Shuanghui International Holdings' recent move to purchase Smithfield Foods can be good for the U.S. pork industry, as it should open more doors for exports to China, the world's largest consumer of pork. Dermot Hayes, Iowa State University professor of finance and consultant to the National Pork Producers Council, addressed the China's largest pork producer's pending acquisition of the largest pork producer in the United States during a June 5 session at the World Pork Expo in Des Moines, Iowa.
Hayes said ownership of a U.S. pork processing company will put China more at ease in importing and consuming U.S. pork. Once that trust is established with Smithfield, trust with other U.S. producers should follow, he said.
China, with an incredibly dense population, has a lot of contact between the people and the swine being raised there, Hayes said, which has added to disease problems. "Some of the disease problems in China are pandemic. It is one of the few countries where production is stagnant or falling," Hayes said.
To date, the Chinese government has added more sows to make up for the lack of productivity, but Hayes does not think that is going to fix the problem. A self-sufficient Chinese pork industry may not be possible, he added.
"I view the Shuanghuai purchase of Smithfield as a way for that company and also for Chinese society to have a back-up plan in case they can never get the disease problem under control," said Hayes.