- By Joshua Keating
Joshua Keating was an associate editor at Foreign Policy
China’s pork hegemony is turning into pork imperialism. (Imporkialism?)
With more than 446 million pigs — one for every three citizens of the world’s most populous country and more than the next 43 countries combined — pork is a big deal for the Chinese economy, to the point where analysts joke that CPI actually stands for China Pork Index and the government actually maintains a strategic pork reserve of frozen meat that can be released during times of shortage.
But all that hog is apparently not enough. Today brings news that Shuanghui International Holdings — China’s biggest pork producer — is acquiring the Virginia-based producer Smithfield Foods Inc. for $4.72 billion in order to bolster Chinese supplies.
This is obviously a matter of great geostrategic concern (my emphasis):
China’s consumption of pork is rising with the expansion of its middle class while there are questions being asked about the safety of the country’s food supply. Smithfield’s livestock unit is the world’s largest hog producer, bringing about 15.8 million of the animals to market a year, according to the company’s website. It owns 460 farms and has contracts with 2,100 others across 12 U.S. states.
The takeover is valued at $7.1 billion including debt, which would make it the largest Chinese takeover of a U.S. company, according to data compiled by Bloomberg. The deal is likely to face scrutiny by the Committee on Foreign Investment in the U.S., said two people familiar with the situation who asked not to be identified because the information is private.
“On the one hand, pork is not directly an issue of national security, as defense or telecom might be,” Ken Goldman, a New York-based analyst for JPMorgan Chase & Co. who has a hold rating on the shares, said in a report today. “On the other hand, if CFIUS comes to believe that Chinese ownership of the U.S.’s largest hog farmer and pork supplier presents a food supply risk, then it may have a heightened concern.”
During last fall’s round of hysteria over global pork supplies, I wondered if China might open its strategic reserve. In the end, these reports proved to be greatly exaggerated: the Baconator is still on the menu. Next time we might not be so lucky… and find ourselves suddenly at the mercy of Big Zhu.