The
AGRIBUSINESS
EXAMINER
June 11, 2002   #167
Monitoring Corporate Agribusiness
From a Public Interest Perspective

EDITOR\PUBLISHER: A.V. Krebs
ADDRESS: PO. Box 2201, Everett, Washington 98203-0201

NATION'S GROWTH-STARVED FOOD CONGLOMERATES
SUDDENLY HAVE RAGE FOR ORGANIC FOOD MARKET

KEVIN HELLIKER, THE WALL STREET JOURNAL: Four new breakfast cereals are set to hit grocery shelves nationwide this month under a brand called Cascadian Farm. But here's a secret: Their actual maker is General Mills Inc.

For the purveyor of Cheerios to keep its legendary logo off of a cereal box defies all conventional marketing wisdom. But these new cereals aren't aimed at the conventional market. They're organic, and organic-food buyers tend to eschew conglomerates' famous brands.

Catering to the organic market suddenly is the rage of the nation's growth-starved food conglomerates. While sales at their traditional outlets --- supermarkets --- are growing barely more than 1% a year, sales at so-called natural-foods retailers are rising at several times that rate.

At Whole Foods Market Inc., the nation's biggest natural-foods retailer,       more-than-20% growth in profit and sales makes it the hottest grocery stock around. Yet, a stroll down the aisles of Whole Foods shows the food giants are getting only a nibble of that growth.

Whole Foods' shelves are stocked not with such mainstream brands as Frito-Lay snacks or Peter Pan peanut butter, but rather by specialty brands such as Little Bear and East Wind. Looking for Coke or Pepsi? The soda sold here is Blue Sky and Hansen's. As an extra prod to the food makers, conventional grocers such as Kroger Co. and Safeway Inc. are adding natural-foods sections selling the brands found at Whole Foods. Kroger has separate natural-foods concessions inside nearly 1,000 of its 2,418 stores.

No longer are the food giants dismissing as eccentric consumers such as Jacque Blix, 52, a book writer in Seattle. "I try to buy almost everything organic or natural," she says.

This isn't the first time a food or beverage giant has gone incognito to appeal to customers hostile toward big companies. Already on the shelves of Whole Foods is a breakfast cereal called Mother's --- only the fine print discloses it's made by PepsiCo's Quaker Oats unit. In the exclusive, high-end world of craft beers, big conglomerates have tried to pass as funky shoe-string microbrewers to skeptical consumers.

Red Dog beer, for instance, whose label identifies the maker as Plank Road Brewery, is really made by No. 2 beer heavyweight Miller Brewing Co., a unit of Philip Morris Cos. Then there are the Blue Moon beers with odd varieties such as Belgian White, labeled as a product of Blue Moon Brewing Co. Its undisclosed parent: No. 3 brewer Adolph Coors Co.

But what's a conventional food company to do? Taking a page from the big movie studios --- which responded to the art-film craze by buying up independent studios --- many big food makers are buying up little brands that dominate the shelves of Whole Foods.

The list of recent acquisitions is lengthy: Coca-Cola Co. last year bought Odwalla Inc., maker of a natural juice. Kraft Foods Inc. in 2000 bought Balance Bar Co. and Boca Burger Inc. Kellogg Co. in 2000 bought Kashi Co., maker of natural cereals. H.J. Heinz Co. in 1999 bought a 19.5% stake in Hain Food Group Inc., and a year later General Mills bought Small Planet Foods Co., owner of the Cascadian Farm brand. Hain and Cascadian make all sorts of natural-foods products.

The big players also are starting to devise their own natural products. Heinz is seeking to sell a Heinz-made organic ketchup at Whole Foods and Wild Oats Markets Inc., the nation's second-largest natural-foods grocer, according to those grocers. Heinz declined to comment.

PepsiCo's Frito-Lay unit is test-marketing several brands of natural and organic versions of existing snacks, including Cheetos, Tostitos and Sun Chips, labeled as being from Frito-Lay. In case the test goes well, Pepsico is talking with Whole Foods and Wild Oats about shelf space. "Given that Whole Foods is the fastest growing among retailers, we'd love to be in there," Frito-Lay spokeswoman Lynn Markley says.

But developing their own products can raise a host of questions for these companies. Will slapping their own label on the product attract or deter die-hard consumers of organic and natural foods? "Our most loyal customer is somewhat leery of established brands," says Dr. Mary Mulry, senior director of product development and standards at Wild Oats.

A bigger challenge might be that food giants lack the expertise to produce        good-tasting food that is also organic (grown without synthetic pesticides) or natural (made without preservatives, artificial flavoring or artificial colors). Both Whole Foods and Wild Oats routinely reject products from big and small companies that fail either their taste or purity test. Furthermore, if a food company modifies a hit product for the natural market, it could pose a marketing dilemma. "If they come out with an organic version, [consumers might ask] what that says about their existing brand," says Dr. Mulry.

