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TheMeatSite Newsletter - 5th June 2013

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TheMeatSite
Wednesday 5th June 2013.
Chris Harris - TheMeatSite Editor in Chief

Chris Harris
Editor in Chief


Zoetis

Who Benefits from Smithfield-Shuanghui Deal

As World Pork Expo opens in Des Moines Iowa this week, much of the talk on the exhibition floor will be about the takeover of Smithfield Foods by the Chinese company Shuanghui.

This was a deal that not even the most hardened of market watchers saw coming.

Both in China and in the US, there has been mixed reaction to the takeover. However, in the main response has been positive.

Dr Feng Yonghui, chief analyst with Beijing Zhongke Yiheng Modern Farming Information and Technological Institute described it as a “win-win deal” and this seems to have been mirrored by US agricultural economists such as Purdue University’s Chris Hurt and agricultural economists Steve Meyer, Ron Plain and Scott Brown.

The only questioning of the takeover has come from the US farmers, who have said that it needs to be looked into very carefully.

The sale at a price of $7.1 billion includes Smithfield’s considerable debt and as there have been mumblings of dissent among some shareholders – largely Continental Grain – which had called for a break-up of the present company structure, a large influx of cash and a fresh owner could give the company new impetus.

Smithfield has a throughput of 27 million pigs and Shuanghui about half that amount, but their combined production of 4.4 million tonnes of pig meat will amount to nearly five per cent of global production.

More important might be what each company will be able to gain from the other.

For Smithfield, the link with Shuanghui has the potential to open up the Chinese market. The growing wealth and urbanisation of the population in China has seen an ever increasing demand for meat and pork in particular.

The Chinese pork market is growth at an estimated three per cent a year. The US domestic market is fairly stable and the US profitability in the pig meat market in recent years has been driven by export. With the foothold in the Chinese market through Shuanghui, Smithfield in the US could benefit in the long term.

However, China is also endeavouring to become more self-sufficient in pork and it is looking to increase and improve its own production.

For Shuanghui, the link with Smithfield could also bring benefits in production methods and processes and even in genetics as well as hygiene and sanitary programmes and animal welfare regimes.

The link between the two companies will also help in product development and offer a global network for products from both China and the US.

If this is the case, then Dr Feng’s suggestion that the deal will be a win-win one for both companies could come true.

The deal still has to be approved by the various authorities but it is a situation that is not without precedent in the meat industry.

The growth of the Brazilian beef and meat giant JBS, which has also bought US companies including the once ailing Pilgrims’ Pride poultry processor and the Canadian-US beef company XL Foods, has shown that foreign investment and takeovers can and do occur.

The current deal indicates where the investment money is and several companies may now be looking over their shoulders to see whether more investment might be coming from the BRIC (Brazil, Russia, India, China) bloc.


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This Week's Articles and Analysis

Seeing What is Inside Food Products
How much fat is there in this meat? How much meat is there in this crab? How sweet is this apple? Being able to answer what is inside a food product without cutting it open or damaging it opens up new market opportunities, wirtes Wenche Aale Hægermark for the Norwegian research institute Nofima.

Pigs Could be Reservoir for New Multiresistant Salmonella Strain
A new multiresistant strain of Salmonella has recently been identified, for which pigs could be the reservoir according to research by the European Food Safety Authority.

Product Information Promotes Sustainable Food Consumption
Providing information to consumers on the environmental and social impacts of their food purchases could help change their consumption choices, research from Norway suggests.

Use of Antimicrobials to Extend Shelf Life in Fresh Catfish Fillets
Extending the shelf life of fresh catfish fillets would make it possible for catfish producers to increase the length of time in the supply chain and make it more feasible for processors to produce fresh, never-frozen, tray-packed products that can be sold in the retail market. To extend shelf life, the microbial load on the fresh catfish products must be decreased.

Food for 9 Billion: A Perspective on Global Agriculture in 2050
Concerns about the planet's ability to feed a growing population date back to at least the beginning of the 19th century with Reverend Malthus' dire warnings, and were echoed again in the 1960s and 1970s Dr Dominique van der Mensbrugghe from the FAO said in the second lecture in the Teagasc/RDS lecture series.

