Smithfield deal could lift markets

Tuesday, September 10, 2013

by BETTER FARMING STAFF

With just one more hurdle to go before the sale of Smithfield Foods to Hong Kong-based Shuanghui International Holdings is complete, there is some speculation that the deal could have a positive effect on the North American pork industry. The $7.1 billion takeover has been approved by the U.S. Committee on Foreign Investments. Smithfield shareholders have their say when they vote Sept. 24.

Patrick O’Neil, manager of the marketing division at Ontario Pork, notes that North American futures markets were stronger when the deal was first announced “on speculation that it would be a great benefit to market access just to solidify the market relationship with China (through Shuanghui) and at least keep product flowing, potentially increasing North American pork sales into China.

“Theoretically,” O’Neil says, “if an extra kilo of meat from the United States goes to China, that’s one less kilo of meat in North America increasing the price of meat in North America.”

O’Neil also notes that no product moves between Ontario producers and Smithfield and none has moved since country of origin rules were applied in 2008.

Gary Stordy, manager of public relations for the Canadian Pork Council, says “if there is increased volume and cuts going offshore, that can help the domestic price producers receive because product is moving out of the country.”

According to their website, Smithfield is the world’s largest pork processor and hog producer. Shuanghui International is a Hong Kong-based, privately held company. It owns a variety of businesses that include food and logistics enterprises, the Smithfield website says. BF