Monitoring Corporate Agribusiness From a Public Interest Perspective
A.V. Krebs Editor\Publisher
Issue #132 November 8, 2001
LUGAR FARM BILL WINS DUBIOUS PRAISE
WHILE SETTING UP THE TABLE
FOR BILLIONS OF DOLLARS IN AFBF "SUBSIDIES"
USDA Secretary Ann Veneman has commended Sen. Richard Lugar (Rep.-Indiana) for a farm policy approach Lugar plans to take that would phase out crop support programs and pour twice as much money into conservation as now is allowed by law. Instead of crop supports, farmers would rely on conservation measures, crop insurance and vouchers.
Lugar's bill would allow any farmer or rancher with more than $20,000 of farm income, regardless of the agricultural products the farmer produced, to secure federally backed insurance and guarantee up to 80% of the average income for a farm or ranch over the previous five years. The practice of assisting only farmers who produce selected or "program" crops would end, "thereby allowing all of the nation's agricultural producers to have a chance to protect their business against losses from poor weather and depressed market prices," according to Lugar.
Council for Citizens Against Government Waste (CCAGW), the nation's largest taxpayer advocacy group, President Tom Schatz applauds Lugar "for introducing farm legislation that would provide real reform of crop subsidy programs. It is encouraging to see that at least one U.S. Senator is willing to object to the `stampede to subsidize' that resulted in an unwise, unsound piece of legislation being adopted by the U.S. House of Representatives."
Likewise, curious enough key support to date for the Lugar bill has come from Ken Cook of the Environmental Working Group as well as other environmental, conservation and wildlife groups that are enthusiastic about the broad scope of the bill's conservation title. In addition, the Lugar bill, which so far has no cosponsors, but which is supported by the Bush Administration, has been endorsed by the National Conference of State Legislators as well as the American Public Human Services Assn. and the Food Research & Action Center, both of which represent the food stamp and nutrition lobby and environmental defense. Lugar said his bill will have broad appeal to a national constituency.
Yet, what these "friends of family farmers" seem to have completely ignored is that by relying so much on crop insurance as a means to replace price supports, the Lugar bill in effect will provide one huge helping of billions of dollars in subsidies for agriculture's "enemy within" --- the American Farm Bureau Federation (AFBF).
As Defenders of the Wild Life's Scotty Johnson correctly pointed out when President Bill Clinton signed 1999 farm legislation which allocated billions to go toward reducing premiums on federally subsidized crop insurance over the next five years in making a series of changes in the insurance program designed to get more farmers to buy the coverage from an insurance industry in which the Farm Bureau has numerous vested financial interests:
"By some estimates, factoring in underwriting gains, reinsurance schemes and administrative costs, with current expansion, the federal crop insurance could generate seven billion dollars in gross annual capital for the insurance industry. Of the 14 companies approved by the USDA to provide crop insurance, Farm Bureau owns and controls about one-third of them. The others may be linked through re-insurance schemes.
"If crop insurance was an economical, environmentally sound risk management tool, a several billion dollar subsidy might make sense. Unfortunately, insurance is not highly regarded. At best, farmers see it as an option protecting against catastrophic disaster. At worst, insurance is an unwelcome prerequisite for financing. It builds no long term wealth and can end up chaining farmers to production treadmills where returns just offset costs.
"From a farm policy perspective, crop insurance could be equally devastating. The resulting over-supply of commodities will prolong and intensify the current economic crisis in agriculture. Never before have prices, across the board, been so low. These prices have helped spawn what is probably the worst market concentration ever. Statistics show concentration is now worse in some areas than when Senator Sherman developed the anti-trust statutes over100 years ago. While, today's situation is a challenge, there are more effective ways to deliver billions dollars into the agricultural sector --- ways that won't worsen what you’re trying to fix.
"According to Farm Bureau literature, crop insurance is the savior of the family farmer. They continually promote the concept on their national radio show, on their web site, and numerous other media outlets. . . .
"To understand Farm Bureau's interest in crop insurance, it helps to understand Farm Bureau's insurance affiliations. Of the nearly 3000 Farm Bureau's nationwide, all of them, including the parent organization, the American Farm Bureau Federation, derive most of their income from insurance sales. Currently, across the nation, there are more than 60 farm bureau owned and controlled insurance companies selling various forms of Life, and Property and Casualty insurance.
