WASHINGTON — C. Larry Pope, the chief executive officer of Smithfield Foods, Inc., appeared before the U.S. Senate Committee on Agriculture, Nutrition and Forestry on July 10 to defend the acquisition of Smithfield Foods by Shuanghui International Holdings Ltd. The deal is the largest acquisition of an American company by a Chinese company and lawmakers expressed concern about how such a deal may impact food security in the United States.
“We are entering into this transaction not only because it provides good value to our shareholders, but because we believe that this is a great transaction for all Smithfield stakeholders, including our employees, suppliers, communities, and farmers,” Mr. Pope said in his testimony. “This transaction will give Smithfield new channels to market and the strongest distribution network in China. By combining Shuanghui and Smithfield, we will accelerate both companies’ strategic plans, broaden our market reach and create exciting growth opportunities.
“The most important aspect of this transaction is that it not only preserves Smithfield, a name synonymous with excellence among American consumers, but also offers us more opportunities in new markets and new frontiers. Shuanghui is committed to maintaining Smithfield’s operations, staff and management.”
Mr. Pope noted that pork is the No. 3 ranked protein in the United States with regards to per capita consumption, but that it is the No. 1 in China.
“ … The Chinese consume more than 20 pounds more pork per capita per year than Americans,” he said. “Over the last 15 years, Chinese per capita consumption has grown by 25% and U.S. per capita consumption has shrunk by 10%.”
But Senator Debbie Stabenow of Michigan, chair of the committee, noted that there are long-term ramifications from the transaction that must be considered.
“In the short term, I know this deal looks good for our producers,” she said. “This also needs to be a good deal in the long term. It’s our responsibility to ask the right questions to make sure that we are thinking in the long term about these issues.
“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. Because as we all know on this committee, food security is part of our national security.”
Mr. Pope said he did not think food security was an issue with regard to the acquisition of his company by Shuanghui.
“Smithfield will continue to produce pork in a safe and responsible way for U.S. consumers, in full compliance with the standards and regulations of the U.S.D.A., F.D.A., and other federal and state authorities,” he said. “The U.S. pork market remains incredibly competitive and attractive, and we will continue to aggressively produce and market our high-quality pork products in America.”
Mr. Pope added that Smithfield has voluntarily sought review of the acquisition from the Committee on Foreign Investment in the U.S. (C.F.I.U.S.) and that the review is currently on going.
Established under the leadership of the Secretary of the Treasury, the C.F.I.U.S. is an inter-agency committee made up of representatives from the departments of Defense, State, Commerce and Homeland Security. The committee reviews the national security implications of foreign investments in the United States. Its review process is confidential, and lawmakers as well as executives from Smithfield and Shuanghui are awaiting its results.
During the hearing, Ms. Stabenow said she and other members of the committee had requested that the U.S. Department of Agriculture and the Food and Drug Administration be included in the C.F.I.U.S. review.
“We also asked that this be the process in any future transactions that involve our food supply,” she said. “I firmly believe that economic security is part of our national security, and that it should be considered when our government reviews foreign investment into the United States. Unlike other countries, the United States does not currently undertake such a review, and I believe that needs to change.”