The
AGRIBUSINESS EXAMINER
Monitoring Corporate Agribusiness From a Public Interest Perspective
A.V. Krebs  Editor\Publisher
 
Issue #141                                                                      January 25, 2002
 

ATTENTION KMART SHOPPERS !!! ATTENTION !!!
COMPANY FILES FOR BANKRUPTCY PROTECTION
SQUEEZED BY $4.7 BILLION DEBT, POOR HOLIDAY SALES,
COMPETITION FROM WAL-MART AND TARGET STORES

DINA ELBOGHDADY, WASHINGTON POST: Kmart Corp., the discounter that tried to resurrect itself with promotions such as BlueLight Specials and Martha Stewart tea towels, filed for bankruptcy protection . . . becoming the largest retailer to seek such shelter from creditors. The Troy, Michigan-based chain hopes to emerge from bankruptcy in 2003 as a leaner, more viable operation in part by closing unprofitable stores this year, laying off some of its 240,000 employees and terminating the leases of about 350 stores it no longer occupies but for which it remains responsible.

Kmart declined to say which of its 2,100-plus stores would close or how many employees would lose their jobs as it tries to reorganize its finances under the supervision of a federal bankruptcy court in Chicago. The chain said it would honor its credit cards, gift certificates and store credits. To keep its remaining stores stocked and running, the company has a $2 billion credit line from a group including Credit Suisse First Boston, Fleet Retail Finance Inc., General Electric Capital Corp. and J.P. Morgan Chase
Bank.

"After considering a wide range of alternatives, it became clear that this course of action was the only way to truly resolve the company's most challenging problems," Charles Conaway, the company's chief executive, said in a prepared statement. Kmart's problems mounted in recent months, capped by dismal holiday sales. On Monday, the company acknowledged missing a weekly payment to its sole food distributor, Fleming Cos., which stopped all food shipments.

Fleming's move was a serious blow to a company already struggling to deal with $4.7 billion in debt, a series of money-losing quarters and immense competitive pressure from retail behemoth Wal-Mart Stores Inc. and the trendy Target Corp.

As the corporate descendant of S.S. Kresge five-and-dime stores on Main Streets in hundreds of small towns and cities, Kmart eventually broke into urban areas and dominated the discount retail world, delighting regular customers with the on-the-spot in-store promotions known as BlueLight Specials. By 1987, it was the nation's second-largest retailer with about $24 billion in sales, compared with the largely rural Wal-Mart's $12 billion. . . .

One analyst estimated that 80% of Kmart stores are within a seven-minute drive of a Wal-Mart. Kmart will continue to be outflanked if it closes about 400 of its stores this year, as many analysts expect. "Their competition is not going to sit around and wait for them to get out of bankruptcy," said Eric Beder, an analyst with Ladenburg Thalmann & Co. Beder said Kmart could turn around if it emerges from bankruptcy at a time of economic prosperity with its major licensing agreements intact, particularly its five-year alliance with Martha Stewart.

The Martha Stewart Everyday line -- including bedding, towels, linens and paint --- accounted for about $1.5 billion of Kmart's $40 billion in revenue last year, making it Kmart's top-selling brand. "If Kmart loses Martha Stewart and a number of other exclusive licensing agreements, you can argue that even with the size of its chain, Kmart has no competitive advantage even if it emerges out of bankruptcy," Beder said. "That would be a doomsday scenario." . . . .

Stuart Hirshfield, a bankruptcy lawyer at Dewey Ballantine in New York, said a key to Kmart's survival will be whether it has enough money through the reorganization to satisfy its vendors. Kmart's size is a plus, he said. Some retail experts also say vendors fear having Wal-Mart gain leverage if Kmart fails. Wal-Mart is known to drive a hard bargain. Kmart will "have tremendous support from the vendor community," Hirshfield
said. The vendors also have incentive to keep shipping. Bankruptcy law dictates that those vendors who do business with Kmart subsequent to the bankruptcy filing will be among the first to get paid, Hirshfield said. . . . .

Adding to Kmart's problems, company officials said, was the Enron scandal, which hurt the surety bond market. Kmart self-insures against liabilities tied to its worker compensation programs and its gun and liquor sales. It buys surety bonds from third parties to back up the insurance.  Enron also depended on such bonds. Insurance companies that were left to cover Enron's liabilities increased surety-bond prices, further straining the cash-strapped Kmart.
 

