Is the recently announced sale of Smithfield Foods, the largest hog producer and processor in the United States, to China's largest meat producer and processor, Shuanghui International Holdings Ltd., a good deal or a bad deal for U.S. pork producers and consumers -- in the long run? At the World Pork Expo in Des Moines last week, pork producers from Iowa and other states were pondering that question. The $4.7 billion sale was a surprise when it was announced May 29. If the sale goes through as planned, it would be the largest U.S. acquisition by a Chinese company ever.
Analysts say the merger will likely increase pork exports from the U.S. to China, which is the world's largest pork consumer. But concerns remain about the takeover of a major U.S. company by a foreign entity. That's what Wallaces Farmer field editor Tyler Harris and I found as we attended the 25th anniversary World Pork Expo and talked to Iowa producers and others. Some hog producers fear China could impose further restrictions on how pork is raised in the U.S., shutting out other U.S. suppliers in favor of meat from the Smithfield business that meets its qualifications. Some also worry a hike in pork demand in China could increase chances that more of the meat would head overseas and, at least in the short term, lead to shortages and higher prices in the U.S.
Sale of Smithfield to a Chinese company would give U.S. hog producers access to millions of new customers in China
Most of the questions being raised have to do with the topic of foreign investment in the United States, notes Steve Meyer. Can the Chinese company and the government of China be trusted? "There is a lot of potential to export more meat to China. It's a huge market," says Meyer, an Iowa-based livestock economist and pork industry consultant.