Chinese meat processor Shuanghui International Holdings Ltd. has made… (LM Otero / Associated Press )
Of course you are familiar with the phrase “bring home the bacon,” but did you know it now has an international meaning?
Seems that a Chinese meat processing company has agreed to pay $4.7 billion to buy Smithfield Foods Inc., a U.S. firm that is the world’s largest pork producer.
As my colleagues Ken Bensinger and Tiffany Hsu wrote Wednesday:
The deal, the largest-ever purchase of a U.S. company by a Chinese firm, underscores the rapidly evolving taste of China's growing middle class, which is demanding more high-quality protein in a nation that has been beset by food safety scares.
So, double cheeseburgers with bacon for everyone!
Today, it’s pork. Tomorrow, the story says, the world:
Once limited to purchasing other nations' crops on the open market, the world's second-largest economy has steadily moved to take control of production. Over the last decade, it's been buying up vast acreage overseas and spending billions to lock down long-term supplies of key staples. If approved by regulators, the Smithfield deal would give China one of the most prestigious names in the lucrative meat industry.
In other words, there are about 1.3 billion Chinese, they need to be fed, and they apparently envy Americans’ choices -- and our ever-expanding waistlines. (Do you suppose they’ll get the racy Carl’s Jr. commercials too?)
So, should we be worried about this deal? Will the Chinese siphon off America’s pigs? Or is it just a pig in a poke?
Well, as the story notes:
In 1978, Chinese collectively ate just a third of the meat that Americans did. Last year, they consumed twice as much, according to the U.S. Department of Agriculture.
And no animal lands on more plates than the pig. In 2010, China consumed 51 million metric tons of pork, nearly half the swine in the world, according to the U.S. Census Bureau. By comparison, Americans ate just under 9 million metric tons of pork that year and about 13 million metric tons of chicken.
Certainly, then, it’s bad news for pigs. But it’s good news for Smithfield and its shareholders, seeing as how the purchase price is a 31% premium for the company. Who knew communists could be such, uh, capitalists?
Of course, it’s not just food that we are battling the Chinese over. On Thursday, The Times Op-Ed page ran an article headlined “America’s China mistake.” Its authors warned of the threat from an increasingly bellicose China, which is apparently itching for a military confrontation with the United States.
Great. Today our baby back ribs, tomorrow Hawaii.
But I'm not buying it. Mostly because we’re already buying most of what China makes, and if we’re now going to be making food for them too, why would they want to kill off their best customers -- and the folks feeding them?
However, it pays to be careful. Remember that movie “Trading Places”? Well, you might want to call your broker and put in a “buy” order for pork bellies, just in case.
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