June 4, 2002   #166
Monitoring Corporate Agribusiness
From a Public Interest Perspective

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HEATHER HOLLINGSWORTH, ASSOCIATED PRESS: Farmland Industries Inc. announced Friday that it was unable to reach terms with Smithfield Foods on a buyout offer and had filed for Chapter 11 bankruptcy protection. The nation's largest farmer-owned cooperative said it will maintain its current operations through the reorganization but will cut its work force.

"This was a difficult decision for us," president and chief executive officer Robert B. Terry said. "We fought to pull ourselves through this time of tight liquidity. Regrettably, we were unable to overcome one significant challenge aggressive early redemption demands from our subordinated debt holders."  The cooperative's third quarter ended Friday, the same day a $10 million payment was due on a $500 million loan it received in February.

Smithfield, the world's largest hog producer and pork processor, had offered to buy all or part of Farmland to help it cover the loan payment. The offer was made in a letter Smithfield executive vice president Richard J.M. Poulson sent to Terry on Thursday. Terry, speaking during a conference call with reporters late Friday, said Farmland pursued the offer with interest last night and throughout the day, but decided it didn't present a viable alternative to its filing.

"Ultimately we were unable to come to an agreement with Smithfield today  that would keep us from filing Chapter 11 bankruptcy," Terry said. He would not describe how the negotiations broke down.

Smithfield released a statement saying it was "disappointing ... that the co-op's management chose the uncertainty of bankruptcy rather than explore the far more secure and valuable alternative that we proposed, which would have averted bankruptcy."

Although no price was specified in Thursday's offer, The Wall Street Journal said a deal for Farmland's pork and beef operations could be worth between $1 billion and $1.2 billion. Smithfield, the nation's No. 1 pork processor, was rebuffed on May 16 when it tried to acquire Farmland's pork and beef operations. In Thursday's letter, Smithfield portrayed stark consequences if Farmland misses the debt payments to its banks.

"We believe, based on the unfortunate history of bankruptcy filings by  agricultural cooperatives, that the hard-earned equity and interests of your farmer-owned members could be wiped out by a bankruptcy filing. Moreover, we are concerned that the bankruptcy of America's largest agricultural cooperative could jeopardize the developing economic recovery, damage the agribusiness sector and would be contrary to our national interest," the letter said.

Terry said the bankruptcy filing, which does not include several of  Farmland's subsidiaries, would allow the company to operate with more  stability than it has for the last several weeks. He said the next step was to begin examining what Farmland's cost structure should be and how to operate more efficiently. The board of directors also would begin looking strategically at which direction the company should head." We intend to look at the entire operation," he said, but offered few specifics.

The effects of the recession on farming and a long-lasting drought in the nation's midsection have created financial problems for the Kansas City-based cooperative, which has seen mounting losses. The company lost $90 million in the fiscal year ending last August 31, after a $29 million loss the year before. It recently reported a $49 million loss for its second quarter ended February 28.

Farmland had brought up in its latest quarterly filing with the Securities and Exchange Commission the possibility that it could file for Chapter 11 bankruptcy protection. The company paid its employees two days early on Wednesday. Workers said they were told to cash their checks within 24 hours.

EDITORS NOTE: From Farm and Food File by Alan Guebert for the week beginning Sunday, May 6, 2001

The last time we checked in on H. D. "Harry" Cleberg, the chief of Farmland Industries, in late 1999 he was selling a grand plan to Midwestern and Great Plains farmers to merge their two $8 billion farmer cooperatives. .. . . .

On April 27, Farmland continued to market what's left of itself to reduce debt by renting 24 of its Great Plains grain elevators to ADM for five years. The arrangement has far broader implications than patching up a bleeding Farmland. It eliminates a vital alternative market for wheat farmers while strengthening ADM's already strong grip on coop-originated corn, wheat and soybeans from Ohio to Colorado and North Dakota to Texas.

Farmland may save the interest on the $250 to $300 million per year it usually borrows to finance grain inventory. Farmers, though, stand to loose much more if competitive markets vanish. For this to occur because the coop was in a hole dug by its own management only adds deep insult to deep injury.

