May 28, 2002   #164
Monitoring Corporate Agribusiness
From a Public Interest Perspective

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DOW JONES NEWSWIRES: A group of six U.S. senators led by Sen. Dianne Feinstein, Dem.-California, asked the U.S. Justice Department Tuesday to review Archer Daniels Midland Co.'s (ADM) potential aquisition of Minnesota Corn Processors LLC, a combination the lawmakers said could boost gasoline prices.

Such a transaction would further concentrate the production of ethanol --- a fuel made from corn that the Senate is trying to bring into greater use --- the lawmakers said in a letter to Attorney General John Ashcroft. The senators asked Ashcroft to closely monitor any consolidation in the ethanol industry that could take away competitive pressure on the price of the commodity and, ultimately, the price of retail gasoline.

"A proposed merger between ADM and MCP could have severe repercussions on the price and supply of ethanol," the lawmakers wrote. "A consolidation between ADM and MCP will move ADM closer to a monopoly in an already dangerous anticompetitive environment."

Minnesota Corn Processors said May 8 that it has engaged in preliminary talks with ADM regarding a potential acquisition. According to the senators, ADM now controls 41% of the ethanol market, and Minnesota Corn Processors controls 6%. The top eight ethanol firms control 71% of the market, the senators said.

The Senate energy bill past in April would nearly triple U.S. ethanol use to 5 billion gallons a year by 2012 to boost the amount of renewable components in U.S. motor fuels. The U.S. House's energy bill lacks such a measure, though, and a single bill remains to be crafted in conference committee.

Along with Feinstein, Sens. Patrick Leahy, Dem.-Vermont; Charles Schumer, Dem.-New York; Hillary Clinton, Dem.-New York; John Corzine, Dem.-New Jersey; and Barbara Boxer, Dem.-California, signed the letter to Ashcroft.


Hicks, Muse, Tate & Furst Incorporated ("HMTF") announced May 21 a definitive agreement under which HMTF, in partnership with Booth Creek Management Corporation, of Vail, Colorado, will acquire ConAgra Meats Company, the fresh beef and pork processing business of ConAgra Foods, Inc., in a transaction valued at approximately $1.4 billion.  The newly independent company will be named Swift & Company, honoring and building upon one of ConAgra Meats' premier brand names. The original Swift & Company, currently a unit of ConAgra Meats, was incorporated in 1875.

Under the transaction, which the parties expect to complete during August 2002, HMTF and Booth Creek will acquire ConAgra Meats, the third-largest processor of both beef and pork in the United States, its Australia Meat Holdings unit, the leading Australian beef processor, and its U.S. cattle feeding operations. HMTF will control the acquired entity.

Booth Creek, an investor in meatpacking and value-added processing operations, among other investment areas, will provide support to the acquired businesses and will hold a minority stake.  Reflecting what the parties expect to be the ongoing relationship of ConAgra Foods with its soon-to-be-former meat processing division, which is currently its principal supplier of beef and pork products, ConAgra Foods will also retain a significant minority stake in the acquired operations.

John R. Muse, a Partner of HMTF, said: "This is an attractive opportunity to acquire leading positions in both the beef and pork processing industries, to partner with ConAgra Foods—which acquired International Home Foods from us in a $2.9 billion transaction two years ago—and to team up with Booth Creek Management, an experienced operator in the meatpacking and value-added processing industry. We look forward to working with George Gillett and his colleagues at Booth Creek Management, as well as with ConAgra Meats Company President John Simons, who will be named Chief Executive Officer of Swift & Company, and the team he has assembled since he joined the company in 1999, to further optimize the performance and build the value of these outstanding operations."

George Gillett, Jr., Chairman of Booth Creek Management, said: "ConAgra Meats Company has made significant progress over the past three years in enhancing its operations and financial performance. We believe that as a standalone enterprise, with an outstanding and entrepreneurial management team headed by John Simons, and with the strategic and financial support of HMTF, one of the most experienced and successful food industry investors, this new enterprise has a great future."