FLEMING COS.:
SOLE SUPPLIER OF FOOD AND GROCERIES
CUTS SHIPMENTS TO BELEAGUERED KMART

WALL STREET JOURNAL ONLINE NEWS ROUNDUP: Fleming Cos., a key food supplier to Kmart Corp., joined the growing list of suppliers to cut off shipments for the struggling retailer. Fleming said Monday that it suspended the shipments because Kmart had missed a weekly payment but that it is working with the chain as it navigates through its financial problems. "We intend to resume delivery of food and other consumable products to Kmart upon receiving satisfactory assurance of Kmart's performance," Fleming said.

Fleming signed a 10-year agreement nearly a year ago to provide Kmart with all the food and groceries in its supercenters. . . . Fleming's arrangement with Kmart includes a seven-day invoice-and-payment cycle. The company said it believes that the short payment terms for product shipments to Kmart put Fleming in a strong position to recover most of its approximately $78 million in merchandise receivables. Fleming added that it has ample capacity under its credit facility to address the nonpayment.

For its part, Kmart said it looks forward to resuming its business relationship with Fleming as it works through financial issues and is able to provide adequate assurance of payment. Fleming follows a growing list of Kmart suppliers to suspend shipments. Scotts Co., maker of Miracle-Gro plant food and other garden products, has said it is postponing shipments until Kmart explains its survival strategy. Scotts received about $175 million in revenue from Kmart last year, representing about 10% of its business.

One retail consultant surveyed 15 to 20 Kmart vendors early last week and found that about one-third had ceased shipping to Kmart, another third were holding shipments pending further news, and the final third were shipping normally.  . . .
 

WAL-MART, THE COMPANY THAT MAKES NOTHING,
POISED TO BECOME WORLD'S LARGEST CORPORATION

BRAD FOSS, ASSOCIATED PRESS: Forty years after Samuel Moore Walton opened the first Wal-Mart Discount City store in Rogers, Arkansas, the 4,150-store global retail chain that now sells everything from children's clothing to hunting equipment is poised to become the world's largest company. Wal-Mart Stores Inc. is on pace to record more than $220 billion in revenue for the 2001 fiscal year and dethrone oil giant ExxonMobil Corp. from the top of Fortune magazine's list of the country's and the world's biggest corporations. ExxonMobil had $212.9 billion in revenue in 2001.

"Everyone needs toilet paper and toothpaste, and they're the most efficient at selling it," said Eric Beder, analyst at Ladenburg, Thalmann & Co in New York. "It is really an incredible story." The most notable aspect of Wal-Mart's achievement, analysts said, is that a company that makes nothing would launch to the front of a list long dominated by blue-chip manufacturers. "It's indicative that we've made a big shift in this country to a service economy," said Warren Batts, professor of strategic management at the University of Chicago School of Business. Service companies became part of the Fortune 500 only in 1995.

While the major factor of Wal-Mart's achievement is its overwhelming dominance among retailers in the United States--about two-thirds of the economy is based on consumer spending --- the worldwide economic slowdown also played a role. "If we were in a booming economy, the other companies would have done better," Batts said.

Wal-Mart, based in Bentonville, Arkansas, reported $203.66 billion in sales through December. In January 2001, it reported $16.7 billion in sales. Conservatively assuming that Wal-Mart will have no sales growth in January 2002, its revenue for fiscal 2001 will surpass $220 billion. However, through December, Wal-Mart's sales were up 13.9% from the same period a year earlier. Analysts are forecasting that the company will report five percent sales growth for January 2002. The company's fiscal year ends January 31 and it will report its financial performance for the fiscal year on February19.

Wal-Mart has grown more than 10% annually for the past 20 years, expanding into Asia, Europe and South America, and along the way has forced its competitors to lower their prices, too, analysts said. Industry watchers say Wal-Mart's incredible success can be attributed to the business philosophy Walton swore by and which is still in practice a decade after his death:

"Try to squeeze the lowest price possible from the people who sell to you, and then pass the savings on to the customer," explained Kurt Barnard, a longtime retail consultant and president of Barnard's Retail Trend Report in Upper Montclair, New Jersey "They live up to that," Barnard added. A spokesman for Wal-Mart said it would be inappropriate for the company to comment at this time. Fortune magazine's list comes out each April. According to company reports, General Motors Corp., Ford Motor Co. and General Electric Co. should hold their respective No. 3, 4 and 5 spots.
 

