Monitoring Corporate Agribusiness From a Public Interest Perspective
A.V. Krebs Editor\Publisher
Issue #138 January 4, 2002
30,000 CATTLE PRODUCERS SCORE MAJOR VICTORY
JUDGE RULES THEY CAN SUE IBP FOR PRICE FIXING
ASSOCIATED PRESS: More than 30,000 cattlemen from across the country could join in a lawsuit against the nation's largest meat packer, IBP Inc., under a federal judge's decision to give the case class-action status. Senior U.S. District Judge Lyle Strom broadened the lawsuit Wednesday to potentially include all U.S. cattle producers and owners who sold cattle to IBP on a cash basis since February 1994.
The suit claims IBP illegally cornered the beef market and conspired to fix prices paid on the open market. "There's no question this is a victory for us, and a victory for cattlemen all over the U.S.," said Birmingham attorney Joe Whatley, who is representing the plaintiffs. The ruling keeps the cattle producers' five-year-old lawsuit alive and sets up the possibility for a trial in federal court in Montgomery. Without class-action status, the case would have likely been dismissed, lawyers had previously said.
The suit was originally filed by 10 cattlemen who claimed IBP was violating antitrust laws by buying mostly packer-owned cattle and cattle committed to packers under long-term contracts --- rather than bidding on auction markets --- to unfairly depress prices paid to producers.
The cattlemen are seeking damages from IBP, Mr. Whatley said. A dollar amount would need to be calculated based on the amount by which IBP has allegedly depressed prices. The plaintiffs also want the court to limit IBP's cattle supply to increase competition and drive up prices. IBP is reviewing the decision before deciding whether to appeal, said spokesman Gary Mickelson.
"While we are disappointed with the latest development in this long-running case, we remain confident our company will ultimately prevail," Mr. Mickelson said. "Numerous studies have proven that changes in cattle prices are due to basic supply and demand, not packer concentration or livestock marketing agreements." . . .
BILL HORD, OMAHA WORLD-HERALD: . . . The livestock industry has been watching the case for years as producers and policy-makers have wrestled with antitrust questions in meatpacking. Eighty percent of U.S. beef packing is concentrated in four companies, and IBP is the largest.
"Even the fact that this case has been certified as a class-action lawsuit could add some boost to new legislation for more competition in the livestock industry," said Neil Harl, an Iowa State University scholar on agricultural law. Just two weeks ago, the U.S. Senate rejected an amendment to a proposed farm bill that would have limited the ability of packers to contract for cattle in advance of delivery. Similar amendments could be considered again when the farm bill debate resumes in 2002.
Cattlemen say only about 30% of cattle now go to packers through traditional bidding procedures, either at auction markets or through direct negotiations during the week. In the lawsuit, they allege that the "captive" supply gives IBP leverage to reduce cash prices. [Bob] Rothwell [of Hyannis, Nebraska, one of the plaintiffs] .said that bidding often boils down to one "take-it-or-leave-it" price per week. "There needs to be more competitive bidding," he said.
Strom's ruling means that the potential financial payoff --- if there is a settlement or a victory at trial --- could warrant the expense of going to trial. If plaintiffs win, their lawyers' fees will be set by Judge Strom. "If an appeal is denied, we expect we will be in trial in Montgomery by fall," said Nora Kane, a lawyer for Domina Law in Omaha, one of five firms representing cattlemen in the case. . . . Strom is hearing the case because, as a senior judge, he is free to handle cases across the country. The case originated in Alabama.
The new definition of "class" as approved by Strom has been refined to
include only producers who sold cattle exclusively on the "cash" market and to
exclude anyone who used contracts. In the process, four of the original 10
plaintiffs have been dropped from the case because they did not meet the new
definition. Among those remaining is widely-known anti-packer crusader Mike
Callicrate of St. Francis, Kansas. "This is the best news for fair markets since
the Packers and Stockyards Act was passed in 1921," Callicrate said. "This means
we get to put this case before a jury."
AMIDST ENVIRONMENTAL AND IMMIGRATION LAWSUITS
TYSON FOODS AWARDS CEO $2.1 MILLION BONUS
DOW JONES NEWSWIRES: Tyson Foods Inc. said it has been advised by the U.S. Attorney's office for the Western District of Missouri that the government intends to seek an indictment of the company for alleged violations of the Clean Water Act. According to the company's annual report released . . . by the Securities and Exchange Commission, the alleged violations occurred at Tyson's facility in Sedalia, Missouri. Tyson said it's discussing the possible resolution of the matter, but it couldn't determine the likelihood of an unfavorable outcome or an estimate of its ultimate liability. . . . .
LEGAL BRIEFS: . . . The company is already involved in an alleged pollution case in Tulsa, Oklahoma. The city and the Tulsa Metropolitan Utility Authority is suing six out-of-state poultry processors ---- including Tyson ---- for allegedly contributing to overwhelming taste and odor problems in the city's drinking water. The suit alleges the problems are linked to waste from chicken production, the city said. Named with Tyson foods in that case are Cobb-Vantress, Peterson Farms, Simmons Foods, Cargill and George's.