Since its formation in 1989, HMTF has completed or currently has pending more than 400 transactions with a total capital value of approximately $50 billion. Headquartered in Dallas, the firm also has a major office in London and satellite offices in New York and Buenos Aires.

ConAgra Foods, Inc. is one of North America's largest packaged food companies, with a strong presence in consumer grocery as well as restaurant and foodservice establishments. ConAgra Foods' consumer brands include: Hunt's tomato products, Healthy Choice, Banquet meals, Armour meats, Bumble Bee tuna, Louis Kemp seafood, La Choy, Chun King, Lunch Makers, Knott's Berry Farm, Wesson, Country Pride, Blue Bonnet, Kid Cuisine, Parkay, Reddi-wip, Marie Callender's, Cook's ham, Butterball, Act II, Slim Jim, Eckrich, Chef Boyardee, Orville Redenbacher's, PAM cooking spray, Snack Pack puddings, Van Camp's, Peter Pan, Hebrew National, Gulden's mustard, Pemmican jerky, Swift Brown 'N Serve Sausages, Swiss Miss, and many others.

Booth Creek Management Corporation, based in Vail, Colorado, has extensive interests and experience in food processing, distribution and marketing in the United States and Canada.  In addition, Booth Creek has significant investments and experience in the transportation, resort and leisure industries. George Gillett is also the owner of the Montreal Canadiens.

EDITORS NOTE: From Farm and Food File for week beginning Sunday, Oct. 8, 2000 by Alan Guebert

" . . . .George N. Gillett, an unsinkable Molly Brown of business, twice going down in bankruptcy (one corporate, the other a $66 million personal bust) and twice bobbing back up. In 40 years of deal-making, Gillett has owned the Harlem Globetrotters, several television stations, a piece of the Miami Dolphins, Packerland Packing Co --- twice --- a huge Oregon ranch, several ski resorts, a 15,000-acre Illinois farm, and Corporate Brand Foods America, Inc.

"Gillett keeps his cards close; he prefers to do deals privately, outside the view and votes of Wall Street. Corporate Brand was a privately-held food processor owned partly by Gillett. In 1999, he swapped his piece of the company to IBP for 4.5 million IBP shares. On February 7, IBP bought the remainder of Corporate Brand for 14.4 million newly-issued IBP shares.

"With his back pockets stuffed with IBP stock, Gillett then watched as Wall Street whipped the hide off the company. After a year of pricey acquisitions to extend its meatpacking muscle into retail selling, word was that IBP's $2 billion buying spree had left its wallet too thin to pull off the grand endgame. The stock tanked, from a Nov. 1999 high of $25.27 per share to $11 four months later. In the tumble, Gillett's IBP holdings were shaved by nearly 40%.   As reported in the October 3 Wall Street Journal, Gillett then began to urge the IBP board to take the company private. "I think private investors have more patience," Gillett grumbled to the Journal.

"Maybe, but the IBP board was anything but patient once it seized Gillett's idea. It swiftly cobbled together the financing to put the company in private hands --- two being Gillett's. The speed was made possible by a member of IBP's board, John Chalsty, chairman of Donaldson, Lufkin & Jenrette, who knew where to get the money needed to underwrite the leveraged buyout. With Chalsty holding DLJ's checkbook, the board agreed to offer IBP's stockholders $22.25 a share for a $2.4 billion purchase. Wall Street analysts quickly called the offer cheap, noting IBP was worth $30 a share . . . . "


ASSOCIATED PRESS: A law requiring meat to be labeled with its country of origin will be difficult to administer because of the movement of livestock between the United States and neighboring countries, Agriculture Secretary Ann Veneman said [last] Tuesday. The new farm bill gives the department two years to implement the new labeling requirement, which will also apply to fish and produce.

Veneman said she would consider a request from Canadian cattle producers to develop a grown-in-North America label that would cover Mexico, Canada and the United States. "I have not discussed this yet with the lawyers to determine whether or not this is an option, but it is something that they suggested and certainly we're going to look at every option that we can," Veneman told reporters.