Expect Farmland's debt reduction sale to continue, say sources. All or part of its huge contract hog growing business, one of Harry's bigger air-suckers, and its member-owned beef and pork slaughtering business are on the block. But Harry isn't; he retired last August 31, his grandiose plans having bitten Farmland's 600,000 members badly and their once profitable coop joint-ventured, sold or rented off piecemeal.

Good Old Harry ended on the plus-side even as Farmland tanked. Last year he was paid $633,584 in salary and the board awarded him a $700,000 bonus upon retirement.


AMY BRECOUNT WHITE, WASHINGTON POST: "What's that smell?" asked my 7-year-old son, David, as we approached the town of Smithfield, Virginia, world-renowned for its hams. I had opened the windows to see if what I'd heard was true. "It smells like sausage pizza," said David.

I inhaled deeply. The scent was unmistakably porcine, though slightly acrid. Were those patented porkers smoking even on a Saturday afternoon?

Smithfield --- home of the Fortune 500 Smithfield Foods, the world's largest hog producer and pork processor --- is a consummate company town. The town water tower has a large ham emblazoned across it. As you drive in, a sign directs the hog trucks to the packing plant rather than through the heart of this historic hamlet of 6,000 or so. The town is not named for John Smith of Pocahontas fame, although he was active in these parts, but for one Arthur Smith IV, who donated land for a town on the Pagan River back in 1752.

The town will be celebrating its 250th anniversary this year, complete with a parade and a giant ham biscuit eight feet across. USA Today recently selected the Smithfield Inn's ham biscuit as the "Number One Plate in Virginia." These people are serious about their biscuits.

Jamestown, Yorktown and Williamsburg (across the James River) might have their archaeological digs, re-creations and re-enactments, but this is the real old Virginia. Isn't it? Observing the swell of cash-in-hand visitors crowding into those other towns and Virginia Beach, the people of Smithfield must have yearned for a piece of the tourist pie.

"That's all there is anymore downtown," said a docent at the Isle of Wight (County) Museum a bit wistfully. Tourist stuff. Strolling down the tidy Main Street, one passes the requisite Christmas-all-year-long store and shop after shoppe of antiques, shabby-chic accessory vendors and ham specialty stores. The pig motif is omnipresent. You'll find iron piggy banks, hand towels with pigs, piggy ice cream scoopers, pig-shaped soap, etc.

Although its gift shop caters to the town motif, the Isle of Wight Museum showcases historic Smithfield. A life-size cutout of P.D. Gwaltney, one of the most famous purveyors of pork, greets you as you walk into the main space. His "pet ham" is encased in glass nearby. Originally cured in 1902, this wily ham somehow escaped shipping and turned up several years later. A man unafraid of a gimmick, Gwaltney decided to keep it and see how long it would last. The pet ham became Gwaltney's mascot and was featured in "Ripley's Believe It or Not" as the world's oldest ham. Gwaltney even insured it for $5,000. Now, brown and petrified, it's celebrating its 100th birthday as a ham this year. Hmmm.

Smithfield hams keep indefinitely without refrigeration. They are dry-cured, salted, smoked and aged from nine to 12 months. Genuine Smithfield meats --- declared so by the Virginia legislature in 1926 --- are hogs raised in Virginia or North Carolina and cured within the town limits of Smithfield. Originally, they were free-range porkers who dined on the abundant supply of peanuts in these parts. Hams have been shipped worldwide from Smithfield since Colonial times.

One old newspaper article in the museum refers to Smithfield hams as "the aristocrat of the Virginia table" and gives well-heeded directions on its consumption: "The thoughtful host will slice Smithfield ham so thinly that he can see the knife through the ham. If he does so, the taste buds of his guest will not be overpowered; they will be delicately aroused."

I think back to that holiday ham my Virginia mother-in-law graciously sent my Ohio mother years ago. My mother soaked that ham for a day, tasted it, then soaked it again. Finally, she pronounced it inedible and threw it away. It's very salty stuff, as even the waitress at the Smithfield Inn will tell you.