SEATTLE POST-INTELLIGENCER NEWS SERVICES: Tyson Foods Inc. awarded its
chief executive officer a $2.1 million bonus for the latest fiscal year, despite
company troubles over the purchase of meatpacker IBP and a federal indictment
accusing it of smuggling illegal aliens. In a filing with the Securities and
Exchange Commission . . . . Springdale, Arkansas based Tyson Foods said it
awarded CEO John Tyson a $2.1 million bonus on top of his $650,000 salary for
the fiscal year that ended September 29. Tyson received no bonus for the
previous fiscal year. Tyson Foods' $3.2 billion acquisition of IBP Inc. in
September made Tyson the largest meat producer in the world.
UNION-BUSTING MEAT PACKING INDUSTRY
"RACING TO THE BOTTOM" FOR CHEAP LABOR
EXACERBATES ILLEGAL IMMIGRATION
NANCY CLEVELAND, STUART SILVERSTEIN, LOS ANGELES TIMES: The worker-smuggling indictment handed down last week against the nation's largest meat processor was a dramatic advance for federal authorities, who have worked since the late 1990s to crack down on employers that collaborate in schemes to recruit illegal immigrants. At the same time, the investigation of Tyson Foods Inc., which involved wiretaps, paid informants and 2 1/2 years of undercover work, illustrates the massive effort and resources required to probe employer culpability in the widely acknowledged practice of hiring undocumented workers.
Critics of immigration policy argue that although the charges may alter workplace practices temporarily, in the long run, such investigations, even if they are successfully prosecuted, will be no more effective than previous approaches at preventing employers from circumventing the law.
The national anti-smuggling strategy by the Immigration and Naturalization Service is the agency's latest effort to reduce the flow of undocumented workers into American workplaces. It de-emphasizes traditional work-site raids and instead focuses on employers believed to be conspiring with smugglers to transport and house the workers.
The INS estimates that seven million illegal immigrants are in the United States. "It's admittedly a large problem in this country," said Joseph R. Greene, the INS assistant commissioner in charge of investigations. He said the tight labor market of the late 1990s accelerated illegal immigration, in some cases with employer assistance. Using smugglers, he said, "was a way of obtaining an unfair advantage in a highly competitive labor market."
Meatpacking and poultry processing have been of particular concern to the immigration agency, which estimated two years ago that one-fourth of the workers in the industry were undocumented. Over the past decade, the INS has tried a series of approaches, including high-profile raids, audits of company records, and computerized checks of employee IDs, to reduce the dependence of packinghouses on illegal labor. . . .
DAVID BARBOZA, NEW YORK TIMES: . . . Because of this heavy reliance, agriculture experts say, a major effort to crack down on the hiring of illegal workers could disrupt the nation's food industry. "This would really cripple the system," said William Heffernan, professor of rural sociology at the University of Missouri who has studied immigrant labor. "In the communities where these plants are located there isn't an alternative work force. They'd have to raise wages and improve the conditions."
Until 15 or 20 years ago, meatpacking plants in the United States were staffed by highly paid, unionized employees who earned about $18 an hour, adjusted for inflation. Today, the processing and packing plants are largely staffed by low-paid non-union workers from places like Mexico and Guatemala. Many of them start at $6 an hour. The shift in the economics of the food and agriculture industry has made such jobs unappealing to Americans, but highly enticing to immigrants.
Companies like Tyson, Smithfield Foods and Conagra have profited from paying low wages, pushing production lines faster and hiring workers who are much more willing to endure the hazardous conditions of a meat-processing plant, industry experts say. "This is certainly not unique to Tyson," Professor Heffernan said. "This has been around for a long time in the meat-processing industry. And employers can take advantage of these people because they can threaten to send them back." . . .
The government charged the company and six of its employees with conspiring to transport illegal immigrants across the Mexican border and help them get counterfeit work papers for jobs at more than a dozen Tyson poultry plants. The indictment said that, to meet production and profit goals, Tyson officials would contact local smugglers near its plants to get more workers. Industry experts said it has long been believed that American food companies recruit in Mexico and knowingly hire illegal workers. Some said the companies advertise on the radio in Mexico, distribute leaflets, show videos and hire immigrant smugglers, or "coyotes." . . .
Professor Heffernan, at the University of Missouri, said it was simple: "It's the race to the bottom; it's just the race to the bottom. Companies started breaking the unions, moving the plants to rural areas and hiring immigrants a long time ago." The same foreign-born workers harvest fruits and vegetables in Florida and California, they milk cows on giant dairy farms in Wisconsin and Oregon and process and pack potatoes in Idaho.
. . . About one million farm laborers are on the job at any one time, according to the United States Department of Agriculture. And a government study estimated that nearly 40% are illegal. A few years ago, the Immigration and Naturalization Service estimated that about 25% of meatpacking workers in the Midwest were probably illegal. "We have enormous segments of agriculture that are critically dependent on hired farm labor," said Keith Collins, the chief economist at the Agriculture Department. "They are needed, particularly for harvesting perishables, like fruits and vegetables in Florida and California." Asked whether many of the foreign-born migrant laborers were illegal, Mr. Collins said, Absolutely. "It's in the hundreds of thousands," he said. "No doubt." . . . .
