WASHINGTON — Congressional lawmakers grilled the top executive at pork giant Smithfield Foods Wednesday about how the proposed $4.7 billion purchase of the company by China’s largest meat producer might affect the U.S. food supply and agricultural producers.
“This is a wonderful opportunity for the U.S. to do what it does best: produce agriculture products and ship them around the world,” Pope told the Senate Agriculture Committee. “This is an opportunity for U.S. pork producers to grow.”
Pope said the merger would have “no noticeable impact on how we do business in America and around the world, except that we will do more of it.”
But committee members from both parties appeared unconvinced.
Lawmakers expressed concern the takeover would squeeze the U.S. pork supply by shipping more of the meat to China and leave the U.S. susceptible to food safety concerns that have plagued Chinese companies, including Shuanghui.
They also raised a host of other concerns, including what would happen to Smithfield’s intellectual property and the impact of the deal on U.S. agriculture producers.
“In the short term, I know this deal looks good for our producers. This also needs to be a good deal in the long-term,” said Sen. Debbie Stabenow, D-Mich., chairwoman of the Agriculture Committee. “One pork company alone might not be enough to affect our national security, but it’s our job to be thinking about the big picture and the long-term for American food security and economic security.”
Smithfield, founded in 1936 and based in Virginia, sells packaged products under its own name and other popular brands, including Farmland, Armour and Cook’s. The company, the world’s largest pork processor and hog producer, employs more than 46,000 people in 25 states and four countries.
Pope said the transaction would not lead to food imports from China. Instead, he said, it would open up the market for U.S. pork farmers by giving them more access to Shuanghui’s large distribution system and millions of meat-hungry consumers in China, South Korea, Japan and other Asian countries.
Smithfield has stressed repeatedly that the merged company would keep its current management and facilities in place and maintain existing relationships with U.S. pork producers. Pope made those points again Wednesday.
The deal, which would be the largest takeover of a U.S. company by a Chinese firm, is expected to close later this year. Shareholders and regulators, including the U.S. Committee on Foreign Investment (CFIUS), which reviews such transactions for their impact on national security, must approve the merger.
Sens. Chuck Grassley, R-Iowa, and Tom Harkin, D-Iowa, and other lawmakers have called for the CFIUS review of the Smithfield deal to include the Agriculture Department and the Food and Drug Administration. Lawmakers met privately with CFIUS officials after Wednesday’s hearing to ask questions about the Smithfield merger and the notoriously secretive review process.
The proposed takeover of Smithfield has stoked growing concern about an influx of foreign investment in the United States. Many expect cash-rich China to be an active player in the future, much to the dismay of Washington lawmakers reluctant to cede control of U.S.-owned businesses to the communist country.
“I think it is reasonable for you to expect a wave of Chinese investments into our food and agriculture industry, and this potential purchase is not a one-off,” said Daniel Slane, a member of the U.S.-China Economic and Security Review Commission, a government agency that monitors trade and economic relationships between the two countries. “Today, it’s Smithfield, but tomorrow, it could be Consolidated Grain, ConAgra or Tyson Foods.”
Slane said Shuanghui likely views the deal as a way to help minimize the risk of volatile commodity prices and to obtain Smithfield’s valuable intellectual knowledge of meat processing and animal genetics.
“This is really all about control,” he said. “The Chinese could easily go out and buy pork.”