Development of the new Cascadian Farm cereals shows how General Mills, a pioneer among food titans turning organic, negotiated some of the potential pitfalls. When it was bought by General Mills, Cascadian Farm was a small maker of organic frozen fruits, vegetables and entrees. It had never produced a breakfast cereal.

General Mills, a close rival to Kellogg to be the nation's largest cereal maker, wanted a larger share of that category in the natural-foods market. Its only attempt under the General Mills logo was an organic cereal called Sunrise. Its taste didn't impress Whole Foods or Wild Oats, which devoted little shelf space to it.

General Mills officials also concluded its reputation meant less to natural-foods customers than a brand known to be organic. "To the organic customer, the heritage of Cascadian Farms has more equity" than the image of General Mills, says Marc Belton, a Mills senior vice president.

So the new cereals make no connection to General Mills, even though one of them --- Honey Nut O's --- is essentially just an organic version of Honey Nut Cheerios. The two products look the same, and their advertised descriptions are nearly identical: "Whole grain oat cereal touched with golden honey and almonds."

Although General Mills dropped its name from cereal boxes, Whole Foods said it plans, with General Mills' approval, to post a sign above the Cascadian Farm cereal that reads, "Cascadian Farm, one of the original producers of organic foods in this country, is now part of the General Mills family."
 

AMERICAN CORN GROWERS ASSOCIATION:
DEMAND FOR ORGANIC PRODUCTS OFFERS
POSITIVE NEWS FOR NATION'S FARMERS ONLY IF
THEY CAN MEET MARKET AND CONSUMER DEMANDS

The American Corn Growers Association (ACGA) warned . . . .that the future marketing of genetically modified (GMO) grains has taken a major set back due to the recent announcement by General Mills, the second largest cereal maker, that it plans to introduce a new line of organic cereals.

"Food items must be free of GMO materials in order to be labeled organic," says Larry Mitchell, CEO of the ACGA.  "That means that the issue of raising pure organic grains, uncontaminated from genetically modified crops, must be addressed."

"Since ACGA introduced its Farmer Choice - Customer First educational program, we have consistently cautioned that American farmers should seriously consider growing the crops that the market dictates. The growth in demand for organic and natural foods suggests positive market opportunities for non-GMO commodities will grow into the future," said Mitchell.

"While the growth trend in demand for organic foods presents exciting potential for American farmers, it also presents some major challenges regarding issues of pollen contamination, commodity segregation, and identity-preservation on the marketing side and compliance with tighter traceability, labeling, and liability regulations on the legal side," says Dan McGuire, ACGA Program Director.

"Recent action by the European Parliament calling for the labeling of food and fodder processed from GMOs and  for keeping GMO-derived food and fodder  separate from non-GMO varieties, along with a reduction from one percent to 0.5 percent in the threshold for accidental contamination and the level at which mandatory labeling would kick in, is just one example of the more restrictive trend."

General Mills is not the only major food company getting into organics. Other companies including Kraft, Kellogg, H.J. Heinz, Coca-Cola and Adolph Coors, are becoming players in the organic market.  PepsiCo recognized this consumer-driven market potential by announcing two years ago that Frito-Lay snacks would be non-GMO.

"Market prices for corn and other U.S. commodities remain near historic lows while U.S. grain export markets have suffered severely since the introduction of GMOs.  The recent growth in demand for organic products offers positive news for American agricultural producers, but only if farmers are able to meet market and customer demand.

"The biotechnology industry seems unconcerned about what pollen drift from its GMO varieties will do to consumer choice and market demand, either for organic or for non-GMO commodities (about 80% of the U.S. corn crop is non-GMO varieties) and products It also appears to lack concern for the loss of U.S. export sales, not to mention the various liability issues that could develop.  Add in the fact that the loss of export
markets increases domestic grain inventories, lowers grain prices, and raises the cost of the farm program, U.S. farm program expenditures move closer to being non-compliant with World Trade Organization (WTO) spending limitations, potentially causing U.S. farmers even more public relations problems well into the future," concluded McGuire.
 

OBESITY IN CHILDREN REACH STAGGERING NUMBERS;
FOOD INDUSTRY'S "COOPERATIVE" POLICY SOLUTIONS
SHOW DISTURBING PARALLELS WITH TOBACCO

KELLY D. BROWNELL & DAVID S. LUDWIG, WASHINGTON POST: Obesity in children has tripled in the past 20 years. A staggering 50% of adolescents in some minority populations are overweight. There is an epidemic of type 2 (formerly "adult onset") diabetes in children. Heart attacks may become a disease of young adults.

