ANALYSIS - The US authorities have approved the purchase of pork producer, Smithfield Foods by Shuanghui International of China although approval by Smithfield's shareholders for the transaction is far from a foregone conclusion. In other news, the annual cost of Foot and Mouth Disease worldwide has been estimated at up to US$22 billion.
Shuanghui International Holdings and Smithfield Foods have announced that they have received clearance on their proposed transaction from the required US authority and also governmental merger clearance in Ukraine.
Shuanghui International Holdings Limited and Smithfield Foods, Inc. announced late last week that the companies have received clearance on their proposed transaction from the Committee on Foreign Investment in the United States (CFIUS). It was also announced that governmental merger clearance for the deal has been given in Ukraine.
The transaction remains subject to Smithfield shareholder approval and other customary closing conditions. Smithfield's shareholders are scheduled to vote on the transaction at a special shareholders meeting on 24 September. Shuanghui International and Smithfield expect the transaction to close shortly thereafter.
Commenting on the news, the National Farmers Union commented that the news came as "a disappointment for family farmers and ranchers across the United States. The deal represents the sale of one quarter of US hog processing to a quasi-state-owned Chinese enterprise and is a dangerous precedent, in terms of food security and market competition".
Support for the deal with cannot be taken for granted from Smithfield's shareholders at their meeting on 24 September. One of its leading shareholders is urging others to vote against the company's proposed merger at the meeting in order to allow time for an alternative offer to be finalised.
Also at the end of last week, Smithfield Foods reported total sales 10 per cent higher in the first quarter of its 2014 financial year than in the same period last year. The Fresh Pork division reported an operating loss but the other businesses were in profit.
Also in US-China pork trade news, to keep its position as the number one pork exporter to China, the United States – through the US Meat Export Federation – is seeking every opportunity to set American pork apart from its competitors among the 17 other nations that are selling their product in China this year.
In the latest Poultry Quarterly Review for the third quarter of 2013, Rabobank's Agri Commodity Market Research team reports that a further downward slide in grain and oilseed prices to the end of 2014, assuming that the new crop supply at lest matches expectations.
And finally, a new report from the UK's Royal Veterinary College puts the global annual cost of Foot and Mouth Disease (FMD) at up to US$22 billion.
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