Elsewhere in the museum you'll find the ubiquitous arrowheads, glass beads and pottery fragments. What you'll also find out is that this town has a sense of humor about itself. Swine versions of famous paintings hang above Gwaltney's head. There are dancing pigs ? la Keith Haring, a squealing pig in the style of Edvard Munch's "The Scream" and a Tiffany pig. Elsewhere in the museum I found Mona Lisa with a pig's face and a pig skipping across Monet's water lily bridge.

Unlike most of the surrounding Tidewater towns, Smithfield managed to avoid destruction in the Revolutionary War, the War of 1812 and the Civil War, though there was a skirmish that sank a Yankee boat. Locals might tell you with a wink that the generals didn't want to threaten their supply of ham. Most of the older, 18th-century homes are spread out along the Pagan River, and later houses fill in the spaces. Follow the self-guided walking tour --- the brochure's available at the visitors center in the 1750 Old Courthouse --- and you'll find a slew of gingerbread Victorians, Colonials, Federals and Georgian styles dating from 1730.

But this is Hamtown. The processing plants are not tucked away discreetly in the countryside. While you may relish the sunset over the river as you nibble your ham delicacy at Smithfield Station's outdoor restaurant, the processing plant is the backdrop. It can be clearly seen and smelled from most vantage points in town.

Still, if it weren't for the ham industry, Smithfield would probably be a place where you merely slow to 25 mph for a minute.

"He's done a lot for Smithfield," the docent told us of Joseph Luter III, the CEO of Smithfield Foods, who is also known as "boss hog." Once a regional company, Smithfield Foods is now multinational with revenues in excess of $6 billion. Okay, so there's that little matter of the $12.6 million that Smithfield Foods was fined for violating the Clean Water Act by polluting the Pagan River, but that's all offal under the bridge. The processing plant now feeds directly into a wastewater treatment plant, and the company proudly proclaims its environmental achievements in a glossy brochure and online, complete with bird calls. They're even working on a project with North Carolina State University that would "harvest the energy value of hog manure to create green electricity."

A Smithfield native, Luter seems commited to an Americana version of his home town. A stately and impressive new Smithfield Foods headquarters overlooks the grassy islands of the river. The company also helped fund a Main Street beautification project that added lifelike metal sculptures around town. In front of the local newspaper office, Ben Franklin contemplates the Constitution, while Thomas Jefferson proofreads the Declaration of Independence outside the Smithfield Center and Robert Frost puts the finishing touches on "Stopping by Woods on a Snowy Evening" at the entrance of the new theater, both partly funded by the company.

As the founders and poets ponder, real-life fishermen pull out croakers along the river, and the marina fills with boats and diners. All in all, it's a pleasant place. If you like ham.


SHERRI DAY, NEW YORK TIMES: After agreeing to sell the Miller Brewing     Company to South African Breweries . . .. Louis C. Camilleri, the president and chief  executive of the Philip Morris Companies, told analysts that the deal would allow Philip Morris to focus on its core food and tobacco businesses.

But with Philip Morris already the owner of the country's largest tobacco company and the No. 1 food concern, Mr. Camilleri's comments fueled  speculation about how and where the company plans to expand in the future. The answer, according to many people close to the company, is to seek new business outside the United States.

"It's going to be going out and looking to make acquisitions," said Marc Cohen, a tobacco and beverage industry analyst at Goldman, Sachs. "The  question is what kind of returns is it going to get as it does that?"

David J. Adelman, a tobacco analyst at Morgan Stanley Dean Witter, said Philip Morris might be interested in expanding its food business by purchasing a majority stake in United Biscuits, a leading British cookie and snack maker. Philip Morris, through its Kraft unit, already owns a stake in United Biscuits.

"It makes sense if you think about the Kraft side of Philip Morris," Mr. Adelman said. "They are No. 1 in U.S. foods. There are no large obvious  acquisition candidates for them. In my mind United Biscuits is a natural. It would give them much more scale within Europe."

Growth in the Philip Morris tobacco business is likely to come through exploring the privatization of national tobacco companies in countries where the government owns and controls the industry, analysts said.