"In many areas, the Farm Bureau non-profits, and the Farm Bureau insurance companies are housed in adjacent offices. Often, because rent amounts are adjusted accordingly, the Farm Bureau insurance company pays tens of thousands of dollars rent, tax free, to the parent Farm Bureau affiliate.
"Furthermore, it must be understood that through interlocking boards of directors and other mechanisms, Farm Bureau insurance companies operate as one huge company. For instance, the national parent organization, the AFBF, owns a portion of the American Agricultural Insurance Company (AAIC). (AAIC is one of the companies approved by USDA to provide crop insurance)
"AAIC is a huge national insurance company with assets of more that $575
million and a surplus of $285 million in early 1999. The remainder of AAIC
is owned by a group of 33 other state farm bureaus. Dean Kleckner, former
president of the AFBF, also has served as president for AAIC, and every member
of the board of directors for AAIC is chosen from the AFBF board.
"Because of the complexity of these business structures, it is hard to tell how far the sphere of Farm Bureau influence spans. For example, AAIC bought the re-insurance division of another huge insurance conglomerate, Nationwide. The terms of the deal were not disclosed. Nationwide insurance was started as the insurance company for the Ohio State Farm Bureau, but was forced to separate in 1948 when state insurance regulators grew concerned about conflict of interests. Under the current crop insurance plan, insurance companies can choose to re-insure with private companies.
"Beyond insurance, Farm Bureau companies form the keystone to a huge agricultural empire that is connected via Farm Bureau controlled co-ops and investments to just about every aspect of agribusiness imaginable . . . For instance, a group of state Farm Bureau insurance companies are heavily invested in Premium Standard Farms --- a huge factory hog business with a bad-neighbor reputation for undermining family farmers, rural communities and environments.
"With a federal crop insurance subsidy of over four billion dollars, and with a potential gross capital cash flow in excess of 7 billion, it is clear this huge network of farm bureau insurance companies stand to profit quite handsomely. This profiteering however, seems to place Farm Bureau in direct conflict of interest.
"It has been said the Farm Bureau cannot serve two masters. On one hand the Farm Bureau is given tax-free, non-profit status because their mission statement says they serve the farmers and ranchers of America. On the other hand, the Farm Bureau derives most of their income and members from related insurance companies This sets up a delicate situation. When push comes to shove, will Farm Bureau serve the farmer or the insurance company stockholders? Though Farm Bureau literature would like to convince us otherwise, common sense tells us they can't serve both.
"A broader over-riding concern for farmers is that Farm Bureau uses their huge tax free lobby to advance agribusiness policy detrimental to the family farmer. The concept of `production management' is the best example of this. With the single exception of the Farm Bureau, all farm organizations admit over-supply is currently a major fundamental problem and recommend some sort of supply management. These groups embrace basic supply-demand concepts, and believe managing production will return market prices to healthier levels.
"Farm Bureau has historically fought any attempts to manage production. When you look at their insurance and other agribusiness connections the reasons become apparent. Any reduction in production translates as fewer sales of insurance, pesticide, fertilizer, oil, biotechnology, etc.
"This raises another conflict of interest question," Johnson concludes, "even
more fundamental than crop insurance. Should the Farm Bureau be able to use
their considerable non-profit resources to lobby for farm policy that favors
agribusiness interests over farmers, when they are granted non-profit status
because they represent farmers? This is a question Farm Bureau members
need to ask their leadership."
"THE FOOD POLICE" ???
CSPI GETS BIG BUCKS
TO FLACK FOR GE FOODS
CENTER FOR SCIENCE IN THE PUBLIC INTEREST: Foods currently on the market, such as corn flakes and salad dressings, that are made from genetically engineered (GE) crops, are safe to eat, according to the nonprofit Center for Science in the Public Interest (CSPI). However, that group recommends stricter government oversight to ensure that future crops and foods will be safe for consumers and the environment.
