Economist Says Smithfield Food Deal Positive for U.S. Producers

It was announced early Wednesday that China’s largest pork processor is buying Smithfield Foods – the largest pork processor in the United States – for 4.7-billion dollars. Paragon Economist Steve Meyer says this deal just made good business sense for China versus importing cheaper U.S. grain to feed to their own hogs for production. He believes it will translate into more Chinese pork business for U.S. producers…

“The fact the Smithfield production organization is vertically integrated and they have gone direct company production, most of that leaves a lot of product that will qualify to go to China. My guess is this will help our business with China so its positive for exports and US producers.”

Meyer says the deal should also help ease concerns regarding pork produced with ractopamine – as well as other sanitary and phytosanitary issues the Chinese have had in the past…

“This will give us more of an ally in fighting those battles in the Chinese government, that what we had in the past. Before we only had customers, now we have people who have a stake in product going into China.”

Meyer says the acquisition does not change the concentration level in the pork processing business…

“This is just a different owner of one plant, its not one company buying another one in the US. The big thing will be within the US borders and little global effect.”

The completion of the deal is pending U.S. government approval and a green light from the Committee on Foreign Investment on the U.S. However – Meyer anticipates no regulatory red flags.