SARAH KERSHAW, NEW YORK TIMES: In the 1990's, they came here by the thousands from Mexico and Central America, making their way across the border and traveling by van to this rural town in horse country. They found jobs easily at the Tyson Foods chicken-processing factory on the edge of town, often without working papers or, perhaps, using counterfeit Social Security cards, current and former workers say. Shelbyville, 60 miles south of Nashville, became a magnet for Mexicans and Guatemalans who found shelter at the trailer parks that sprang up near the plant and in cottages and shanties not far from the town square.
The immigrant community and the Mexican grocery stores and taco stands that have opened helped transform Shelbyville's identity. But now this town of 16,000 people is at the center of the largest immigrant-smuggling case that involves a major American company, government prosecutors said. An investigation that started four years ago here, when the Police Department heard about immigrant smuggling that prosecutors said involved a Mexican grocer and Tyson executives, has led to the indictment of Tyson and six managers. . . .
With the national economy in a slump and the local economy reeling from layoffs at other companies in the region, many of the Mexicans and Guatemalans are leaving. "There's no work here," said Ren Gaspar, 23, a Guatemalan who arrived six months ago with no working papers and no money and is sharing a heatless shanty with three other unemployed Guatemalans. "We were looking for work and looking for a life here. But what we are is poor and ashamed." Among those who were dismissed from the factory that drew them in the first place, some have found seasonal work in the nearby tobacco fields. . . .
In 1990, according to Census figures, Shelbyville had 92 Hispanic residents. A decade later, in 2000, it had 2,343, although those figures are considered low because they are unlikely to reflect many of the illegal workers. For those who remember Shelbyville from long ago --- who might have seen Mexicans arriving in town as grooms for the annual Tennessee Walking Horse Celebration over the years but never expected a large enclave --- the influx has required an adjustment. "It is quite a different place," said the city manager, Ed Craig, who grew up here, left for 35 years and returned three years ago.
The schools have enrolled thousands of Spanish-speaking children over the
last few years, starting programs in English as a Second Language. A Hispanic
church, Iglesia de Cristo, opened on Madison Street, a main road, a few years
ago. Bank tellers are taking Spanish courses, and drugstores sell Glamour
magazine in Spanish. Last year, The Shelbyville Times-Gazette added two
pages in Spanish, which are published on Fridays. The editor, Mark McGee,
said some readers called to cancel their subscriptions in protest. . .
INFLUENTIAL FRIENDS IN HIGH PLACES
CHARACTERIZES TYSON FOODS HISTORY
DAVID BARBOZA, NEW YORK TIMES: Tyson Foods, the nation's largest meat
processor, has long cultivated close ties to influential politicians, generously
backing Bill Clinton and George W. Bush. Yet few major corporations have been so
battered by the authorities. Over the last few years, federal officials
have accused Tyson of violating labor, environmental and civil rights laws and
of making illegal gifts to a cabinet secretary. . . .
Tyson insists it has been the target of overzealous investigators and crusading special interest groups. The company largely denies wrongdoing, even in cases it paid to settle years ago. But critics say that Tyson's growth and its transgressions rise from the same devil-may-care philosophy that the Tyson family, which tightly controls the company, has imbued it with from the start. "The history of this company has been living on the edge," said John McMillin, a food analyst at Prudential Securities.
Everyone in this Ozarks town, where the company is based, knows the Tyson legend, beginning with John Tyson, who founded a poultry empire during the Depression from the back of his truck. His visionary son Don expanded the business through innovation, popularizing the Rock Cornish game hen, along with boneless, battered and frozen chicken and helping McDonald's create the Chicken McNugget.
But Don Tyson was also known for giving lavish parties and bringing young women along with him to meetings with Wall Street analysts. Today, Don Tyson's imprint on the company remains strong, but Tyson Foods is run by his son, John H. Tyson. Once addicted to drugs and alcohol, the 48-year-old family scion, known as Johnny, is chief executive of a $20 billion company that processes a quarter of the nation's beef, pork and chicken.
Marvin Schwartz, who wrote a history of Tyson Foods for the company, says that the corporation's aggressive culture reflects both its leaders and its origins. "Don is a gambler, and he's very comfortable taking risks," Mr.Schwartz said. "And in a state like Arkansas, where there are very few regulatory controls, corporations have more flexibility. The state motto was `The Land of Opportunity,' and that's why entrepreneurs like Sam Walton and Don Tyson have made it here." It was that aggressive corporate mentality that twice led Tyson Foods into the hostile deals that turned it into an industry giant. . . .
Two years ago, the company was fined by Federal officials for violating child labor laws after a 15-year-old immigrant working illegally at a Tyson plant died and a 14-year-old was seriously injured. A few months later, Tyson settled federal charges that it discriminated against women and blacks in its hiring practices at a plant in Forest, Mississippi.