The cover story in the November issue of CSPI's Nutrition Action Healthletter advises that people should not be nervous about eating food that contains genes from another plant or bacterium. "We eat foods with new genes and proteins all the time," said Gregory Jaffe, co-director of CSPI's Biotechnology Project. "The tomatoes, potatoes, and wheat we buy in the supermarket have been drastically altered by breeding them with wild relatives, and those products are considered safe."
Current genetically engineered crops, which include soybeans engineered to resist herbicides and corn and cotton engineered to kill insect pests, benefit farmers and the environment by increasing yields, reducing the use of pesticides, and lowering costs.
"Genetically engineered crops could be a boon to farmers and consumers, especially in developing countries," said CSPI Biotechnology Project co-director Doug Gurian-Sherman. "For example, scientists are working on crops that resist pests and droughts and contain more nutrients. The U.S. Government needs to support that research because if left primarily in the hands of large corporations, such products will not be developed for the impoverished countries that need them."
Engineered crops, along with genetically engineered animals, could possibly contain unwanted new allergens or toxins. "That's why biotech companies must demonstrate that engineered foods are safe before they reach the market," said Jaffe. "Current GE crops have been tested voluntarily, but the Food and Drug Administration (FDA) should require safety testing and formally approve fuure crops before they are used in food for humans or animal feed. Any crop that contains a new allergen should not be approved."
"Biotech crops potentially could harm the environment," said Gurian-Sherman.
"The new genes could spread to other plants to create `superweeds.' Plants with
built-in pesticides might harm beneficial insects like ladybugs or lead to
insects resistant to the pesticidal protein. In many cases, the solution is not
banning those crops, but minimizing and
eliminating these risks."
"All engineered crops should be subject to a thorough environmental review before approval, and EPA should require more field testing of those crops both before and after approval," said Jaffe. "EPA should also ensure that the measures it requires to prevent insects from becoming resistant to Bt crops are enforced."
Nutrition Action Healthletter's cover story also advocates that the U.S. government fund more research on genetic engineering and help developing nations benefit from that technology.
JOHN C. STAUBER, SPIN OF THE DAY: Last year Michael Jacobson's Center for Science in the Public Interest (CSPI, also known as "the food police") received $200,000 from the pro-biotechnology Rockefeller Foundation to be a moderate voice in the raging debate over genetically engineered (GE) foods. CSPI has since made many statements very favorable to GE foods and recently called for government action against companies marketing non-GE foods. Ironically, CSPI's Integrity in Science Project criticizes and reveals the special interest funding and agendas of other nonprofit organizations. Apparently the food police don't see accepting a $200,000 grant to flack for GE food as a "competing interest" to their own objectivity and scientific integrity.
Lobbyist Rick Berman runs the DC-based Guest Choice Network, a mean and nasty PR operation serving the tobacco, booze and food industries. . . . His favorite target is often Jacobson's "food police" at CSPI. But now, after years of sitting on the sidelines in the genetically engineered food debate, Jacobson has received biotech funding from the Rockefeller Foundation, and CSPI is praising the alleged benefits and safety of GE food. As a result, Berman's Guest Choice Network is praising CSPI, especially after CSPI's Gregory Jaffe told the New York Times that the benefits of GE food, "without any evidence of harm to humans or the environment --- partly explain why engineered crops are spreading so rapidly."
Oh really, Gregory? We suspect that the failure of the U.S. FDA to require
mandatory safety testing or labeling --- and the failure of the snoozing food
police at CSPI to demand they do so --- are the more obvious reasons why GE
foods have stealthily grabbed market share in the U.S. Politics is known for
strange bedfellows, and Mike Jacobson and Rick Berman are today's odd couple.
"THE NATURE OF WHAT'S TO COME":
ADM MAY INCREASE STAKE IN TATE & LYLE,
MAJOR CORN AND SWEETNER PROCESSOR
MARVIN G. PEREZ, DOW JONES NEWSWIRES: Archer-Daniels-Midland Co. (ADM), a world leader in agricultural processing, is looking to acquire companies that fit its strategic objectives, Larry Cunningham, ADM's senior vice president of corporate affairs, told Dow Jones Newswires. . . .
