A bipartisan group of farm-state senators called on the Treasury Department on Thursday to review a state-owned Chinese company’s proposed acquisition of Syngenta over concerns that Chinese control could impact US food security and farm interests.
The senators asked Treasury Secretary Jack Lew to include representatives of the US Department of Agriculture and the Food and Drug Administration on the Committee on Foreign Investment in the US when it reviews the acquisition by the China National Chemical Corp, or ChemChina. The letter to Lew was signed by Debbie Stabenow, the ranking Democrat on the Agriculture Committee, and three other members of the committee: Democrat Sherrod Brown of Ohio and Republicans Chuck Grassley and Joni Ernst of Iowa.
“While this committee has not reached any conclusions regarding the proposed purchase of Syngenta by ChemChina, we believe that any foreign acquisition of an important US agricultural asset should be reviewed closely for potential risks to our food system,” they wrote.
“It is not unreasonable to suggest that shifts in company governance; operational strategy; or financial health – particularly in light of the magnitude of this leveraged transaction – could have consequences for food security, food safety, biosecurity, and the highly competitive US farm sector as a whole,” the lawmakers wrote.
The fear is that China could use its power to hurt US farm interests, given that Basel, Switzerland-based Syngenta is a major producer of pesticides and seeds.
“The risk of negative outcomes is heightened to the extent that an acquired US agricultural asset becomes in some part governed by a foreign government with clear strategic interests,” they wrote. “Non-market behaviour due to state ownership could lead to inconsistent or seemingly arbitrary treatment of US farm products in key export markets, particularly when company governance includes governments of countries with which the US exchanges a high volume of trade.” Syngenta said it welcomed a full review and that the deal is good for farmers and customers in the US. “We do not believe the proposed transaction raises any food safety or significant national security issues,” Paul Minehart, a spokesman for the company, said in a statement on Thursday afternoon. “Syngenta will remain Syngenta. It will retain its broad portfolio of businesses and geographic presence. In the US, nothing will change for farmers or customers.”
Food security has not traditionally been a big consideration when it comes to reviews by CFIUS, which takes into account a range of national security concerns when it scrutinises foreign acquisitions.
But the committee did review and approve the 2013 purchase of Smithfield Foods, a major hog and pork producer, by China’s Shuanghui International Holdings. The committee, led by the Treasury Department, is made up of representatives from the Justice, Homeland Security and Defence departments, as well as five other agencies.