USDA FEARS CROP PRICES
WILL REACH RECORD LOWS
WITHOUT ENACTMENT OF NEW FARM PROGRAM

JOSHUA LIPSKY, WWW.MEATINGPLACE.COM: With crop prices reaching record lows, the Agriculture Department says farm earnings will drop nearly 20% this year unless Congress enacts a new farm program quickly or approves more emergency payments. USDA said last week that net farm income would fall to $40.6 billion in 2002, down from $49.3 billion in 2001. USDA said that wheat farms stand to lose the most in 2002, an average of $10,000 per farm.

In the past, when USDA has projected a decline in net farm incomes, lawmakers have passed bailouts to supplement the payments growers receive under the 1996 farm bill. Last year, farmers received $21.1 billion in federal assistance. Most of the money goes to farmers who raise grain, cotton and soybeans. Government payments account for 30% of the gross incomes of wheat farms and 20% of revenue for other grains and soybeans.

According to Senate Agriculture Committee Chairman Tom Harkin (Dem.-Iowa), Congress is working on an expansion of farm subsidy programs that could take effect in time for this spring's crops. The programs will provide payments tied to swings in crop prices or farm income. Harkin added that if that legislation is not enacted in time for this year's crops, Congress would consider another one-year package of supplemental payments.
 

NFU'S SWENSON:
"WHAT'S WRONG WITH THIS PICTURE ???"
FARM INCOME DOWN 20%, CARGILL PROFITS UP 51%

NATIONAL FARMERS UNION PRESS RELEASE: While net farm income is expected to decline 20%, agribusiness giant Cargill, Inc., is enjoying a 51% increase in earnings compared to a year ago.

"Something is definitely wrong with this picture," National Farmers Union President Leland Swenson today told delegates to the National Farmers Organization convention. "While farmers have experienced a five-year economic slump, some large agribusinesses are profiting from low prices farmers must take for the commodities they produce."

Cargill's profits have risen 34% in the quarter ending November 30 and have jumped 51% during the first six months of its 2002 fiscal year. According to the organization's web site, Cargill attributes its success to increased sales in food ingredients, commodity processing and trading, as well as lower energy costs.

"It is unfortunate that the producers of our food struggle with low commodity prices while traders and processors pocket the fruits of increased sales to consumers," Swenson said. "Agricultural producers also would like to reap the true value of that which they sow in the marketplace. However, with rising concentration in production and processing, it is becoming increasingly more difficult for individual farmers and ranchers to survive."

Swenson pointed out that while Cargill now employs 90,000 people, more than three times that many U.S. farmers will lose their jobs in the next ten years, according to the latest U.S. Department of Labor report. "A rural economic stimulus package should be a top priority when Congress returns to business January 23. The Senate farm bill will go a long way toward repairing this sector of the economy that has experienced financial devastation for the last five years," Swenson continued. "Congress must also implement a system to tackle concentration and preserve our independent farmers and ranchers," Swenson said. "Our next farm bill should fully address this trend that places our food supply in the hands of a decreasing number."
 

CEO WARREN DALEY:
"CARGILL IS ABOUT NOURISHING PEOPLE . . .
COMPANY OF DIVERSE AND ENTERPRISING PEOPLE
COMING TOGETHER TO MAKE A VALUABLE DIFFERENCE
FOR FOOD AND FARM CUSTOMERS"

Cargill on January 15 reported $234 million in earnings for the second quarter ended November 30, up 34% from $174 million earned in the same period a year ago. Earnings for the first six months of fiscal 2002 totaled $522 million, a 51% increase from the $346 million net income reported in last year's first half.

"Our results reflect a journey Cargill began several years ago to be less dependent on buying and selling commodities and more invested in solving our customers' problems," said Warren Staley, chairman and chief executive officer. "We're doing more to help farm customers market their output successfully and to help food customers manage their supply-chain risks. That enabled us to post strong earnings in spite of the tragic events of September 11, the deepening financial crisis in Argentina, the sudden
bankruptcy of a major energy trader and a weak global economy."