Cattle are shipped into the United States from both Mexico and Canada to be slaughtered. Under the law, livestock must be born and raised in the United States to be labeled as U.S.-produced. "It's going to be very difficult to identify a beef product that's been born, raised . . . in the United States and we're going to have to have a very considered process in trying to determine how to implement this part of the bill, and we will do that," Veneman said.

Advocates of the labeling requirement say it will allow U.S. consumers to distinguish American from foreign products. Critics say the real intent is to protect U.S. producers from foreign competition. The law bars the government from setting up a tracking system for livestock to verify the country of origin. The Bush administration had opposed including the labeling requirement in the farm bill.


A recent NBC-TV "Dateline” investigation finds some of the nation's largest grocery chains extended sell-by dates

It's something most Americans take for granted --- that the food in our local supermarket is safe. But we recently heard something that made us question that so we went to investigate and we took our hidden cameras with us. What we found may leave you wondering whether the meat, poultry and fish you buy is as fresh as you think. Are some of America's biggest supermarket chains being less than honest about the freshness of the food you buy? Correspondent John Larson reports.

AMERICA'S GROCERY stores are among the most abundant food markets in the world.
Meatworker: "We cut fresh meat here everyday."
Meatworker: "Every day fresh."

We rely on stores to tell us how fresh their meat poultry and fish are, trusting those tiny dates, computer programmed and carefully stamped on every package: the sell-by dates.

Correspondent John Larson: "What do they think the date means?"
Woman Consumer: "It's supposed to mean sell by, it's only fresh till."
Consumer #2: "They have to sell it by that day."
Consumer #3: "That's right and if it's not out of the store then it should definitely be tossed or something."

Well actually, according to the USDA, we can rely on those dates to tell us when to freeze meat or throw it away --- three to five days after the date runs out for beef and pork, one or two days for chicken.
Meatworker: "You could get somebody sick. The date's wrong and the meat might be going bad."

So, you think you know how fresh the meat is, but do you? What if what appears to be a promise is really a lie?
John Larson: "Everybody behind the counter knows this?"
Store employee: "Pretty much. I don't know of anyone who don't know it."

"Dateline" investigated stores owned by seven of the largest grocery chains in the nation, which operate more than 7,000 stores in nearly every state to find out whether grocery stores are telling the truth about the meat they sell. What began as a tip, turned into a five-month "Dateline" hidden-camera investigation into a practice with little or no regulation. Our investigation began with Jim Morrison, a former bonds salesman who tried to blow the whistle on what he called a massive consumer fraud.

Jim Morrison: "I just don't like big companies that rip off the little guy. I've just got a problem with that." The rip-off, he says, had to do with those tiny numbers ---- the sell-by dates. Most meat and fish come into stores in bulk, where employees cut and package it and, because the clock is always ticking, they say they generally give it around three days to sell before throwing it away. But Morrison says during trips to grocery stores near Jupiter, Florida, seven years ago, he realized the stores were secretly changing the sell-by dates on packages of meat to lengthen their shelf life.

His discovery became a crusade --- some might say an obsession. For two years he videotaped and documented evidence, investigating several chains, but focusing especially on stores owned by Winn Dixie, which operates more than 1,000 stores in 14 Southern states.

Jim Morrison: "Every store that I visited had this scam going on." Morrison quickly became a thorn in Winn Dixie's side, even demanding the company hire him to inspect their stores. But not only did Winn Dixie deny Morrison's allegations, the company accused him of extortion and fabricating the evidence.

John Larson: "So now they're saying, `He hasn't detected a problem, he is the problem?'"
Jim Morrison: "They said that I was smuggling tampered and spoiled products and placed them on the shelves of these companies."
John Larson: "Had you?"
Jim Morrison: "Not once."

But in December of 1997, Winn Dixie helped convince the government that Morrison was concocting a "scheme. . . .to defraud" Winn Dixie. The FBI raided his home, taking his notes and tapes.
Jim Morrison: "There never should have been one FBI agent anywhere near my house. Period." No charges were ever filed against Morrison and the FBI closed the case. But it all made us wonder, what about the things he had claimed? Evidence of a scam --- selling out-of-date meat to the public. Was it happening at Winn Dixie or at any other stores? We decided to set out on our own, to go undercover to find out for ourselves.

