Guebert: Reasons to smile over the Smithfield purchase

Here are 10 reasons for American farmers and ranchers to be thrilled by Shuanghui International Holding Inc.’s proposed $4.7-billion purchase of Smithfield Foods, Inc.

No. 10: The U.S. gets back some of the dollars held by China.

While $4.7 billion is chicken feed compared to the $1.2 trillion of U.S. debt (about 7.5 per cent of our $16 trillion total) China holds, look at the bright side: If it buys 300 more U.S. companies the size of Smithfield they’ll own us, not our money.

No. 9: In buying Smithfield, China, not Virginia, will be home for “one of the worst-performing large U.S. food companies over the past five years,” according to Bloomberg News.

Smithfield’s “negative return of 18 per cent in the five years through March 28, (2013)” was the second-worst record for “any U.S. food company with annual sales of $10 billion or more,” Bloomberg said May 31.

No. 8: Shuanghui plans to keep in place the top five of the Smithfield management team that delivered those stinky results and pay them an estimated $85.4 million in bonuses once the deal is completed.

No. 7: Shuanghui claims this deal is a wide, one-way street; Smithfield’s American-bred, born and butchered hogs will flow to China and no Chinese pork will float to the U.S. either by ship, raft or river.

Promise?

No. 6: Smithfield’s Wilmington, N.C, port facility can now be used to import South American corn and soybeans — as it was in the summer of 2012 — for its 862,000 Chinese-owned sows in the U.S. rather than its 862,000 American-owned sows in U.S.

No. 5: Ironically, when (if, in some government circles) the buyout is complete, a Chinese company — which farrows, feeds and slaughters about one in five American-grown hogs each year — will pay an estimated $16 million to the mandatory, non-refundable U.S. pork checkoff, based on 2012’s total checkoff collections of $81 million.

That amount is more than double the $7 million the pork checkoff budgeted last year to boost, as its strategic plan explains, the “U.S. share of global exports of pork” by 2014. “Sell Smithfield to a Chinese company,” however, was not part of the checkoff’s published strategy.

No. 4: Most analysts predict the purchase will lead to greater U.S. pork exports to the Forbidden Kingdom. That would be a good thing because American per capita pork consumption continues to slide, down 12 per cent (from 66.9 lbs. to 59.2 lbs.) in the last decade.

No. 3: “Unlike other Chinese companies that have loomed large on the world stage,” reported the Wall Street Journal, May 30, “Shuanghui isn’t state controlled.”

Translation: The country is Communist; the company probably isn’t.

No. 2: Unlike many U.S. livestock groups and their meat-packer allies, Shuanghui will label all American pork sold in China as “Born, raised and slaughtered in the United States.”

That label is worth, oh, say $4 billion or more in China, right now.

And the No. 1 reason to rejoice?

Maybe the world’s top pork eaters will be so busy chewing American babybacks that America will be safe from “Chinese hackers” who already have “breached… programs critical to U.S. missile defences and combat aircraft and ships,” as reported by the Washington Post just two days before the Smithfield buyout was announced.

Hocks for hacks, as it were.

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