BECKHAM
07-06-2013, 01:10 AM
Wang Cheng You came to Iowa to buy. He wants 1,000 breeding hogs, and he wants them in a hurry.The farm manager from Iowa's sister state in China, Hebei, quizzed breeders Wednesday at the World Pork Expo, trying to find who could accommodate such a large order. His desire could cost $3,000 per boar or $1,000 per sow, not including blood tests, quarantine costs, and a one-way ticket to fly the hogs, which could weigh 180 to 300 pounds by the time they're ready.
Wang said he likes Iowa pork because of its high survivability rate and disease resistance. And he needs to double the size of his breeding herd to fulfill demand for protein in China, the world's largest consumer of pork.
His purchase might be tiny compared with a Chinese company's planned $4.7 billion buy of Smithfield Foods, the nation's largest hog producer and processor, announced last week. But the goal is similar. The Chinese want our hogs, and they want our expertise in raising pork and other livestock.
The interest benefits Iowa and its pork industry, Gov. Terry Branstad and others say. But critics point out several concerns, including food security.
"In the short run, this kind of thing probably looks really good to farmers in Iowa," said Peter Navarro, a business professor at the University of California-Irvine. The bottom line: "Do we want China to basically gain partial or full control of our food supply at some point?"
Navarro even raises the specter of Chinese buying Iowa farmland: "It has more than enough money to buy the entire state." But Branstad emphasized that Iowa law would prevent foreign ownership of farmland.
Goal: Expand food supply
China's agriculture industry, still dominated by small farms, is under pressure. The world's most populous nation needs to improve its productivity to prevent food shortages. And as its population grows wealthier, it's eating more protein. But chronic water shortages, lack of arable land and other environmental constraints will restrict productivity gains.
"The grand strategy behind these types of acquisitions is feeding their people so the people don't revolt, so the Communist Party can stay in power," Navarro said.
Iowa officials emphasized that China and Iowa share a common goal of increasing the food supply. Branstad said the Smithfield deal, in particular, shows a Chinese commitment to buying U.S. pork long term.
Some U.S. senators, including Iowa Republican Charles Grassley, have raised concerns about the deal between Virginia-based Smithfield and Shuanghui International. Smithfield has eight processing and packing plants with 3,500 employees across Iowa.
"I haven't made up my mind about the goodness or the badness" of the deal, Grassley told reporters this week. He has sent a letter asking the Department of Justice "to make sure it does what the law requires them to do, thoroughly examine the deal to make sure that it's not anti-competitive."
Grassley has resisted moves by companies like Smithfield to own hogs as well as processing plants, a business strategy known as vertical integration.
"Vertical integration has already proven to be bad for the American farmer," he said. "It's not going to get better with globally integrating meat production. I share concern with many Iowans that fewer competitors and increased consolidation leads to less choice and higher prices for consumers."
Grassley said the positives of the deal include potential increased exports to China, helping offset a 4 percent drop in domestic pork consumption.
John Lawrence, Iowa State University economist, sees few downsides to the Smithfield deal. If China bids up prices for U.S. pork, America's farmers will respond with more production, he said.
Push for research center
Iowa's opportunities in China were evident in this week's visit by agricultural officials from Hebei. Officials repeatedly asked Iowa companies to consider sharing technology and providing investment.
At the World Pork Expo, the Chinese met with Iowa Agriculture Secretary Bill Northey and other officials about an animal husbandry research center in Hebei. Jay Johnson, deputy agriculture secretary, said officials agreed to work on a memorandum of understanding to cooperate. He said the idea is still vague, but it could include training on breeding and management of dairy and swine herds.
The Chinese wanted to move more quickly than the Iowans. Johnson's sense was that Hebei officials "are under a lot of pressure to do more cooperation," he said.
But how to do business in China without giving up trade secrets remains a question for American companies. Many firms remain frustrated by the limited intellectual property protections in China, said Peter Yu, an expert in intellectual property law at Drake University and a native of Hong Kong.
"There is always a love-hate relationship between the benefits brought by U.S.-China trade and our continued concerns about the potential problems and challenges," he said.
Wang said he likes Iowa pork because of its high survivability rate and disease resistance. And he needs to double the size of his breeding herd to fulfill demand for protein in China, the world's largest consumer of pork.
His purchase might be tiny compared with a Chinese company's planned $4.7 billion buy of Smithfield Foods, the nation's largest hog producer and processor, announced last week. But the goal is similar. The Chinese want our hogs, and they want our expertise in raising pork and other livestock.
The interest benefits Iowa and its pork industry, Gov. Terry Branstad and others say. But critics point out several concerns, including food security.
"In the short run, this kind of thing probably looks really good to farmers in Iowa," said Peter Navarro, a business professor at the University of California-Irvine. The bottom line: "Do we want China to basically gain partial or full control of our food supply at some point?"
Navarro even raises the specter of Chinese buying Iowa farmland: "It has more than enough money to buy the entire state." But Branstad emphasized that Iowa law would prevent foreign ownership of farmland.
Goal: Expand food supply
China's agriculture industry, still dominated by small farms, is under pressure. The world's most populous nation needs to improve its productivity to prevent food shortages. And as its population grows wealthier, it's eating more protein. But chronic water shortages, lack of arable land and other environmental constraints will restrict productivity gains.
"The grand strategy behind these types of acquisitions is feeding their people so the people don't revolt, so the Communist Party can stay in power," Navarro said.
Iowa officials emphasized that China and Iowa share a common goal of increasing the food supply. Branstad said the Smithfield deal, in particular, shows a Chinese commitment to buying U.S. pork long term.
Some U.S. senators, including Iowa Republican Charles Grassley, have raised concerns about the deal between Virginia-based Smithfield and Shuanghui International. Smithfield has eight processing and packing plants with 3,500 employees across Iowa.
"I haven't made up my mind about the goodness or the badness" of the deal, Grassley told reporters this week. He has sent a letter asking the Department of Justice "to make sure it does what the law requires them to do, thoroughly examine the deal to make sure that it's not anti-competitive."
Grassley has resisted moves by companies like Smithfield to own hogs as well as processing plants, a business strategy known as vertical integration.
"Vertical integration has already proven to be bad for the American farmer," he said. "It's not going to get better with globally integrating meat production. I share concern with many Iowans that fewer competitors and increased consolidation leads to less choice and higher prices for consumers."
Grassley said the positives of the deal include potential increased exports to China, helping offset a 4 percent drop in domestic pork consumption.
John Lawrence, Iowa State University economist, sees few downsides to the Smithfield deal. If China bids up prices for U.S. pork, America's farmers will respond with more production, he said.
Push for research center
Iowa's opportunities in China were evident in this week's visit by agricultural officials from Hebei. Officials repeatedly asked Iowa companies to consider sharing technology and providing investment.
At the World Pork Expo, the Chinese met with Iowa Agriculture Secretary Bill Northey and other officials about an animal husbandry research center in Hebei. Jay Johnson, deputy agriculture secretary, said officials agreed to work on a memorandum of understanding to cooperate. He said the idea is still vague, but it could include training on breeding and management of dairy and swine herds.
The Chinese wanted to move more quickly than the Iowans. Johnson's sense was that Hebei officials "are under a lot of pressure to do more cooperation," he said.
But how to do business in China without giving up trade secrets remains a question for American companies. Many firms remain frustrated by the limited intellectual property protections in China, said Peter Yu, an expert in intellectual property law at Drake University and a native of Hong Kong.
"There is always a love-hate relationship between the benefits brought by U.S.-China trade and our continued concerns about the potential problems and challenges," he said.