Since purchasing Smithfield Foods, China hasn’t increased its imports of Smithfield-branded pork, according to Xudong Roa, an assistant professor in the North Dakota State University Agribusiness and Applied Economic Department.

Xudong Rao, assistant professor in the North Dakota State University Agribusiness and Applied Economics Department
Xudong Roa. Photo by North Dakota State University.

That’s one of 10 facts he lists in a briefing about China’s pork industry. Roa’s total list of facts includes:

1. China’s per capita pork consumption has grown more than fivefold from 1975 to about 77 pounds per year in 2018.

2. China has struggled to meet growing demands with its domestic supplies, even though it runs the largest hog and pork business in the world and is responsible for more than half of the hog output worldwide.

3. As many of 98.7% of Chinese hog producers are small-sized farmers who raise fewer than 100 hogs, and they jointly contributed about 51.6% of the national pork output in 2009.

4. Among China’s individual hog farmers, approximately 38.8% of them are still backyard producers who usually raise fewer than five hogs annually and keep the hogs in a pen in their backyard or let hogs run in the village.

5. In 2007, China’s central government launched national support programs for hog production, starting with subsidizing sow farmers. The goal is to cover as many hog farms as possible, regardless of their size.

6. Chinese hog farmers can insure each of their eligible sows for about $8.50 per head. Central and local governments jointly subsidize 50% to 80% of the premium. When a sow dies due to major diseases, natural disasters or accidents, farmers receive an indemnity payment of $142.30.

7. Although the insurance program has been applauded by Chinese hog farmers, its effectiveness in stabilizing hog supplies remains to be confirmed more than 10 years after its initiation.

8. China’s leading hog- and pork-producing companies have been actively expanding their capacities by upgrading their technologies, integrating with upstream input companies and contracting with individual hog farmers. The most noteworthy change was the 2013 acquisition of the U.S.-based Smithfield Foods, then the world’s largest hog producer and pork processor, by China’s largest pork-processing company the WH group, commonly known as Shuanghui.

9. Shuanghui’s acquisition of Smithfield set the record for a firm in a developing country acquiring a larger firm with strong financial, operational and technological holds in a developed country. This is contrary to the direction in which typical acquisitions would go.

10. Seven years after the Smithfield acquisition, there has been no pronounced changes in the industry. Shuanghui has neither upgraded its existing processing capacities using Smithfield’s technologies nor beefed up its hog production. Even the widely asserted goal of this purchase — to import more Smithfield-branded pork — clearly has not been achieved based on visible evidence in the market, casting doubts on the worthiness and significance of this acquisition.

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