Smithfield Foods to ship pork to China

by Keith Nunes
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SMITHFIELD, VA. — Smithfield Foods, Inc. announced it has entered into an agreement with a Chinese trading company for the purchase of 60 million lbs of Paylean-free pork for delivery by the end of December. Paylean is a growth promotant allowed for use in the U.S., but banned in China.

"We are very pleased to begin a business relationship with this trading company in the Chinese market," said C. Larry Pope, president and chief executive officer. "Although our agreement today is modest, we believe there could be additional purchases and we are hopeful that this is the beginning of a longer-term and growing association. This is a milestone for Smithfield in terms of our business alliances in China and represents another step in our global expansion."

In an Aug. 23 conference call with financial analysts regarding the company’s most recent financial results, Mr. Pope alluded to the fact such an agreement was in the making with the trading company COFCO.

"Those who know the industry know who they are; they’re a very large trader, not particularly meat traders, but they have been given a mandate from the Chinese government," he said. "We have been having very substantial conversations with them about some sizable shipments, even this fall and winter into China."

Mr. Pope said he had been hearing that the hog disease problem in China is more severe than Chinese government authorities have indicated.

"I think there is a very real problem in China and I won’t speak to some of what’s coming out of there from the government authorities, but some of that information is certainly questionable from my standpoint," he said. "I believe they have a very severe problem. It is just my opinion (but) I’ve talked to a number of people. I believe the problem could be as severe as 20% of their whole production. Given that they’ve got 500 million hogs produced annually, that could be a 100 million hog shortage. That’s as large as the whole U.S. production."

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