The
AGRIBUSINESS
EXAMINER
July 16, 2002   #174
Monitoring Corporate Agribusiness
From a Public Interest Perspective

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

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GAO REPORT SHARPLY CRITICAL
OF GOVERNMENT'S SCIENCE-BASED,
IN DISARRAY, FOOD INSPECTION SYSTEM

ELLIOT JASPIN, COX NEWS SERVICE: The federal government's new science-based system of food inspections is in disarray, according to a draft report prepared for Congress.

The report by the General Accounting Office, obtained by Cox Newspapers, concluded that inadequately trained food inspectors are unable to spot problems at a majority of the nation's thousands of meat and poultry plants. GAO investigators also found that nearly all of the 47 plants that it sampled had food safety programs that "failed to meet regulatory requirements."

Despite these shortcomings, the report said the U.S. Department of Agriculture, which oversees food safety, continued to allow plants to ship meat and poultry for consumption by the public, even though tests repeatedly found some were laced with either hazardous bacteria or feces. Despite the findings, it is unclear what impact these problems are having on the safety of America's food supply.

In April the Centers for Disease Control and Prevention in Atlanta announced that the incidence of food borne illness had declined 23% since 1966. The Bush administration cited the new inspection system as one of the reasons for the decline. Specific plants were not mentioned in the GAO report.

Steven Cohen, an Agriculture Department spokesman, said his agency is still formulating a response to the GAO. But he said the report does not accurately reflect the current state of the government's food inspection program.

"Many of the things that the GAO cite in their report were things that (the Agriculture Department) had identified prior to the beginning of their investigation," Cohen said. "And what we are going to be reporting to the GAO are systems and programs that have been designed but not fully implemented to address many of the things that the GAO cited." A GAO spokesman declined to comment, citing the agency's policy of not talking about reports until they are made public.

Beginning in 1997, the Agriculture Department started phasing in a new system of inspecting meat and poultry plants. Under the old program, food safety inspectors stationed in slaughterhouses oversaw the killing and processing of animals. Derided as the "poke and sniff" method, it was replaced by a program called Hazard Analysis and Critical Control Points, or HACCP.

Under HACCP, such things as the presence of bacteria are continuously monitored by company inspectors at key points in the production process. If a problem is detected at a control point, the plant knows it needs to stop production to make corrections.

HACCP has dramatically changed the role of government inspectors. Instead of inspecting each carcass as it moves down the production line, they are now supposed to monitor how well the company is implementing its HACCP program.The GAO investigation found that the government "has not trained and does not expect in-plant inspectors to be able to identify deficiencies in the scientific basis of HACCP plans."

Two years ago, the Agriculture Department asked Congress for money to create a force of 588 specially trained inspectors capable of reviewing HACCP plans. However, that request was turned down. Instead, the Agriculture Department cobbled together a force of 35 --- a group so small that the GAO says it will take years to look at the thousands of plants around the country. The result, according to the GAO, is that no one can be sure that a plant's HACCP plan is effective.

The GAO noted that when special teams reviewed the HACCP plans in 47 plants, they found that 94% "failed to meet regulatory requirements." While not disputing the GAO numbers, Cohen said the GAO's sample size may be too small.

The GAO report also found that, according to Agriculture Department records, 55% of the plants in the United States are so-called "perfect plants" because they do not have a single violation from Agriculture Department inspectors. Because it is highly unlikely that a plant could have a perfect record, the GAO suggested that "inspectors did not understand, or were not fulfilling their responsibilities under HACCP."

Cohen acknowledged that the department's implementation of HACCP has been uneven and that it is working to correct the problems cited in the GAO study. Even when problems are found, the GAO said that the government is not moving quickly enough to have them corrected. It cited one unnamed plant where drug residues were found repeatedly in the animals that were slaughtered. Although first discovered in August 2000, the problem was not addressed until April 2001.

Felicia Nestor, a lawyer at the Washington-based Government Accountability Project (GAP), a consumer group that protects whistle-blowers, said the report shows "we don't have a science-based inspection system." She said that the Agriculture Department training programs for inspectors are inadequate and "no one out in the field knows what to do." She also argued that Agriculture Department policies are vague and contradictory.

