Since the announcement several weeks ago that Smithfield Foods, the largest pork producer and processor in North America would be purchased by Chinese pork giant Shuanghui International, grain farmers in the Upper Southeast have been concerned.
They feel the sale would interrupt the progress made by Smithfield subsidiary Murphy-Brown in developing grain markets for growers in the Carolinas and Virginia.
Testifying before the Senate Agriculture Committee hearing on the pending sale, Smithfield Foods CEO Larry Pope said, “There should be no noticeable impact on how we do business in America and around the world, except that we will do more of it.
“This is a wonderful opportunity for the U.S. to do what it does best, which is to produce agricultural products and ship those around the world."
The high cost of transporting grain, corn in particular, from the grain rich Midwest to swine producers in the grain deficit Southeast has been a major financial trouble for Smithfield for the past few years. To offset the rise in grain prices, plus the rise in transportation prices, Smithfield’s subsidiary, Murphy-Brown has ramped up efforts with farmers to produce more grain.
The company has significantly raised interest among farmers in the Carolinas and Virginia in growing more grain and more diverse grain crops. In North Carolina alone, grain sorghum acreage jumped from less than 10,000 to more than 100,000 acres in three years. Similar, though less spectacular increases, have been recorded in South Carolina and Virginia.
Don Butler, vice-president for government relations and communication said, “We expect the Shuanghui International purchase to go through sometime in the fourth quarter of this year, and from everything we’ve been told Murphy-Brown will continue with our commitment to increase grain production in the Southeast.
“If anything, growers may see an increased effort to maximize Southeast grain production and minimize dependence on grain from the Midwest,” Butler says.
Despite assurances from Smithfield Food executives, agriculture leaders still appear to be concerned about the takeover of one of the country’s largest agricultural companies by the Chinese.
The plan, which is subject to federal and shareholder approvals, is expected to close later this year. It would be the largest takeover of a U.S. company by a Chinese firm, valued at about $7.1 billion including debt.
Debbie Stabenow, chairperson of the Senate Agriculture Committee, citing health related issues tied to Shuanghui International, said “The proposed purchase of the Smithfield, Va.-based company raises many questions, including the impact on food safety and security.”
"Smithfield might be the first acquisition of a major food and agricultural company, but I doubt it will be the last," Stabenow added.
She asked the Treasury Department to include both the U.S. Department of Agriculture and the Food and Drug Administration in the government's review of the sale.
Pope said the takeover isn’t about bringing Chinese pork products into the U.S. market, rather it’s about exporting U.S. products, like those from Smithfield, Armour and Farmland into China.
He also noted that the proposed buyout and China's growing demand for pork will be a boon for American agriculture and Smithfield's 46,000 employees in 25 states and four countries.
Smsithfield also owns more than 400 hog farms and has contracts with more than 2,000 family farmers across the U.S.
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