When America’s largest pork producer, Virginia-based Smithfield Foods, was looking to sell itself to a Chinese company a few years ago, it had a problem: Part of its operations were in Missouri, where a state law prohibited foreign ownership of agricultural property.
But by the time that sale was made public in mid-2013, the problem had evaporated like morning dew on farmland.
In what was presented as a coincidence, Missouri legislators — led by recipients of Smithfield Foods’ political donations — pushed through a controversial, last-minute measure to allow up to 1 percent of Missouri’s agricultural land to come under foreign ownership.
That let Smithfield’s new owners, Shuanghui International of Hong Kong, legally own the company’s Missouri land. Those holdings total about 42,000 acres.
Now another new Missouri law, signed last month, loosens state oversight of those foreign farmland purchases. And, critics say, it creates a loophole that could allow purchases to exceed the 1 percent limit.
The new law was sponsored by a legislator who has received more than $30,000 in campaign contributions to date from Smithfield Foods. And it was advanced by a state Senate committee of which every single member had previously received money from the company.
Defenders of Missouri’s unusual no-limits campaign contribution system maintain there’s no proof that unlimited money is driving political decisions.
But to some in Missouri’s agricultural community, the Smithfield Foods saga demonstrates that even a corporate entity from the other side of the planet can use political money to get what it wants in Jefferson City.
“Large chunks of our food are controlled by foreign, multinational corporations who don’t have the best interests in mind of U.S. families or family farmers,” warns Tim Gibbons of the Missouri Rural Crisis Center. The group contends that increased foreign ownership of U.S. agriculture endangers America’s “food security.”
And the group isn’t buying Missouri lawmakers’ claims that their sudden interest in allowing those purchases has nothing to do with the more than $390,000 that Smithfield Foods has pumped into Missouri politics in recent years.
“It’s too obvious,” said Gibbons. “We’re not that stupid.”
Missouri’s law against foreign agricultural ownership dates to 1978, when increased foreign investment in the U.S. was creating concerns about economic autonomy. The law said no foreign entity could own farmland in Missouri.
In 2013, Smithfield Foods, with pork operations in Missouri and more than two dozen other states, was closing the deal to sell itself to Hong Kong-based Shuanghui International (which has since changed its name to WH Group Limited). The $7 billion sale remains the single largest acquisition of an American company by a Chinese company.
The problem, in Missouri as in several other states, was the ban on foreign farmland ownership.
But just weeks before the company’s planned purchase was announced in late May 2013, then-state Rep. Casey Guernsey, R-Bethany, quietly amended a pending bill, adding wording to allow foreign entities to own up to 1 percent of Missouri’s agricultural land. That’s equal to almost 300,000 acres.
Smithfield was the largest employer in Guernsey’s district, and it was among his biggest campaign contributors.
He said at the time his goal was greater oversight of foreign land acquisition, which officials said was happening despite the prohibition. To enforce the 1 percent limit on foreign ownership, the new law required that foreign buyers apply directly to the state director of agriculture.
When Gov. Jay Nixon vetoed the legislation — arguing in part that Guernsey’s amendment was slipped into the bill without adequate debate — Guernsey led a successful veto override in September of that year. With that, Smithfield Foods’ problem with Missouri’s foreign land-ownership ban disappeared.
“It was hard to tell why the legislation was being created” at the time, said Gibbons, of the Missouri Rural Crisis Center. “Then two weeks later, when Smithfield got bought by China, we were like, ‘Oh, that’s why.’ ”
MONEY FLOWS AS LAW CHANGES
Records show Guernsey had received $5,000 in campaign contributions from Smithfield between 2010 and 2012. And in February 2014 — less than five months after he led the veto override to put the land bill into law — the company gave him another $5,000, which represented almost half his campaign income for that period.
Guernsey has denied the legislation had anything to do with helping Smithfield Foods’ soon-to-be owners in Hong Kong take possession of Missouri farmland. That part, he said, was coincidental.
“I didn’t even know about [the sale of] Smithfield until we were out of session,” Guernsey said in June 2013. “Trust me, the last person Smithfield tells about any of their business decisions is Casey Guernsey.”
Guernsey, who didn’t run for re-election last year, didn’t respond to a request seeking comment last week.