Caroline Smith DeWaal, food safety director at the Center for Science in the Public Interest in Washington, a nonprofit education and advocacy group, said she also questions administration claims about the reduction in food borne illness. She said that while there has been an overall reduction in salmonella outbreaks, this has been because salmonella contamination of eggs has dropped. The incidence of salmonella in meat and poultry products has either stayed the same or gone up, she said.
 

UNDERPAID ANGRY OREGON FARMERS ACCUSE
CORPORATE AGBIZ PRO-FAC COOPERATIVE
OF FRAUD, BREACH OF CONTRACT, MISDEEDS

JIM CARLTON, THE WALL STREET JOURNAL: Farmers helped build Pro-Fac Cooperative Inc. into an agricultural giant. Now some of them are going to court about an accounting dispute with the company. About 170 farmers in Oregon's fertile Willamette Valley have banded together to sue the Rochester, New York, company, alleging it inflicted an estimated $50 million in damages on them by shifting profitable assets of a Pro-Fac unit they belonged to called AgriFrozen Foods Inc. to the parent company.

As a result, the farmers say, AgriFrozen was left so unprofitable that Pro-Fac closed it down last year, leaving them with no place to sell many of their fruit and vegetable goods while also wiping out their investments in the company.

On top of that, they allege Pro-Fac underpaid them by as much as 50% for their crops. The farmers accuse Pro-Fac and its subsidiary, Agrilink Foods Inc., of fraud, breach of contract and other misdeeds in an Oregon Circuit Court case that a judge on July 1 certified to be heard as a class action. Trial is set for January 15.

"We feel like Pro-Fac just came in here, promised a lot of things and then let us down," said Bob Dettwyler, one of the farmers who filed the suit. He added his family farm's annual income has been reduced by about 20% as a result. Mr. Dettwyler said other farmers who sold a greater percentage of their crops to the Pro-Fac unit are in danger of going out of business.

Officials of Pro-Fac, a co-op with more than 500 growers nationwide that trades on the Nasdaq Stock Market, declined to comment. In a recent filing with the Securities and Exchange Commission, the company said it believed the case was without merit and it intended to vigorously defend itself.

Pro-Fac was founded in 1960 to process and market crops grown by its members. Its Agrilink subsidiary is the largest frozen-vegetable producer in the nation. Last month, the private equity firm Vestar Capital agreed to buy a majority stake in Agrilink, the producer of Birds Eye frozen vegetables, for $175 million. Agrilink's management will continue to run the business and Pro-Fac will retain a significant minority stake, both companies said.

Roots of the Oregon case go back to early 1999, when Pro-Fac's AgriFrozen unit bought the frozen-food division of a financially ailing farmers cooperative in Salem, Oregon called Agripac. The farmers who belonged to Agripac agreed to a deal under which they would sell their canned-good crops such as beans and corn to AgriFrozen for three years, while also getting restricted shares of Class B stock in the parent company that they believed would be valued at as much as $1,000 each.

But the deal unraveled, they say in the suit, as payments by Pro-Fac for their crops during both 1999 and 2000 were reduced below commercial market value by 11% and 50%, respectively. Last year, the farmers say in the suit, they didn't get a chance to send any of their co-op crops to market because Pro-Fac shut down AgriFrozen, citing its unprofitability. But lawyers for the farmers allege Pro-Fac used accounting gimmicks to transfer many of the profitable parts of the Oregon operation to its Rochester headquarters. They also allege AgriFrozen sold frozen vegetables at a low price to its parent's Agrilink unit, which would resell them for a higher price to benefit Pro-Fac.

"Had Pro-Fac operated the Oregon operation in good faith and not this self-dealing, we think the Oregon operation would have been successful," said Michael L. Williams, partner in the Portland, Ore., law firm of Williams, Dailey, O'Leary, Craine & Love P.C., which represents the farmers who first filed suit last year.
 

PHARMACIA BOUGHT BY PFIZER FOR $60 BILLION
CREATING WORLD'S LARGEST DRUG COMPANY,
WILL SPIN OFF MONSANTO CORP.

ROBERT FRANK & SCOTT HENSLEY, THE WALL STREET JOURNAL:        In the biggest corporate combination in more than a year, Pfizer Inc. agreed to buy Pharmacia Corp. for stock valued at $60 billion, giving what is already the world's biggest drug company full rights to one of the industry's crown jewels, the blockbuster arthritis drug Celebrex.