Last January, the Labor Department accused Tyson and other poultry companies of cheating workers out of thousands of hours of wages. Labor Secretary Elaine Chao still must decide whether the government will seek up to $340 million in back wages. . . . .
"This is a company with a bad history," said the Rev. Jim Lewis, an Episcopal minister in the Delmarva region of the Northeast, where poultry processing is a big industry. Mr. Lewis has been helping workers organize since the 1980's, when they began to approach him with complaints about Tyson. "They cheat these workers out of pay and benefits, and then try to keep them quiet by threatening to send them back to Mexico," Mr. Lewis said.
Tyson officials insist the company has been falsely portrayed by activists and that it has been working to improve plant conditions and environmental compliance. If anything, they add, the cascade of government accusations disproves the notion that the company wields enormous political influence ---- a part of Tyson's image since its backing of Senator J. William Fulbright of Arkansas in the 1950's and 60's.
"If we've got all this political power, how come the government keeps doing this to us?" [Tyson spokesman Bob] Corscadden asked. "This is part of the myth. We have not spent a lot of time in Washington."
Still, Tyson Foods paid $6 million in 1997 to settle accusations that the company made illegal gifts to Mike Espy, the agriculture secretary during Mr. Clinton's first term, when regulations affecting Tyson were pending before the Agriculture Department. Don Tyson, then the company's chairman, and John Tyson, then vice chairman, were named unindicted co-conspirators, accused of playing roles in arranging for the gifts, including a college loan that the Tyson Foundation arranged for Mr. Espy's girlfriend.
Two Tyson executives were eventually convicted and received prison terms in the case, but President Clinton later pardoned the men. Mr. Espy was acquitted. Tyson officials called the gifts an "act of common hospitality" and said the company was drawn into a political battle because of its ties to Mr. Clinton.
Don Tyson was an early supporter of Mr. Clinton's campaigns for public office
in Arkansas. Though he opposed Mr. Clinton's gubernatorial re-election campaign
in 1980, Mr. Tyson returned to the Clinton camp in later campaigns. Mr. Tyson
and Mr. Clinton also shared close friends, including James B. Blair, for many
years the general counsel of Tyson Foods. It was Mr. Blair who in the late
1970's placed many of the trades that helped Hillary Rodham Clinton make a
profit of nearly $100,000 in the cattle futures market. See "HILLARY RODHAM
CLINTON'S $99,537 MIRACLE: IT'S THE PITS!!!"
Tyson Foods said that Don Tyson, who recently stepped down as senior chairman, and John Tyson were not available for comment. But in a telephone interview Mr. Blair said that the Clinton-Tyson relationship had been exaggerated. "The Clinton haters always believed Tyson was much closer to Clinton than he actually was," Mr. Blair said. "Don Tyson and Bill Clinton are both my very personal friends, and they can barely tolerate one another."
The latest investigation could not come at a more difficult time for Tyson Foods. Profits in the meat industry are slumping, and management has its hands full integrating IBP --- with its own history of run-ins with immigration and environmental authorities --- into the company.
Now, among those close to Tyson, there is a sense that the company needs more
political influence, not less. "Tyson has never had the political power of, say,
ADM," Mr. Blair, the former general counsel said, referring to the Archer
Daniels Midland Company. "I don't think they have been aggressive enough in
protecting themselves politically."
FOOD COMMODITY PRICES LOWER IN 2001
WHILE STOCKS IN FOOD COMPANIES BECOME FLAT
KENNETH N. GILPIN, NEW YORK TIMES: Nowhere do the laws of supply and
demand govern economic activity more nakedly or completely than in the buying
and selling of commodities. For the most part, commodity prices moved lower for
the better part of 2001 because supplies were high, demand contracted and the
dollar, the currency in which most commodities are priced, was strong. The
outlook for this year is not much different, even if the global economy begins
to recover. . . .
Abundant harvests dragged down prices of corn and soybeans and consumables like coffee. Live cattle also slipped, but hogs managed a small gain on the year. "Natural disasters, drought, low commodity prices and global surpluses have hurt producers," Agriculture Secretary Ann M. Veneman said last month.
Corn, a $4 billion-a-year export for the United States and the nation's most important feed grain for raising beef, pork and poultry for Americans' tables, fell 11.1%, to $1.9975 at the end of the year.
One reason for the price slides was that export markets were shrinking since December 2000, when Japanese inspectors said that tests of shipments of American corn had detected StarLink, a genetically modified corn that is not approved for human consumption in the United States and is banned in Japan and some other nations. The Agriculture Department said corn exports were running four percent lower so far this crop year compared with the period in 2000. Japan, Taiwan, Egypt and Mexico, the biggest buyers of American corn, have all cut purchases.
Other grains were mixed. Wheat futures rose 3.4% from 2000 to end the year at $2.89 a bushel. . . .
