ROBERT SIEGEL, HOST:
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Members of the Senate Agriculture Committee had a lot of questions today about the takeover of Smithfield Foods. That's because a Chinese company has offered to buy America's largest pork processor. Both Democratic and Republican senators have expressed concerns about the $4.7 billion deal and its potential effects on U.S. food safety and security.
NPR's John Ydstie has been following the testimony today and joins us now. Hi, John.
JOHN YDSTIE, BYLINE: Hi, Robert.
SIEGEL: Smithfield's CEO Larry Pope was at the hearing today trying to allay the senators' concern. Was he successful?
YDSTIE: Robert, Pope tried to emphasis that Smithfield will continue to produce pork in the U.S. for export to China, so there's a potential for job growth from the deal. He told senators that pork is the number one source of protein in China, and consumption continues to grow as Chinese incomes grow. Here's a little more of what he had to say.
LARRY POPE: The combined company expects to help meet the growing demand for pork in China by exporting high-quality pork products from the U.S. This means increased capacity for U.S. producers, more jobs in processing and more exports for the U.S. economy. At the same time, we will continue to supply our same high-quality renowned products to U.S. consumers.
SIEGEL: That last phrase from Smithfield CEO sounds like he was trying to reassure senators that China's dismal food safety record won't become a problem for U.S. consumers if this deal goes through.
YDSTIE: Exactly. Pope pointed out that all of Smithfield's products will continue to be produced under the laws of the United States and USDA inspection programs, not the laws of China. But senators were also concerned that through its purchase of Smithfield, the Chinese company Shuanghui might have a long-term strategy to move production to China and compete with U.S. producers. Here's the chair of the Senate Ag Committee Debbie Stabenow, a Democrat from Michigan.
SENATOR DEBBIE STABENOW: Can we expect that after the company has adopted Smithfield's excellent technology and practices, they will increase exports to Japan, our largest export market, in competition with U.S. products?
YDSTIE: And Stabenow pointed out that much of Smithfield's technology was developed with the aid of U.S. taxpayers through government grants.
SIEGEL: Well, John, how realistic is that concern that China would use the purchase of Smithfield to then compete with U.S. producers?
YDSTIE: Well, at this point, China can't even raise enough pork to satisfy its domestic demand. And given its cropland and water shortages, it's unlikely to be able to change that. So the prospect that it might become a major pork exporter seems unlikely. But one witness suggested that the Chinese government is behind this deal because it wants to control the price of pork. That could negatively affect U.S. consumers and producers. Technically, though, Shuanghui International is a private company, and, in fact, the U.S. investment bank Goldman Sachs is a minority shareholder.
SIEGEL: So is this deal likely to be allowed by the U.S. government?
YDSTIE: Well, we'll see. The Committee on Foreign Investments in the United States, which is chaired by the Treasury secretary, is reviewing the deal. Right now, it's hard to see on what grounds the committee would stop the deal, though.
SIEGEL: OK. Thank you, John.
YDSTIE: You're welcome.
SIEGEL: That's NPR's John Ydstie. Transcript provided by NPR, Copyright NPR.