The deal will create an industry behemoth with over $48 billion in revenue and a research-and-development budget of more than $7 billion. The new combination will be the world's largest drug maker by far and the leading pharmaceutical company by revenue in every major market around the globe.

That any company should strike a deal amid the stock-market turbulence of recent months is surprising. Corporate accounting scandals, plunging share prices and economic uncertainty have made companies reluctant to strike bold deals, while several big mergers --- such as AOL-Time Warner ---- have faced strong investor criticism. While the Pfizer-Pharmacia deal is seen as practical, it's unclear how investors will react to such a large deal in the uncertain market environment.

The deal comes amid unprecedented pressure on Pharmacia Corp. pharmaceutical companies, as the industry struggles with a dry spell in its research labs, fights rising competition from generics makers and wrestles with intense pressure on prices from governments and private buyers around the world. As a result, drug companies are facing slowing or declining revenue and are watching their stocks sink to their lowest level in years.

Under terms of the deal, Pharmacia will proceed with its previously announced plans to spin off its remaining 84% ownership of Monsanto Co. to its current shareholders After the spinoff, Pharmacia shareholders will receive 1.4 shares of Pfizer stock for each share of Pharmacia, valuing Pharmacia stock at $45.08 per share, representing a 36% premium over Pharmacia's Friday closing price.

In addition to the blockbuster Celebrex, the transaction will join Pfizer's dominant cardiovascular franchise --- including the cholesterol drug Lipitor and the blood pressure pill Norvasc, as well as its Zithromax antibiotic and its epilepsy medicine Neurontin --- with such popular Pharmacia drugs as Xalatan for glaucoma and the cancer drug Camptosar.

People familiar with the transaction expect minimal antitrust problems because the companies have few overlapping products and because Pfizer's global share of total pharmaceutical sales --- currently at eight percent ---would rise only to about 11% if the deal is completed. However, one potential antitrust roadblock could be in the area of urinary incontinence, where Detrol, Pharmacia's blockbuster-in-the-making was poised to get competition from Pfizer's Darifenacin, which it expects to submit for Food and Drug Administration approval this year.

The Pfizer-Pharmacia deal is expected to heighten pressure for other companies to consider combinations --- including industry giants Bristol-Myers Squibb Co. and Merck & Co., which have been hard-hit by generic competition as their flagship medicines lose patent protection. A Pharmacia spokesman and a Pfizer spokeswoman declined to comment.

Pfizer's move, which is largely the brainchild of Pfizer CEO Henry McKinnell, echoes its acquisition two years ago of another of its partners, Warner-Lambert, in a $115 billion deal that gave it full control over the cholesterol-lowering drug, Lipitor. In recent years, big mergers had fallen into disfavor with some industry executives, who note that companies that pursued that tack, such as GlaxoSmithKline PLC and Bristol-Myers Squibb, failed to solve their problems --- particularly in research --- and appeared to be distracted by the merger process.

Pfizer's acquisition of Warner-Lambert, however, is considered one of the success stories to emerge from the raft of drug industry-combinations in the mid-1990s. In that case, Pfizer's acquisition was hostile, so it was free to unilaterally cut Warner-Lambert operations and personnel to make the operations meld smoothly.

As in the Warner-Lambert deal, Pfizer is capturing a blockbuster drug, in this case Celebrex and its follow-on drug, Bextra, both of which it already markets with Pharmacia, a mid-sized drug company based in Peapack, New Jersey. Buying the company will give Pfizer full control over the Celebrex-Bextra arthritis franchise. The two drugs are expected to have combined sales of $3.75 billion this year . . .

Industry experts long speculated about a deal between Pfizer and Pharmacia because of the good strategic fit. The two companies have had a partnership since 1998 to market Celebrex, the world's leading arthritis medicine and the No. 7 global drug overall, and have continued that arrangement with Bextra, a second-generation medicine launched in the U.S. this spring.

In Pharmacia, Pfizer is acquiring a relatively strong drug company, with four drugs that have $1 billion-plus sales or potential sales. That could give Pfizer, with eight drugs already at those sales levels, an even dozen blockbusters. Moreover, Pharmacia's major drugs don't face any patent threats for years. Its cancer drug Camptosar is the closest to patent expiration --- in 2007. . . . .