"They played this beautifully," Robert Campagnino, a senior tobacco analyst at Prudential Securities, said. "They have a number of options. What this transaction gave them was flexibility."

A spokeswoman at Philip Morris said the company was interested in pursuing food and tobacco opportunities both in the United States and  abroad. But, she said, as a general rule, the company did not discuss any kind of pending acquisition.

[The Miller] deal effectively freed Philip Morris, which is based in New York, from a laggard among its more successful businesses. Miller represented  only three percent of Philip Morris's operating revenue last year, and it has been losing market share to Anheuser-Busch for some time. The tobacco  business represented 61% of Philip Morris's profits in 2001, and its food sales made up most of the rest.

"This really enables us to focus our attention on our core food and tobacco businesses where we have global scale and considerable potential for growth both organically and through acquisition," Mr. Camilleri said yesterday in a conference call. At the same time, he said, "this transaction pole-vaults Miller into a different league, and we will have a significant stake in that company."

According to the terms of the deal, Philip Morris will continue to hold a 36% stake in SABMiller, as the new company will be called, and it will be able to appoint three people to its board. Philip Morris will have to hold on to its shares until June 2005, a provision that has led some analysts to believe that the company could be considering increasing its stake in the future, provided that SABMiller can make Miller grow again. Mr. Camilleri did not rule out that possibility, saying that the company could elect at some point to add SABMiller as its third major global arm. The sale of Miller was the first major action taken by Mr. Camilleri, who became the company's chief executive last month.

Analysts said the sale itself did not represent a major departure from the strategic approach of Mr. Camilleri's predecessor, Geoffrey C. Bible, since Philip Morris had been trying to sell Miller while Mr. Bible was chief executive. But Mr. Camilleri's decision to use the $1.7 billion the company will receive from the sale in a share repurchase program represented a sharp difference between the two men, analysts said, speculating that the more conservative Mr. Bible might have used the money to pay down company debt. . . . .

Philip Morris has long been an acquisitive company. It purchased the majority stake in Miller in 1969 when it wanted to enter the beer business.  When it decided to establish a presence in the food industry, the company bought General Foods in 1985 and acquired Kraft Foods in 1988. Its most recent large-scale acquisition came in December 2000, when it bought Nabisco. That same year, the company also acquired two small companies, Boca Burger and Balance Bar.


SHIRLEY LEUNG, WALL STREET JOURNAL: Located on street corner after street corner, McDonald's brings in 46 million customers a day in more than 30,000 locations around the globe. Now the world's largest restaurant company is exploring how to use that vast real-estate network to sell other items beyond food. Super-secretive about it, McDonald's Corp. executives in Oak Brook are calling the strategic project simply "extension."

"We need to think of ourselves as a retailer," says Matthew Paull, McDonald's chief financial officer. "What else can we do on that real estate and that can make us a whole lot of money?" While refusing to divulge what "extension" means, Paull says Big Mac is about two years away from any kind of launch "beyond food," but the company is "going to try a bunch of experiments."

In the long term, the burger giant needs to find more sources of revenue: Its sales have slowed in the saturated U.S. fast-food market, where the chain has 13,100 stores. The company has gone on an acquisition binge, going beyond fast food to buy up more formal restaurant concepts such as Boston Market, Chipotle Mexican Grill and Donatos Pizza. Nationally, there is a spreading practice of cross-promoting one company’s network of outlets with the merchandise and goods of other companies.

Banks have hooked up with grocers, such as Wells Fargo & Co. which has 750 outlets in supermarkets, including Safeway Inc. stores, and FedEx Corp. counters have opened in Kinko's Inc. copy centers. Reebok International Ltd. announced last month that it is displaying new shoe styles in a thousand music stores, including outlets of Wherehouse and FYE.

McDonald's is unique in the fast-food industry in that it owns much of its real estate or has it tied up in long-term leases, giving the company more control over what it can do on the land. And industry observers say the restaurant company is sure to get retail advice from directors Jeanne Jackson and Edward Brennan. Jackson is former CEO of both Wal-Mart Stores Inc.'s, and Banana Republic, a unit of Gap Inc. Brennan, a former chairman of Sears, Roebuck & Co., was elected to the McDonald's board just last week.

