The head of Smithfield Foods faced tough questioning on Wednesday from U.S. lawmakers concerned that the proposed sale of the Virginia ham maker to China’s largest pork producer could hurt U.S. food safety and lead to higher prices for American consumers.
“I think to your constituents back home, it’s the same old Smithfield,” company President Larry Pope told members of the Senate Agriculture Committee. “Nothing’s going to change. This is going to be an American company. We will continue to operate like an American company.”
The sale of Smithfield Foods, the world’s largest pork producer with more than 46,000 employees in 25 states and four countries, to Shuanghui International Holdings for $4.7 billion would be the biggest Chinese takeover of a U.S. company to date.
Pope acknowledged that he would benefit significantly from the proposed sale, but he declined to say how much he would gain.
Congress has no direct role in approving or blocking the transaction, but the Senate hearing sheds light on issues facing the Committee on Foreign Investment in the United States, a panel led by the Treasury Department that examines whether a foreign purchase of a U.S. company poses any national security risk.
“This is a precedent-setting case, and we owe it to consumers, producers and workers to ensure we are asking the right questions and evaluating the long-term implications,” Senate Agriculture Committee Chairman Debbie Stabenow (D-Mich.) said in a prepared opening statement. “Smithfield might be the first [Chinese] acquisition of a major food and agricultural company, but I doubt it will be the last.”
The Smithfield, Va.-based company makes ham, sausage, bacon and other prepared meats under labels including Eckrich, Gwaltney and Armour. Smithfield has argued that the deal is good for the United States because it will boost pork exports and good for China because it will help meet that country’s growing demand for pork as hundreds of millions of Chinese move into the middle class.
But some have questioned what kind of production practices Shuanghui could bring to the United States, especially after images this year of thousands of rotting pig carcasses floating down the Huangpu River that runs through Shanghai raised concerns about food-safety practices in China.
“Regardless of where the ownership is, this company is going to have to operate under the laws of the United States. We’re not operating under the laws of China. We’re operating under the auspices of the USDA and food inspection process,” Pope said.
Lawmakers have also expressed concern about the impact on the competitiveness of U.S. pork production if Shuanghui gains access to Smithfield’s valuable technology and hog genetics.
Stabenow noted that Shuanghui is offering to pay a 30 percent premium for Smithfield even though the U.S. company has been struggling to make a profit.
“That, to me, raises questions about the economic motivations of the purchase. Is Shuanghui focused on acquiring Smithfield’s technology, which was developed with considerable assistance by U.S. taxpayers?” Stabenow asked.