May 10, 2002   #161
Monitoring Corporate Agribusiness
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Children across the country continue to be exposed to toxic pesticides, all the while Congress withdraws a provision to the Farm Bill that could have protected children from these types of incidents. The provision, the School Environment Protection Act of 2002 (SEPA), was an amendment attached to the Farm Bill until it was withdrawn due to unyielding opposition from the House Agriculture Committee.

SEPA promotes school pest management practices that minimize risk to children and notify and provide safety information to parents and school staff when pesticides are used in the schools.

"Passage of the Farm Bill without SEPA is shortsighted and unfortunate. Children, teachers and school staff deserve the basic health and safety protections that this right-to-know and pest management measure would provide," said Jay Feldman, executive director of Beyond Pesticides.

This is not the first time SEPA was purged in conference committee. Last November, SEPA was derailed in the House-Senate Education Conference by one vote when House Agriculture Committee members opposed the bill. At that time, supporters announced that it would attach SEPA to legislative vehicles moving through Congress repeatedly until it passes.

Attaching the provisions to the Farm Bill was viewed by supporters as a long shot, given the vehemence of opposition in the leadership and staff of the House Agriculture Committee. According to its supporters, the bill continues to have strong support in the Senate and House.

"While people and the groups that we work with have had important success at the local and state level, all children deserve protection," said Feldman. "Despite the fact that many in pest management adhere to the principals of integrated pest management (IPM), the practice is still not implemented in schools as widely as it should be. School pest management plans, as required by SEPA, can make this happen."

"SEPA has brought the issue of pesticides, children and schools to the front burner of American politics. And it is simmering," said Kagan Owens, Beyond Pesticides program director. "Just in the past year six states have passed laws that address school pesticide use." Overall, 31 states have adopted pesticide laws that have one or more of the provisions in SEPA, according to a Beyond Pesticides report, "The Schooling of State Pesticide Laws 2002 Update."

However, state laws are uneven and inadequate across the country. With regard to the three major programmatic components of SEPA --- posting, notification and integrated pest management (IPM) --- only four states, including Maryland, Massachusetts, Michigan and Pennsylvania, have statutory requirements in all three areas.

Although the legislation resulted from negotiations between the pesticide industry and public interest organizations, groups normally at odds with each other, and had wide bi-partisan support, environmentalists, and Senator Torricelli charge that the pesticide industry reneged on the agreement it had signed off on and supported before a unanimous consent Senate vote last June. Throughout Conference deliberations a coalition of environmental, public health, parent and teacher organizations, spearheaded by Beyond Pesticides and the National Pest Management Association have actively supported the legislation.


MARIAN BURROS, THE NEW YORK TIMES: The first detailed scientific analysis of organic fruits and vegetables, published . . .  shows that they contain a third as many pesticide residues as conventionally grown foods.

The findings, published in the Food Additives and Contaminants Journal, confirmed what consumers of organic food have taken for granted but did not settle the argument over whether organic food is safer than conventional food treated with chemical pesticides.

The debate gained prominence in February 2000 when John Stossel, a correspondent on the ABC News program "20/20," reported that testing had proved that the levels of pesticide residues in conventional produce were similar to those in organic produce, making organic claims a fraud. Though Mr. Stossel retracted his statement --- such testing had never been conducted --- his report alarmed proponents of organic agriculture and
those like Consumers Union who do not oppose the use of synthetic pesticides but want stricter standards.

Edward Groth III, a senior scientist at Consumers Union and a co-author of the report, said: "There have been some very strong opinions voiced about organic produce that haven't been based on data and have confused the issue. This report shows rather convincingly and compellingly that organic foods are much less likely to have any residues;  that when they have residues they have fewer and that the levels of the residues are generally lower."

The findings are based on pesticide residue data collected on a wide variety of foods by the United States Department of Agriculture from 1994 to 1999, tests conducted on food sold in California by the state's Department of Pesticide Regulation from 1989 through 1998, and tests by Consumers Union in 1997. The combined data covered more than 94,000 food samples from more than 20 crops; 1,291 of those samples were organically grown, about 1.3%

The Agriculture Department data showed that 73% of the conventionally grown foods had residue from at least one pesticide and were six times as likely as organic to contain multiple pesticide residues; only 23% of the organic samples of the same groups had any residues. The California data found residues in 31% of the conventional food and 6.5% in the organic. Consumer Union tests found residues on 79% of the conventional samples and 27% on the organic.

