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A pork-filled deal between Smithfield and Shuanghui, but who wins?

People purchase pork at a market on May 9, 2013 in Nantong, China.

China is buying $4.7 billion worth of American bacon. Chinese meat producer Shuanghui International is taking over Smithfield Foods, the world’s largest pork producer. If the deal goes through, it’ll be the biggest Chinese takeover of an American company.

As business stories go, pork mergers don’t exactly capture the imagination. But for Americans making a living off pigs, a deal like this is wild boar-sized news.

In the largest pork-producing state, Iowa, there’s optimism that Chinese ownership could help more of America’s hogs overcome trade hassles to reach the world’s largest market. The meat is so important in China that the government has a strategic pork reserve. Chinese are eating more pork than ever.

“With growing demand internationally, we could see likely increases in production would mean increases in jobs,” says Iowa State University livestock economist Lee Schulz.

Over in another big pork state, North Carolina A&T agriculture professor Osei Yeboah has been to China to survey consumers and drum up demand for American pork. Perhaps because China has seen its share of tainted food scandals, pork lovers there see the U.S. product as higher quality than domestic meat.

Smithfield already exports to China, and Yeboah thinks will sell even more once Chinese consumers know that Smithfield is Chinese-owned.

“That will translate into higher prices if the demand goes up,” Yeboah says.

Higher prices are good for farmers, though painful to bacon-crazed shoppers. But new access to Chinese markets won’t drive up American retail prices if hog farmers ramp up supply. Other analysts don’t fear ham inflation.

“Right now I don’t anticipate any higher prices for shoppers in the United States because we have other companies that produce pork as well,” says University of Georgia agricultural economist James Epperson. “It’s a pretty competitive business.”

Epperson wants to see the deal examined for potential impact on America’s food supply. A U.S. government panel has to sign off on the Chinese takeover after reviewing any national-security concerns.

Kai Ryssdal: $4.7 billion is a whole lotta bacon. And, it turns out, it buys you a whole lotta bacon, too. And pork belly, and pigs' feet and -- well, that's about enough of that.

The American corporate news of the day is Chinese, actually. The Chinese meat processing conglomerate Shuanghui International is buying Smithfield Foods, the world's largest pork producer, for the aforementioned $4.7 billion.

Marketplace's Mark Garrison reports on what China's ham grab means for American workers and shoppers for the other white meat.


Mark Garrison: Ok, so pork stories may not exactly be high on your agenda. But for Americans making a living off pigs, a deal like this is wild boar-size news, especially in the largest pork producing state.

Lee Schulz: That’s what we do here in Iowa, you know. We grow corn and soybeans and we produce hogs.

Iowa State livestock economist Lee Schulz believes Chinese ownership could help more of those hogs overcome trade hassles to reach the world’s largest market. The meat is so important in China that the government has a strategic pork reserve. Chinese are eating more than ever.

Schulz: With growing demand internationally, we could see likely increases in production would mean increases in jobs.

Over in another big pork state, North Carolina A&T ag professor Osei Yeboah has surveyed consumers in China. They see American pork as higher quality. Smithfield already exports to China. Yeboah thinks it’ll sell more once consumers know it’s Chinese owned.

Osei Yeboah: That will translate into higher prices if the demand goes up.

Higher prices are good for farmers, though painful to bacon-crazed shoppers. But University of Georgia ag economist James Epperson doesn’t fear ham inflation here.

James Epperson: Right now I don’t anticipate any higher prices for shoppers in the United States because we have other companies that produce pork as well. It’s a pretty competitive business.

He does wanna see the deal examined for potential impact on America’s food supply. Because it’s China, a U.S. government panel has to sign off on it after reviewing any national security concerns. In New York, I'm Mark Garrison, for Marketplace.

About the author

Mark Garrison is a reporter for Marketplace and substitute host for the Marketplace Morning Report, based in New York.
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This sale is sort of mind boggling to me.
Ok, China is a Huge market. America is not the market the Smithfield people want.
So sell it to an American investor/owner that Can sell to the China market.
I am not the most nativist person, and I don't buy much of Smithfields product to begin with, but they will loose me completely. And they are a 'home state' company.
These types of short sighted decisions do not bode well for the continued well being of our economy.
Do the pork producers think that a more vertical integration of their supply chain will benefit them in the long run?
Who needs food security anyway?

Grumble, Grumble.....

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