We came up with a way to secretly mark the packages of meat: a small metal bar with tiny numbers. We wore the bar like a splint on our finger,       and marked the bottom of the trays by imprinting, pressing numbers into the styrofoam.

First, we needed a way to track large amounts of meat out for sale and it had to be fool-proof. We came up with a way to secretly mark the packages of meat: a small metal bar with these tiny numbers. We wore the bar like a splint on our finger, and marked the bottom of the trays by imprinting, pressing numbers into the styrofoam, without breaking the plastic wrap.

For example, if a steak has a sell-by date of May 7th, we'd impress a small zero/seven on the tray. If anyone changed the date on the label but kept the original tray, we'd know it. And then, we would shop just like you do, except sometimes to explain why we were spending so much time in the meat department we'd suggest we were thinking of starting a catering business and we'd ask questions.

Dateline: "So do you ever change the date like once it's on there?"
Store worker: "No. We can't. That's... oh, no. We got cameras watching us. And this computer runs straight up to the main office. If you do something like that, you could get fired."

Cameras watching him? What he didn't know was that "Dateline's" hidden cameras were rolling too as we investigated stores across the country to see who was telling the truth.

Dateline: "Do you change the date?"
Store worker: "Oh, no, no, no, never change the date."


AMY LORENTZEN, ASSOCIATED PRESS: Ranchers and agricultural officials in Nebraska want to convince McDonald's that the burger chain's use of imported beef isn't necessary.

"We'll find them the beef they need," said John Hansen, president of Nebraska Farmer's Union. "We'll even supersize it for them."

The Nebraska Cattlemen conference next month will feature a visit from McDonald's purchasing representative John Hayes, who plans to explain why the company is testing imported beef. The McDonald's burger issue is a contentious one in Nebraska, where some ranchers are boycotting the fast-food chain over the imported beef issue. Nebraska produces about 20% of the nation's hamburgers and steaks, said Mike Fitzgerald, a spokesman for the 5,000-member cattlemen association.

He said cattle producers want to know what McDonald's next step will be after testing the imported beef. "We've got several key issues --- the farm bill, foreign trade and McDonald's is right up there with them," he said. The conference on June 6-7 is expected to draw about 400 ranchers.

McDonald's is testing beef from Australia and New Zealand in about 400 of its 13,000 U.S. restaurants in the Southeast. The company already uses grass-fed Australian beef in many chains outside the United States. The company has said U.S. ranchers can't supply the chain with meat that's lean enough. Australian beef is often leaner than U.S. grain-fed beef.

"The reality is that when you go to the grocery store today . . . there's a tremendous demand for lean beef and that's a cause of the decline of the supply of U.S. lean beef," McDonald's spokeswoman Linda Howard said.  Cattle ranchers shouldn't be worried and should continue to support McDonald's, which is the single largest buyer of U.S. beef, she said.

"This test only represents less than one percent of the beef sold in restaurants nationwide," Howard said. "We have been speaking to cattlemen's groups all over the Midwest just trying to get the facts out there that this is a small test."


GREG WINTER, NEW YORK TIMES: From the shade of a loading dock, watching the big rigs shed payloads of leftover Coca-Cola for supermarkets in the black neighborhoods of Dallas, William D. Wright says he learned how to keep quiet and do as he was told.

For years, he says, he stripped expired soda cans from their cardboard sheaths, stuffed them into fresh boxes with new dates stamped on the side,  then piled them on store shelves as if they were new. As long as they had no leaks, dented cans were sometimes repackaged, too. It was all part of what his co-workers called the fire sale.

"I knew what we were doing was not right," said Mr. Wright, a Coke deliveryman for 14 years. "But every time I brought it up, I'd hear: `I'm the  boss. You do what I say.'"

Marching with bullhorns and spreading their message over talk radio, dozens of Coke drivers, plant workers and salespeople are accusing their bosses of inching up profits for almost a decade by pawning off expired soda cans and bottles on minority communities across North Texas.

