The US Senate Agriculture Committee heard testimony today on the pros and cons of the takeover of pork company Smithfield Foods by China’s Shuanghui International. The title of the hearing alone sounded foreboding: “Smithfield and Beyond: Examining Foreign Purchases of American Food Companies.” It’s clear that some US politicians won’t let the largest Chinese takeover of a US company go quietly, but what’s still unclear is how much it will matter in the end.
Smithfield’s CEO, Larry Pope, tried to set the record straight by telling the committee that the deal would not result in any food imports from China to the US. Therefore, it would not have any impact on the US food supply or food security.
But Daniel Slane of the US Chamber of Commerce disagreed. He told senators that the deal will “exacerbate a pattern in US-China trade relations that have taken hold over the past ten years, whereby value added production is shifted to China, to the detriment of US workers and businesses.”
Senator Debbie Stabenow, who is head of the committee, questioned the economic motives of Shuanghui and whether long-term US economic interests would be affected. Others echoed her concerns. She was part of a group of senators who wrote a letter to Treasury secretary Jacob Lew, urging him to include both the US Department of Agriculture and the Food and Drug Administration in US government review of the Smithfield deal.
Lew is chairman of the Committee on Foreign Investment in the US (CFIUS), which is made up of various government agencies that examine foreign transactions for national security concerns. “The United States has the safest, most efficient and reliable food supply in the world,” the senators told Lew. “It is one of our nation’s great strengths, and we must ensure that it is preserved and protected. ”
Some legal experts have said they expect the deal to clear CFIUS review but vocal political opposition could cause problems. Stabenow and other senators have been steadily ratcheting up their public concerns about the transaction. But it hasn’t reached a point of hysteria—yet.
So far, the politicians are asking for tough oversight of the deal as opposed to having it blocked. Still, Smithfield investors weren’t happy with today’s hearing. Shares of the company dropped amid the proceedings, and the stock is slightly down overall today.