In response to this public health crisis, federal and state officials are seeking ways to protect children from the ravages of poor diet and physical inactivity. National legislation on the prevention and treatment of obesity is being considered. California and Texas are working to remove snack foods from schools. There are proposals for the regulation of food advertising to children.

One big question facing those who deal with the problem is whether to fight the food industry or work with it. The industry, of course, favors the work-together approach. Currently, food industry lobbying groups are invited to Agriculture Department meetings, participate in professional nutrition conferences, and have testified before Congress on obesity legislation. A large and powerful lobby is at work.

But before taking the cooperative approach in these matters some disturbing parallels with tobacco should be considered.

In 1995 the American Academy of Pediatrics stated that advertising to young children is inherently deceptive and exploitative. Yet each year the food industry spends an estimated $10 billion to influence the eating behavior of children.

The average child sees 10,000 food advertisements per year, 95% of them for fast food, soft drinks, candy and sugared cereals --- all high-profit and nutrition-poor products. Marketing campaigns link fast food and soft drinks to toys, games, collectibles, movies and popular personalities. Soft-drink companies have established lucrative contracts with cash-strapped school districts tying financial incentives to sales.

By contrast, the entire federal budget for nutrition education is equal to one-fifth of the advertising costs for Altoids mints. Is it any wonder that children now consume about 15% of their total calories from fast food, ten percent from sugar-sweetened soft drinks and only half the recommended amount of fruits and vegetables?

The obesity epidemic has many causes, but deterioration in the diet almost certainly plays a central role. Fast food is served in massive portions, contains highly processed carbohydrate and the worst fats (especially "trans-fat"), and has little or no fiber. Each of these factors has been linked to increased risk for obesity, diabetes or heart disease. Excessive soft-drink consumption is related in scientific studies to increased calorie
intake, weight gain and obesity.

The food industry contends that more research is needed before action is taken on regulating advertising and sales; that physical inactivity and not specific foods should be the target for change; that parents must teach their children to act responsibly; that vending and soft-drink machines in schools provide freedom of choice; and that no food or company should be demonized.

We agree on one count --- that more research on children's diets and their health would be helpful, but the research must be conducted in a rigorous and unbiased fashion by independent scientists.

More insidiously, the food lobby uses money and power to influence national nutrition policy. Even the country's main professional dietetic association has succumbed; it has a Web page on beverage choices sponsored by a grant from the National Soft Drink Association. Legal Times reported that industry pressure led to weakening of USDA dietary guidelines aimed at reducing consumption of added sugar.

Versions of these tactics have been used by the tobacco industry for years. Largely because of industry resistance, it took decades before the war on tobacco reduced rates of smoking significantly.

The nation cannot afford stalling, diversion and policies with no teeth in the nutrition arena; the human toll is too great. There are voices of reason, or at least enlightened self-interest, within the food industry. But will they prevail?

The time has come for the industry to demonstrate that it will be a trustworthy public health ally by adopting the following policies: (1) suspend all food advertising and marketing campaigns directed at children; (2) remove sugar-sweetened soft drinks and snack foods from vending machines in schools; (3) end sponsorship of scholastic activities and professional nutrition organizations linked to product promotion; and (4) refrain from political contributions that might influence national nutritional policy.

Otherwise, profit prevails over public health and the nation loses.

Kelly D. Brownell is a professor of psychology, epidemiology and public health at Yale and director of the university's Center for Eating and Weight Disorders. David S. Ludwig teaches at Harvard Medical School and directs the obesity program at Children's Hospital in Boston.
 

EPA INTENDS TO CRACK DOWN
ON UNEXPECTED ETHANOL PLANT EMISSIONS

JULIE DEARDORFF, CHICAGO TRIBUNE: Factories that produce ethanol, the homegrown fuel touted for environmental benefits, pollute more than anyone anticipated, according to the U.S. Environmental Protection Agency, which intends to crack down on the unexpected plant emissions.

Representatives from ethanol factories in five Midwestern states [were] expected to attend a meeting [last] Monday in Chicago to discuss plant changes and new permitting requirements, said Steve Rothblatt, the EPA's Acting Director of Air and Radiation Division for the Midwest region. The EPA will individually investigate those who don't attend, Rothblatt said.

The surprise findings, which complicate the ongoing argument over ethanol's overall contribution to clean air, come during the most aggressive and rapid expansion in the industry's history. Notoriously malodorous ethanol plants are opening primarily in rural areas, as the industry gears up to double production over the next decade.

In the last two years, 15 facilities have opened and another 14 are under construction, including Illinois' first farmer-owned venture in Lena, near Rockford.

"We want to make sure from a long-term standpoint there are no health problems," said EPA Regional Administrator Tom Skinner. "We have an industry that has every reason in the world to be cooperative. The basic premise is that this was a common misunderstanding or oversight."