There are signs that the imbalance of supply and demand is beginning to right itself, [Director of commodities research at Goldman, Sachs & Company Steve] Strongin said. But it will take many months before the change shows up in prices. And it will take some time to bring commodity prices back up to where they stood at the end of 2000.
Reflecting the slump in the industrial economy, copper prices fell 22.9% last year. Cotton tumbled 42.9%. Coffee prices, reflecting abundant harvests, slid to 30-year lows and ended the year down 29.5%. The slump has aggravated already weak conditions in developing countries like Chile and Brazil, which are major commodity exporters. Brazil is forecasting a 2002 coffee crop that could match the record set in 1961 of 39.6 million 132-pound bags. The United States Agriculture Department puts Brazil's 2001 harvest at an estimated 33.7 million bags.
AMEET SACHDEV, CHICAGO TRIBUNE: As investors review their battle-scarred portfolios of 2001, those who loaded up on shares of food companies probably feel like they received fewer lumps of coal in their stockings than other market players. Food stocks as a group are practically flat year to date, compared with a 13% decline for the Standard & Poor's 500 index, a leading stock market indicator. Given the safe nature of most food stocks --- people have to eat, right? --- their resilience in such turbulent economic times is not unprecedented.
There also were some star performers in the group, even excluding companies that were acquired in 2001. Spicemaker McCormick & Co. is up 18.3% since the beginning of the year; General Mills, 16.1%; and Kellogg Co., 15.5%.
So with the economy still in the doldrums heading into 2002, should investors seeking safe havens gobble up food stocks again? Not so fast, experts say. The industry still faces some ongoing challenges, namely sluggish volume growth of less than three percent combined with a lack of pricing power. "We feel obliged to note that the rise and relative strength of food stocks have not been driven by industry or company fundamentals," said David Nelson, an industry analyst at Credit Suisse First Boston, noting that the industry has benefited as investors fled more volatile sectors such as technology. . . . On average, earnings across the food group are down 15% from a year ago, Nelson said.
The big trend to watch next year is whether Americans will prepare more meals at home, rather than dining in restaurants or ordering takeout. An increase in home cooking became apparent earlier this year as the economy went into a tailspin and consumers became more frugal. . . . The shift away from takeout and restaurant dining accelerated after September 11 as Americans spent more time at home watching the news. In turn, they sought out comfort foods like soup. . . . .
One way food companies are trying to appeal to consumers is to make home cooking almost as convenient as eating out. In the past year, they have introduced an array of frozen and shelf-stable meal kits that offer pre-measured ingredients, such as pasta, sauces and cheese. All the consumer has to do is provide the chicken or beef. Some of the products to recently hit the shelves include Campbell's Supper Bakes, Lipton Sizzle & Stir and Freshmade Creations from Kraft Foods Inc.
"Just because people are eating at home, doesn't mean they are cooking at home," said Ken Harris, a food-industry consultant at Cannondale Associates in Evanston. "As a result, the convenience trend is still hot." As more convenient meals come to market, private-label, or generic, brands are expected to make inroads in the category, offering similar quality at a lower price. The onslaught of private label in other categories, from cereal to coffee, has reduced the pricing power of branded food products. Retailers are pushing private label or their own brands because they offer better profit margins. Since 1994, the market share of private-label brands has increased 1.5% to 15.5% in 2000. This may accelerate as competition intensifies among the supermarket chains.
A price war could have a profound effect on the margins of food companies,
analysts said. Considering the obstacles confronting the industry, investors
would be wise to shop carefully. "I don't see many bargains in the industry,"
said John McMillin, a food analyst at Prudential Securities. "I'm much more
selective than I was a year ago or two years ago."
DOCUMENTS SHOW THAT MONSANTO CORP.
CONCEALED 40 YEARS OF KNOWINGLY
DISCHARGING MILLIONS OF POUNDS
OF TOXIC PCB WASTES IN ALABAMA TOWN
MICHAEL GRUNWALD, WASHINGTON POST: On the west side of Anniston [Alabama], the poor side of Anniston, the people ate dirt. They called it "Alabama clay" and cooked it for extra flavor. They also grew berries in their gardens, raised hogs in their back yards, caught bass in the murky streams where their children swam and played and were baptized. They didn't know their dirt and yards and bass and kids --- along with the acrid air they breathed --- were all contaminated with chemicals. They didn't know they lived in one of the most polluted patches of America.
Now they know. They also know that for nearly 40 years, while producing the now-banned industrial coolants known as PCBs at a local factory, Monsanto Co. routinely discharged toxic waste into a west Anniston creek and dumped millions of pounds of PCBs into oozing open-pit landfills. And thousands of pages of Monsanto documents -- many emblazoned with warnings such as "CONFIDENTIAL: Read and Destroy" -- show that for decades, the corporate giant concealed what it did and what it knew.
In 1966, Monsanto managers discovered that fish submerged in that creek turned belly-up within ten seconds, spurting blood and shedding skin as if dunked into boiling water. They told no one. In 1969, they found fish in another creek with 7,500 times the legal PCB levels. They decided "there is little object in going to expensive extremes in limiting discharges." In 1975, a company study found that PCBs caused tumors in rats. They ordered its conclusion changed from "slightly tumorigenic" to "does not appear to be carcinogenic."