The majority of Cargill's business units turned in improved results from a year ago, including food ingredients, the egg, poultry and pork processing businesses, animal nutrition, grain and cotton trading, and oilseeds processing. The company's financial businesses also performed well. Lower energy costs, plus actions taken last year to cut costs and streamline operations, aided performance overall.

Cargill's involvement across the food chain also helped cushion several shocks. "The beef industry was challenged by the slowing U.S. economy, the post-September 11 falloff in restaurant dining and the sharp drop in Japanese beef imports, and all of those impacts came at a time when market-ready cattle supplies were large," said Staley.

"Although our cattle feeding business suffered losses, Cargill's ongoing shift to higher-value and branded meat products and our ability to adapt to changing consumer buying patterns helped us hold beef earnings to near last year's level. We also increased exports of pork and poultry products to Japan and accelerated shipments of soybean meal for use in animal feeds."

Results in fertilizer production and steel manufacturing continued to reflect ongoing global supply-demand imbalances in those two markets. Looking ahead, Staley said that Cargill aims to bring noticeably better ideas and offerings to customers. "At our core, Cargill is about nourishing people," he said. "We're in a knowledge business, and we are changing how we come together as a company of diverse and enterprising people to make a valuable difference for food and farm customers."
 

NATIONAL FARM ACTION ACTION CAMPAIGN
STEPS UP EFFORTS TO BLOCK
DORR'S NOMINATION AS USDA UNDERSECRETARY

Leaders of the National Farm Action Campaign announced  . . . that they are dramatically increasing their efforts to block the controversial nomination of Thomas Dorr of Marcus, Iowa as USDA Undersecretary for Rural Development.

"Dorr's support for large agribusiness would spell disaster for rural America," said George Naylor of the National Farm Action Campaign.   "We were successful last year in forcing the postponement of Dorr's confirmation hearing.  Now we must block Dorr's nomination once and for all."  Last May, over 160 rural, environmental, civil rights and labor organizations joined the family farm movement to block Dorr's nomination.

Members of the National Farm Action Campaign are conducting an aggressive grassroots outreach effort, including direct mail to thousands of farmers, as part of their national effort to block Dorr.  In addition, representatives of the campaign will testify at Dorr's confirmation hearing in Washington. The Senate Agriculture Committee has scheduled Dorr's confirmation hearing for January 30th.

Following Dorr's nomination last spring, the National Farm Action Campaign spearheaded a national grassroots effort to block Dorr, citing the following reasons for their opposition:
* Dorr favors North Carolina's factory farm model of hog production, and will use his post at the USDA to further the expansion of giant factory farms that pollute the environment, disrupt rural communities, and force family farmers off the land.
* During a videotaped meeting at Iowa State University in 1999, Dorr made comments suggesting that ethnic and religious diversity hinder rural economic development.
* There remain unresolved allegations that Dorr was involved in a payment scheme several years ago to collect farm subsidies for which he knew he was ineligible. The FSA and the USDA continue to refuse to release information and documents regarding this alleged scandal, even after repeated Freedom of Information Act appeals by members of the National Farm Action Campaign.

"It's pretty simple. Dorr is a bad appointee for an agency that is supposed to keep family farmers on the land and advocate for the interests of rural Americans," said Naylor. "Rural America deserves better much better."
 

USDA'S GIPSA AUDIT REVEALS MEATPACKERS
UNDER REPORT CAPTIVE SUPPLY NUMBERS

USDA's Grain Inspection, Packers and Stockyards Administration (GIPSA) released a report and audit on January 18 revealing that meat packers have been under reporting their captive supply numbers.  In their 1999 annual reports to GIPSA, for example, meat packers previously reported that their captive supply numbers were 25.2% of annual slaughter.  The audit revealed that the 1999 captive supply numbers 32.3%, more than 28% higher than what packers reported.  GIPSA also reiterated its definition of captive supplies.

"It seems that meat packers, like other corporations in the news, provide inaccurate information calculated to deceive," said Fred Stokes, president of the Organization for Competitive Marketing (OCM).  "Producers have long known that packer captive supply numbers were larger than packers admitted. The USDA-GIPSA audit has now shown this to be true."

