Ag Policy Blog

U.S. Shanghaied in Smithfield Deal?

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Senate Agriculture Committee Chairwoman Debbie Stabenow said reiterated her concerns Monday that legislation is needed to protect American companies from foreign acquisition after a PBS report over the weekend examined the role of the Chinese government in the purchase of Smithfield Foods to Shuanghui International last year.

PBS detailed how the Bank of China quickly approved a $4 billion loan to Shuanghui last year to help finance the $4.7 billion purchase of Smithfield, the world's largest pork producer. The Bank of China's financing decision was driven by the China government's directive to expand meat protein within the country by buying overseas countries. In China, Shuanghui also is required by the government to build a pork reserve of frozen meat, PBS reported.

"And why has the government given so much support? Because Shuanghui, according to its own documents, is required to carry out China’s five-year plan. In effect, the Chinese government does exercise management control," PBS stated in its report.

A Treasury Department committee greenlighted the Smithfield sale in September 2013 in what was the largest purchase of a U.S. business by a Chinese company. The Committee on Foreign Investment in the United States approved the sale.

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The Senate Agriculture Committee held a hearing on the Smithfield purchase in July 2013. Stabenow told PBS in the report that she is drafting legislation to overhaul the American government’s review process for foreign acquisitions.

“Food security is national security,” Stabenow said in the PBS report. “And I can’t imagine that the American people will feel comfortable if they wake up someday and find that half of our food processors are owned by China. And I think there are some very, very tough questions that need to be answered.”

Sabenow said during the Senate hearing that she believe economic security of the U.S. should be considered when the federal government reviews foreign investments.

“We need to evaluate how foreign purchases of our food supply will affect our economy broadly, and frankly, whether there is a level playing field when it comes to these kinds of business purchases.”

Chairwoman Stabenow said the private and secretive nature of the government’s review process of foreign acquisitions, overseen by the Committee on Foreign Investment in the United States, also raises questions about what factors are taken into consideration when undergoing evaluation.

The PBS report can be viewed at http://www.pbs.org/…

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Chris Clayton