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Smithfield review is secretive

DANIEL LOOKER 07/16/2013 @ 11:08am Business Editor

The Obama Administration is keeping its review of the sale of Smithfield Foods to a Chinese hog company virtually secret, which may be a normal practice for the reviewer, the Committee on Foreign Investment in the U.S. (CFIUS), which is housed in the Treasury Department.

Senator Chuck Grassley, a member of the Senate Agriculture Committee with a long history of advocating for competition in the livestock industry, expressed his frustration about the process during a press conference with reporters Tuesday.

Grassley was among a group of Committee members who attended a closed briefing with Treasury officials last Wednesday, just after the Committee held a hearing on the $4.7 billion sale of Smithfield to Shuanghui International Holdings, Ltd.

"I met with them, and it was a very disappointing meeting," Grassley said Tuesday. "They informed us that we 'don't even admit we're considering something.'"

With so little divulged about the Smithfield review, "you can imagine how useless the meeting was," Grassley said.

CFIUS is an interagency group that considers whether a foreign purchase of a U.S. business poses threats to national security. Foreign investment is hardly unusual. A Brazilian company, JBS, owns Swift and Pilgrims Pride brands. And numerous Asian and European car makers manufacture in the U.S. CFIUS normally doesn't recommend that a foreign investment be blocked.

Grassley said in a statement released at the end of last week that he sees potential benefits to the U.S. pork industry in the form of increased exports to China after several years of declining pork consumption by Americans.

But he said he has many concerns, too:

"As far as the food supply, as China gears up its own pork production, some of that pork may find its way into the United States. No one can deny the unsafe methods utilized by some Chinese food companies. And, to have a Chinese food company controlling a major U.S. meat supplier – without strong safety inspection standards, without any shareholder accountability, without robust quality control mechanisms – frankly, that’s concerning for me.

"In addition, the Committee on Foreign Investment in the United States . . . is analyzing the Smithfield purchase’s impact on food security. It’s important to understand the Chinese government’s role in a company purchasing Smithfield, as the Chinese government can have a heavy hand in private business.

"I’ve also focused on making certain the anti-trust division of the Justice Department considers the special characteristics of agriculture when it reviews the proposal. This is part of my ongoing effort to look out for independent livestock producers trying to compete in a marketplace where there’s a continued trend to more vertical integration. As a company like Smithfield becomes even more capital rich, more non-Smithfield growers could be shut out of the marketplace. Independent producers need to be able to market their products for a fair price. Competition is important for consumers, too, as concentration can result in fewer choices and higher prices for the consumer."

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