Monsanto enjoyed a lucrative four-decade monopoly on PCB production in the United States, and battled to protect that monopoly long after PCBs were confirmed as a global pollutant. "We can't afford to lose one dollar of business," one internal memo concluded.
Last month, the Environmental Protection Agency ordered General Electric Co. to spend $460 million to dredge PCBs it had dumped into the Hudson River in the past, perhaps the Bush administration's boldest environmental action to date. The decision was bitterly opposed by the company, but hailed by national conservation groups and many prominent and prosperous residents of the picturesque Hudson River Valley.
In Anniston, far from the national spotlight, the sins of the past are being addressed in a very different way. Here, Monsanto and its corporate successors have avoided a regulatory crackdown, spending just $40 million on cleanup efforts so far. But they have spent $80 million more on legal settlements, and another lawsuit by 3,600 plaintiffs -- one of every nine city residents -- is scheduled for trial next Monday. David Carpenter, an environmental health professor at the State University of New York at Albany, has been a leading advocate of the EPA's plan to dredge the Hudson, but he says the PCB problems in Anniston are much worse. . . . .
MICHAEL GRUNWALD, WASHINGTON POST: The first time the man from Monsanto Co. knocked on Ruth Mims's door, he announced that her hogs were trespassing on company property. "We'll give y'all 24 hours to move those hogs," he warned her. She panicked. She had no room for hogs in her little yard.
But the man knocked again a few minutes later. Tell you what, he told Mims. We'll buy the hogs for $25 a head, plus a pint of white corn liquor. Mims didn't drink, but Christmas was coming and she was short on cash, so she said yes.
That was in December 1970. It wasn't until Mims told that story in federal court last April that she saw Monsanto's secret "Hog Analysis Results" from 30 years earlier. The company had dissected some hogs from the west Anniston area and found PCB levels as high as 19,000 parts per million. There were no legal limits then, because the idea that PCBs could end up in hogs was pretty new, but that would be more than 90,000 times the legal maximum in some states today. "Nobody ever told me!" Mims shouted in an interview. "I used to eat them hogs!"
Mims, a 70-year-old retired seamstress who still lives in her childhood home, is a community matriarch with a no-nonsense manner. She was the star witness for the plaintiffs in a lawsuit brought against Monsanto by 1,600 Anniston residents. According to testimony last spring, her blood had one of the highest PCB levels ever recorded for someone who had never worked with PCBs, and her yard had PCB levels that qualified for an emergency cleanup. Monsanto settled the case for about $40 million ---including $32,000 for Mims --- shortly after she took the stand.
Her story, in many ways, is the story of west Anniston, the story of life in
a contaminated zone. . . . . .
FEDERAL JUDGE RULES THAT USDA CAN NO LONGER
REQUIRE MEAT AND POULTRY PLANT CLOSINGS
FOR VIOLATING SALMONELLA FOOD SAFETY STANDARDS
JILL CARROLL, THE WALL STREET JOURNAL: In a victory for the meat-processing industry, the Agriculture Department said it no longer will close processors that violate its five-year-old salmonella food-safety standard. The announcement followed a federal appeals-court ruling that the department's standard wasn't scientifically based and couldn't be used as an indicator for the presence of other more dangerous bacteria in meat products.
The U.S. Court of Appeals for the Fifth Circuit in New Orleans said the USDA lacked the authority to enforce its salmonella standard and shut Supreme Beef Processors Inc., of Dallas, in 1999 after the company repeatedly failed tests for salmonella. Supreme Beef, a major supplier of the USDA's school-lunch program until 1999, was the first company shut as a result of the salmonella standard.
Supreme Beef sued, arguing that the government's salmonella standards couldn't be justified scientifically. A federal judge agreed, but the USDA continued to enforce the standard during its appeal. Officials said few if any other plants were closed by the actions. The USDA is reviewing the appeals-court ruling and hasn't said if it will appeal again.
The USDA started testing for salmonella in 1996 as part of new rules it developed to prevent meat contamination. Salmonella sickens at least 40,000 people a year and kills about 1,000, according to the Centers for Disease Control and Prevention. The most susceptible are children and the elderly, although most people recover fully. The USDA used the levels of salmonella in meat produced at a plant as an indication that more dangerous germs could be in the meat.
The appeals-court decision was heralded by the meat industry, which said better ways must be developed to measure the contamination level of meat. "We are gratified, but not surprised, that the court has affirmed that the salmonella performance standard is scientifically insupportable as a measure of plant sanitation," said J. Patrick Boyle, president of the American Meat Institute, an industry group in Arlington, Virginia. The decision applies to beef as well as poultry processors. The meat and poultry industries together sell $100 billion a year.
Consumer advocates decried the decision, saying the USDA now has no way to independently assure that meat from a plant is safe. . . . .
