Senators Raise Food Safety, Security Concerns About Smithfield Purchase
June 21st, 2013
Yesterday, Senators Debbie Stabenow (D-MI), chair of the Senate Agriculture Committee and Thad Cochran (R-MS), ranking member of the Committee, delivered a letter to the Secretary of the Treasury that laid out concerns with the proposed purchase of Smithfield Foods by a Chinese-based conglomerate – the Shuanghui Group. Smithfield Farms is the world’s largest producer and processor of pork and the proposed acquisition by Shanghui would be the largest purchase of a U.S. corporation by a Chinese company. The letter was signed by members of the Senate Agriculture Committee, except Senators Max Baucus (D-MT), Mitch McConnell (R-KY), Saxby Chambliss (R-GA), John Boozman (R-AR) and John Thune (R-SD).
The proposed purchase will be reviewed by the Committee on Foreign Investment in the United States (CFIUS), which is chaired by the Treasury Secretary. CFIUS is an inter-agency committee charged with reviewing transactions that could result in control of a U.S. business by a foreign entity, in order to determine the effect of such transactions on U.S. national security.
The Senators’ letter urged the Committee to consider the U.S. food supply as critical infrastructure included within the definition of national security. It also requested that the Committee look beyond the impact of the transaction of government agencies to the broader issues of food security, food safety, and biosecurity. The Senators requested that USDA and the Food and Drug Administration be included in the review of the Smithfield acquisition. Specific concerns included the need for measures needed to ensure that Shanghui can meet U.S. food safety and biosecurity standards. The company has a history of selling tainted and mislabeled meat products. Another concern was whether taxpayer-supported research and development and resulting intellectual property can be properly safeguarded by a Chinese corporation.
In a separate press release, issued when the pending Shanghui- Smithfield deal was first announced in May, Senator Chuck Grassley (R-IA) raised concern about the acceleration of consolidation and concentration in the meat and poultry sectors, epitomized by the potential takeover of the world’s largest pork processor. He called for antitrust investigation by the U.S. Department of Justice. He also emphasized that the pending Smithfield-Shanghui deal highlights the need for Country of Origin Labeling, so that U.S. consumers can choose meat and poultry products raised by U.S. farmers if they so desire.
Senator Grassley’s press release stated, “I share the concerns of many family farmers and independent producers that the agriculture industry has consolidated to the point where many smaller market participants do not have equal access to fair and competitive markets. Today’s announcement by Smithfield and Shuanghui do not alleviate those concerns. In fact, the two companies pointed out in their statements that the vertical integration employed by Smithfield was a major attribute to the acquisition. The fact of the matter is that vertical integration leaves the independent producer with even fewer choices of who to buy from and sell to and hurts a farmer’s ability to get a fair price for his products. Concentration also leads to consumers having fewer choices and higher costs at the grocery store. The Justice Department should take a close look at this agreement.”