Sources in the sweetener industry told Dow Jones that ADM's actions might include increasing its share in the U.K. sugar producer and processor Tate & Lyle PLC, or the purchase of A.E. Staley Manufacturing Co., a Tate & Lyle subsidiary and one the U.S.'s major corn processors.
Cunningham wouldn't confirm or deny that ADM may be interested in raising its Tate & Lyle stake from the current six percent, or buying the Staley unit. "Within the boundaries of what is legally permissible (in the U.S.) we could increase our share in Tate & Lyle," up to 12-15%, Cunningham said. "There are no current plans to increase our ownership, although that's a possibility.
"We're always looking into acquisitions of businesses that fit our strategic goals and competencies," said Cunningham. And that includes "taking renewable agricultural resources and converting them into value-added food, fuel and industrial products. . . . "
Tate & Lyle said earlier this year that it was looking to divest some of its non-performing U.S. assets. In August, it sold its flagship Domino sugar operations to an investment group led by the Fanjul brothers of Palm Beach, Florida. That deal is expected to close in the next few days. Earlier . . . ADM filed a shelf registration to offer up to $500 million in debt securities and warrants. Asked if that money could be used for near-term acquisitions, Cunningham said that that's "a possibility" . . . .
A.E. Staley could be attractive to ADM because of its production of the renewable fuel additive ethanol, of which ADM is the leading U.S. producer and for which it sees growing demand. Cunningham said Staley is an "attractive asset."
"ADM would like to increase the production of ethanol, from which they're getting lots of cash and the Staley plant would help them meet those needs," a source in the sweeteners industry told Dow Jones Newswires.
Staley produces 45 million gallons of ethanol per year, and is one of the largest producers of high-fructose corn syrup, the main sweetener in the U.S. soft drink market. Its corn processing capacity exceeds 600,000 bushels per day. Annual sales exceed $1 billion. The company has operations in Lafayette, Indiana, Loudon, Tennessee and Decatur, Illinois.
ADM is a leader in the U.S. ethanol market, with an annual production
capacity of 797 million gallons, followed by Minnesota Corn Processors with 110
million gallons, and by Cargill Inc. with 100 million gallons.
INDEPENDENT COUNSEL SMALTZ REPORT:
FORMER USDA SECRETARY MIKE ESPY
PUT "PRIVATE GAIN BEFORE PUBLIC INTEREST"
BILL MILLER, THE WASHINGTON POST: Nearly three years after he was acquitted of corruption charges, former agriculture secretary Mike Espy is once again under fire from the man who prosecuted him. In a report released by a court . . . independent counsel Donald C. Smaltz said his $24.2 million investigation showed Espy put "private gain before the public interest" by taking gifts from businesses he was supposed to regulate.
Smaltz, one of the most visible independent counsels during the Clinton era, said his probe "illustrates the destruction of the public trust" that came about because donors "gained access to Espy" after giving him $35,000 in gifts. "The influence this gave them over his decisions can never be measured," Smaltz declared in the report. The report, which Smaltz was required to write under federal law, detailed the ups and downs of his investigation.
Smaltz and his team netted 14 convictions, including a guilty plea from Tyson Foods Inc., which agreed to pay a $4 million fine and contribute $2 million to the independent counsel's investigation. President Bill Clinton later pardoned or commuted sentences of the eight individuals caught up in Smaltz's probe. All told, Smaltz's office collected more than $10 million in criminal fines, civil recoveries and restitution orders, according to the report.
But Espy was the primary target and Smaltz was unable to convince a jury in
U.S. District Court that the former agriculture secretary did anything for or
because of the gifts --- a key element in proving the gratuities charges that
formed the case. . . . .
FAMILY FARMERS NATIONWIDE SURVEY:
CALLS FOR A NATIONAL FARM POLICY
NOT RELIANT ON GOVERNMENT,
BUT ONE THAT EARNS A FAIR PRICE FROM MARKETPLACE
As Congress searches for answers to the lagging rural economy, a coalition of farm groups have released the results of a comprehensive farm policy survey.
"As farmers, we know what it will take to preserve family farms and maintain a secure and independent food supply for America. This survey should help Congress lay the groundwork for an effective farm program that works for family farmers, rural communities and our nation's current security needs," said Bill Christison, a crop and livestock farmer from Chillicothe, Missouri.
