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
Washington, D.C. 20220