It turns out the monumental merger between two giant pork producers, Smithfield and Shaunghui (now WH Group), was a foregone conclusion. One big question lingers: Was the deal a trade of water for waste?
The World’s Biggest Pork Deal
Ultimately, the buyout of the world’s biggest pork producer, US-based Smithfield Food, by its giant Chinese counterpart, Shuanghui International [renamed the WH Group] was a foregone conclusion. It was evident by the media’s muted response to both the merger approved by Smithfield shareholders late last month as well as the earlier announcement by the US federal government to grant the deal national security clearance. For China, by far the world’s largest pork market, this eagerly anticipated decision further assures their pork supply, already bolstered by a demand-stabilizing strategic pork reserve. This occurred despite the apprehensive tone of a mid-July Senate hearing in the Committee on Agriculture, Nutrition & Forestry that cast a bit of doubt over this monumental deal, the largest ever Chinese takeover by a US corporation. In the end, doubt was not involved.
Yet the hearing did air numerous important concerns about the transaction. Smithfield CEO, Larry Pope, and others were peppered with questions about the deal’s potential effect on food safety, foreign corporate ownership vis-à-vis American food security, the transfer of intellectual property and technology, the potential of pork price volatility for US consumers and China’s strength in the global food trade. All this is wrapped in the context of China as the biggest meat consumer in absolute terms, where the hunger for meat, and pork in particular, is expected to grow with its huge and rapidly expanding middle class.
But one big question mark that received little attention was implications of this huge merger for American water supplies. More importantly, just how much water does water-stressed China save in the Smithfield deal?
Even if the merger hasn’t been discussed as a massive water transfer, in essence it is, because the water requirements to raise livestock for meat production are enormous with pork one of the highest in the water department, although beef remains king. Consider the global average water footprint for one pound of pork is 576 gallons (while one pound of beef takes 1,799 gallons). Then consider the water inputs necessary for Smithfield in 2012 to process about 27.7 million hogs and package and distribute approximately 3.8 billion pounds of pork. The reason for meat’s tremendous water requirements is cumulative and due to the large quantity of feed consumed by animals over the course of their lifetimes. To cultivate the crops for feed in turn requires tremendous volumes of water.
Yet the water impacts don’t end with what’s coming in.
As sure as the hogs eat the feed they excrete manure, and a lot of it–approximately 1,200 pounds of manure per hog over its time on the “farm.” The manure generated by hogs and livestock is a valuable fertilizer in moderate quantities, yet in the US manure is an immense polluter of water, soil and air. The overabundance of manure stems from the system in which most animals are raised, that being industrialized facilities called concentrated animal feeding operations (CAFOs) where many thousands of animals are intensively raised. While CAFOs offer certain benefits to a producer’s bottom line, they have negative costs for the health and well-being of the surrounding communities and natural environment. Besides the pollution caused by so much animal waste, other problems abound like disease outbreak risks from overcrowding, overreliance on chemicals and antibiotics (the latter was recently shown to increase antibiotic resistance near hog CAFOs), as well as poor animal welfare, to name a few. (For a full account of CAFOs many downsides, visit GRACE’s Sustainable Table.) In the case of the Shuanghui-Smithfield deal, not only has pork been purchased, but also the technical CAFO know-how.
To be sure, Shanghui and the Chinese government wanted to purchase Smithfield to supplement their pork supplies and improve their production methods, among other advantages. I’m not the first to note that the highest objective might have been to achieve these benefits without the harm to water (and other natural) resources. Rather than have Shuanghui simply ramp up production, the deal allows for China to avoid water withdrawals from dwindling supplies, on the one hand, and avoid water contamination from excessive manure loading, on the other. This is a pressing concern for China since most of its population lives in regions where surface water and groundwater are seriously polluted, plus it might prevent more distressing events like the 6,000 pig carcasses floating in the Huangpu River. At root, the Shuanghui-Smithfield deal cannot merely be viewed as exchange of pork, technology and revenue, but as a trade of water for waste, or, perhaps more aptly, Smithfield sold something that belongs to all of us–unpolluted water supplies.
Smithfield Foods must have recognized the value they provided to Shuanghui even if issues arose stateside. As Andrew Gunther of Animal Welfare Approved wrote in a sharply worded blog post a few months ago:
“Despite the ever-growing concern among U.S. consumers about the impact of intensive livestock operations on our health and the local environment, the nation’s largest pork producer has sold out to meet the growing Chinese demand for cheap pork–and it is more than happy to pollute our environment and harm our health in doing so.”
As meat consumption and production grow in the coming years, such transactions as the Shuanghui-Smithfield must be understood within a much broader scope of natural resource use and abuse, as well as the potential costs and benefits exacted on people, animals and the environment. For all the talk in the Senate hearing, on these three important issues, what spoke the loudest is what went undiscussed.
Originally published at GRACE’s former blog Ecocentric by Kai Olson-Sawyer on 10.28.2013.
Image: GRACE staff; Weiling Fu.