Shuanghui International Holdings is offering to pay $4.7 billion to buy Smithfield Foods Inc., the biggest hog producer in the United States. There is concern because of the food safety history of Chinese firms. There seems to be a culture of trying short cuts in food production that compromises food safety. For example putting melamine in baby formula so that the formula will test out as if it contained more protein.
Shuanghui International Holdings have pointed out that they will have USDA inspectors to watch over the operation. The Smithfield deal, which needs regulator and shareholder approval, has raised bipartisan concern in congress. They are definitely concerned about food safety.
China has 20% of the worlds population and only 8% of the world’s farmland. With their growing population they have a very large food problem. The United Nations estimates that china needs to spend 8.61 million to be able to feed its population.
China is buying up agricultural holdings over the world at a record pace. China has spent 7.8 million dollars on agricultural purchases this year. They have made major purchases in Brazil, the United States and Australia. They have purchased farmland food processors and producers of farm chemicals.
Part of the reason for these purchases is to learn the technology used by these companies and later use the same technology in China. This may help the Chinese with their safety problems at home and increase their food production.
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