Rather than throw the old drinks away, the workers contend, factory managers have ordered them to salvage truckloads of old, unsold drinks from stores in predominantly white areas, only to cart them to the poorest neighborhoods --- where shoppers are seen as just as thirsty but a lot less discriminating.

"It still looks good to the naked eye," said John Wayne Waleford, a Coke driver for the last 14 years. "But the people in the community don't know  what they're buying."

A spokesman for the Coca-Cola Bottling Company of North Texas, which oversees the plants and workers around Dallas and Fort Worth, called the accusations "irresponsible and offensive." Not only would such a practice fly in the face of Coke's policies nationwide, the company says, but it has scoured supermarket shelves to ensure that only the freshest drinks are served.

"These allegations are totally without merit," said the spokesman, David Swords. "This would not be tolerated. If it did happen, it was a select few individuals who were acting on their own." Still, the accusations come from more than workers, including one current and one former employee who have unrelated employment discrimination lawsuits against the company. Even some store managers in largely black neighborhoods grumble about getting the dregs of the lot.

"Whenever I called and complained, instead of taking the product away, they would just bring it to the back room and repack it," said Kenneth  Newsome, a manager at the Sack-N-Save in Oakcliff, a predominantly black suburb of Dallas. "Then they would use Windex cleaner to erase the expiration date on the bottles."

Though Coca-Cola workers say that the drinks were as much as 30, 60 or sometimes even 90 days out of date, none contend that they posed much of a health risk. Soda can be old enough to grow mold without causing any acute illnesses. But soda past its expiration date goes flat and loses much of its taste. So the real issue, the workers argue, is one of basic fairness.

"I would warn the African-Americans coming into the store not to pick it up," said Llewellyn Hamilton, who has stacked cases of Coke for nine  years. "I'd tell them, `There's a reason why you got it that cheap.''" The workers said Coca-Cola products were often discounted in these stores.

The controversy comes at a bad time for Coca-Cola Enterprises, which owns the Texas operation and controls much of Coke's distribution across the country. Inspired by the $192 million racial bias settlement won by their counterparts at the company's corporate headquarters in Atlanta two years ago, black workers in the Baltimore-Washington area, Cincinnati and Chicago have begun organizing discrimination cases of  their own.

"We have a clear policy against discrimination of any kind," said John H. Downs Jr., a spokesman for Coca-Cola Enterprises. "If any employee has violated it, they will be held accountable and we will take appropriate and swift action."


ANDREW C. REVKIN, NEW YORK TIMES: Expansion of cities, destruction of forests, erosion of fields and rising demand for water are likely to threaten human and ecological health in many countries for at least a generation, according to a new United Nations report on environmental trends.

The world has seen significant environmental progress in recent years, says the report, which was released  . . .  by the United Nations  Environment Program. Population growth is slowing, for example, and food production is largely keeping pace with it.

But the report warns of severe water shortages in the Middle East over the next generation, and it says the growth of agriculture is damaging  landscapes, depleting aquifers, raising the level of salt in the soil and reducing habitat for wildlife.

It also includes some bleak findings, cast in a manner that is rarely seen in United Nations reports --- with no path leading to a good result. Even under scenarios in which environmental protection becomes a high priority, it says, most regions of the world will still see their biological diversity and coastal ecosystems badly damaged by 2032.

The report says an important cause is the accelerating growth of vast, poor and largely unplanned cities in developing countries, most of them near coastlines. Increased sewage, storm runoff, and conversion of land around such cities will inevitably produce more human disease and kill more marine life, it says.

Such environmental damage often ends up hampering economic growth, the report says, noting that damage to farmland in India is cutting  agricultural productivity there by about $2.4 billion a year.

The analysis, the third in a series begun in 1997, involved more than 1,000 scientists and a host of international research centers and agencies. It  was issued as 140 countries prepared for talks starting . . . .. in Bali to finish planning for the World Summit on Sustainable Development, a meeting of world leaders in Johannesburg in late August focused on meshing economic growth and environmental protection. That meeting is widely viewed as a 10-year checkup to see how the world has fared since the United Nations Earth Summit in Rio de Janeiro in 1992.