GIPSA claimed that the difference in numbers was due to a "misunderstanding" in their definition of captive supply. Thus, the agency has now restated its definition of captive supply as "livestock that is owned or fed by a packer more than 14 days prior to slaughter, livestock that is procured by a packer through a contract or marketing agreement that has been in place for more than 14 days, or livestock that is otherwise committed to a packer more than 14 days prior to slaughter."  This definition will be published in the Federal Register.

"Producers need to bear in mind that the new captive supply numbers were for 1999," stated Stokes. "We know that in 2002, the numbers are much higher. Also, the hog industry is reported to have at least 83% captive supply.  The captive supplies allow packers a tremendous amount of control over the markets."
 

CARGILL, MEATPACKERS, AMERICAN MEAT INSTITUTE
"INTENTIONALLY MISCONSTRUE" LEGISLATION
ON SENATE-PASSED PACKER FEEDING BAN

Meat packers and the American Meat Institute have continued providing misinformation on the packer feeding ban since its passage in the U.S. Senate last month as part of the Farm Bill, according to the Organization for Competitive marketing. Their methodology is to intentionally misconstrue the legislative language and repeatedly speak of unproven "unintended consequences" that may result from this market facilitating measure.

The packer feeding ban will prohibit meat packers from "owning, feeding or controlling" livestock.  It is supported by large majorities of the citizenry, as shown in all polls on the issue as well in the immense grass roots support for this legislation.  Packer feeding of livestock is one part of the larger captive supply problem.  Captive supplies are all livestock committed to delivery to a certain packer more than 14 days before slaughter.

However, the co-sponsors of the bill (Johnson, Grassley, Wellstone, Harkin, and Thomas) were clear that the word "control" does not include forward contracts and marketing agreements.  In a statement in the Senate record, Senators Johnson and Grassley were clear that the word "control" is a loophole closer which prevents clever attorneys from circumventing the will of Congress. Control means substantial control over the production operation by a packer --- not a mere contract right of delivery of cattle to a packer from an operation controlled by a producer.

Major agricultural states prohibit packer ownership and control of livestock but not contracting.  Examples include Iowa and Nebraska.  Both states have agricultural sectors that are as strong as other states.  There is no evidence that packer feeding bans have harmed farmers in those states. Further, in a USDA press conference January 18, 2002 JoAnn Waterfield, acting director of Packers & Stockyards Programs for USDA,
refused to state that captive supplies were packer controlled livestock within the meaning of the Senate bill.  That statement was in direct response to a question by a Cargill/Excel attorney seeking a statement that "control" and "captive supplies" are the same.  The USDA definition of captive supplies is "all livestock committed to a packer more than 14 days before slaughter."

One of the most recent examples of the meat packer misinformation campaign is a letter sent by Excel to thousands of pork producers. Excel, a subsidiary of Cargill, not only says that control includes contracting --- it claims that the bill "clearly prohibits almost all risk management tools that packers offer to producers."  This claim by Excel, one of the biggest meat packers in the country, and a major owner of cattle, is blatantly false and without support, according to the OCM.
 

AGRI NEWS EDITOR WILMES
DUBS SMITHFIELD FOODS CEO JOSEPH LUTER
"HIGHLY SKILLED PRACTITIONER" OF THE "BIG LIE"

MYCHAL WILMES, MANAGING EDITOR, AGRI NEWS: If you're going to lie, you might as well make it a whopper. Adolf Hitler used the "Big Lie" approach to great success in Nazi Germany during the 1930s.

Unhappily, the approach remains chillingly effective today.

Smithfield Foods CEO Joseph Luter --- who has built the company into a vertically integrated monster that processes 12 million hogs annually --- is a highly skilled practitioner. Smithfield Foods has become a Wall Street darling. Fat with profits, investors have sent its stock price soaring. The company is flush with cash and it is using it to do in beef what it has already accomplished in hogs. There have been bumps in the road. Smithfield has a woeful environmental record.

Luter dismissed environmentalists' complaints with the same coolness as he pooh-poohs his firms impact on family farmers. Luter suggests that any governmental or societal attempts to stop its vertically integrated success would be costly to consumers. Meat quality would deteriorate, he maintains, and family farmers would be subsidized on the backs of unwitting consumers.