Pfizer shareholders will own about 77% of the company, with Pharmacia shareholders owning around 23%. The deal, which is expected to close by year-end 2002, is subject to approval by shareholders of both companies and regulators. The deal isn't expected to dilute Pfizer's 2003 adjusted net income and to add about six cents a share to earnings in 2004. . . .. .

Pfizer, feared and sometimes cursed by rivals for its brashness, hopes the deal will cement its status as the leading company in the global pharmaceutical industry. Ten years ago, most drug-company CEOs decided the rise of managed-care companies and government proposals for universal care meant the end of the large sales forces and huge marketing campaigns. Most executives in the industry predicted that government or managed-care groups would choose which drugs to buy no matter how much salesmen tried to persuade doctors otherwise. Merck & Co. and other companies cut their sales forces and slashed their marketing expenses. Pfizer did just the opposite --- adding salesmen        and investing heavily in smart marketers.

Pfizer proved prescient, surpassing everyone else in the industry on the strength of the organization's selling power. Merck eventually acknowledged it had made a mistake and has been steadily adding to its sales and marketing forces since the mid-1990s, playing catch-up ever since. By having a large sales force, Pfizer was also able to license blockbuster drugs from others --- including Lipitor and Celebrex --- and turn them into even larger sellers. Sales of Lipitor, after Pfizer acquired Warner-Lambert, "exploded," a person familiar with this deal said. Pfizer hopes the Pharmacia arthritis franchise would show similar results.

Now Pfizer is doing it again, betting heavily that size is what counts most. The combined company will put even more distance between itself and its rivals in two of the most important parts of the drug business: sales and research. Pfizer expects to spend $5.2 billion on finding and developing drugs this year, already about 20% more than GlaxoSmithKline, the next biggest spender. Add in Pharmacia's $2.2 billion in research spending, and the combined company would have a research budget nearly one-third the size of the National Institutes of Health.

In the war for drug sales, the expanded Pfizer would field 13,000 sales        representatives in the U.S. alone, more than any other drug company. A person familiar with Pfizer's plans said the sales force could grow even larger to support new products in the works at both companies. . . . .

The deal is expected to get tough scrutiny from antitrust enforcers given its size, according to people familiar with the situation. The transaction will likely be reviewed by the Federal Trade Commission, rather than the Justice Department, because of the agency's expertise in drug-industry mergers. The FTC is likely to do a market-by-market investigation of the two companies and could seek divestitures or compulsory licensing in areas where the two companies have a combined dominant market share . . . .
 

ADM BUYS REMAINING 70% SHARES
OF MINNESOTA CORN PROCESSORS

Archer Daniels Midland Co. (ADM) agreed to acquire the remaining 70% of Minnesota Corn Processors it doesn't already own for $2.90 a share and the assumption of $240 million of debt.

Minnesota Corn President and Chief Executive L. Dan Thompson said Archer Daniels will buy 136 million shares for $2.90 apiece in cash, which puts the cash portion of the deal at about $394.4 million. Archer Daniels originally bought 58 million shares of Minnesota Corn, or a roughly 30% stake in the company, for $120 million in August 1997.

Based on Minnesota Corn's recent trading price of $1, the purchase price represents a 190% premium, which Minnesota Corn called "fair from a financial perspective."

Archer Daniels, with about $20.05 billion of annual revenue, plans to merge the corn processing company with a unit of the corporation. In a press release Thursday, Minnesota Corn said the transaction remains subject to a number of conditions, including shareholder and regulatory approval. Minnesota Corn expects to have a shareholder vote in late August.
 

CONSUMER AND ENVIRONMENTAL GROUPS
WARN NEW CLASS OF GE FIELD CROPS  THREATEN
TO CONTAMINATE THE NATION'S FOOD SUPPLY

MATT RAND, NET: A coalition of consumer and environmental groups called on the U.S. Department of Agriculture (USDA) . . . . to prohibit a new class of genetically engineered food crops that threatens to contaminate the food supply much the way StarLink genetically engineered corn did in September 2000.