Ethanol supporters downplayed the new data, and said the problem could be fixed without reducing production or expansion. "The black eye is frustrating especially since we produce it in an environmentally sensitive way," said Monte Shaw of the Renewable Fuels Association. "This isn't the case where a bunch of people are knowingly doing something wrong. We'll make the changes and put it behind us." Ethanol opponents, including citizens groups fighting proposed ethanol plants, find the new information somewhat vindicating.

"When you factor in the pollution generated by the entire production cycle of ethanol --- emissions from tractors, planting, harvesting and now the plants themselves --- there's a strong argument that we actually generate more pollution than we save by burning it in fuel," said Bob Scidmore of Menomonie, Wisconsin, who is leading a protest against a proposed plant three miles from his home. "Ethanol may not be an issue of saving or eliminating pollution but of displacing it."

Questions over plant emissions first surfaced in St. Paul, when residents living near the Gopher State ethanol plant complained about the stench. Last year, the beleaguered plant corrected a long list of environmental violations --- including operating without pollution control equipment --- and paid a $45,000 penalty, according to the Minnesota Pollution Control Agency.

When Gopher State's emissions were tested because of odors, other substances emerged. "It wasn't a very popular production from the beginning because of odors, but it wasn't clear how we could establish cause and effect," said Dan Pena, a research scientist with the Minnesota Department of Health.

The EPA followed up Pena's investigation and also conducted tests at plants in Indiana, Minnesota and Illinois, including Archer Daniels Midland in Peoria. They found the plants' dryers were emitting volatile organic compound ranging from 120 tons for some of the smallest plants up to 1,000 tons annually, according to Rothblatt.

Volatile organic compounds are a group of chemicals that evaporate easily into the air and cause urban smog and carbon monoxide. Some of the unexpected compounds EPA officials found include acrolein, formaldehyde, acetaldehyde and butanone, with some chemicals rising to the level of listed hazardous air pollutants, said Rothblatt.

Formaldehyde, a colorless, pungent smelling gas, can cause eye, nose and throat irritation, wheezing and coughing, fatigue, skin rash, allergic reactions and possibly cancer. Acetaldehyde, widely used in industry, irritates the throat and respiratory tract. Higher exposure levels can cause nausea, vomiting, headaches, drowsiness and hallucinations.

"I can't say why no one anticipated formaldehyde and acetaldehyde," said the EPA's Skinner. "It could be just part of the natural way things developed." But Skinner added, "It's under control and will be a non-factor in the overall ethanol debate."

Ethanol, made from corn or vegetable matter, is mixed with gasoline to produce a cleaner burning fuel and is used year-round in Chicago to reduce smog-forming emissions. Farming interests, oil companies and environmental organizations champion ethanol production as an alternative to America's dependence on foreign oil.

Last month the U.S. Senate passed legislation that would require five billion gallons of ethanol to be blended into the nation's fuels by 2012 as part of the proposed Energy Policy Act. Meanwhile, many states, including Illinois, are phasing out MTBE, another widely used fuel additive linked to ground water pollution, a move further boosting demand for ethanol.

Currently, 61 plants, primarily in the Midwest, produce 2.3 billion gallons of ethanol a year. Illinois, the nation's leader, produces about 800 million gallons of that, according to the American Ethanol Coalition.

But ethanol's environmental benefits are still debated. Oxygenates like ethanol decrease the amount of carbon monoxide from tailpipes, and promote more complete fuel combustion. In hot summer months, however, when ethanol is combined with gasoline, it increases the vapor pressure and evaporates more quickly, actually contributing to the ozone problem.

"It has been our contention all along that ethanol is not a bad additive, but we need to get realistic about what its real pluses and minuses are," said David Sykuta, executive director of the Illinois Petroleum Council. "Ethanol has been a `fledgling fuel' and the `savior of the family farm' for so long that often the harder questions about fuel are never discussed. I don't doubt the EPA's numbers for a minute. But that's not to say it's unsolvable."

Thermal oxidizers, equipment that can cost $800,000 to $2 million, are already used in the industry and are the most likely solution to the emerging pollution problem, said Jack Huggins, an ethanol industry consultant and past president of Williams BioEnergy in Pekin. In a typical ethanol production process, corn mash is pumped to a fermentation tank where the sugars are changed to ethanol. Various chemicals are created in the process while fumes are produced when the fermented corn mash is dried to be sold as a supplement for livestock feed.

Thermal oxidizers burn emissions at high temperatures to convert pollutants to carbon dioxide and water, using natural gas as the primary fuel, according to the Energy and Environmental Research Center at the University of North Dakota. While they use a good deal of energy, some of the heat can be recycled into the process. The type of equipment and emissions vary from plant to plant. Once the EPA revises requirements, those already operating may have to install pollution-control equipment.
 