One clue to what McDonald's could do: It has an experiment under way with mortgage-finance agency Freddie Mac, in which computers were installed in some restaurants to provide information about homeownership by linking users to Freddie Mac's own Web site.

Partners may be willing to line up for access to McDonald's millions of customers. The average McDonald's customer visits 16 times a year in the U.S., and so-called heavy users show up much more. Retail experts say McDonald's would probably stick close to its core audience, families, by building on its partnership with Walt Disney Co.

Gwen Morrison, president of WPP Group PLC's retail consulting unit, the Store, said McDonald's could sell toys or offer travel planning to Disney parks while mothers watch their kids play in McDonald's playgrounds. However, there are constraints on what McDonald's can sell, the retail experts add. There is little space to display merchandise or to store inventory. And clothes are probably out because of greasy odors from the food.

McDonald's also won't have the luxury of browsing shoppers, says Peter Brown, chairman of Kurt Salmon Associates, a New York retail consultancy, since clients zip in and out. McDonald's operations at its counter and drive-in window are timed to within seconds. Brown says he could see McDonald's selling such things as stamps, videos or even watches. "Little things that aren't bulky and that aren't so pricey," he says.

Though it is anybody's guess right now, McDonald's might simply act more like an advertising agency and sell space on the back of its food receipts or display ads on video screens, figures Peter Oakes, an analyst at Merrill Lynch. "They have a distribution channel second to none," says Oakes. "There are third parties who would love to have access to those eyeballs."

But he cautions that whatever McDonald's does, it can't interfere with running a smooth restaurant operation. If food service suffers, he adds, "the merits are more suspect."


DOW JONES NEWSWIRES: A labor-rights group is threatening legal action to require the U.S. government to consider banning cocoa imports from Ivory Coast, alleging that forced child labor is employed extensively in production.

In a letter to U.S. Customs Commissioner Robert Bonner on Thursday, the International Labor Rights Fund (ILRF) demanded an official investigation and enforcement action under the 1997 Sanders Amendment to the U.S. Trade Act of 1930, a law which prohibits U.S. imports of products created with "forced or indentured child labor."

"There is with existing evidence an ample basis for barring the entry of all cocoa from Ivory Coast because of the pervasive use of prohibited forms of child labor in the harvesting of cocoa beans," ILRF said. The U.S. Customs Service had no immediate comment on the issue.

ILRF cited reports by the U.N., the International Labor Organization, and the U.S. State Department documenting child trafficking from neighboring Mali and Burkina Faso into Ivory Coast for the purpose of providing cheap indentured child workers for the labor-intensive cocoa harvest. Last month ILRF sent its own economist, Marx-Vilaire Aristide, to Ivory Coast for a two-week investigation.

"Child slaves are used on cocoa plantations all over (Ivory Coast without any observable programs to stop the practice," Aristide said. After talking with cocoa farmers to get an idea of their demand for labor and what type they expect to employ, he said he found that farmers are pressed to cut labor costs to maintain income as cocoa prices have plummeted. Aristide suggested that one simple solution could be for the large multinational cocoa processors to offer to pay more for cocoa beans produced on farms certified free of indentured child labor.

The chocolate industry says it is trying to fight the problem. Cocoa users around the world have joined with labor-rights groups in a formal agreement to seek to end bonded child labor. The industry is working with the Ivorian government and the U.S. Agency for International Development (USAID) to set up programs for testing different solutions throughout West Africa during the harvest this September.

"This petition is really counterproductive," said Larry Graham, president of the Chocolate Manufacturers Association, an organization which represents U.S. chocolate manufacturers and distributors. "There are 600,000 family farms in the Ivory Coast alone, and there is no evidence from anyone that (forced child labor) is going on in the vast majority of them."

Graham said that most of the cocoa farms are between five and 10 acres in size, and that hired labor generally works alongside the farmers and their families. He disagreed that lower cocoa prices are driving the use of child labor, arguing that, "the few farmers out there that are abusing their workers will do so if the price is high or if the price is low." Ivory Coast's government has tightened its borders and has imprisoned some child labor brokers, Graham said.