"Without the environment, there can never be the kind of development needed to secure a fair deal for this or future generations," Klaus Toepfer, the executive director of the United Nations Environment Program, said at a news conference in London at which the new report was discussed.

Already, the report says, five billion acres of soil, more than the area of the United States and Canada combined, is degraded by human activity, with a sixth of that "strongly or extremely degraded." Most of the damage has come through water and wind erosion and excessive grazing.

The report says water shortages will be particularly acute in a zone running from the Arabian Peninsula north through Syria and Iraq, with more than 90% of the population in that region living in what it called "severe water stress" by 2032.

In considering what may happen in the next 30 years, the report looks at a variety of social and economic scenarios --- from one in which all  countries focus mainly on promoting growth to one in which they seek to balance environmental, social and economic progress. It concludes that serious additional harm is likely without more focus on meshing economic  growth with environmental planning.

The analysis does find that substantial reductions in air and water pollution in industrialized countries in the past three decades can potentially be copied by poorer countries. It also notes that protected preserves have grown steadily for 30 years, to 4.7 million square miles worldwide in 2000 from 1.07 million in 1970. And it cites a study of 93 protected areas finding  that most are blocking the clearing of land, though they are not as effective at preventing illegal logging, poaching, fires and grazing.


THE ECOLOGIST: The agricultural cost of cheap supermarket food  As government and farmers rethink the United Kingdom's agricultural future, it's time to bring the argument back to that fundamental sticking point: the cost of food. We hear it over and over again: the UK's farmers will have to compete on the global market if they are to survive.

And that, by the British government's book, means bigger holdings, fewer farmers and greater intensification. In short, the globalisation of rural Britain and with it the final nails in the coffin of a way of life that for more than 100 generations has forged the country's landscape and wildlife habitat as we have come to know and love it.

In fact British farming, post-BSE and now post-F&M, is at a watershed. Either, we destroy the past by selling ourselves to the notion that the only way farmers can make a living is through crop monocultures and feedlot husbandry for livestock achieved through inputs of chemicals and imported fodder. Or we reinvent the past by going back to a modern version of mixed farming, in which crop rotations and livestock are integrated into a sustainable cycle of harvesting and replenishment.

Of course, if we did our sums correctly we would know that the high yields of intensive farming come at a cost of soil degradation, carbon loss into the atmosphere, pesticide and fertilizer run-off into our waterways and, most pernicious of all, food products that are positively unhealthy (The Ecologist, Vol 31/5). As Professor Jules Pretty of the University of Essex has shown us, the external costs of intensive farming in the UK amount to as much as £208 per hectare.

The water companies, for instance, pay as much as £135 million a year to get drinking water down to European Union pesticide levels. All in all we may be paying as much as £2 billion a year for the environmental and health costs of UK agriculture. The irony is that not only does the farmer go scot-free, but he and his colleagues receive up to £3 billion per year in direct subsidies.

The problem is not just that the British government is promoting the intensification of agriculture. It is doing so with the understanding that the main players of the future will no longer be conventional landowners but agribusinesses linked directly to multinational food corporations. This is not just true of the UK, but of the US and, increasingly, the rest of the world too.

The extent of the danger to sustainable farming is evident in a recent report, Consolidation in Food Retailing and Dairy: implications for farmers and consumers, prepared by scientists at the University of Missouri's Department of Rural Sociology. The report shows how  six global food enterprises have spread themselves downwards and sideways to achieve a domain that stretches right around the planet. Events in the U.S. and Europe from 1997 to the present day, show the degree to which the large stores are gaining ground through consolidation and buying into every aspect of food production.

In 1997 the top five U.S. food retailers had about one quarter of the country's market. Today those same companies --- Kroger, Albertson's, Wal-Mart, Safeway and Ahold USA, a subsidiary of Dutch firm Royal Ahold --- account for 42% of that market. This has come about largely as a result of recent acquisitions.