QUESTIONS RAISED CONCERNING ADM BID RIGGING
USING COMPANY PROXIES INVOLVING CONVERSION
OF TRANSSHIPPED EUROPEAN WINE INTO ETHANOL

NICHOLAS E. HOLLIS, THE AGRIBUSINESS COUNCIL: The latest apparent bid-rigging controversy from ADM  --- involving the conversion of transshipped European wine into ethanol for the California market --- is now under investigation in Congress and the EU.

Someone in authority is likely to enlighten Mr. Richard Vind, an ADM agent operating under the name Regent International (Brea, California),on the fine line between collusion and cooperation among so-called competitors in a free marketplace. Against the backdrop of ADM's massive price-fixing activities captured on FBI tape and used to force the powerful company into a plea bargain ($100 million fine also insured immunity for company chairman Dwayne Andreas) -- Mr. Vind's denials have a hollow ring.

Back in 1997, ADM supposedly underwent an "ethics training course" in compliance with USDA requirements as part of the company's distorted agreement which enabled ADM to maintain its business links with the U.S. government

But these latest revelations --- which detail bid rigging using ADM proxies in close coordination with ADM Ingredients in London (D.Bok) throughout the same period --- suggests ADM International was not taking its ethics prescription seriously or regularly .

For a company where the senior management mantra was aired before the Chicago pricefixing pury.."My competitor is my friend . . . .my customer is my enemy" this old wine in new bottles doesn't go down well. It isn't just another bogus scam from the Supermarkup to the World --- it's also a crude betrayal of the midwest corn farmers, now duped at another level --- since they believed their corn was the feedstock of choice for the future California ethanol market requirements.

As Congress contemplates the stakes for the proposed mandating of massive ethanol increases, it would be wise to review ADM's not-so-concealed leadership in the drive to open Cuba for trade. Behind that facade is the reality that ADM wants to modernize Cuba's low cost sugar production, and process it into ethanol within the Caribbean (probably expanding the facilities it is using for wine ethanol production in Jamaica and Costa Rica). This will be smokescreened with humanitarian cover using U.S. taxpayer food surpluses for needy Cubans --- and the world's fragile sugar market will be upended in the process.

The shrouded wine ethanol scheme represents the exploratory phase of ADM's invasion of Calfornia --- and it won't surprise anyone to learn that Vind and other associates, such as George Fitch of Gainesville, Virginia (IOP Associates), who have lobbied Brussels extensively --- have secured legal counsel from Gibson, Dunn & Crutcher --- a powerful California lawfirm with former representative Mel Levine (Dem.). Now, where would some half-baked traders come up with that connection?

You can connect the dots. . . .
 

VIA CAMPESINA CALLS FOR
"LAND AND DIGNITY"
AT WORLD FOOD SUMMIT

On the 8th of June 2002 in Rome: Via Campesina is convinced that the rally on the 8th of June 2002 in Rome will be a turning point in the debate on agriculture and food. The rally will make it clear to the general public and to Head of States that a profound change in agriculture and food policies is absolutely necessary!

The rally is receiving broad support both in Italy and at the international level. This should be a clear signal to the FAO and the Heads of State that concrete commitments are more urgent than ever!

Via Campesina calls for food sovereignty and wants the WTO out of agriculture and food because this is the only way to maintain and develop domestic food production to ensure food security for farming families and all citizens. There is a great need for agricultural policies that stop dumping of food, allow countries full control of food imports and avoids
surplus production.

Via Campesina calls for diversified farmer-based sustainable production because this is the only way to assure a decent living for the world's population of which over 50% are working in agriculture. We cannot accept that more than half of the world population is marginalised and condemned to poverty because our governments see market liberalisation as the only way forward!

Via Campesina does not want Genetically Modified Organisms (GMO's) in food and agriculture production because they do not contribute any benefits to farmers and consumers. GMOs are geared specifically to increase the profits of agro-industry. GMOs pose new and unknown risks to the environment, the quality of food and human health. Therefore, Via Campesina also strongly opposes the use of patents and IPR's on life forms.

Via Campesina wants policies that enhance the sustainable production and marketing of healthy and safe food. Access to safe and healthy food is a right of every citizen.

Via Campesina wants prices that remunerate the work of farmers. This is the basis of farmer-based sustainable agriculture that respects the environment, produces quality food and allows rural families to make a decent living.

Via Campesina calls for genuine agrarian reform programs based on land redistribution schemes and policies that enable the landless to produce on the land they have occupied. The so-called "market-led" land reform schemes pushed by the Worldbank and the policies of the WTO are in no way a solution to the inequitable distribution of land that plagues many countries.

