BUSINESS
Off Centre
by

Hogging an industry: Chinese conglomerate’s pork prerogative gets under noses of poor Americans

PUBLISHED : Wednesday, 05 August, 2015, 5:23pm
UPDATED : Monday, 19 October, 2015, 2:19pm

They used to be sort of unreceptive when it came to communists, the Americans – a bit disobliging, all things considered. Not to overstate matters, during the cold war, normal human vitality often seemed indivisible in the American imagination from a desire to kick Bolshevik butts. That was the main thing I took away from watching the 1984 version of the film Red Dawn, at any rate.

For better or worse – the former, one supposes – American attitudes towards modern-day Communist China are several degrees mellower. Indeed, tacit acceptance of China’s rise looks at times to have given way to a new dread of upsetting it and being thus dis-invited to the party.

Being nice about China in blockbuster movies is one manifestation of this. Giving Chinese state-backed companies a role in the immiseration of America’s poor would seem to be another.

Smithfield Foods, until recently the world’s largest pork producer and processor, used to own hundreds of pig farms in North Carolina alone. These farms consist of three important elements: pigs, giant sheds for housing them and adjacent “lagoons” into which millions of gallons of their faeces and urine are deposited. The cesspits are emptied at intervals, their contents sprayed as a noxious mist over nearby fields.

In 2013, Smithfield sold out to Shuanghui, China’s largest pork producer, for US$4.7 billion, a 31 per cent premium on the company’s publicly traded share price. The two had been weighing a partnership deal before the Chinese firm made a bolder offer, financing the purchase with a US$4 billion loan from the state-owned Bank of China.

Now effectively the owner, at a conservative estimate, of 1 in 4 American pigs, Shuanghui has been busy expanding production for export back to China, where the middle classes prefer not to eat anything reared in the motherland for fear of it being contaminated. This, in turn, appears to have increased levels of hydrogen sulphide and ammonia wafting into properties near US farms, causing complaints of burning eyes, breathing difficulties, headaches, hypertension and anxiety.

Many of those affected in North Carolina are on low incomes. Many are black. Most have little option to move away. But a fightback of sorts is under way: in the last year some 500 individuals in the state have filed two dozen lawsuits against Shuanghui’s subsidiary, Murphy-Brown, complaining about the smell from its farms.

Initially, these actions sought to fix ultimate responsibility on the Communist Party. “Red China has taken a huge dump under the noses of the American people and been allowed to get away with it,” ran one writ – which, mark you, I have paraphrased.

Last month, however, Shuanghui’s attorneys got their way, as a judge ruled any references to China, pork exports thereto, the CCP or even Smithfield being Chinese-owned, were inflammatory, irrelevant and off-limits. Meanwhile, state lawmakers have proposed debarring newcomers to hog farm neighbourhoods from filing nuisance lawsuits and making losers in court pay corporate farms’ legal bills.

Voices were raised at the time of the takeover as to the wisdom of green-lighting Chinese control over such a large segment of the US food chain. Daniel M Slane of the US-China Economic and Security Review Commission told Congress he had concerns over Shuanghui’s strategic ties to the Chinese government, preferential access to subsidies, and so on.

Debbie Stabenow, Democratic Senator for Michigan, worried that the Chinese company meant to use Smithfield’s processing technology to build up its own capabilities at home and undercut US pork exports to the Pacific Rim. In the end, though, faith in open markets, and in Chinese money, prevailed.

Simply a case of one private company buying another is how Smithfield’s CEO, Larry Pope, described the merger in a Senate hearing. Only it clearly never was that simple, was it? In keeping with its efforts in the field of currency manipulation, credit from Beijing gives Chinese companies a huge advantage over competitors in the US and elsewhere.

What we’re seeing here is partly about China securing stable food supplies for itself – the country already consumes about 50 per cent of all pork globally and demand is rising sharply. In line with the government’s soon-to-elapse 12th Five-Year Plan, Chinese businesses – state-owned or otherwise – have been investing in food assets around the world.

Americans are far from alone in worrying about their producers being undercut or about Chinese corporations cornering markets. It may be tempting to shrug those concerns off as paranoid, but it’s probably judicious to wait until deals comparable to the Smithfield one are being sanctioned the other way round.

For America, making its own poor folks sick through turning swathes of itself into a hog farm capable of sustaining expanding waistlines in a formerly hermetic communist state whose ruling party used to order its own agriculture along collective lines is perhaps both an achievement of sorts and further evidence of a crisis in the idea of American exceptionalism.

After all, the whole point of an American-led world order was surely to encourage strains of American-style capitalism elsewhere. But being stung on the buttocks by globalisation was always a possibility too.