Increasingly, the supermarkets are seeking control over producers through binding contracts and agreements. They seek to source their merchandise from a handful of producers. Kroger, for example, obtains its beef ready-packed from Cargill, while Ahold USA's Stop and Shop outlets obtain their dairy foods from Suiza Foods. Wal-Mart, a more recent entry into the food-retailing business, gets its ready-packed meats from IBP, Farmland and Smithfield.

As the supermarket companies tighten their grip on food retailing, so they are forcing the producer to comply with their specific requirements. As the University of Missouri report points out, between 50 and 75 per cent of large retailers' total net profit comes not from the actual sale of produce, but from fees demanded of producers for presentation space, for the display itself and "pay-to-stay" fees and failure fees. According to The Tampa Tribune, $50,000 would place one jar of speciality pickles on the shelves of all four major grocery chains in Tampa, Florida. Producers are, in effect, paying for the privilege of having their goods sold.

In a world awash with producers looking for outlets, it's very much win-win for the supermarkets. As the University of Missouri report says, "most producers now see the retail firms as their consumer." Inevitably, those producers and small processors who either do not wish or are unable to comply with the supermarkets will find themselves increasingly cut out of the main retailing market.

Constantly battling to expand their interests at the expense of each other through the price war, the big retailers need a global market for purchasing their goods. Here we have a classic situation in which producers who apply strict environmental and health standards are likely to lose out to those who do not. Some economists now question whether, in the light of globalisation, the U.S. needs its farmers. The same also applies to the UK.

Vertical and horizontal consolidation of food retailers in the U.S. has led to the four largest firms sharing the production and processing of as much as half of the country's broiler, turkey and egg sales. And today 20 feedlots in the whole of the U.S. are involved in the production of 50% of all the country's cattle. These feedlots are directly connected to the four processing firms that control 81% of beef processing in the US.

The potential rewards for the supermarkets in their attempts to outdo each other are staggering. In 1999, the U.S.'s leading supermarket Kroger acquired Fred Meyer --- giving it coast-to-coast coverage. The Ohio-based Kroger now receives 10 cents in every dollar spent in supermarkets across the country.

In terms of food retailing Wal-Mart was nowhere in 1993. Since then it has become second only to Kroger. It was one of the first retailers to use case-ready beef and pork in its stores. Wal-Mart now has a strong presence in Germany and the UK through the acquisition of Wertkauf and Spar Handels and Asda, respectively. Asda now has 14.2 per cent of the UK's food market --- practically equal to Sainsbury's market share. Wal-Mart also operates in Argentina, Brazil, Canada and Mexico, and has joint ventures in China and Korea.

Wal-Mart's aggressive expansion into Europe and elsewhere is now being countered by the merger of other major players. In France Carrefour and Promodes have joined forces to become the second largest retailer in the world. Business Week (31 August, 1999) observed: "As Europe's new top dog, Carrefour can use its buying clout to extract deeper discounts from suppliers, undercutting rivals, and accelerating a push towards consolidation in the industry."

The French giant is now the number-one supermarket in Brazil and Argentina, with 20% and 30% of the market share, respectively. It is also the leading retailer in Taiwan, France, Spain, Portugal, Greece and Belgium. Not be outdone, Dutch company Ahold has begun acquiring smaller retailers in Europe. It has 28% of the market share in the Netherlands, while its sales in Latin America generate some $4.5 billion a year. It is also now operating in eastern Europe as well as Scandinavia and in China.

Through its cooperatives, the dairy industry in the U.S. was until recently fairly immune to supermarket control. But, as in the UK with the demise of the Milk Marketing Board, that is all changing. In the U.S. Suiza Foods is the largest milk processor and leading manufacturer and distributor of dairy products. Since 1996 it has bought 39 dairies across the US, as well as Spain's fourth largest dairy --- Leche Celta. And through Horizon Organic, in which it has a 13.8 per cent share, it is now entering the UK market.