The study also looked at why organic foods contained any pesticide residues. When residues of persistent insecticides, like DDT, were excluded, the percentage of organic samples with residues dropped to 13% from 23%. The findings were minimized by opponents of organic agriculture, like the American Council on Science and Health, which gets 40% of its financing from industry.

"So what?" said the council's Dr. Gilbert Ross. "The health risks associated with pesticide residues on food are not at all established. I think the amount of pesticide residues to which we are exposed on our foods pose no significant health risks to human beings." The Environmental Protection Agency disagrees and has been working to reduce pesticide levels since 1996.

Dr. Groth said the amount of residues in conventional food was well below the level that is clearly unsafe but above the level scientists say is probably safe. "There is a large gray area in between," Dr. Groth said, "and we need a wide safety margin which is not wide enough with conventional produce. This is especially true when we talk about infants and children because they are still developing." . . . .


WALL STREET JOURNAL ONLINE NEWS ROUNDUP: A nonprofit environmental group on Wednesday named several chocolate makers in a lawsuit alleging that their products contain dangerous levels of lead and cadmium.
The American Environmental Safety Institute alleges that Hershey Foods Corp., Kraft FoodsInc., and Nestle SA's Nestle USA Inc. unit are exposing their customers, especially children,to the toxic metals. Also named were Rocky Mountain Chocolate Factory Inc. and privately held Mars Inc. and See's Candies Inc.

"Our scientific research clearly shows that chocolate products contain lead and cadmium, heavy metal poisons also known to the state of California's health experts to be hazardous to human health," Deborah A. Sivas, president of the California-based institute, said in a prepared statement.
"The chocolate manufacturers have neither taken appropriate actions to remove potentially dangerous levels of lead and cadmium from their chocolate products, nor notified consumers of the health risks," she said. The chocolate companies named in the suit, which was filed in Los Angeles County Superior Court, collectively control more than 80% of the U.S. chocolate-product marketplace, the institute said.

Responding to the suit, the Chocolate Manufacturers Association described the claims as baseless, and said the California attorney general had reviewed the allegations and determined the lawsuit lacks merit. The companies also said scientists and doctors at the Food and Drug Administration have confirmed the chocolate products are safe to eat.

Nestle, the world's largest food and beverage producer, fiercely rejected the allegations. "We intend to vigorously defend ourselves against these baseless and frivolous allegations," Nestle spokesman Francois-Xavier Perroud said. "Nestle products are perfectly safe, according to the U.S. Food and Drug Administration, food-safety experts and the California State attorney," he said. Other companies named in the suit weren't immediately available for comment.

A health expert working with the institute called chocolate a "long-recognized, but under-appreciated source" of dangerous heavy metals. "The presence of lead and cadmium in chocolate was flagged as a problem by the World Health Organization almost 20 years ago," said Dr. Marc Lappe, director of the Center for Toxics and Ethics, in the institute's press release.

The institute said it is seeking enforcement of Proposition 65 --- a California consumer-health statute that requires warnings be issued to individuals before they are exposed to hazardous chemicals --- and California's Unfair Competition Law. It is also seeking an injunction to require warnings on chocolate products before they can be sold.

The American Environmental Safety Institute is a nonprofit group that investigates environmental and public-health hazards. The group also has filed lawsuits against cigarette and drug makers.


JOHN J. FIALKA, THE WALL STREET JOURNAL: Federal regulators are        investigating emissions produced by the nation's ethanol industry, concerned that the work of turning corn and other agricultural materials into fuel may be violating the Clean Air Act.
The Environmental Protection Agency inquiry, disclosed in a letter sent to ethanol producers last month, comes as lawmakers from farm states and environmental groups are pushing a "renewable fuels" mandate in an energy bill, passed by the Senate, that would triple the size of the rapidly growing industry.
Monte Shaw, spokesman for the Renewable Fuels Association, said the letter came as a shock to the industry. Twenty-one companies --- operating about a third of the plants in the industry --- were summoned to a meeting Monday with EPA officials in Chicago, but the session was canceled due to a scheduling conflict. Mr. Shaw said he expects another invitation soon. "We are committed to addressing any issues that might be raised by the EPA," he said.
Tom Skinner, EPA's regional administrator in the Midwest, said he called for the meeting after an agency test showed that an ethanol plant in the St. Paul, Minnesota area was producing volatile organic compounds, which can cause urban smog and carbon monoxide. These, in turn, can lead to heart disease in very high concentrations. He called them "additional emissions that weren't anticipated" in prior tests of ethanol plants and said the meeting with the industry would be held soon.
"This is much earlier than we would normally be talking about an ongoing investigation," he said, adding that he wants to get industry leaders together to discuss whether the problem is industry-wide and what can be done about it. "If this meeting doesn't bear fruit, then we'll get back to our normal course of doing things," which he said could include company-by-company investigations.
Mr. Shaw said the industry was surprised by the EPA test, which was different from those used to measure emissions from ethanol plants. Ethanol, used as a gasoline additive, has won strong backing from Senate Majority Leader Tom Daschle of South Dakota and other farm-state senators because it creates more farm jobs and tends to produce cleaner-burning automobile fuels.

