NFU Comes Out Against Chinese Purchase of Smithfield

Earlier this summer Chinese company Shuanghui International and Smithfield Foods, Inc. announced the Chinese company’s proposed $4.7 billion acquisition of the huge U.S. pork producer.

While Smithfield would be a powerful addition to any food company’s portfolio, many family farmers, food activists and others in the U.S. are alarmed by the Chinese takeover of Smithfield due to the lack of adequate food safety regulations in China and potential foreign domination of an important U.S. industry. According to the National Farmers Union, Smithfield accounts for 15 percent of U.S. pork production and 26 percent of pork processing in the country.

NFU is also concerned about the further consolidation of the U.S. pork industry into the hands of mega corporations.

“The proposed buyout of Smithfield by a Chinese interest is extremely alarming to NFU members across the country,” said Johnson. “Uncompetitive markets in the pork and beef industries have had a dampening effect on the ability of family farmers and ranchers to stay in business.”

In 1980, there were 660,000 hog farms. Today there are only 67,000. In 2011 alone, approximately 2,300 hog producers went out of business.

“The costs of the acquisition far outweigh the benefits to Americans, and the security of our domestic food system is threatened by foreign control,” said Johnson. “ I urge CFIUS to set a bold precedent – that the administration values our farms, our food, and our rural economies so much that the federal government will stand up to a takeover of a large swath of our agriculture industry.”

Other than Shuanghui and Smithfield shareholders, who else stands to benefit from the takeover? Smithfield CEO stands to pocket nearly $47 million. Chinese private equity firm New Horizons and investment bankers at Morgan Stanley will win from Shuanghui’s planned IPO listing on the Hong Kong stock exchange after the deal is complete.

The deal does some hurdles to clear here in the U.S. It will need to be cleared through the Treasury Dept.’s Committee on Foreign Investment in the U.S. The committee is chaired by Treasury Secretary Jack Lew. NFU has sent a letter to Lew voicing opposition to the deal.

The committee’s website does not have a form for public comment on deals under review, instead, you may want to send Lew a letter voicing your opinion at:

Department of the Treasury

Treasury Secretary Jack Lew
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220

 

News Break – October 5, 2011 – Fracking, Biofuels, China Currency, Farm Bill

PA Governor supports tougher shale drilling regulations

Columbus Dispatch

Energy companies that drill into Pennsylvania’s Marcellus shale for natural gas would have to pay an impact fee and would face tougher sanctions for violations under a plan Gov. Tom Corbett endorsed yesterday.

The announcement is part of an increasingly tougher stance the state has taken in recent months in response to its natural gas boom, in which more than 3,800 horizontal wells have been drilled and hydraulically fractured, or “fracked” in recent years. In April, Corbett ordered a halt to the dumping of brine, a salty, toxic wastewater from wells, into that state’s streams.

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Study says biofuels costly, their impact questionable

Des Moines Register

Next-generation biofuels are so expensive and difficult to make that the nation is unlikely to meet the government’s usage mandates, according to the National Research Council.

A congressionally requested study by the research council, an arm of the National Academy of Sciences, also warns the feedstocks needed to produce the advanced biofuels could increase food prices by competing with food crops for land,  a key criticism of the corn ethanol the next-generation biofuels are supposed to replace. Producing the future biofuels also could have unintended environmental consequences in some areas because of the fertilizer and water requirements and may not do as much to reduce greenhouse gas emissions as the government has estimated, the study found.

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Vilsack says USDA food safety programs likely to be cut

Bloomberg

Food-safety programs may be less vulnerable to cuts than other areas of U.S. Department of Agriculture spending because of the importance placed on the nutrition supply, Secretary Tom Vilsack said.

“I’m least concerned about the food-safety part than any other part,” Vilsack said today at a food-policy conference in Washington. Nutrition assistance for poor families may be more vulnerable, even as it helps reduce poverty, he said.

Funding for programs that protect the nation’s food supply are being pressured by congressional spending cuts. The USDA’s Food Safety and Inspection Service budget would be reduced by 3.4 percent to $972.7 million in the year beginning Oct. 1 under the appropriations bill the House of Representatives passed in June, while the Senate’s plan would leave funding unchanged.

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Reid sets stage for next vote on China currency bill

The Hill

Senate Majority Leader Harry Reid (D-Nev.) filed a cloture motion on Tuesday night to end debate on the pending Chinese currency bill.

The legislation, designed to pressure the Chinese government to stop undervaluing its currency, already cleared one important hurdle on Monday night, advancing to the first stage of debate by a vote of 79-19. That strong show of support indicates the bill could very well clear the upper chamber by week’s end.

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Thune touts bipartisan Farm Bill proposal

Indiana Prairie Farmer

The Aggregate Risk and Revenue Management program, or ARRM Farm Bill proposal has been introduced by a bipartisan group of farm state Senators including Senator John Thune, R-S.D. So far it’s getting positive initial reaction among the agricultural community.

Thune says it builds on the Average Crop Revenue Election and the crop insurance program to provide a safety net in crop years where prices are low. However, he says it’s less complicated and less restrictive than either ACRE or SURE.

“It does away with direct payments, it does away with counter-cyclical payments, and it sort of reforms the ACRE program and acts as a compliment to crop insurance,” Thune said. “So for example if a farmer takes a crop insurance program, this would allow them to fill the gap between what crop insurance covers and what their 90% of revenue would be in any given year.”

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Krugman adds voice to Senate consideration of currency manipulation bill

Last week on this blog we ran a release from the National Farmers Union which urged the U.S. Senate to adopt legislation that hold currency manipulators, like China, accountable. Today, Nobel Laureate and New York Times columnist Paul Krugman devoted his column to this issue. Read the excerpt below and visit the NYT to read the entire column.

Ask yourself: Why is it so hard to restore full employment? It’s true that the housing bubble has popped, and consumers are saving more than they did a few years ago. But once upon a time America was able to achieve full employment without a housing bubble and with savings rates even higher than we have now. What changed?

The answer is that we used to run much smaller trade deficits. A return to economic health would look much more achievable if we weren’t spending $500 billion more each year on imported goods and services than foreigners spent on our exports.

To get our trade deficit down, however, we need to make American products more competitive, which in practice means that we need the dollar’s value to fall in terms of other currencies. Yes, some people will shriek about “debasing” the dollar. But sensible policy makers have long known that sometimes a weaker currency means a stronger economy, and have acted on that knowledge. Switzerland, for example, has intervened massively to keep the franc from getting too strong against the euro. Israel has intervened even more forcefully to weaken the shekel. …

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