Over the last year, 1,453 farmers and rural citizens responded to a comprehensive questionnaire and gave their view on key issues facing rural America. These surveys were distributed at public meetings, through direct mail and general postal route mailings, on-line and at county and state fairs. Survey respondents answered questions in five categories: farm bill, trade, concentration, food safety/genetic engineering and food security. Citizens from 46 states participated in the survey, with most coming from the Midwest and Great Plains states.
The vast majority of farmers and rural people surveyed indicated their support for a federal farm bill that:
1. Does not rely on the government to make payments. Instead farmers favor national policy that levels the playing field with agribusiness, and allows family farmers to earn a fair price from the marketplace for their commodities.
2. Takes grain and feed storage out of the hands of regional monopolies operated by companies like Cargill, Con Agra and ADM. Farmers seek laws supporting a farmer-owned grain reserve to provide price stability for consumers and protect against food shortages during poor production years.
3. Ends predatory and monopolistic behavior in the beef and pork industries. Family farmers and ranchers want national laws that establish fair and open markets through a comprehensive competition title that bans packer ownership of livestock, stops unjust price discrimination and mandates country-of-origin labeling for all meats and produce.
4. Makes corporate livestock factories accountable for their pollution. Instead, family farmers seek a Farm bill that enhances long-term conservation measures and promotes environmentally sustainable farming practices.
"If you take a look at wha's on the table so far, whether it's the House farm bill or from Senators Harkin and Lugar, we're still going to be suffering from low prices and increased corporate concentration out here in the countryside," said Iowa Citizens for Community Improvement member and Iowa farmer George Naylor. "They need a wake-up call out in Washington, DC."
"Let's not just paint ourselves into another corner by rushing through a terrible bill this year," said Missouri farmer and Missouri Rural Crisis Center member Rhonda Perry. "Farmers know what's best for rural America. Instead of listening to Cargill and ConAgra, Congress needs to clean the wax out of their ears and pay attention to the proposals coming out of the Heartland."
Helen Waller, a Montana farmer and Northern Plains Resource Council member, believes that the survey lays the groundwork for a farm bill that meets the needs of family farmers and rural communities.
"The Food From Family Farms Act is the only comprehensive farm bill proposal that was written by and for the American family farmer. It will increase farm prices from the marketplace, save taxpayers billions of dollars, create food security and ensure the long-term productivity of our nation's farmland.":
Of the 1,453 farmers and rural people surveyed:
1. 80.2% favor raising commodity loan-rates to cover farmers' cost-of-production.
2. 86.4% of farmers and rural people surveyed believe that a farmer-owned and controlled grain reserve should be part of any federal farm program.
3. 86.8% believe that long-term conservation programs should be included in any federal farm program.
4. 95.8% support country-of-origin labeling for all foods, including meats that are imported into the United States.
5. 88.8% support a 2-year moratorium on corporate agribusiness mergers.
6. 81.7% support banning packer ownership of livestock.
7. 92.8% support strong measures banning price discrimination in any federal farm program.
8. 83.2% support reforming government procurement policies to require that some food purchases be made from independent family farmers.
9. 57% favor supply management provisions in exchange for fair market prices, with only 30.1% disagreeing (12.8% have no opinion).
Over the last year, 1,453 farmers and rural citizens responded to a comprehensive questionnaire and gave their view on key issues facing rural America. These surveys were distributed at public meetings, through direct mail and general postal route mailings, on-line and at county and state fairs. Survey respondents answered questions in five categories: farm bill, trade, concentration, food safety/genetic engineering and food security. The National Farm Action Campaign will release a full report of the survey results and analysis later in the year.
Copies of the preliminary survey results can be obtained through the Missouri
Rural Crisis Center at email@example.com, or
WHAT IS THIS TOY CALLED FOOD ???
"AS LONG AS THEY ARE PUTTING IT
ON THEIR PLATES, WE ARE HAPPY"
JONATHAN EIG, THE WALL STREET JOURNAL: With a dash of food coloring and a fancy new container, H.J. Heinz Co. transformed one of the planet's most mundane food products --- tomato ketchup --- into a star. When the company launched green ketchup last year, consumers grabbed it off the shelves. In less than a year, Heinz boosted its share of the ketchup market by almost five percentage points. But while most media attention focused on the ketchup's color, Heinz officials who developed the product say the new container --- built to fit the hands of children and encourage extra squeezing --- was more important to the product's success.