The St. Paul test showed that the emissions from the ethanol plant were coming from a drying process that turns the "mash," or residue of corn and other materials that have been used to produce the ethanol, into cattle and chicken feed. "This showed stuff coming out of the stacks that nobody thought would be there," said Mr. Shaw, adding, "State and federal officials issued permits to these plants."

Frank O'Donnell, who heads the Clean Air Trust, a Washington-based  environmental group, said he worried that the EPA might use the unusual forum of the industry meeting to "cut a special deal for the industry." He said the Senate plan to expand the ethanol industry might still be appropriate, "but first we need to make sure that it's not adding to our health problems."


DOW JONES NEWSWIRES: The U.S. Federal Trade Commission and the U.S. Department of Justice's antitrust division are discussing which agency, if either, should investigate the ethanol market for possible anticompetitive practices.

In a letter sent Monday to Rep. Doug Ose, Rep.-California, FTC General Counsel William Kovacic said the commission's bureau of competition has shared internal memos from ethanol companies with the Justice Department's antitrust division to determine which agency has responsibility.

"(FTC) staff's action in conveying these materials to the (Justice) antitrust division does not reflect any decision about the existence of an antitrust violation, nor does it mean that the Justice Department necessarily will decide to initiate a formal inquiry," Kovacic says in the letter.

Ose, who chairs the House subcommittee on energy policy, natural resources and regulatory affairs, held a hearing April 23 in which he presented Kovacic with industry documents that the congressman said raise concerns about possible collusion in the ethanol industry.

In March, the General Accounting Office reported that 98% of U.S. ethanol        production capacity was in the Midwest, 71% was controlled by four companies and 41% was controlled by Archer Daniels Midland Co. (ADM).

Critics of ethanol-supportive measures in energy legislation approved by the Senate last month say such a highly concentrated industry could easily lead to market manipulation. The Senate bill includes a renewable automotive fuels mandate that could triple ethanol's market over 10 years. The House energy bill doesn't. House and Senate negotiators have yet to begin work reconciling their bills.


CHICAGO TRIBUNE:  G. Allen Andreas, the chairman and chief executive of Decatur, Illinois-based Archer Daniels Midland Co., on Tuesday downplayed a federal investigation into allegations that the company colluded to fix prices for ethanol in the 1990s. He said that the Department of Justice was the "appropriate" entity to investigate the case. The Federal Trade Commission shifted the case to Justice on Monday. "This event occurred some eight to 10 years ago," Andreas said. "We are looking into our records and will cooperate in every way with their investigation.


SHAILAGH MURRAY, THE WALL STREET JOURNAL: What if you could turn a plentiful plant into a fuel that powers trucks, buses and tractors, doesn't pollute the air and creates an exhaust that smells like french fries? Well, it already exists: It is called biodiesel. Produced mainly from soybeans, some people call it a miracle fuel. Europeans have been using it for years, but its cost --- as much as three times more than regular diesel fuel --- makes it too pricey for most U.S. drivers.
The federal government may be about to change that. With the support of farm-state senators, biodiesel backers have secured a special tax break in a pending Senate energy bill that in effect would eliminate the price gap. The tax break is just temporary, the industry insists; three years is enough. "This will help get us to the point where we can stand on our own," says Joe Jobe, executive director of the National Biodiesel Board, the industry-trade association.
Right, says a sarcastic Bill Frenzel, formerly a senior Republican on both the House budget and tax committees. "I'll bet they'll be heartbroken if it ever gets extended." Mr. Frenzel has seen it many times before: Costly, long-lived federal subsidies often start small and temporary. "It sounds better and looks cheaper," says Mr. Frenzel, now at the Brookings Institution, a Washington think tank. "That's just the way the game is played."
Take ethanol, the corn-based fuel that soaks up subsidies --- and can make or break presidential bids in the early caucuses of corn-growing Iowa. Like biodiesel, this fuel additive also started as a sure thing in need of only a temporary boost from Washington.
That was 25 years ago.
In a Senate floor debate on October 27, 1977, former Republican Sen. Charles Percy of Illinois, another corn state, predicted that when the tax break expired in 1984, ethanol would be "cost-competitive with gasoline, and preferential treatment will no longer be necessary." Extended several times, the ethanol tax break now is set to expire at the end of 2007 --- though few expect it will. Since 1979, according to the General Accounting Office, the investigative arm of Congress, various ethanol incentives have cost taxpayers as much as $15 billion. Today, ethanol is the third-largest use of U.S. corn, topping cereals and sweeteners.