Via Campesina is alerted by the attempts to privatise public services and goods like water, education and health. This leads to further marginalisation of millions of people, totally contrary to the goals of this FAO Summit. We expect that the FAO Summit will take a clear and independent position on these and other issues in favour of the poor, criticising the policies put forward through WTO, IMF and Worldbank and that it allows organisations and movements to speak out independently, free from attempts of co-optation like the so-called "multi stakeholder dialogues" that only aim to construct a consensus on issues over which in reality exist strong contradictions of interest and opinion and that deserve a solution that answers to the basic human rights of all citizens.

Via Campesina calls for the immediate release of our leaders, men and women, that are imprisoned only because they have given voice to the hopes of those that want a world where they can live a dignified life and be free from hunger. If these leaders cannot come to Rome to participate it is difficult to trust the declarations of governments that call for "dialogue" and "partnerships."
 

WORLD FOOD SUMMIT OPENS:
ABSENT WORLD'S TOP LEADERS

SEATTLE TIMES NEWS SERVICE: Most of the world's top leaders will skip the opening of the United Nations' World Food Summit today [June 10], undermining hopes the meeting will resuscitate efforts to reduce hunger. While dozens of leaders from developing countries have arrived in Rome, including shunned Zimbabwean President Robert Mugabe, only the heads of two wealthy Western countries --- Italy and Spain --- are expected.

"How many OECD (Organization for Economic Cooperation and Development) heads of state and government have made the journey to this summit of the poor? Two out of 29," Jacques Diouf, director general of the U.N. Food and Agriculture Organization (FAO), said . . . . before the four-day meeting began. "We have a good indication of the political priority that is given to the tragedy of hunger."

Many affluent countries, including the United States, will be represented by their agriculture ministers, who look likely to resist U.N. demands to pump more cash into the war on hunger.

The Rome summit follows a 1996 one during which participants vowed to cut the number of hungry people to no more than 400 million by 2015, from 840 million. The number has dropped only to 815 million, with war, natural disasters and political indifference taking their toll. To hit the 1996 goal, the FAO wants $24 billion more a year in agricultural and rural investment.

At present, development assistance from wealthier countries totals $68 billion, of which $11 billion is earmarked for agriculture, compared with about $15 billion spent on farming in 1988.

The conference also is likely to revive debate over genetically modified crops. The United States has been a major advocate of genetically engineered foods, saying the creation of drought- and insect-resistant crops ensures greater food security. But opponents say engineered crops pose environmental and health hazards and are designed to benefit
multinational corporations that develop them, not farmers or consumers.

U.S. Agriculture Secretary Ann Veneman, who is heading the U.S. delegation, blamed the debate on a lack of consumer understanding about the benefits of biotechnology and cited drought-resistant corn and Vitamin A-enriched rice that have been developed.

U.S. and European Union (EU) officials also will be pressured about the massive subsidies paid to their farmers, which the FAO said depress world commodity prices at the expense of Third World producers.

Critics say trading practices designed to open markets have put farmers out of business in the developing world because they cannot compete with the subsidized imports. "Hunger can increase even if there are cheap imports," said Michael Windfuhr, head of the German-based Food First, Information and Action Network human-rights group and member of the nongovernmental coalition at the summit. Diouf, for his part, said the world produces more than enough food to feed its six billion people.

The issue, he said, is getting that food to the hungriest. "We cannot consider nowadays --- with the possibility of daily telecommunications, transport, Internet, TVs and so on --- that people can (in some places) be wealthy, be rich, and in other parts of the world people are in a situation of starvation."

Windfuhr said another hot issue is whether the summit's final, nonbinding resolution would include a call for developing a voluntary code of conduct on "the right to adequate food for all." The European Union, the Vatican and developing countries back the concept, but the United States remains opposed, he said.
 

U.S. BEHAVIOR AT WORLD FOOD SUMMIT
"REPREHENSIBLE, REDEFINING
VERY CONCEPT OF `ROGUE NATION'"

Rome at 3:00 AM on Monday morning [June 10] the United States stood alone among all nations of the world in blocking further discussion of the draft text of the declaration that governments will sign at the World Food Summit.  What was leading the U.S. to stop the all night negotiating session?

First, the U.S. wanted all references to "food as a human right" to be deleted, and second, the U.S. wanted strong language saying that genetically modified (GM) crops are a key way to end hunger.  The Third World nations organized in the Group of 77 wanted mandatory language on the Right to Food, while Europe and Canada held out for the compromise of a voluntary Code of Conduct.  No other nation felt strongly that GM crops should receive prominence.

"The U.S. is behaving in a reprehensible fashion," said NGO delegate Dr. Peter Rosset, co-director of Food First/The Institute for Food and Development Policy, an American food policy think tank. "It makes me ashamed to be an American when my government stands alone in the entire world in opposing the recognition of food as a fundamental human right," he said.