And Heinz quickly realized that selling more ketchup no longer required that people eat more ketchup. Today, Heinz's Web site illustrates how children can build a fort using french fries as bricks and new Funky Purple ketchup as mortar.
"As long as they're putting it on their plates, we're happy," says Michael
Mullen, a company spokesman. . . .
CORPORATE TAKEOVER OF THE U.S.:
PATRIOTISM SOILED BY WARTIME PROFITEERING
AS GOVERNMENT TAKES CARE OF BUSINESS
REUTERS: Consumer advocate Ralph Nader said on Monday the United
States was "ripe for a revolt" against what he called corporate power grabs
following the September 11 attacks on the United States. Joined by
representatives of groups including Greenpeace and Friends of the Earth, Nader
criticized congressional leaders, the Bush administration and big business for
taking advantage of the attacks that killed nearly 4,800 people in New York,
Washington and Pennsylvania.
"There is a whole range of power grabs going on," Nader said at a Washington news conference. "There is an escalation of the corporate takeover of the United States. The ground and soil are ripe for a revolt by the American people," the 2000 Green Party presidential candidate added.
BOB HERBERT, THE NEW YORK TIMES: . . . With Americans fighting and dying both at home and abroad, we are understandably in a season of patriotism. That patriotism should not be soiled by wartime profiteering.
The House package is a breathtaking example of cynicism and chutzpah. The bill's primary author, Representative Bill Thomas, a Republican from California, piously proclaimed that there is an urgent need to help businesses because they are the nation's employers. "They're the hardware store," he said, "the diner down the street, the gas station on the corner." And then you look closely at the legislation and find that it overwhelmingly favors the giant corporations, with tax breaks approaching $1.4 billion for I.B.M., more than $800 million for General Motors and $670 million for General Electric.
It's a stimulus package in name only because the Americans who are the most strapped --- the consumers who would take any relief that they received and immediately pump it right back into the economy --- get the least. The package has very little to do with economic recovery. It's about using the shield of war and economic hard times as a cover for the perpetual task of funneling government largesse to the very rich. Nearly $2 trillion in tax cuts were passed just a few months ago, but that was not enough. True greed knows no bounds. . . . .
PAUL KRUGMAN, THE NEW YORK TIMES: Cynics tell us that money has completely corrupted our politics, that in the last election big corporations basically bought themselves a government that will serve their interests. Several related events last week suggest that the cynics have a point.
Consider, for starters, the airport security issue. On Thursday morning this newspaper reported that London-based Securicor --- the biggest of the three companies that provide almost all airport security in the United States --- was threatening to sue for damages if baggage screening is taken over by federal employees. This just two weeks after we learned that Securicor's U.S. subsidiary --- which had already been fined for employing convicted felons --- continued to hire employees without checking their background after September 11, and then lied about it to regulators.
Under the circumstances, to claim that federalizing the business would represent a "taking" showed remarkable chutzpah. (Chutzpah, according to the classic definition, is when you kill your parents, then plead for mercy because you're an orphan.)
But the company evidently has friends in high places. Later that day the Bush administration endorsed the proposals of House Republican leaders, who have refused to allow an airline security bill to come to a vote unless it leaves baggage screening in private hands. The rhetoric behind this position emphasizes the supposed advantages of the private sector --- competition, accountability, etc. But there is little real competition in this industry, and --- as we've just seen --- not much accountability for companies with the right connections.
Then there was the House "stimulus" bill. The remarkable thing we learned from that bill was that conservative politicians --- who used to claim that they were improving incentives by reducing marginal tax rates, and that it was just an incidental side effect that big corporations and wealthy individuals were so richly rewarded --- no longer feel the need to disguise their payoffs. The core of the bill was a repeal of the corporate alternative minimum tax retroactive to 1986, which means that selected companies would immediately receive huge lump sum payments from the government, totaling around $25 billion, with no incentive effect at all. . . .
