Pork, globalization, and small town America
EC: Smithfield Ham Was Bought by a Chinese Company Three Years Ago. Has Anything Changed?
Credit: Photo courtesy of Flickr User Anthony DeRobertis

In Smithfield, Virginia, Smithfield Foods is everywhere. The $14 billion global meat-processing company—the world’s largest hog farmer and pork producer and maker of the uniquely aged and smoked Smithfield ham—is the biggest employer in the town of about 8,000 people. On Main Street, the 80-year-old company operates a retail store, The Genuine Smithfield Ham Shoppe, and a restaurant, Taste of Smithfield. Just up the road, the company also operates the Smithfield Inn, a historic bed and breakfast. In town, restaurants stock their kitchens with food from Smithfield.

“It means everything,” Dee Dee Darden said of the company, which annually supplies the 1,000 hams that she and her family cure and sell at their small business, Darden’s Country Store, just five miles from the Smithfield Foods plant.

Three years ago, when Smithfield Foods announced that it was planning to be purchased by China’s leading pork producer, Shuanghui International Holdings Ltd. (now called WH Group Ltd.), Darden was anxious. Would she still get her regular supply of ham? Would it be the same product she’d always known?

“We depend on Smithfield for our little ham operation we have out here in the country,” she told me.

Darden wasn’t the only nervous one. Some consumers proclaimed they’d never buy Smithfield products again if the deal went through. In Smithfield, the self-proclaimed Ham Capital of the World, residents feared the Chinese takeover would mean the loss of their jobs and, moreover, a signature part of their identity dating back to 1936, when Joseph W. Luter and his son opened the Smithfield Packing Company along the Pagan River.

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Credit: photo by the washington post via getty images

“It's Smithfield ham, it's not China ham,” Smithfield resident Carolyn Burke told the Associated Press at the time.

Lawmakers and advocacy organizations, meanwhile, had a range of concerns about the largest Chinese acquisition of an American company to date. Iowa Senator Chuck Grassley stewed about the impact of the deal on pork prices and said having “a Chinese food company controlling a major U.S. meat supplier, without shareholder accountability, is a bit concerning.” Virginia Congressman J. Randy Forbes worried about the role of the Chinese government in the deal and its impact on food supply in the United States. Connecticut Congresswoman Rosa DeLauro expressed “deep doubts” about whether the deal would best serve American consumers.

But three years since the deal, in Smithfield and beyond, the fears seem to be abating.

In 2013, the nonprofit Center for Food Safety (CFS) publicly opposed the takeover, citing WH Group’s less than stellar record on food safety in China. But according to Jaydee Hanson, senior policy analyst at the CFS, under WH Group’s ownership, Smithfield Foods is safer today than it was three years ago. Hanson told me he’s seen the company accumulate fewer federal environmental violations than it did before the takeover, and he’s been pleased to note that Smithfield followed through on its promises to halt the use of the controversial feed additive Ractopamine in half of its pork production.

“The bottom line is that to some extent, Smithfield, under the Chinese ownership, has done a better job of taking care of its problems than I thought it was going to at the time,” Hanson told me.

Meanwhile, according to Bloomberg, Smithfield has added more than 1,000 employees to its American workforce since the merger, and the company increased investment 24 percent last year. That shouldn’t come as a surprise, NYU adjunct professor of economics and finance Ann Lee told me. It should serve as a clear message for other companies and communities mulling future investments from Chinese entities.

“If U.S. businesses want to have higher gross in their revenues, of course they should be welcoming Chinese investors and Chinese markets. It’s a no-brainer given it’s the most dynamic economy in the entire world, and the largest one. So the U.S. is really stupid not to look at it as a giant opportunity,” Lee said.

For her part, Darden says she’s gotten her Smithfield hams as usual for the past three years, and she’s noticed no difference in their quality. She’s encouraged that the company has added jobs and shown no signs of leaving town. But three years in, she’s still keeping an eye out for disturbances to the status quo.

“We’re still in the honeymoon phase and we don’t know how long the honeymoon phase is going to last. But so far the fears we had were unfounded. Everything’s been exactly the same,” Darden said.