China’s Hog Wild Hunger for Pork

Sep 24, 2013 at 5:17 PM ET

China can’t get enough pork. Half of the world’s hogs grow up in China (and will die in China)—nearly 500 million of them—but that’s still not enough to satiate meat-hungry citizens, the number of which has risen along with the middle class. Over the past five years, purchases of U.S. pork in China rose by 155 percent. Half of the meat eaten in China is pork. Zhurou, the Chinese word for meat, is even synonymous with pork.

There is so much demand for pork that when a disease outbreak in 2006 killed millions of China’s hogs, causing the price of pigs to spike, the government created the world’s only strategic pork reserve. But it’s not enough.

Pigs, while they are alive, need to be fed. Crops need to be grown to feed these pigs, specifically soybeans, the main ingredient in commercial pig-feed mix. But China lacks the land to pull off massive soybean production. While China has almost a fifth of the world’s population, it has only 9 percent of the world’s arable land. And because of manure runoff from pig farms, among other things, China’s water is too polluted to allow for fertile farmland. There’s a clean water shortage. Food and water: The things you need to raise and feed pigs.

So in addition to importing pork from the U.S., China imports feed for its pigs. Over the past 10 years, U.S. agricultural exports to China have grown from about $2 billion to more than $19 billion a year—and 55 percent of those imports are pig-feeding soybeans.

Recently, the Chinese have amped up their efforts to acquire more pigs and more land to grow feed. On Tuesday, shareholders of Virginia-based Smithfield Foods Inc. approved a plan to sell the world’s largest pork producer to a Chinese company, Shuanghui International Holding. Smithfield is responsible for 15 percent of the world’s pork production, and 26 percent of pork processing in the U.S. It’s a deal valued (including debt) at about $7.1 billion—and, when finalized (likely on Thursday), it will be the biggest Chinese takeover of a U.S. company to date. Soon, the Chinese may have their bacon and sell it too. But not everyone is happy about it.

Despite approval by The Committee on Foreign Investment, the merger has many opponents in Washington.

“China and Shuanghui’s troubling track record on food safety and do everything in their power to ensure our national security and the health of our families is not jeopardized,” said Sen. Debbie Stabenow of Michigan, who chairs the Senate Committee on Agriculture, Nutrition and Forestry, following the Committee’s approval last month.

China doesn’t have the cleanest record when it comes to pork safety and humane treatment either, to say the absolute least. In March, thousands of diseased, dead pigs were found in rivers around Shanghai. Two years ago, Shuanghui shut down a plant after numerous reports that it fed pigs a carcinogen that made their meat leaner—but also made humans sick. In 2012, Shuanghui-branded ribs were found to contain maggots, and large amounts of diarrhea-causing bacteria were found in its sausages. And this spring, Shuanghui sausages were reported to have gone bad well before their sell-by date.

But Dave Warner, director of communications for the National Pork Producer’s Council, says he thinks food safety is irrelevant when it comes to the merger.

“We’re exporting, not importing,” Warner says of the U.S. “China needs a lot of pork. They’re certainly not going to be exporting their pork here. We are the number one producer of pork in the world and we can do it for the lowest cost.”

According to the South China Morning Post, China will also have more land to farm pig chow in the future. According to the newspaper, China has reached a deal with Ukraine to acquire up to 3 million hectares of farmland—an area that is approximately the size of Massachusetts. The agreement would amount to 5 percent of the Ukraine’s total land.

One Chinese media outlet put it bluntly with this headline: “China will purchase one twentieth of Ukraine’s land to feed pigs!”

The deal will be China’s largest agricultural project overseas, if it’s real. Ukraine’s KSG Agro released a statement on Tuesday denying that it had reached a formal agreement to sell land. The company did say, however, that it was working with China on irrigation systems, which would be the “first stage of cooperation in the area of application of modern technologies in crop production, vegetable growing and pig farming.”

Even a plot of land the size of Massachusetts will not solve China’s pork problem, and the country is primed to expanding pork and soy production overseas. In 2000, the Chinese Government adopted a  “go global” strategy to encourage investments abroad. In particular, to solve scarcity problems in China, like food (and pork) insecurity. Until the turn of the century, China had highly restrictive controls on investment aboard. That has changed.

In May The New York Times reported that China was looking to acquire vast stretches of Latin America’s “agricultural heartland” for soybean production. When Brazil’s farming officials would not sell the hundreds of thousands of acres the Chinese wanted, they instead offered credit to farmers who would increase their soybean production to sell to China.

“They are moving in,” Carlo Lovatelli, president of the Brazilian Association of Vegetable Oil Industries, told the Times. “They are looking for land, looking for reliable partners. But what they would like to do is run the show alone.”

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