Food is not always something that you put in your mouth and eat!

The Smithfield deal has gotten the attention of our illustrious politicians and depending on how one views the deal it could be a good thing or it could be a bad thing for the U.S. farming sector.  The most recent twist in the saga – a question of “National Security”.

China’s Shuanghui International’s proposed acquisition of U.S. pork giant Smithfield Foods valued at approximately 7.1 billion (yes folks, that is 7.1 BILLION) which includes assumption of Smithfield’s net debt would bail out a failing industrial ag giant.  The deal would include a huge cash infusion from Shuanghui as well as debt financing committed by Morgan Stanley Senior Funding Inc.

Since the announcement of the proposed acquisition at the end of May 2013, I’ve remained quiet in my opinions as everyone along with their brothers and sisters have weighed in on the subject.  My quietness stemmed from the fact that firstly, I don’t know anyone who has 7.1 billion dollars, and secondly, I’ve pondered in my mind as to how we have a domineering corporate giant leading the U.S. pork market in sales considered as a farm entity.  I’ve also wondered how the Smithfield model of raising hogs could be failing when all I’ve ever heard from the “powers that be” is that the Smithfield model is great for American farmers and the animals they raise.  This deal makes it crystal clear that the corporate ag model  isn’t sustainable. – I’m still pondering!

U.S. senators haven’t wasted time pondering they’ve jumped into the fray asking that both USDA and FDA be included in the review of the Smithfield deal.  Since the proposed acquisition will undergo a national security review by the Committee on Foreign Investment in the United States and the Treasury Secretary has the authority to add agencies at will, the senators got what they asked for.  Moving rapidly, the Senate Committee on Agriculture, Nutrition, and Forestry held a hearing yesterday, July 11 2013, to hear testimony from opposing sides of the issue.

Smithfield’s president and CEO, Larry Pope, said the merger represents a major opportunity for U.S farmers to access the growing Chinese market, in which pork is the leading protein.

“This is a wonderful opportunity for the U.S. to do what it does best,” Pope said. “To produce agricultural products and ship those around the world. This creates jobs. This creates opportunities for American commerce to grow. This is all of the good things American business is trying to do.”

Well of course, what did anyone expect the man to say?  We might as well say that Pope is now China’s emissary on the subject.  It’s a good thing that I wasn’t at this hearing I would have spoken up and told Pope he was mouthing all of the right words of an expertly crafted message from spin doctors and policy wonkers!   A major opportunity for U.S. farmers to access the growing Chinese market?  I’ll be polite here and say BALONEY!  Farmers don’t reckon into the deal.  Since when does Smithfield give a hoot about farmer’s opinion on anything?  Farmers to Smithfield are numbers of things that fulfill a contract to crank out hogs for a corporate ag giant at an unbelievable pace and are paid poverty level wages.  Farmer’s don’t sell their product in the global market place they produce for industrial ag.  They have no say about sales or what markets they gain access to!

If we’re to swallow what Pope is saying, such as, – “a wonderful opportunity for the U.S to do what is does best producing agricultural products around the world” – it proves the case for those who say that we mass produce food and animals as fast as possible without thought to the consequences of our methods to be a player in the global market.  It’s all about money and nothing else short of that!  It surely doesn’t say much for what the U.S. does best.  Throwing in the highly emotional subjects of creating jobs and growing American commerce in his statement is a good lever to use but its hogwash.  We can look to China to know who benefits from big business and working conditions.

On the flip side of the debate we have those who question believing that the Smithfield deal isn’t just one acquisition.  Usha Haley, director of the Robbins Center for Global Business and Strategy at West Virginia University and Daniel Slane, commissioner of the U.S. – China Economic and Security Review Commission of the U.S. Chamber of Congress views the Smithfield deal as a small part of a larger plan for more investment of U.S. business.  Haley said that “it has government support and they (China) see it as a foot in the door; there are other companies waiting in the wings to buy more U.S. companies”.

Senate Agriculture Committee Chairwoman, Debbie Stabenow (D-Michigan) says “Smithfield might be the first acquisition of a major food and agricultural company, but I doubt it will be the last”. She went on to say “We need to be having this conversation and evaluating what is in the best interest of American families and our American economy because of the importance of our food supply, security, and safety.”  You go girl!

For a very long time I’ve said that if you can control the world through its stomach you can write your own ticket.  Becoming the “super power” of food, which we all need to survive, will enable control of the world.  Personally, I don’t want to have to look any further than the good ole U.S. of A. to feel secure about my food supply, security, and safety.  If China has a shortage of protein supply to feed its people then let them buy it on the global market.  I thought this was the purpose of global trade.  You know, one country says I need this and the other says I need that so they make a deal and trade!

The saga will continue and in the end the Smithfield deal will more than likely go through.  I see it as an American giant corporation selling out to a foreign entity and a sellout to the American people who’ve supported the company for a very long time.  It is clearly a deal of take the money and run no matter who is handing out the cash without any thought to the consequences.  Smithfield’s claim of “this is all of the good things American business is trying to do” is an embarrassment.  If this is the route our country will be taking to grow our economy then it’s anyone’s guess who will conquer us in the end.

Comments on: "Smithfield Deal a Question of National Security!" (1)

  1. Thank you for writing about this deal, Carole. You said everything I was thinking and then some. It’s a crazy world out there. We’re living the vida locavore with all our animal foods. Smithfield has already been a foreign entity to me for several years now.

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