WASHINGTON, D.C. – During a Senate Agriculture hearing today, U.S. Sen. Sherrod Brown (D-OH) urged heightened scrutiny of a Chinese-subsidized company’s bid to buy Smithfield Foods. Brown emphasized that any review should consider the national security, food safety, and long-term food security implications of approving the transaction— the largest acquisition of any American company by a Chinese company in history.
“With a sale of this size, measured and thorough scrutiny is critical,” Brown said. “We must not only consider the national security implications of this sale, but also the long-term impact on workers, producers, and consumers. We need guarantees that under Chinese ownership, we will continue to see high-quality food products that comply with stringent American food safety and biosecurity standards. That’s why it’s so important that USDA is engaged in this process.”
In May, Shuanghui International Holdings Ltd. acquired Smithfield Foods for $34 per share. Before the deal is finalized, the Committee on Foreign Investment in the United States (CFIUS)—led by the U.S. Department of Treasury—must review and approve the agreement. Last month, Brown joined a group of 15 senators in urging Treasury Secretary Jack Lew to name a USDA official to the Committee on Foreign Investment in the United States (CFIUS), the board which reviews and approves foreign acquisitions of American companies.
Smithfield Foods currently controls 26 percent of the U.S. pork-processing industry and has one processing facility in southwest Ohio. Because of the potential impacts the sale could have on pork prices for independent producers and for consumers, Brown has called on the Obama Administration to include the USDA in the CFIUS review.
The text of the letter is below.
June 20, 2013
The Honorable Jacob J. Lew
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Dear Secretary Lew:
We are writing with regard to the proposed purchase of Smithfield Foods, the world's largest producer and processor of pork, by the Shuanghui Group. Although the Committee has not reached any conclusions with respect to this particular acquisition, it has raised a number of questions about how the foreign purchase of a major agriculture or food company is reviewed by the United States Government.
It has been publicly reported that the parties to this transaction are submitting it to the Committee on Foreign Investment in the United States (CFIUS) for review. The President has delegated to you the authority to add "the heads of any other executive department, agency, or office" that you deem appropriate to CFIUS on a case by case basis, and to designate a "lead agency or agencies" to "have primary responsibility" for that review.
We believe that our food supply is critical infrastructure that should be included in any reasonable person's definition of national security. As such, we strongly encourage you to include the Department of Agriculture and the Food and Drug Administration in any CFIUS review of this transaction, and consider designating the Department of Agriculture as one of its lead agencies. Further, any CFIUS review of this transaction should look beyond any direct impact on government agencies and operations to the broader issues of food security, food safety, and biosecurity.
Considering the potential for other foreign acquisitions of American food and agriculture companies, we also have a number of broader questions about how these transactions are reviewed and whether the appropriate authorities are evaluating potential risks and proposing sufficient mitigation measures to protect American interests. For instance, what measures should be considered to ensure that a company will maintain operations that comply with stringent American food safety and biosecurity standards? What measures should be considered to ensure that taxpayer supported research and development and any resulting intellectual property are properly safeguarded? Should trends in foreign acquisitions also be monitored to ensure the ongoing integrity of key components of the American food supply?
The United States has the safest, most efficient and reliable food supply in the world. It is one of our nation's great strengths, and we must ensure that it is preserved and protected. The Committee on Agriculture, Nutrition, and Forestry will further examine how this transaction is reviewed and how these transactions should be reviewed in the future. We look forward to your cooperation in that important effort.
Sen. Debbie Stabenow (D-MI), Chairwoman
Sen. Thad Cochran (R-MS), Ranking Member
Sen. Sherrod Brown (D-OH)
Sen. Charles Grassley (R-IA)
Sen. William Cowan (D-MA)
Sen. Kirsten Gillibrand (D-NY)
Sen. Pat Roberts (R-KS)
Sen. Tom Harkin (D-IA)
Sen. Mike Johanns (R-NE)
Sen. Amy Klobuchar (D-MN)
Sen. Michael Bennett (D-CO)
Sen. John Hoeven (R-ND)
Sen. Pat Leahy (D-VT)
Sen. Mike Donnelly (D-IN)
Sen. Heidi Heitkamp (D-ND)