Aristide said farmers he interviewed had heard nothing from the companies which buy cocoa about programs to end forced child labor.

Dissatisfaction with the pace at which industry is moving is why ILRF decided to petition U.S. Customs, said ILRF Deputy Director Bama Athreya. "Whatever the Chocolate Manufacturers claim to be doing about this, we cannot leave a problem as serious as child slavery to voluntary private efforts, particularly when there is a federal law on the books to combat it."

Athreya said just ten companies, handle 90% of the cocoa business in Ivory Coast. Because Nestle, Cargill and Archer Daniels Midland (ADM) have processing plants in the country, they are allowed to buy directly from the farmers. Therefore, a system of spot inspections to ensure those companies are refusing to buy cocoa produced through bonded child labor "would have a significant effect on the entire industry," she said.


GEOFFREY LEAN: Organic farming will be forced out of production in Britain and across Europe if GM crops are grown commercially, a startling new EU report concludes. The report --- which is so controversial that top EC officials tried to stop it being made public  --- shows that organic farms will become so contaminated by genes from the new crops that they can no longer be licensed or will have to spend so much money trying to protect themselves that they will become uneconomic. Conventional non-GM farms will also be seriously affected.

Drawn up as a result of two years of studies in Britain, France, Italy and Germany, it provides the most damning confirmation to date of the arguments, long advanced by environmentalists, that it is not possible for GM and organic farming to co-exist and that, as a result, shoppers will be denied a choice of what to buy.

The conclusion is politically explosive because the demand for organic produce is increasing rapidly across Europe, while consumer resistance to GM food has forced supermarkets not to stock it.

The Director General of the EC's Joint Research Centre, which produced the report, submitted it with a letter saying: "In view of the sensitivity of the issue, I would suggest that the report be kept for internal use within the Commission only." Publication of the findings is embarrassing for the Government. On Friday the Prime Minister denounced GM opponents as using "emotion to drive out reason."

The report --- which follows a study by the European Environment Agency warning that genes from GM crops will travel long distances, creating superweeds --- studies the effects of growing modified maize, potatoes and oilseed rape commercially on several types of farms.

It found that even if only a tenth of a country or region was planted with them --- far less that the 54% of Canada now under GM crops --- keeping contamination at a level that would allow organic farming to continue would be "extremely difficult for any farm-crop combination in the scenarios considered."

It adds that when contamination occurred every year through "the wide-ranging cultivation of GM crops" in an area "organic farms will lose their organic status and face severe problems to grow their crops according to the regulations given by the EU."

GM farmers would also be at risk, it added, because organic farmers might well be entitled to compensation.. . . . Adrian Bebb, food campaigner of Friends of the Earth, said: "This report shows that if GM crops are grown in Britain farming will be plunged into even greater crisis and consumers will be denied their fundamental right to choose what they and their children will eat."


JOHN H. CUSHMAN JR., NEW YORK TIMES:The Environmental Protection Agency is embroiled in several fierce legal and scientific debates as it struggles to write new rules governing the use of atrazine, one of the nation's most widely used pesticides.

The chemical, used to banish weeds from cornfields in the Midwest and residential lawns in the Southeast, and for many other purposes, has been linked in studies to cancer in humans and to deformities in frogs that caused them to grow both testes and ovaries. It is banned in some European countries. Now, the environmental agency acknowledges that the newly published research on frogs may force it to seek an extension of a court-ordered August deadline for issuing the rules.

Atrazine's major manufacturer, Syngenta AG of Switzerland, now says it will offer studies of its own to refute the frog research, and it continues to challenge many of the agency's findings as being too cautious. But environmental groups are making just the opposite claim: that the agency is not being cautious enough.

Complicating matters further, a lawsuit against the company brought by factory workers who say they got prostate cancer after being exposed to the chemical has provided new ammunition for critics challenging the agency's decision two years ago to remove atrazine from its list of  substances that probably cause cancer in humans.

