Smithfield CEO Tells Lawmakers Shuanghui Deal Won’t Impact Food Safety

By Helena Bottemiller

American consumers will not be impacted and the safety of pork products will not diminish if Smithfield Foods is acquired by Shuanghui International, Smithfield’s CEO Larry Pope told the Senate Agriculture Committee at a hearing Wednesday.

The assurances come as the proposed $4.7 billion sale, which would be the largest ever Chinese acquisition of an American company, is facing an interagency government review and increased scrutiny on Capitol Hill.

Fielding tough questions from lawmakers about the potential downsides of the deal, Pope, who will remain CEO, was upbeat about the acquisition. He said the deal would deliver more American jobs and increase exports.

“It will be the same old Smithfield, only better,” he said, noting that pork producers and industry groups are supportive. “There should be no noticeable impact in how we do business operationally in America…except we plan to do more of it.”

Pope’s view was backed up by the testimony of Matthew Slaughter, an associate dean at the Tuck School of Business who served on the Council of Economic Advisors to President Bush. Slaughter said the investment and the increased trade with China is exactly what the sluggish economic needs, adding that a smooth transaction would signal that the U.S. is ripe for foreign investment.

On the whole, however, the hearing was extremely divided. Committee chairwoman Debbie Stabenow (D-MI) raised concerns about the Chinese meat company gaining access to valuable pork industry technologies that were heavily supported by taxpayer-funded research and seriously questioned the federal government’s process for reviewing such acquisitions.

Stabenow and more than a dozen senators from the committee recently asked the Committee on Foreign Investment in the United States (CFIUS), headed by the Treasury Department, to include the U.S. Food and Drug Administration and the U.S. Department of Agriculture in its review of the proposed deal because of the potential threats to food security and public health, but it’s not clear whether that will happen. In a letter to the committee this week, the Treasury did not respond to that request, but noted that its review process is confidential.

During the hearing, lawmakers echoed the concerns many consumers have: that the deal will ultimately result in the U.S. importing more food from China in the wake of multiple unsavory and dangerous food scandals.

Pope told the committee that the acquisition “will not result in any imports of food into the U.S. from China” and said specifically that China has “no plans” and “no applications in place” seeking permission from the USDA to sell its meat products to U.S. consumers. He also reminded the committee that regardless of who owns the company, it will be under strict scrutiny by the USDA’s Food Safety and Inspection Service, which oversees the safety of all meat, poultry, and processed egg products in the U.S.

“We’re going to protect these brands and products and if we don’t the U.S. government will,” he said. “You know how tight those inspection processes are.”

Daniel Slane, Commissioner of the U.S.-China Economic and Security Review Commission at the U.S. Chamber of Commerce, told the committee he thinks the long-term implications of the deal are wholly negative.

“This is all about control,” said Slane, who argued that giving Shuangui access to technology and intellectual property could end up disadvantaging American producers. Eventually, he said, China can use that knowledge to achieve the same efficiency in their production and undercut U.S. pork exports to the Pacific Rim. “Their endgame is to dominate our markets.”

Dr. Usha Haley, a professor for the Robbins Center for Global Business and Strategy at West Virginia Univeristy, was equally critical in her testimony before the committee.

“I don’t think shanghai is buying Smithfield for its pork,” said Haley. She believes the deal is about Shuanghui’s access to intellectual property and technology and assuaging local consumers’ food safety concerns by using an American brand. Even if China gobbled up Smithfield’s entire production, she said, it would only account for about 3 percent of the country’s total pork consumption.

“China is not seeing this as one acquisition,” she said. “China sees this as a foot in the door.”

Haley said she also believes the deal will ultimately impact food safety. In June, she penned an Op-Ed for USA Today arguing against the Smithfield sale.

“Shuanghui’s culture exudes outrageous food-safety violations and a history of food adulteration. For example, the company finally shut down a plant after numerous reports that it fed pigs a chemical that sickened humans but enhanced leanness in pork,” she wrote. “Over the past five years, U.S. pork purchases in China rose 155%, one of the few areas in which a trade surplus with China exists. China’s history of forced technology transfer to access markets indicates that other Chinese demands will follow.”

Stabenow said she remains concerned about the adequacy of the government’s review process.

“I really believe this is a precedent-setting case,” she said. “We need to be thoughtful on behalf of consumers and producers and the broader economy.”