In a letter to the USDA, the coalition called for an end to open air cultivation of crops engineered to produce prescription drugs or industrial chemicals. The new crops, already planted in over 300 field trials at secret locations nationwide, include plants that produce an abortion-inducing chemical, growth hormones, a blood clotter, and trypsin, an allergenic enzyme.  The coalition proposed that the USDA permit only contained cultivation of non-food plants under the same controlled circumstances as other drug production.

"Just one mistake by a biotech company and we'll be eating other people's prescription drugs in our corn flakes," said Larry Bohlen, Director of Health and Environment Programs at Friends of the Earth, a member of the coalition. "The USDA should prohibit the planting of food crops engineered with drugs and chemicals to protect the food supply from contamination."

The National Academy of Sciences warns: "it is possible that crops transformed to produce pharmaceutical or other industrial compounds might mate with plantations grown for human consumption, with the unanticipated result of novel chemicals in the human food supply."

And the editors of Nature Biotechnology recently warned: "Current gene-containment strategies cannot work reliably in the field."  A contamination incident may already have occurred as one biotech company official noted at an government-industry conference that: "We've seen it on the vaccine side where modified live seeds have wandered off and have appeared in other products."

In a new report released [recently], the Genetically Engineered Food Alert coalition details the threats that biopharm crops pose, the extent to which they have been planted across the U.S., the failure of regulatory agencies to serve the public, and a set of recommendations.  The report, entitled "Manufacturing Drugs and Chemicals in Crops: Biopharming Poses New Threats to Consumers, Farmers, Food Companies and the Environment," may be found at www.gefoodalert.org.

The majority of engineered biopharmaceuticals and chemicals are in corn, a prolific pollinator. ProdiGene, the company with the most plantings of drug and chemical-producing plants, projects that 10% of the corn crop will be devoted to biopharm production by 2010.  StarLink corn, planted on less than 1% of total US corn acreage, contaminated hundreds of food products and corn seed stock with a potentially allergenic protein despite the use of gene containment measures.

Far from supporting containment strategies such as buffer areas, Anthony Laos, ProdiGene's CEO, wrote farmers in 2001 that: "We will be dealing with these distances until we can gain regulatory approval to lessen or abandon these requirements altogether." Some companies also propose extracting drugs or chemicals from plants, then selling the remainder. Incomplete extraction would mean drugs or chemicals in food or feed.

"Farmers cannot afford another contamination incident hurting sales and throwing the harvest into turmoil like StarLink did in 2000" said Matt Rand, Biotechnology Campaign Manager at the National Environmental Trust.

Genetically Engineered Food Alert founding members include: Center for Food Safety, Friends of the Earth, Institute for Agriculture and Trade Policy, National Environmental Trust, Organic Consumers Association, Pesticide Action Network North America, and the State Public Interest Research Groups.

Genetically Engineered Food Alert supports the removal of genetically engineered ingredients from grocery store shelves unless they are adequately safety tested and labeled.  The campaign provides web-based opportunities for individuals to express concern about genetically engineered food and fact sheets on health, environmental and economic information about genetically engineered food.  The coalition is endorsed
by more than 250 scientists, religious leaders, doctors, chefs, environmental and health leaders, as well as farm groups. The executive summary, the full report, the letter with recommendations to USDA and a link to the ProdiGene statement are located at: www.gefoodalert.org
 

CHEMICAL POISON INDUSTRY AND OFFICIALS
"CONNIVE" TO SUCCESSFULLY LIFT BAN
ON DEADLY PESTICIDE IN KERALA , INDIA

AGBIOINDIA: A hard-hitting expose by the Centre for Science and Environment (CSE) in its publication Down to Earth on how the pesticide industry connived with government officials and scientists in Kerala to successfully lift the ban on a deadly pesticide.

At stake here is the integrity of the state government's decision making for generations far into the future. It not only spells irreparable harm for the residents of Kerala, India but also makes a mockery of public health concerns.

A recent confidential report by the National Institute of Occupational Health (NIOH), Ahmedabad, has unequivocally blamed endosulfan, an organochlorine pesticide, as the reason for the unusually high cases of disease and deformity in Kerala's Kasaragod district. Endosulfan is either banned or restricted in many countries.