Later in the day U.S. negotiators backed off from their harsh stance, accepting "with reservations" watered-down language on the right to food.  What this means is that the discussion of the rest of the declaration can move forward, but the U.S. reserves the right to re-open the Right to Food issue later in the week.  The U.S. may also decide to not to sign the final declaration, as it did at the 1996 World Food Summit, and in Kyoto, Rio and other major international negotiations.

Meanwhile, delegates and ministers from other nations report being subject to "immense" U.S. pressure to accept strong language in favor of GM crops.  "The United States is redefining the very concept of `Rogue Nation,'" said Dr. Rosset. "Any concept of human dignity and decency would see food as the most basic of all rights for human beings, but the U.S. somehow feels such notions would restrict the freedom to operate of
American corporations."
 

FORMER WORLD BANK CHIEF ECONOMIST:
IF WE FAIL TO LEARN FROM OUR PAST MISTAKES
GLOBALIZATION WILL NOT ONLY NOT SUCCEED,
WILL CONTINUE TO CREATE POVERTY AND INSTABILITY

ALAN COWELL, NEW YORK TIMES: For several years now, a fractious debate about the role of the big financial institutions in the globalized economy has encircled the world's policy makers, moving from the initial grumblings of the often-unheeded developing world through the street protests of Seattle and elsewhere and on to a much broader agenda.

With Globalization and Its Discontents (W. W.  Norton), Joseph E. Stiglitz, a Nobel laureate in economic science in 2001, has taken the discussion a step further. He shows just how much the protesters' misgivings about and  outright hostility toward some of those institutions have moved from the fringes into influential, mainstream thinking.

Professor Stiglitz, a former top economic adviser in the Clinton administration and chief economist at the World Bank, is now an economics professor at Columbia. He has long been associated, of course, with the economics of growth and development in the third world. With this accessible, provocative and highly readable study, he brings an insider's insights into the crises of the 1990's and beyond, from East Asia to Russia and on to Argentina.

His central thesis is simple --- that the "market fundamentalism" of the International Monetary Fund, with its insistence that markets themselves will achieve a balance between supply and demand, furthering growth and development, is fundamentally flawed. The I.M.F.'s prescriptions in times of economic crisis, he writes, have caused far more human suffering than they have resolved economic problems.

Globalization has been badly managed, he contends, colliding head-on with some of the nostrums of the I.M.F. and what is sometimes called the Washington Consensus. Those include the idea that poverty is eased by the trickle-down effect of prosperity for the elite and that governments should not get in the way of the markets.

He goes further, embracing ideas once thought the exclusive preserve of the street protesters: the I.M.F. and the United States Treasury  Department, he contends, pursue the interests of the big investment banks rather than the poor most directly affected by their macroeconomic  solutions to crises like those in East Asia and Russia. Indeed, those interests seem intertwined in the very personalities who exerted such enormous influence as globalization emerged as the dominant force of the 1990's.

After all, he says, "did not Robert E. Rubin, the former United States Treasury secretary, hail from Goldman, Sachs and move on to Citigroup  after his spell in Washington? Did not Stanley Fischer, the former No. 2 executive at the I.M.F., go directly from that job to a well-paid position at Citigroup? "One could only ask: Was Fischer being richly rewarded for having faithfully executed what he was told to do?" Professor Stiglitz writes.

The World Trade Organization, too, Professor Stiglitz asserts, promotes the interests of the developed world. The developing world, he says, still labors under unfair rules that restrict access to richer nations that preach trade liberalization but keep their own markets closed.

That is a hypocrisy, he says, that extends to the readiness of the global institutions to bail out their "client" states, differentiating between the strategically significant and the rest. "The I.M.F. is a political institution," he writes, saying the fund was ready to ignore runaway corruption in Russia to rescue Boris N. Yeltsin while suspending aid to Kenya on grounds of corruption.

Of course, it would be disingenuous to ignore Professor Stiglitz's own background as chief economist at the World Bank for almost three years, from 1997 to early 2000. In this study, the bank is spared the searing indictment that Professor Stiglitz reserves for the I.M.F. Yet the two are sister organizations, set up together after World War II. And much as he inveighs against what he calls the I.M.F.'s hard-nosed approach to economic crisis, the World Bank itself withholds loans to developing  countries that fail to secure the I.M.F.'s imprimatur on their economic performance.

To that extent, the World Bank itself creates part of the pressure, particularly on developing countries, to accept those same I.M.F.  prescriptions that Professor Stiglitz finds so distasteful. Often enough, however, officials of the two institutions behave more as rivals than as colleagues.

Not surprisingly, part of the book's purpose seems to be an attempt to ensure that events during his World Bank tenure do not besmirch his own reputation. In the process, one suspects that some score-settling may well be in play.