Luter chooses to ignore that his company receives millions of dollars in indirect subsidies. Current farm policy and its reliance on fence-row-to-fence-row grain production assures Smithfield that its feed costs will never increase significantly. Smithfield's bottom line would take a serious hit if it actually had to pay a price that included a profit for grain producers.

Smithfield's success is also linked to the desire for economic development it finds waiting in each state that wants the giant to move in. There's nothing wrong with economic development, as long as it is sustainable. The economic model created in Smithfield's corporate board room isn't meant to be sustainable. Short-term goals --- an obscene profit margin --- clearly take priority over community needs and sustainability.

Smithfield depends on consumer ignorance for continued success. It will likely succeed if it can convince consumers that its products are better. It helps to have millions allocated for advertising to do so. It and its corporate brethren will succeed unless consumers awaken and tally the social costs of allowing livestock agriculture to become nothing more than an investment opportunity for cash-laden investors.

The Smithfields of this era receive invaluable assistance from state economic development officials who want jobs --- no matter how low-paying --- in their communities. South Dakota state officials are only the most recent examples of overeager policymakers who will sell out their rural communities and environment to the highest bidder.

There are those within the agriculture community who say that the corporates in livestock and grain should not be criticized, because farmers need them as partners in order to prosper. There is truth in that, but farmers need good partners. Companies have the responsibility to be good corporate citizens. The track record indicates few are --- most have used their money and positions of influence to squash family farmers.

Luter wouldn't be the first to get away with a "big lie." The hope is consumers and the general public will catch on before it's too late and hold the Smithfields of this era accountable for their actions.
 

JAMES FREEMAN:
RATHER THAN FAULT FLAWS IN FEDERAL OVERSIGHT
CONGRESS SHOULD CONSIDER STRONGER PENALTIES
FOR WHITE-COLLAR CRIME

JAMES FREEMAN, WASHINGTON POST: As the Enron debacle looks more and more like a criminal case and less like a regulatory failure, congressional investigators should consider a new avenue of inquiry. Instead of examining possible flaws in federal oversight, they might consider stronger penalties for white-collar crime. Ultimately juries will decide whether Enron executives and officials at the firm's auditor, Arthur Andersen, are guilty of crimes. The question for Congress is how to dissuade other executives from cooking the books in the future.

Right now the legal incentives to tell the truth are not that great. Look at some sentences handed out by federal courts in the Southern District of Texas, which includes Houston, home to Enron and its top executives. In its latest annual report, the U.S. Sentencing Commission describes 162 defendants convicted of fraud in that district during fiscal 2000. But only 115 of those convicts actually received prison time. Twenty-three received probation, and the rest some combination of fines, probation and confinement outside of prison. (Such confinement can include home confinement. No one enjoys being grounded, of course, but such punishment is unlikely to frighten people into ethical behavior.)

Of the convicts who were sentenced to prison, 53 received 12 months or less, and the average sentence was just 18.2 months. Factoring in the possibility of early release for good behavior, the likelihood that such convicts are confined in a minimum security prison, and the possibility of spending the final months of a sentence in a halfway house, we might ask whether the disincentives to commit white-collar crime are strong enough.

As you might expect, according to federal sentencing guidelines, frauds that affect lots of people and cause millions of dollars in losses should result in longer sentences than those imposed for small-time scams. So you might say that an Enron-size case, if prosecuted successfully, will result in a much greater punishment than the average sentence in south Texas. But keep in mind that the average defendant can't afford a legion of lawyers to aggressively negotiate a deal (preferably one that includes a big fine but no jail time). And the recent history of financial shenanigans, from Sunbeam to Waste Management, suggests that executives can make most of these problems go away by writing a check.

Recently a former chief financial officer at Aurora Foods, after pleading guilty to securities fraud and several related crimes, did actually receive a prison sentence of 57 months. But considering that the fraud involved underreporting corporate expenses by $43 million, is that a harsh punishment? After all, 57 months is roughly the average prison sentence for federal defendants convicted of auto theft.

In a series of studies in recent years, the Texas-based National Center for Policy Analysis (NCPA) has shown that a move toward longer prison sentences (made possible by a prison-building boom in Texas) tracks very closely with a sharp decline in Texas crime during the 1990s. In a December 2000 report, NCPA notes that the Texas murder rate fell by 57% in the 1990s, rape by 26%, and the rate of burglary by 48%. In each category, crime rates declined faster in Texas than in the nation as a whole.

