Reuters: USDA terminates Chinese-owned Smithfield farm aid contract

FILE PHOTO – Some of the products of Smithfield Foods are displayed in front of at a news conference on WH Group’s IPO in Hong Kong April 14, 2014. REUTERS/Bobby Yip

by Humeyra Pamuk | November 16, 2018

WASHINGTON (Reuters) – The U.S. Department of Agriculture terminated a $240,000 purchase contract with Chinese-owned Smithfield Foods that had been awarded under the Trump administration’s agricultural trade bailout program, a move taken at the company’s request, a department spokesman told Reuters on Friday.

The move comes weeks after Republican Senator Chuck Grassley of Iowa, one of the country’s biggest farm states and the biggest hog-producing state, slammed Smithfield for receiving what he said was aid from the USDA that was meant to help American farmers hurt by China’s trade tariffs.

“Smithfield requested to terminate their contract awarded under the Food Purchase and Distribution Program. USDA has agreed to the termination,” Tim Murtaugh, a spokesman for the USDA, told Reuters.

Murtaugh said the transfer of funds for the food purchase contract had not yet taken place, and that Smithfield’s request to cancel the contract was received on Nov. 13.

Smithfield, owned by Chinese conglomerate WH Group (0288.HK), was not immediately available for comment. The company is the world’s largest pork processor and hog producer with $15 billion annual revenues, according to its website.

President Donald Trump in late May announced tariffs on steel and aluminum imports, prompting retaliation from top trading partners like China that has since spilled into agriculture markets.

To help offset damage to American farmers, a key constituency for Trump, the USDA rolled out a $12 billion aid package that included $1.2 billion in purchases of commodities. The program allocated around $558 million to pork purchases.

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Grassley, who has represented Iowa in the U.S. Senate since 1981 and is one of the most senior Republicans in the chamber, complained in late October about Smithfield’s approval for what he said was federal aid.

“I don’t understand why Chinese owned Smithfield qualifies for USDA $$ meant to help our farmers,” he wrote on Twitter.

A spokeswoman for Smithfield at the time denied the company had applied for federal assistance, but confirmed it was a qualified vendor to take part in the food purchase program.