Significantly, though, Professor Stiglitz dismisses any illusion that the protesters on the streets of Prague, Seattle or Genoa were some kind of lunatic fringe whose arguments will disappear easily. "For decades the cries of the poor in Africa and in developing countries in other parts of the world have been largely unheard in the West," he writes, and it was only the street protesters "who have put the need for reform on the agenda of the developed world."

Once the issue is on the agenda, of course, the discussion moves on to reform issues that have absorbed some strategic thinkers since the late 1990's. Part of his message reflects his argument that the global financial institutions have drifted away from the Keynesian principles on which they were founded. The I.M.F.'s "market fundamentalism" --- placing much faith in  freewheeling markets --- has not worked, he contends, as much as the economic policies of nations like Malaysia, where government intervention provided protection from the worst of the East Asia crisis.

The countries that have benefited most from globalization, he writes, "have been those that took charge of their own destiny and recognized the role government can play in development rather than relying on the notion of a  self-regulating market that would fix its own problems." Equally, though, he says that far greater openness and democratic responsiveness are long overdue, both in the governments of developing countries and in the secretive global institutions where decisions are routinely made in private.

Much as anything else, Professor Stiglitz says, all countries should have a clear picture of what development is supposed to achieve. "It is not about bringing in Prada and Benetton, Ralph Lauren or Louis Vuitton for the urban rich, leaving the rural poor in their misery," he says. Development, he says, "is about transforming societies, improving the lives of the poor, enabling everyone to have a chance at success and access to health care and education."

Judged from that viewpoint, the record of globalization has been patchy to date. And, Professor Stiglitz says, "if globalization continues to be conducted in the way that it has been in the past, if we continue to fail to  learn from our mistakes, globalization will not only not succeed in promoting development but will continue to create poverty and
instability."
 

SNACK FOOD
BRIEFLY NOTED
 

REDUCING COMPETITION (PRICE FIXING)
NOW REFERRED TO AS "COORDINATED PURCHASING"

KROGER'S SEC FILING, DECEMBER 31, 2002 :"The economies of scale created by our merger with Fred Meyer have enabled Kroger to reduce costs through coordinated purchasing (reducing supplier prices). Technology and logistics efficiencies also have led to improvements in category management (restricting shelf space to those who will pay the most) and various other aspects of our operations, resulting in a decreased cost of product."
 

SURPRISE !!!! WENDY GRAMM RESIGNS
FROM ENRON BOARD OF DIRECTORS

KATHRYN KRANHOLD, WALL STREET JOURNAL: Enron Corp. announced the resignation of the last four holdover board members from before it filed for bankruptcy protection. Enron on Thursday announced the resignation of Robert Belfer who has been with the Houston-based energy company since its formation in 1985; Wendy Gramm, the former chairman of the U.S. Commodity Futures Trading Commission, who joined in 1993; acting board chairman Norman Blake Jr., who joined in 1993; and Herbert S. Winokur Jr., who joined in 1985 when Enron was formed.

Raymond S. Troubh who was appointed in the fall as Enron collapsed into bankruptcy is expected to remain on the board indefinitely. Enron in February 2002 announced its intention to make a transition to a board composed of new, independent directors. Thursday's resignations complete that process. The company filed for bankruptcy protection in December.
 

IMPORT HOG CHOW

RICK DOVE, RALEIGH NEWS OBSERVER: According to a recent news report, representatives of the hog industry are turning to cheaper imports to obtain their livestock feed. They intend to buy 180,000 tons of soymeal from Brazil for distribution among six partners, which include North Carolina's Murphy-Brown, a unit of Smithfield Foods, Inc., the largest pork producer in the United States. Ultimately, they want to import 50% of their feed stock in order to increase their profits. North Carolina ports may be used for this purpose.

For years the pork industry has "piggybacked" on the shoulders of the American farmer. At rallies, demonstrations, public hearings and the like, Murphy-Brown, Smithfield and other industrial animal meat producers called themselves "farmers." They depended on this American farmer image and on farmer support to beat back criticism related to their bad industrial practices, including the poisoning of rivers.

I wonder how farmers who have been producing feed stock for corporate hogs are going to feel as they watch these ships arrive from Brazil loaded with feed that used to be produced in America. The hog industry has had more than 15 years to promote feed production in North Carolina to sustain its North Carolina hogs but has failed to do so. Why? Farmers should be outraged over this anti-American farming practice. Maybe
it's time consumers gave real American farmers some help at the market place.

Rick Dove, New Bern was a Neuse Riverkeeper from 1993 to 2000 and is now on the staff of the Waterkeeper Alliance.
 

UPDATED AND STREAMLINED
CORPORATE AGRIBUSINESS RESEARCH PROJECT
WEB SITE INITIATES RENEWED SUPPORT EFFORT

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 166 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.
http://www.ea1.com/CARP/

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.

> 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.
http://www.electricarrow.com

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

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