Market Reports

China Wholesale Prices - 5 June 2013
USDA Dairy Products April 2013 Highlights
Portland Fish Exchange Prices - 4 June 2013
Sri Lanka Fish Prices - 5 June 2013
USDA International Egg and Poultry: US Shell Egg Exports
Portland Fish Exchange Prices - 3 June 2013
Sri Lanka Fish Prices - 3 June 2013
USDA GAIN: New Zealand Cattle and Beef Semi-Annual Report 2013
China Wholesale Prices - 3 June 2013
BPEX Weekly Export Bulletin - Week 22
USDA Egg Products - May 2013
USDA Agricultural Prices - May 2013
China Wholesale Prices - 31 May 2013
USDA National Dairy Products Sales Report - 30 May 2013
Portland Fish Exchange Prices - 30 May 2013
Sri Lanka Fish Prices - 31 May 2013
BPEX UK Pig Meat Market Update - June 2013
Irish CSO: Milk Statistics - May 2013
China Wholesale Prices - 30 May 2013
China Wholesale Prices - 30 May 2013
Portland Fish Exchange Prices - 29 May 2013
UK Milk Prices and Composition of Milk April 2013 - May 2013
AHDB Pig Market Weekly - 30 May 2013

Global Meat Industry News

   United States

JBS USA Fined $83,000 over Safety Violations
CME: Total Meat, Poultry Production Down Due to Memorial Day
Salmonella Vaccine Could Contribute to Sustainable Long-term Poultry Health, Performance
Tyson Foods Acquires Circle Foods
Campaigner Votes Against Antibiotic Bill
Investigators Link Poultry Contamination on Farm, at Processing Plant
Serious Concerns Expressed with Proposed US–EU Trade Agreement
How will Smithfield Foods Sale Impact US Pork Industry?
CME: Outlook for Livestock, Dairy and Poultry Unchanged
Effects of Merger on US Pork Industry Not Yet Known, Says Hurt
Report Highlights Consequences of Intensive Farming Practices
Sanderson's CEO Reasonably Optimistic for Next Quarter
Companies Beat 2015 Goal for Reducing Calories in Food
Don't Let Neighbours Bully You on COOL, NFU Tells Congress
Price of Beef to Rise as Herd Falls Below 30 Million
Cheese Exports Topping $1 Billion Is Down To Communication
US Agricultural Trade Forecast Down but Still Record
US M-COOL Likely to be Discussed at World Pork Expo
Mixed Market Signals Affecting Cattle Markets
CME: Pork Merger Expected to Enhance US Exports to China
US Welcomes Negligible BSE Risk Designation by OIE
CME: Futures Gain A Dollar, Wednesday

   United Kingdom

BPC Disappointed with Commons International Development Committee Report
Give a Fork Campaign Renewed
Call to Curb Food Waste - Support Small Farmers
Farmgate Prices Better in UK Than Europe
Higher Prices Available Than Base Quotes Suggest
Children Believe Fish Fingers are Made of Chicken
More Lamb Cuts Exported to Belgium
Hilton Group Progresses in Diversified Markets

   Australia

Wagyu Cattle Set For Productivity Surge
Drought Leads to Record Beef Exports of Over 100,000 tonnes
Meat Workers Strike at Teys Plant

   Russian Federation

Cargill Opens New Poultry Processing Facility in Russia
Cherkizovo Completes a Sowing and Plans Increase Grain Harvest
Russian Meat Industry at a Turning Point
Cherkizovo Reports First Quarter Loss

   Global

Chinese, Mexican Presidents Discuss Bilateral Cooperation
Shuanghui's Acquisition Deal Win-win for China, US
US Farmers Attack Smithfield Takeover
South American Cattle Prices Stabilise
South East Asian Beef Imports Mixed
Smithfield and Shuanghui Announce Pork Merger

   European Union

EU Pig Prices: Quotations Abroad Going Up Slightly
EU Additives – Making Food Safer
Stronger Imports of South American Beef into EU
LMC: GB Tops Deadweight Figures Again

   Chile

Chile's Blumar Earns Three-Star BAP Certification

   Ireland

Cheese Given Advertising Go-Ahead
LMC: Good Trade for Slaughter and Store Animals
Salt in Processsed Food Reduced but Consumption Remains High

   Philippines

Government Boost for Meat Processor

   Mexico

Call for Investigation into Industry Practices, Stringent Inspection of Imports
Mexico and Chile Consolidate Position on Beef Inspections

   Sweden

Arla Acquires Full Rights To Swedish Butter

   Germany

Otto Franck Tuna, Mackerels, Sardines now Friend of the Sea

   Brazil

Brazil: Hog Markets

   China

Chinese Pork and Poultry Problems Drive Beef Demand
Death Toll High in Poultry Plant Fire
China May Inflation Forecast at Around 2.5 Per Cent

   Japan

Japan Monitors Beef Import Volumes

   Indonesia

Indonesia Accelerates Beef and Cattle Imports
Cargill Launches Poultry Farming Mentorship Programme

   France

French Set Out New Assurance Measures
French Processor to Close Following Horse Meat Scandal

   Norway

Marine Harvest Offers NOK 107 Per Share for Cermaq

   New Zealand

China Approves New Zealand Meat

   Belgium

Horse Meat Scandal Hits Ter Beke Meals' Sales

   Dominican Republic

Dominican Republic in Drive to Become Leading Meat, Eggs Exporter

   Finland

HKScan Acquires Swedish Nordic Genetics

Events/Promotions

Global Poultry Trends 2011

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