Farmers are definitely losing out as a result of such mergers in the dairy industry. The University of Missouri report states: "[In 2000] the U.S. imported enough cheese and dairy ingredients to replace 10.6 billion pounds of domestic farm milk. On an equivalent basis, the U.S. exported about 4.3 billion pounds. The net trade imbalance was equal to about 4 per cent of total U.S. production. . . . The pattern is clear --- dairy imports are larger than exports and are growing much faster.

"Regardless of how we measure the nebulous concept of efficiency, the U.S. is not the low-cost producer of milk in the world. If the dairy lobby is successful in opening up global trade at WTO, we will find most of the remaining 90,000 U.S. dairy farms exiting [the market] rapidly."

If farmers are to survive the flood of cheap imported foods they will undoubtedly need to create new, alternative markets where the public will have access to good local food. One solution is to "go organic." Sales of organic food are now generating $5 billion in the US, and these sales are growing by 20% a year. Local production of organic foods may partially solve the problem of price, but the major retailers are already major players in the organic market. Yet again farmers will find themselves
competing against cheaper imports.

Clearly, if we are to regain a healthy farming system in the UK --- with all the attendant benefits to landscape, soil, drinking water, wildlife and health --- we, as the ultimate consumer, must come to appreciate the full implications of cheap food in the supermarkets. The best way we can support sustainable farming and the people who practise it is by insisting on purchasing locally grown food as much as possible. Such local connections between the production and purchase of food will have the salutary effects of keeping land in the hands of farmers rather than agribusinesses, and will enable farmers to move away from the highly industrialised, intensive agriculture that has proved to be so destructive in its use of resources.


It is rather curious that as more and more people from literally around the world request to regularly receive THE AGRIBUSINESS EXAMINER, lavish in their much appreciated praise for the work it seeks to do, fewer and fewer people seem willing to financially contribute to its support.

Those handful of regular contributors who have earned the editor's undying gratitude over the past four years and the few other occasional welcome individual supporters stand in marked contrast to those many who obviously have believed during that time that their aid could be better applied elsewhere, particularly when it comes farm and rural organizations. Such neglect, however, when it comes to rural concerns is recognized from this desk as not uncommon in our modern affluent and well fed society.

Since the AGRIBUSINESS EXAMINER first appeared some 163 issues ago it has been the publisher's intent to make the work of the Corporate Agribusiness Research Project (CARP) and the monitoring of corporate agribusiness from a public interest perspective available to the widest possible audience, seeing that those few and available publications that still concern themselves with corporate agribusiness are so prohibitively expensive, to say nothing of their pro-corporate bias.

But, because there is a more a need today than ever before to make corporate agribusiness more accountable to the common good, it is the wish and hope of THE AGRIBUSINESS EXAMINER to continue to play a major role in that effort. Your contributions will go far in helping to perpetuate that hope. Such contributions may be sent to the editor at the above address.

As part of a major effort to keep those committed to bringing economic and political democracy to rural America informed, educated and updated the Corporate Agribusiness Research Project is happy to point out that its web site has been updated and streamlined.

Among the sites many features are:

> A complete index of THE AGRIBUSINESS EXAMINER'S  first 162 issues with a "Search" engine to provide easy access to the subject matter of each edition.

> Å new edition of THE AGBIZ TILLER, the progeny of the one-time printed newsletter, featuring the essay "The Merchants of Greed," an in-depth essay dealing with today's corporate agribusiness. Likewise the "Search" engine is also available for past editions of THE AGBIZ TILLER.

> 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. They include:

* CARP's "Mission Statement," "Overview" and THE AGRIBUSINESS EXAMINER'S Editor\Publisher's "Resume."

*  "Fact Miners," an effort to assist the reader in the necessary art of researching corporations

*  "Quotable Quotes" pertaining to agribusiness and corporate power

*  "Links," a page which allows the reader to survey various useful public interest, government and corporate web sites;

* "Feedback" an opportunity for reader input:

* The Corporate Reapers: The Book of Agribusiness, a page where readers can order directly the editor's 1992 published book from Essential Books.

The CARP web site was designed and produced by ElectricArrow of Seattle, Washington.

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