One such group, the Natural Resources Defense Council, says it will file a petition with the E.P.A. and the Justice Department . . . .asking that the chemical be banned and that the company be investigated for not promptly disclosing the workplace cancers, as required by law. "I think that the E.P.A. has missed the boat on the cancer assessment completely, because they did not have available important information about its links to cancer," said Jennifer Sass, a senior scientist at the council, an advocacy group that specializes in litigation to enforce environmental laws.

Ms. Sass said that if the agency had recognized those links, "there would be no safe levels" for atrazine's use.

Syngenta, which is the largest agribusiness company in the world, dismisses that argument. Tim Pastoor, who is in charge of global risk  assessment for the company, said, "The notion that anyone would want to ban atrazine is silly." Mr. Pastoor said that scientific evidence proved atrazine to be safe as currently used, and that the E.P.A., in its current reviews, was being far too conservative in its scientific approach. He said the reason so many workers at the company's factory were found to have prostate cancer was simply that the company intensively screens its workers for the disease.

The United States uses about 60 million pounds of atrazine a year, and its traces are found in the water supplies of many communities. But in  preliminary reviews published this year, E.P.A. scientists suggest that in most parts of the country people are not exposed to dangerous levels. That finding makes an outright ban unlikely. Still, the agency's top pesticide official, Stephen L. Johnson, said the research on frogs raised new issues, and added, "Given these conflicting results, we have to work through it."

The agency's critics say its scientific methods are fundamentally flawed and violate two federal laws --- the Food Quality Protection Act and the Safe Drinking Water Act --- that set strict standards and deadlines for reviewing the safety of hundreds of pesticides and other widely used chemicals.

Peter Lehner, chief of the environmental bureau in the New York State attorney general's office, said the state would file comments this month criticizing the agency's preliminary risk assessment and expressing concerns that the agency is not doing enough to protect the public from  exposure. Public comments on the preliminary assessment are due by July 5.

"Legally, our concern is a pattern of E.P.A. disregarding the science and the legal mandates of the federal statutes," said Mr. Lehner, adding that traces of the weedkiller had been found in 40% of the state's water supplies, 50%  of those in Suffolk County and 75% of those in farming areas of the Hudson River valley.

Critics of atrazine cite scientific evidence that infants and children may be especially vulnerable to developmental problems or to cancer if they or their nursing mothers are exposed even to relatively small amounts for a short time, as when spring rains wash the chemicals from newly tilled  fields.

Syngenta replies that the data on atrazine offer "reasonable certainty," as the law requires, that infants and children would suffer "no harm" from  exposure to it. "The data clearly show that developing organisms are less sensitive than adults are to atrazine," Mr. Pastoor said. The agency's health scientists, though, rejected that argument. Rather, while finding that in general most drinking water supplies appear safe, they identified dozens of towns, mostly in the Midwest, where infant exposures appeared likely to have exceeded their safety threshold. The towns were identified because in one year or another, seasonal rains had washed high levels of the chemical into streams, lakes and reservoirs used to supply drinking water . . . .

While Syngenta has submitted evidence discounting one by one many of the studies considered by the E.P.A., the agency's critics say that approach misses the point. With so many studies raising a variety of concerns, they say, the agency should consider them in their totality and take the weedkiller off the market.


Iowa's Governor [convened a special session of the State Legislature May 28] to deal with the state's deepening budget crises. More cuts need to be made to the coming fiscal year (FY03) budget in light of reduced revenue projections. In the proposed Republican budget-released . . . . environmental funding takes a disproportionately large cut.

Environmental programs currently get only 1.2% of general fund and infrastructure appropriations, but nine percent  of the proposed cuts comes on the back of environmental programs. Iowa already is last in the nation in per capita spending on the environment, and the proposed cuts put it even farther behind. If the cuts take effect, Iowa will spend only 0.7% of the state budget on environmental protection.

The tragedy of these cuts and anemic funding is that these environmental programs are proactive, preventative solutions to problems. Iowa's environmental initiatives are some of the most cost-effective public expenditures, when considered the cost of clean up or restoration after damage has already occurred. They're in line with a core Iowa value --- "An ounce of prevention is worth a pound of cure." Today's costs for these
programs are minuscule compared to the benefits Iowa receives for the tomorrows to come.