One sure sign that something big is afoot with biodiesel is Archer Daniels Midland Co.'s enthusiasm for it. ADM, which dominates the U.S. ethanol market and processes more corn and soybeans than any other company in the world, said recently that it is considering building a biodiesel plant in Minnesota. That state, one of the country's top soybean producers, this year became the first to pass a law mandating that biodiesel be added to most diesel fuels.

Biodiesel stands to be "one of the most important things . . . . to positively affect our margins in our industry," Paul Mulhollem, head of ADM's grain, oilseed-processing and cocoa business, told investment analysts in November.

Securing an exemption from the federal excise tax on motor fuels is a crucial beginning. The most common form of biodiesel sold today blends 20% biodiesel with 80% conventional diesel. It costs between five cents and 20 cents more a gallon than straight diesel. The pending legislation would reduce by one cent the 24.4 cents-a-gallon federal excise tax for each 1% of biodiesel in a blend, up to a maximum of 20 cents. That would eliminate the price gap for the 20% biodiesel mix.

The biodiesel tax break in the Senate's energy bill would expire on December 31, 2005. By then, production will have increased enough to reduce costs, the fuel's supporters say. Both biodiesel and ethanol would benefit from other provisions in the energy bill. A mandate that a certain share of motor fuel come from renewable sources, such as corn and soybeans, could triple the ethanol market, and benefit biodiesel as well.

Meanwhile, the fledgling biodiesel industry has a wish list for future bills, including both tax credits for small producers --- who fear big companies will muscle them aside -- and incentives for converting soybean-oil factories to biodiesel plants. "If there's an obstacle, we've got to challenge that obstacle," says Sen. Blanche Lincoln, a Democrat from soybean-producing Arkansas.

Rudolf Diesel, the German engineer who designed the engine named for him, envisioned that it would run on vegetable oils. Europeans have made biodiesel for years from rapeseed, also known as canola, and its use has spread there with the help of government incentives. The oil is combined with alcohol; when the resulting glycerin separates, what remains resembles diesel fuel --- except it is biodegradable and nontoxic.

Soybean growers have moved cautiously to avoid ethanol producers' initial problems with quality, storage and regulations. They have spent $30 million to clear environmental hurdles before bringing the fuel to market. In 1999, biodiesel sales were only 500,000 gallons; the following year, they were five million. Last year, between 10 million and 15 million gallons were sold.  . . .

In 2001, farmers planted a record 75.2 million acres of soybeans but are burdened by about 250 million surplus bushels, government estimates show. Though a strong export, U.S. soybeans face competition from South America. Soybean-oil prices are soft. Biodiesel, growers hope, could spark a surge in demand.

With that in mind, John Campbell, [a lobbyist who works for Ag Processing Inc., a Nebraska farmer-owned cooperative that makes biodiesel] called home-state Sen. Chuck Hagel, a Republican who serves on the Energy Committee. With the big energy bill under way, biodiesel and ethanol lobbyists wanted to shift jurisdiction over the renewable-fuels issue to the energy panel from the environment committee.

"This allowed Republicans to embrace a renewable-fuels standard on the basis of national security," says Mr. Campbell, noting that the energy-bill debate focused on reducing U.S. dependence on foreign oil. Sen. Hagel calls the renewable-fuels standard "an environmental issue, yes, but an energy issue first and foremost." He and Sen. Charles Grassley, an Iowa soybean farmer who is the top Republican on the Finance Committee, worked to convince colleagues.

Mr. Grassley sent lobbyists to see Sen. Tim Hutchinson of Arkansas, a Republican in a tough re-election race. His help for biodiesel would score points with homestate soybean farmers, and it was Mr. Hutchinson who introduced an excise-tax exemption proposal last June.

The industry has gotten 16 biodiesel-related bills introduced in Congress; the farm bill now headed to President Bush for signing would provide $1 million a year in biodiesel "education funds."

The soybean and biodiesel industries don't have political-action committees to make campaign contributions. "In Washington, you either have a PAC or you have people," says Mr. Campbell. "When I go to town, I have my farmer hat on."