Just to cap off a great week for the mining interests, the Bush administration also announced on Thursday that the Interior Department would no longer be able to veto mining projects on public land. You might think that extracting minerals from public land, without even paying a royalty, was a privilege rather than an entitlement; but in today's Washington, financial might apparently makes right.
I'm sure I'll be accused of being unpatriotic for suggesting that the administration and its Congressional allies are pandering to special interests at a time like this. That, of course, is what they are counting on ---that and the difficulty of getting people's attention when the news is all anthrax, all the time.
But the truth must be spoken. Lately our government has not exactly inspired confidence; its response to terrorism is starting to look a bit scatterbrained. But on some subjects our leaders are quite clearheaded: whatever else may be going on, they make sure that they are taking care of business.
FLOYD NORRIS, THE NEW YORK TIMES: . . . There are often international political reasons it seems unwise to let a country go under. Turkey, for example, is now dealing with an I.M.F. plan that may not be enough. Given its strategic role in the Middle East, the United States no doubt will want to find a way to keep it solvent.
That brings up the issue of "moral hazard." Investors who are confident they will be bailed out are less likely to exercise prudent judgment, and thus increase the need for a bailout. It is easy to promise not to bail out those who made the bad loans, but often harder to live up to those promises in a crisis.
It is also harder when the government is on the hook before the crisis erupts, as was the case in the savings and loan industry. Deposit insurance had been legislated in the 1930's as a way of restoring confidence in the financial system and assuring that small depositors would not be wiped out in bank failures. When the savings and loan institutions got into trouble, the government looked for ways to avoid paying the bill. The stalling tactics ended up giving financial institutions the power to keep gambling with taxpayer money, and made the situation much worse. . . .
"GAMBLERS IN THE NECESSITIES OF LIFE"
"It is absolute insanity for us to lead ourselves or anybody else to believe that this nation can succeed in war when hundreds of thousands of parasites, the gamblers in the necessities of life, use the war only for the purpose of exacting exorbitant profits. We are working, not to beat the enemy, but to make more multi-millionaires."
--- A.C. Townley, co-founder of the Non-Partisan League, Jamestown, North
Dakota, July 9, 1917.
GROWING GAP BETWEEN WORLD'S RICH AND POOR
COULD SINK WORLD TRADE ORGANIZATION
JEFF MADRICK, THE NEW YORK TIMES: . . . Despite glowing optimism 20
years ago, the rich nations' record in raising the developing world to a minimal
level of material well-being has been nothing short of disaster. In 1983, the
World Bank predicted that developing nations' average gross domestic product
would grow 3.3 percent a year over 15 years. In fact, it barely grew at all.
The extent of poverty remains shocking. There has been a modest decline in the portion of those who are poor, but in absolute numbers, they have risen sharply. About a third of the world lives on the equivalent of about $2 a day. In 1820, the richest country had only three times as much income per person as the poorest; today, the richest nation has 30 times the income.
Rich nations are shamefully stingy about aiding the poor, but none more so than the United States. In 1999, the World Bank reported that the States gave 0.1 percent of its economic output for development, or $9.1 billion, the lowest proportion among the 30 or so wealthiest nations. Japan gave more than $15 billion --- still skimpy, but 0.35 percent of its output. Moreover, America stipulates that about two-thirds of the $9 billion must be spent on American products. . . . .
JOSEPH KAHN, THE NEW YORK TIMES: With only a week to go before trade ministers are scheduled to gather in Doha, Qatar, to try to set the agenda for a worldwide trade accord, actions the United States has taken since the terrorist attacks appear to have widened the gap between rich and poor nations and persuaded some negotiators that the meeting could become a casualty of war.
The Bush administration's tussle with Bayer A.G. --- in which Washington forced the company to sharply reduce the price of its anthrax drug Cipro --- has emboldened developing countries to insist on a broad "public health" exception to international patent rules for other drugs, like those used to keep AIDS victims alive. . . .
The 11th-hour standoff has raised the possibility that trade ministers will converge on Qatar only to have the talks collapse, as they did in Seattle two years ago. Such a failure would be especially bitter because many officials say they fear for their safety by convening in the Persian Gulf region even as war rages in Afghanistan. . . .
