Smithfield CEO quells fears over Chinese purchase
Updated: 2013-07-11 11:05
WASHINGTON - Smithfield Foods CEO Larry Pope on Wednesday tried to relieve senators' concerns over a Chinese pork producer's purchase of his company.
In a hearing of the Senate Committee on Agriculture, Nutrition and Forestry, the panel's chairwoman Debbie Stabenow noted Shuanghui International's proposed purchase of Smithfield was the largest purchase of a US company by a Chinese firm.
"Smithfield might be the first acquisition of a major food and agricultural company, but I doubt it will be the last," said Stabenow. "That is why we must take a long-term view of what is happening... because of the importance of our food supply, security and safety."
Pope told senators that since the transaction was announced it had received broad-based support from local, state and national officials, industry labor unions, hog farmers, leading economic and international affairs academics and even US-based food industry peers.
The cornerstone of the transaction was growing Chinese demand, noted Pope. "We as an industry struggle to grow within the country (of the United States). Americans are eating less pork than 10 years ago. Without the opportunity to grow outside the United States, there is no opportunity," Pope told senators.
Some lawmakers feared Chinese food scandals in recent years might smear Smithfield's brand. Pope said nothing is going to change after the purchase. "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 (US Department of Agriculture) and food inspection process," Pope said.
Some other senators worried that once Shuanghui obtained advanced agricultural technology from Smithfield, the United States will lose its export market share to Chinese competitors.
Pope answered that there was a protein deficit in China, and that China needs more pork to feed its people instead of export. Besides, China does not have the export advantage. "Pork prices are 50 percent higher in China than in America," said Pope.
Although US Congress is not in charge of the review process, the hearing helps shed light on the pros and cons of the transaction. The takeover proposal is now subject to approval by the Committee on Foreign Investment in the United States, an inter-agency body chaired by the US treasury secretary.