But individual companies do contribute. ADM is a major contributor to both parties. Mr. Campbell's Ag Processing has a small PAC, and has given $4,000 each to Sens. Hagel and Tim Johnson of South Dakota, a leading Democratic sponsor of biodiesel. It helps the cause of biodiesel, and ethanol, that supportive farm-state lawmakers are prominent in the Senate --- not least is Majority Leader Tom Daschle of South Dakota and the tax-writing Finance Committee's chairman, Max Baucus of Montana. Those with presidential ambitions lend support, including onetime ethanol skeptic Joseph Lieberman, the Connecticut Democrat. "That's what happens when you start spending a lot of time in Iowa," quips Mr. Grassley, in reference to his state's first-in-the-nation presidential caucus.

The House passed its energy bill last year, before the industry began its push. But biodiesel backers are confident a biodiesel provision will emerge as part of the compromise energy bill that is being negotiated in a House-Senate conference committee. GOP House Speaker Dennis Hastert is from Illinois, the top ethanol producer and ADM's home.

While biodiesel backers try to copy ethanol's success, they also want to avoid charges that a tax break would amount to corporate welfare, as ethanol critics have called that product's breaks. In the Senate energy debate, New York Democrat Chuck Schumer at one point asked farm-state colleagues, "Are you on the side of working families, or on the side of Archer Daniels Midland?"

The biodiesel board's Mr. Jobe insists "We made a very, very conscious decision to be different" from ethanol. For one thing, soybean farmers -- who stand to reap huge benefits from a biodiesel boom --- support an energy-bill provision that would offset the cost of the excise-tax exemption by lowering farm subsidies for soybeans, as soybean prices rise. They also want to avoid the path they see corn farmers following, which they say has made the corn industry overly focused on maintaining ethanol supports. Nebraska farmer Bart Ruth, president of the American Soybean Association, says corn growers "devote more time to it than other things, things that down the road might have just as important an impact on the commodity."

But for now, soybean and corn companies are united in lobbying for goodies in the farm and energy bills. That suits the farmers: Many of them grow corn one year, and soybeans the next.


FOOD CHEMICAL NEWS : What some legal observers predict could become a precedent-setting courtroom battle over genetically engineered foods is moving rather slowly through the Canadian court system.

The battle pits a group of Saskatchewan organic farmers against Monsanto Canada and Aventis CropScience. The farmers contend in a suit filed earlier this year that the GE canola marketed by the two companies is polluting organic canola production. They also want the court to ban the introduction of GE wheat.

The parties were in the Saskatoon Court of Queen's Bench in mid-April as the companies argued that by law they should not have to file statements of defense until after the Saskatchewan Organic Directorate gets its class action suit certified by the court, said Aventis spokesman Steve Meister.

He said it is up to the organic producers to get the class action certified; then the seed companies will oppose their request. If the suit isn't certified, then it will not proceed. Class action suits are new in Saskatchewan. The two farmers named in the complaint would have to convince the court to hear their case on behalf of all the organic farmers in the province and perhaps in Alberta and Manitoba as well. No date has been set for that hearing.

The farmers, Larry Hoffman and Dale Beaudoin, contend that the GE canola contaminates their organic canola through natural cross-pollination from neighboring fields. As a result, they cannot sell it as organic canola. In fact, so much GE canola is grown in the province that it has put the organic growers out of production, they say. The suit says that Monsanto and Aventis violated environmental laws by not conducting environmental impact assessments before releasing the seeds.

The crops were approved by the federal government. The suit also accuses the companies of negligence by failing to teach farmers how to prevent the spread of GE canola.

In another Saskatchewan court case involving GE crops, the Federal Court of Canada has told farmer Percy Schmeiser that he must pay court costs of C$153,000 to Monsanto. Monsanto took Schmieser to court in 1998 for illegally using seed from Roundup Ready canola that he had grown to plant a subsequent crop. Schmieser has already had to pay Monsanto close to C$20,000 for patent infringement. Schmeiser argued in court that he didn't use seed from Roundup Ready crops and that it must have blown into his field from other fields or been carried by birds.

On May 15, the Federal Court of Appeals is to hear arguments from Schmeiser's lawyer seeking to have that earlier decision overturned. The lawyer says the lower court was wrong to rule that a farmer cannot grow plants from GE seeds that have ended up in his fields through no fault of his own.

Monsanto spokeswoman Trish Jordan says the company will donate any money it receives from patent infringement cases to charities.


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