NEW YORK TIMES EDITORIAL: A recent ruling by a federal appeals court in New Orleans has undermined the government's ability to police the safety of the nation's meat supply effectively, creating an urgent need for remedial action by Congress and the Bush administration.
The misguided decision by a three-judge panel of the Fifth Circuit Court of Appeals sided with a federal district court judge in Texas who ruled last year that the Agriculture Department had overstepped its authority by shutting down the Supreme Beef Processors plant in Dallas after its ground beef failed three rounds of tests for salmonella contamination over a year. The appeals court reasoned that salmonella was not subject to regulation under the Federal Meat Inspection Act because it was not harmful since the bacteria are destroyed in normal cooking, and because meat may already be contaminated when it arrives at a processing plant.
The court's logic is seriously flawed. It ignores both the government's broad discretion under the law to police unsanitary conditions in meat plants and the serious danger, unresolved by proper cooking, that arises when contaminated raw meat and poultry come in contact with cutting boards, utensils and other foods, such as fruits and vegetables.
The Agriculture Department contends it can continue to reduce harmful pathogens in meat without the ability to shut down processing plants that repeatedly fail to control the salmonella bacteria. But consumer groups are right to be alarmed. The decision's practical impact was to gut the government's power to rely on new scientific methods of policing meat safety that make it easier to detect and significantly limit the invisible hazard of bacterial contamination. These methods have begun to reduce the incidence of food-borne illness.
Earlier this year, Congress declined to adopt an amendment that would have
permitted the Agriculture Department to continue enforcing the salmonella
standard regardless of the court's decision. Now that the ruling's threat to
meat inspections is no longer just theoretical, Congress needs to reverse course
and authorize the government's use of salmonella sampling to police health
standards at meat plants when it reconvenes in January. It would help if the
Bush administration acknowledged the serious gap in the nation's food safety
system, and worked with Congress to fix it.
DESPITE CONCERNS ABOUT FOOD BIOTERRORISM
CORPORATE AGRIBUSINESS SEEKS TO BLOCK, DILUTE
LEGISLATION AIMED TO INCREASE FEDERAL POLICING
OF DOMESTIC FOOD PROCESSORS, IMPORTED FOOD
ERIC PIANIN, WASHINGTON POST: . . . Since the September 11 attacks, counterterrorism experts and lawmakers have warned that the nation's agricultural and food processing industry --- regulated by more than a dozen federal agencies --- is vulnerable to biological attacks that could kill Americans and send the industry into an economic tailspin. Health and Human Services Secretary Tommy G. Thompson said recently he is especially concerned that foreign terrorists could contaminate food imports because of lax inspection and security at 300 ports of entry.
Yet the politically potent food industry, led by the National Food Processors Association, the National Grocers Association and the American Frozen Food Institute, has vigorously --- and effectively --- argued that government and industry food safety and quality control systems are more than adequate to meet any threat. Rather than expanding government regulations, industry officials say, Congress should simply provide more inspectors and more funding.
"I think we've already got the system in place to deal with terrorism," Kelly Johnston, executive vice president and chief lobbyist for the food processors, said . . . "We just need more information from the government to make sure we can address any potential threat."
What security experts fear is not, generally speaking, mass poisoning of wheat fields or food processing plants; because the food supply is so diffuse and diverse, that would be logistically difficult to do on any meaningful scale. What they do fear is the nationwide panic that terrorists could induce by contaminating even a few shipments of imported food or by introducing a virus deadly to U.S. livestock or crops.
Panic could have a devastating economic impact, much as the outbreak of foot-and-mouth disease in Britain virtually destroyed that country's beef industry. And the worst hit, ironically, would be the producers who have lobbied successfully against new regulations. "While you would certainly inflict some casualties, what you're doing with agriculture bioterrorism really is attacking our economy," said Jerry Jaax, a bioterrorism expert at Kansas State University. "It's an assault on our way of life."
Food is big business in America -- the U.S. meat industry alone reported $100 billion in sales last year, and food processors generated $490 billion in revenue --- and it has commensurate political clout. Last year, agribusiness and food processors contributed $13.9 million to Republican and Democratic candidates, according to the Center for Responsive Politics. The industry opposes more government regulation because it adds to its operating costs, forces companies to open their books to investigators and could result in delays in moving perishable goods to market.
Champions of increased policing powers, on the other side, include government food safety experts who are troubled by gaps in the regulatory safety net, lawmakers who take particular interest in consumer issues, and consumer groups. Bioterrorism experts such as Jaax -- a former Army veterinarian who helped respond to the 1989 ebola outbreak in Reston that was detailed in the best-selling book "The Hot Zone" -- believe that agriculture is a definite target of opportunity for terrorists. Even they, however, are skeptical that any of the food safety proposals under consideration in Congress would make much difference.
For the second year, industry leaders last month blocked a proposal by Sen. Richard J. Durbin (Dem.-Illinois) to consolidate the federal food inspection agencies under one roof to coordinate their activities. A few weeks earlier, they helped defeat an amendment by Sen. Tom Harkin (Dem.-Iowa) that would have ensured the continuation of new limits on salmonella in meat and poultry that are being challenged in court.