"Why did the rate of serious crime decrease so fast in Texas?" the report asks. "Certainly a strong case can be made that tougher policies toward criminals played an important part. More people went to prison and stayed there longer. . . . Texas had 704 prisoners per 100,000 population in 1999, compared to 290 per 100,000 in 1990, a 143% increase in imprisonment."

The Texas experience in the 1990s mirrors a national trend that began in the early 1980s. As sentences became longer, as more aggressive law enforcement increased the likelihood of punishment, crime rates began a long downward trend that continues to this day. According to the government's Bureau of Justice Statistics, violent crime rates fell to the "lowest level ever recorded in 2000." The evidence suggests that harsh punishment does deter crime. For those seeking to eradicate corporate crime, it's worth considering whether we should make fraud convictions more costly and painful.

James Freeman is president of Hudson Media Corp., a television production company in Alexandria.
 

DELAWARE CHIEF JUSTICE CREATES TASK FORCE
TO STUDY USING CORPORATE, PRIVATE DONATIONS
TO HELP PAY FOR STATE'S COURT COSTS

DENNIS THOMPSON JR. AND SEAN O'SULLIVAN, DELAWARE NEWS JOURNAL: Delaware's top judge said . . . . he has created a task force to study using corporate and other private donations to help pay for the state's courts. State Supreme Court Chief Justice E. Norman Veasey has asked a 16-member team of lawyers, businessmen and academics to examine the legal and ethical pitfalls of the idea.

National and state experts called the notion risky but said it was worth  studying. Former Superior Court Judge William Swain Lee said the idea could be dangerous because of potential conflicts of interest that could create the appearance of impropriety. "You have to be very careful about having private funding because very few funding sources would be free of litigation in the state," Lee said. "It is a great challenge."

Veasey announced the creation of the task force during his annual State of the Judiciary message, which he delivered to the Wilmington Rotary Club. He said the study was his idea but he has the unanimous support of his fellow Supreme Court judges. Veasey said he knew of no other state that used donations to help run state courts.  . . .

Veasey said the judiciary faces unusual expenses this year. A new courthouse in Wilmington is scheduled to open in August, and a technical committee is expected in March to make a recommendation on a new computer case-tracking system. "This is a tough year budget-wise," he said. "We need to find ways to save money and look for grants and other systems of raising money outside of the appropriations of the General Assembly."

No building would be named after a large contributor, as has happened cases such as the PSINet Stadium in Baltimore or the First Union Center in Philadelphia, Veasey said. "We wouldn't do anything like that. These things would be funneled in a way that nobody has any commercial credit with it," he said. "These are people working strictly for the good of the community."

Some state and national legal groups said the idea of using private donations to help courts operate is worth study despite the risks.."I don't think it is such an appalling idea that they shouldn't look into it." said Cynthia Gray, director of the Center for Judicial Ethics of the American  Judicature Society in Chicago. But John Flaherty, lobbyist for Common Cause of Delaware, said the idea "leaves a bad taste in my mouth. Having private companies donate to the justice system, you have to wonder what they will get in return," Flaherty said. "One of the hallmarks of the judicial system is fairness for all, because the funding for the system comes from the people." . . . .
 

SO THEY SAY !!!!
 
"The farmer can withstand the challenges of unpredictable weather, he can stand the ups and downs of a fickle but fair marketplace, but the one thing neither he nor the small businessman can withstand is the calculated corruption of these gargantuan multinational corporations. When the multinational corporations have been exposed as the scheming greedy giants that they are, it's going to be interesting to see how long Americans will put up with allowing them to financially rape unsuspecting citizens."

--- Marinell Strain, Oklahoma Contract Poultry Growers, 1999
 

"I see in the near future a crisis approaching that causes me to tremble for the safety of my country.  Corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed."

--- President Abraham Lincoln on Corporations (1864)
 

PUBLISHERS MEMO:
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 an
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 range of
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,
Washington.
http://www.electricarrow.com

Simply by clicking on either of the addresses below all the aforementioned features and
information are yours  to enjoy, study, absorb and sow.

http://www.ea1.com/CARP/
http://www.ea1.com/tiller/