But the risks are arguably greater than they were in Seattle. The leading industrial nations are experiencing a rare simultaneous economic slump. World trade flows are shrinking for the first time in two decades. A trade agreement has been viewed as vital to opening new markets and spurring business investment. Moreover, some analysts say the future of the World Trade Organization, formed six years ago to promote trade and resolve disputes with more authority than previously allowed, would be in doubt if its second attempt to advance global trade talks is again stillborn. . . . .
Like any trade negotiation, the coming talks depend on resolving a number of disputes under a single umbrella. Removing barriers to trade in farm products is a top American priority while limiting the use of antidumping rules to block low-price imports has become a major concern of Japan and many developing nations. Both matters are proving especially hard to resolve.
At the same time, tensions are rising between rich and poor. Brazil and India are leading a coalition that wants trade rules rewritten to make it clear that nations can violate patents and save money on, for example, AIDS or malaria drugs when they face an acute health crisis. They argue that poor countries often cannot afford vital medicine. Industrial nations, they say, often seek to punish them if they buy or produce knockoff versions of the drugs. . . . .
THREE WAYS FOR NATIONS TO ACQUIRE WEALTH
"There seem to be but three ways for a nation to acquire wealth: the first is by war, as the Romans did, in plundering their conquered neighbors --- this is robbery; the second by commerce, which is generally cheating; the third by agriculture, the only honest way, wherein man received a real increase of the seed thrown into the ground, in a kind of continual miracle, wrought by the hand of God in his favor, as a reward for his innocent life and his virtuous industry."
--- Benjamin Franklin, "Positions to be Examined Concerning National Health,"
April 4, 1769.
“THE BOMB LIVES”
ERIC PIANIN & DAN EGGEN, THE WASHINGTON POST: While authorities try to cope with the anthrax outbreak, federal and state officials are taking steps to prepare for a possible escalation of terrorism that experts say could include truck bombings and attacks on nuclear power plants as well as more hijackings.
Since the FBI issued its second national terrorism alert Monday,
administration officials and congressional intelligence experts have studied
myriad terrorist threats, including the outside possibility of the use of
portable nuclear weapons. Steps taken by state and federal officials point, in
particular, to concern about assaults on power plants and utilities,
truck explosions in tunnels and on bridges, and attacks on ships carrying hazardous materials. "If you're asking for a scenario of things that could go wrong, it's a mighty long list," said Rep. Porter J. Goss (Rep.-Florida.), chairman of the House intelligence committee and a former CIA officer. . . .
E.L. DOCTOROW, "THE BOMB LIVES," PLAYBOY, MARCH, 1974: . . . We are extraordinarily sensitive now to the damage we do to the delicate web of life on earth simply by being ourselves. We used to fear the bomb, but now we fear everything. What can this be but the diffusion of our horror of this death-in-life weapon that we have given the world. For, of course, having buried our bombs, we are now seeing them stir and unwrap their mummy shrouds.
Conceivably under the right circumstances, we may someday in our nuclear
industry lose to the earth just the amount of radiant material necessary to
effect a chain reaction. And then the failure of our vaunted adaptation will
blaze upon us that what happened to the bomb was that it became the earth and
the earth became the bomb. . . .
RENEWED APPEAL FOR CONTTRIBUTIONS
With each issue of THE AGRIBUSINESS EXAMINER I am pleased to note the
additional readers that have been added to the circulation list of the already over 1000
readers throughout the world who are presently receiving it on a regular basis. At the
same time, however, it is disappointing to also see that the same mere handful of
generous financial contributors, whose help I sincerly appreciate, care to assist in
sustaining the work of the publication.
While THE AGRIBUSINESS EXAMINER is a subscription free e-mail newsletter it
always welcomes contributions of any amount in the hope that readers still value THE
AGRIBUSINESS EXAMINER to such the extent that they will willingly and generously
financially support its continued circulation as it enters its third year. Checks should be
made out to:
A.V. Krebs and sent to P.O. Box 2201, Everett, Washington 98203-0201
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THE AGBIZ TILLER, the progeny of the one-time printed newsletter, now becomes
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