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Top of Mind: More Than Bacon

July 31, 2013
By: Jeanne Bernick, Top Producer Editor
JeanneBernick Spring

China is on track to spend a record amount this year on food and farms. The second largest world power dispersed more than $32.7 billion into agricultural assets during the past five years, compared with $4.2 billion in the prior half-decade, reports Bloomberg. This surge in global food and ag-related purchases is heightened by Shuanghui International Holdings’ $4.7 billion deal to buy Smithfield Foods, the biggest U.S. hog producer.

The bid could result in the largest Chinese acquisition of a U.S. company. Some see the move by Shuanghui as a way to supply a market with premium-brand pork at higher prices. Others worry China might use Smithfield as a channel to sell products in the U.S. The foreign purchase of such a significant company raises red flags about how such transactions are reviewed and authorities protect American interests. At press time, the bid was undergoing federal regulatory review, and the Treasury secretary has authority to add other agencies to the process. Congressional ag leaders are pushing for USDA and the Food and Drug Administration involvement to ensure food safety and transaction transparency.

While our government keeps a keen eye on Chinese investments, developing nations are not so watchful. I traveled to Kenya last year and noticed the new six-lane highway out of Nairobi built by the Chinese, who are constructing everything from bridges to government buildings. Some analysts see a thin line between capitalism and colonialism. For more thoughts on this topic, read "A New Colonialism in Africa?" on Farmer’s Feeding the World website at www.agweb.com/farmersfeedingtheworld/.

Food is Global. No one can deny the uptick in global protein demand. Per capita consumption of pork last year was 85.3 lb. in China, compared with 59.3 lb. in the U.S. Compute the difference in populations, and Chinese demand for pork is six times larger.

Our cover story this month features Top Producer of the Year finalist John Carroll, who raises hogs in Illinois and farms crops in Brazil. Carroll understands the importance of a global market—his South American soybeans feed U.S. pork that feed a growing Chinese population. Carroll takes the business skills he learns in Illinois and replicates them on a larger scale in Bahia, Brazil. Read more about his worldly views on page 18.

With stomachs to fill, China’s bid for Smithfield might simply be an effort to utilize the global food supply chain. Let’s just hope China isn’t hungry for more than bacon.

Jeanne Bernick

Editor of Top Producer

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FEATURED IN: Top Producer - Summer 2013

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