Among supporters of Guernsey’s bill was Sen. Brian Munzlinger, R-Williamstown, chairman of the Senate agriculture committee — and himself one of the Legislature’s top recipients of Smithfield political money. In an interview last week, Munzlinger dismissed critics of foreign land ownership as “alarmists,” and said it’s an overblown issue.
“They can’t pick the land up and move it,” he noted. He said his legislative colleagues have questioned “why we’re putting any kind of restrictions on it. There’s no other industry that requires it to be American-owned.”
Among opponents of allowing foreign land purchases was — and is — the state’s top agricultural organization, the Missouri Farm Bureau.
“One percent might not seem like much, but it is significant given the current worldwide interest in snatching up productive land,” the Farm Bureau said in a 2014 statement. The group argues that foreign farmland ownership here could “compromise our national security and domestic food production capabilities.”
Ashley McDonald, the Farm Bureau’s legislative affairs director, declined to speculate last week on whether the change in the law was related to political contributions from the company.
“I wouldn’t speak to people’s motivations,” said McDonald, whose organization is still trying to get the foreign ownership ban reinstated. “My hope is that they have Missouri agriculture’s best interests at heart.”
A REWRITE OF THE REWRITE
The new Missouri law allowing foreign land ownership was barely on the books before Smithfield’s friends in the Capitol began pushing additional legislation to loosen the rules for that ownership. The effort was spearheaded for the next two legislative sessions by Munzlinger, a farmer-legislator and recipient of $20,000 in donations from Smithfield to that point.
Munzlinger last year filed a bill to scrap the newly created rule requiring foreign farmland buyers to apply through to the state director of agriculture. Instead, his measure would allow those purchases without that filter, as long as the foreign buyer worked through an American subsidiary.
“Based upon our reading, you can set up a subsidiary, fill out your [IRS] W-9s, and bypass the enforcement of the Department of Agriculture,” said Gibbons, of the Missouri Rural Crisis Center. The result, he argues, is that foreign land ownership in Missouri “could go well beyond the 1 percent limit” without state regulators knowing it.
Nixon vetoed the legislation, citing unrelated issues. Munzlinger pushed for a veto override in early September 2014, winning in the Senate but failing in the House.
Three weeks later, Smithfield made an additional $10,000 donation to Munzlinger. Two months after that, Munzlinger refiled the legislation.
It was approved in January 2015 by Munzlinger’s Senate agriculture committee — of which all eight members were recipients of Smithfield Foods donations, totaling some $52,000 among them. It passed the Legislature at the end of March. Nixon signed it into law April 10.
Munzlinger said last week the bill had nothing to do with Smithfield Foods. He said the financial industry had requested the land-acquisition process be streamlined. “As far I know, Smithfield Foods didn’t even care about this,” he said.
Smithfield’s legislative lobbyist in Missouri, Jewell Patek, said in a written statement last week that the 2013 decision to allow “a mere one-percent” foreign ownership of was done “with absolutely no influence from Smithfield.”
“In fact,” he wrote, “Smithfield did not learn of its potential application to its operations until weeks after the session had adjourned.”
Regarding this year’s legislation streamlining the process of foreign land purchases, Patek wrote, “Smithfield has not taken any position on it — either for or against.” He said, as Munzlinger did, that the measure was the brainchild of the financial industry.
Regarding the company’s heavy political donations, he wrote: “Smithfield on behalf of thousands of employees on farms and processing facilities in Missouri [has] always supported legislators who support Missouri agriculture and we will continue to do so.”
Munzlinger, when asked why Smithfield Foods has given him so much money, speculated that it’s because he’s the Senate agriculture chairman, “and I try to do what’s right for agriculture in the state of Missouri.”
But others say the circumstances — a company giving sizable donations to specific legislators as those legislators push laws that are in the company’s interests — are inherently suspicious, all too familiar in Missouri.
“This is, unfortunately, par for the political course right now,” said John Messmer of Missourians for Government Reform, which has called for state campaign finance limits. “We’re no longer a system based upon the best ideas or even the most popular ideas, but on the ideas that come from those who are able to finance legislators.”
Walker Moskop of the Post-Dispatch contributed to this report.