MassPoint Business Update • April 18, 2016
**March 2017 Update. On March 14, 2017, Senators Grassley and Stabenow introduced the Food Security is National Security Act of 2017 that would add the Secretaries of Agriculture and Health and Human Services as a member of the Committee on Foreign Investment in the United States (CFIUS) and expand the scope of CFIUS reviews of certain foreign investment in the United States to include food saftey and impacts on America’s agricultural systems. For background, see the embedded timeline of prior calls to heighten and broaden CFIUS reviews of foreign investment in U.S. agriculture or view it here.**
*May 16, 2016 Update. Reuters reports that the USDA will join the #CFIUS review of the proposed ChemChina-Syngenta deal.*
The 2013 sale of American pork producer and processor Smithfield Foods to China’s Shuanghui International aroused concern among some U.S. lawmakers. The $4.7 billion deal ($7.1 billion including debt), was and remains the largest acquisition of a U.S. business by a Chinese entity. This year, some U.S. lawmakers are again raising concerns about a Chinese firm’s acquisition of an agricultural company: the proposed $43 billion acquisition by state-owned China National Chemical Corporation (ChemChina) of Syngetna AG , the Swiss agrochemicals company that does substantial business in the United States. If completed, the Syngenta deal would “transform ChemChina into the world’s biggest supplier of pesticides and agrochemicals.”
With Chinese buyers, record-setting deals, and industry-leading acquisition targets in the mix, the Smithfield and Syngenta transactions provide the ingredients needed to stir media interest and controversy about foreign investment in and affecting the United States. Beyond deal optics, a more interesting, strategically-oriented, and potentially consequential policy and public discourse about foreign investment in U.S. agriculture is emerging in the United States, at least in some quarters.
Some U.S. lawmakers called for the Committee on Foreign Investment in the United States (CFIUS) to conduct national security reviews of the Smithfield and Syngenta deals on the grounds that U.S. agriculture has direct national security value. This is significant because national security reviews of foreign investment in the United States are typically reserved for transactions that involve sectors, like defense, that are viewed as inherently national security-sensitive or present incidental national security issues (as when property of a U.S. business acquired by a foreign party is located near a military facility). Relatedly, recent news coverage of foreign ownership of U.S. farmland by Middle East-based companies has focused on the key resource implications of foreign farmland ownership—particularly water use. This news coverage, like lawmakers’ concerns about foreign investment in U.S. agriculture, exemplifies an evolving, strategic view of foreign investment in U.S. agriculture that has and will likely further influence public and policy thinking in the United States.