Of particular concern to the Council is the drastic cut to the Leopold Center for Sustainable Agriculture. On the table is a cut of $1 million, reducing the Center's budget by 86%. The budget cut from $1.16 million last year to less than $200,000 effectively ends this nationally recognized, innovative program supporting sustainable agricultural development.

Losing the Leopold Center would be a catastrophe. The Center serves as an incubator for sustainable agricultural practices that will pay significant dividends down the road-in cleaner water, less soil erosion, and greater agricultural vitality. These budget cuts to the Leopold Center today sacrifice significant economic and environmental benefits tomorrow.

The proposed Republican budget cuts to the Leopold Center for Sustainable Agriculture are shortsighted. Such a loss would have detrimental long-term impacts on the viability of Iowa's agricultural economic base. The cuts sacrifice one of the most innovation and beneficial long-term investments that can be made with public money.



WALL STREET JOURNAL: Carl H. Lindner, 81, will retire as a member of this fruits and vegetables company's board. In a letter to Chiquita's chairman and CEO, Cyrus Freidheim, Mr. Lindner said he wished to limit his commitments and devote his full time and energy to the affairs of American Financial Group Inc., an insurance company led by Mr. Lindner and his sons.


ASSOCIATED PRESS: About 2,000 workers employed by Chiquita Brands International Inc. went on strike . . . . at ten company plantations along Honduras' Atlantic coast, calling on the Cincinnati-based banana exporter to offer higher salaries and provide more social services. Workers are demanding that the company provide housing, health care and schools for their families, increase salaries by ten percent, and rehire two workers who were recently laid off.

Most of the striking employees work at the banana exporter's fruit-packing plant and plantations in the Cortes and Yoro provinces. About 70% of them are women. Chiquita workers have gone on strike more than 40 times during the 89 years the company has operated in Honduras. The biggest strike was in 1954, when more than 30,000 employees stopped working.

Chiquita, which emerged from Chapter 11 bankruptcy in March, is trying to make a fresh start, changing its top management, issuing new stocks and securities and adopting a new accounting standard. Chiquita products include fresh fruits and vegetables and processed foods.


REUTERS: Grocery chain operator Winn-Dixie Stores Inc. said May 7 it plans to close its operations in Texas and Oklahoma, resulting in the loss of about 5,300 jobs, or 4.4 percent of its workforce. The company said the operations had become unprofitable because of intense competition led by discounter Wal-Mart Stores Inc. It has 71 stores, a distribution center and a dairy plant in Texas, and five stores in Oklahoma. Some employees in management will be offered jobs elsewhere in the company, spokesman Mickey Clerc said. "Winn-Dixie's the most exposed [to Wal-Mart] of the big food retailers," said analyst Mark Husson of Merrill Lynch, who estimates that last year Wal-Mart knocked two percent off Winn-Dixie's sales.

Winn-Dixie said it would record a charge of $75 million, or 53 cents a share, for a restructuring aimed at focusing the company on profitable areas, namely the Southeast. It expects the moves to cut into annual sales by $630 million a year, but boost annual net earnings by $31 million. The restructuring is expected to be completed by June 26. Husson expects the buyers of the stores to be retailers that are already operating in the markets involved, such as Albertson's Inc., Kroger Co. and Safeway Inc.

UH OH !!!!!

ERIN SCHULTE, THE WALL STREET JOURNAL ONLINE: U.S. stocks tumbled Monday as mounting distrust of corporate America stamped out any encouragement investors got from a pair of surprisingly strong economic reports. Stocks, which were weak all day, took a nose dive in the last hour of trading. The Dow Jones Industrial Average closed down 215.46 points, or 2.2%, at 9709.79, after edging up 13.56 points in the previous session. It was the third-biggest point loss for the blue-chip average this year. The Nasdaq Composite Index lost 53.54, or 3.3%, 1562.19, after giving up 16.19 on Friday. The Nasdaq was at its lowest level since last October.


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 165 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

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.

> Ĺ 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

*  "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,

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