last," said Committee Chairwoman Debbie Stabenow (D-Mich.), quoted by Fox News. The senators were talking mostly to Smithfield CEO Larry Pope, although a few other experts also testified.
Mike Johanns (R-Neb.), quoted by news agency Reuters, said he is bothered by the deal because China would never allow a U.S. company to buy a Chinese pork producer. Johanns is a former secretary of agriculture.
Several news reports quoted the senators as being wary of "technology transfer." In this case, it's not exactly high technology, but processing technology and that involved in the genetics and breeding of swine. "Is Shuanghui focused on acquiring Smithfield’s technology, which was developed with considerable assistance by U.S. taxpayers?” Stabenow asked.
Pope emphasized the takeover isn't about importing Chinese pork into the U.S. but is instead a chance to export U.S. meat and brands such as Smithfield, Armour and Farmland into a new market.
"China is responsible for 50 percent of the world's pork consumption and their demand is still growing, whereas pork demand in the U.S. has been declining for almost 15 years," Pope told the committee.
Pope also acknowledged he would benefit significantly from the proposed sale, but declined to say how much he would gain, said Reuters.
One point I didn't see addressed but I've heard mentioned elsewhere. Apparently no foreign company has ever been allowed to buy American farmland. Smithfield reportedly owns more than 400 hog farms.
In the end, nothing was settled, of course. But it's apparent this takeover is far from a done deal.
And that's good.