Senate Ag Committee Chairwoman Debbie Stabenow, D-Mich., Wednesday questioned a panel of experts on the pending purchase of Smithfield Foods by a Chinese-owned food processor, Shuanghui International.
Stabenow called the hearing to evaluate the size of the takeover, effects on food security and safety and the process used by the U.S. to evaluate the effects of foreign acquisitions. The takeover represents the largest purchase of a U.S. company by a Chinese firm in history.
Hearing participants included Larry Pope, Smithfield Foods President and CEO; Matthew Slaughter, Dartmouth College; Dr. Usha Haley, West Virginia University Robbins Center for Global Business and Strategy; and Daniel Slane, Commissioner, U.S.-China Economic and Security Review Commission, U.S. Chamber of Commerce.
In opening statements, Sen. Stabenow noted that a "long-term view" of the proposed purchase of Smithfield Foods should be considered.
"Despite the strength of America's pork sector, Smithfield has been struggling to make a profit -- and yet Shuanghui is offering to pay a 30% premium for the company. That, to me, raises questions about the economic motivations of the purchase," Stabenow said.
Lawmakers have given the economic plans and the trade policies of the Chinese a hard look ahead of the merger, discrediting Smithfield's position that the merger will boost the American pork sector due to a growing demand in China from a widening middle class.
But some lawmakers said rather than demand for pork, China's one-sided trading policies were a key driving force for the Smithfield purchase. Sen. Stabenow questioned Chinese trade barriers.
"I'm all about exports, I want to see us export our products but it seems to me removing the unfair barriers from China would be a lot quicker and more efficient than saying the only way they can get in is if they own our company. That just doesn't make sense to me," Stabenow commented.
In response, the U.S. Chamber's Slane, said the takeover is about control. "The Chinese could easily go out and buy pork on the market," he noted, but the problem is that they subject themselves to huge price increases through trade barriers.
"I think the end game from the Chinese point of view is to ultimately dominate our domestic pork market," Slane said.
That comment was augmented later to the snickers of listeners in the hearing room when Sen. Pat Roberts, R-Kan., asked Smithfield CEO Pope, "Do you know you are a victim of a Chinese Communist plot? They own our debt, so you gotta be careful here," he said.
Pope declined to answer the question directly, instead focusing on his position that the merger could impact American pork producers and processors by expanding market availability.