Industry lobbyists persuaded lawmakers to water down or drop proposals from bioterrorism bills that would have substantially enhanced the Food and Drug Administration's authority over domestic and foreign food processors and its ability to ferret out adulterated goods. Mounting a vigorous letter-writing and grass-roots lobbying effort, 18 trade groups representing every facet of the food processing and marketing industry worked to limit new FDA food inspection authority in bioterrorism bills being crafted by Sens. Edward M. Kennedy (Dem.-Massachusetts) and Bill Frist (Rep.-Tennessee) and House Energy and Commerce Committee Chairman W.J. "Billy" Tauzin (Rep.-Louisiana). . . .
For years before Americans seriously considered a threat of bioterrorism, there was a simmering controversy over the government's fragmented food safety regulatory policies and gaps in protection. Food-borne illnesses from E. coli, botulism and other bacteria kill an estimated 5,000 people a year and hospitalize an additional 325,000. The General Accounting Office describes the system as a "patchwork structure" that is seriously hampering government efforts to address the new terrorist threats.
Fifteen agencies -- including the FDA, the Department of Agriculture and the Centers for Disease Control and Prevention -- oversee the production, import and distribution of food, and each agency has its own rules and resources.
The Agriculture Department handles the safety of domestic and imported meat, poultry and some fruit; the FDA is responsible for ensuring that all other domestic and imported foods, including fish, vegetables and processed goods, are safe, wholesome and properly labeled.
Yet the FDA has 750 inspectors for 87,000 food processing plants, while the USDA has 10 times as many inspectors to cover 6,000 plants. While the FDA is responsible for inspecting all non-meat and poultry food shipments to the United States, the 150 inspectors assigned to that task are able to inspect less than one percent of the 3.7 million shipments of imported food that arrive each year.
Moreover, the FDA has fewer powers than the Agriculture Department to regulate the activities of domestic and foreign producers and to detain tainted food while seeking a court order to seize it. While the Agriculture Department can insist that countries exporting meat and poultry to the United States have food safety systems comparable to the one here, the FDA cannot.
"The system of food safety in the United States is beyond explanation," said
Durbin, the chairman of a Senate Governmental Affairs oversight subcommittee and
long-time critic of the patchwork regulatory system. Lawmakers are almost
certain to approve the administration's request for $61 million to hire 410 more
FDA food inspectors and technicians and to tighten security at agriculture
research centers. . . . .
FARM BUREAU MEMBERSHIP NOW 5.1 MILLION !!!
SCOTTY JOHNSON, GREEN RURAL UPDATES: Last year nearly 500 family farmers a week went out of business according to Farm Aid, a national family farm advocacy group. During the same time period the American Farm Bureau Federation increased their national membership by 91,291 "members families."
This brings Farm Bureau membership to a total of 5.1 million "families" during a time when the USDA reports fewer than two million total farms. While many question why the number of farmers can be dramatically decreasing while Farm Bureau memberships soars, the answer lays in the fact that the vast majority of Farm Bureau members are not farmers at all. Instead they are insurance customers who join the Farm Bureau in order to receive benefits such as rebates on Dodge and Ford trucks and other customer gimmicks.
This has raised serious tax issues in the past as the portion of the
insurance policy directed towards membership provides tax free income to the
Farm Bureau for lobbying and other uses. While Farm Bureau leadership keeps the
percentage of actual farmer members secret, some estimates place their farmer
membership at less than 10%. See "Facts About Farm Bureau Membership" at:
RENEWED APPEAL FOR CONTRIBUTIONS
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
RECOMMENDED WEB SITE:
CORPORATE AGRIBUSINESS RESEARCH PROJECT
Readers of THE AGRIBUSINESS EXAMINER are reminded that past issues of the
newsletter can be found at the Corporate Agribusiness Research Projectís web site on
the Internet. The CARP web site features: THE AGBIZ TILLER, THE
AGRIBUSINESS EXAMINER and "Between the Furrows."
THE AGBIZ TILLER, the progeny of the one-time printed newsletter, now becomes
on-line news feature of the Project. In-depth essays dealing with corporate agribusiness
activities are posted here periodically.
In "Between the Furrows," besides a modern search engine, there is a wide
pages designed to inform and educate readers on the inner workings of corporate
agribusiness. In addition to CARP's "Mission Statement," "Overview" and the Project
director's "Publication Background," the viewer will find a helpful "Fact Miners" page
which is an effort to assist the reader in the necessary art of researching corporations; a
page of "Quotable Quotes" pertaining to agribusiness and corporate power; a "Links"
page which allow the reader to survey various useful public interest, government and
corporate web sites; a "Feedback" page for reader input, and a page where readers can
order directly the editor's The Corporate Reapers: The Book of Agribusiness.
The CARP web site was designed and produced by ElectricArrow of Seattle,
Simply by clicking on either of the addresses below all the aforementioned
information are yours to enjoy, study, absorb and sow.