When Down To Earth first broke the story in February 2001, both the Union and the state governments imposed a ban on the spraying of the deadly pesticide in Kerala. But shockingly, the Kerala government lifted the ban on March 22, 2002 based on two industry-sponsored studies --- one by the Fredrick Institute of Plant Protection and Toxicology (FIPPAT) in Kancheepuram, Tamil Nadu, and another by the Kerala Agricultural University (KAU).

Surprisingly, both these reports did not find any trace of endosulfan residue --- even though these samples were collected within a few months of the last aerial spraying (done by Plantation Corporation of Kerala since the mid-1970s on its cashew plantations). However, the NIOH study, conducted ten months after the spraying, found conclusive evidence of endosulfan residues in water and blood samples collected from Kasaragod.

The Rs 4,100 crore-pesticide industry is working over time on a no-holds-barred campaign to promote endosulfan sales and ensure their own survival. India is the largest producer of endosulfan in the world. The murky games of the industry include disinformation campaigns, involving misleading advertisements, manufacturing scientific data by sponsoring "scientific" studies, and influencing government scientists and officials.

For the time being, their strategy seems to have worked. The silent screams of Kasaragod's residents have fallen deaf ears. There is no safe level for endosulfan. The U.S. Environmental Protection Agency (EPA) has classified endosulfan as "highly hazardous." Worldwide research emerging in the past few years has found a clear link between pesticides and mental retardation, stunted growth and even cancer.

As is the case with the people affected in Kasaragod. State government officials are taking recourse for this dangerous slide away in the fact that legally they cannot continue the ban. But Section 27 of the Insecticides Act, 1968, --- under which pesticides are regulated --- clearly states that the state government can either extend the ban or issue fresh orders. It is apparent that the A.K. Anthony government has preferred complicity with the pesticide industry to public health commitments.

"Has this damning NIOH report been kept secret because it clearly implicates the pesticide industry," asks Jayakumar C of Thanal, a Thiruvananthapuram-based non-governmental organisation fighting for the victims.

Down To Earth's latest cover story (Endosulfan conspiracy, July 15) gives a  blow-by-blow account of the pesticide industry's deadly intent to profit over public health. One can read the full seven-page story at: http://www.downtoearth.org.in/cover.asp?foldername=20020715&filename=anal&sec_id=9&sid=1

The AgBioIndia mailing list is an effort by the Forum for Biotechnology & Food Security to bridge the yawning gap in the understanding of the politics of food. It believes this mailing list will create wider awareness and understanding of the compexities of the crisis facing Indian agriculture and food security. This list will keep the reader posted on the intricacies and games being enacted in the name of eradicating hunger.
It is a non-commercial educational service for non-profit organizations and
individuals. Subscribers are welcome to contribute information. Previous issues can be viewed at http://www.agbioindia.org/archive.asp
 

SMITHFIELD FOODS THREATENS IOWA
WITH "ECONOMIC BLACKMAIL" UNLESS STATE
ENDS BAN ON PACKERS FROM OWNING HOGS

JERRY PERKINS, FARM EDITOR OF DES MOINES REGISTER: Smithfield Foods Inc., the world's largest pork processor and pork producer, plans to build two new hog processing plants in the next five years. But the Virginia-based company said it won't build the facilities in Iowa if the state continues its "anti-Smithfield" bias.

"We would love to be at peace in Iowa," Richard Poulson, Smithfield's executive vice president and general counsel, told The Des Moines Register after filing a federal lawsuit last week that challenges the constitutionality of a state law that bans packers from owning hogs. But, Poulson said, the company won't build the processing plants "in a state where we are constantly singled out."

"We want to build them in a state where we can have a reasonable relationship with state officials," he said. Poulson charged that the state Legislature singled out Smithfield last spring when it strengthened Iowa's packer law by prohibiting packers from also financing hog operations.

The Legislature approved the amendment after the attorney general's office
unsuccessfully challenged whether Smithfield could help finance the purchase of Murphy Family Farm's Iowa operations by former manager Randy Stoecker. Smithfield bought Murphy Farms in 1999. Poulson called the Iowa amendment "anti-Smithfield legislation."

Ron Parker, press secretary for Gov. Tom Vilsack, denied that the amendment was anti-Smithfield. "I followed the (amendment to the packer ownership ban) legislation last spring, and there was no intention to go after Smithfield," Parker said. "I hope they don't change their plans because of the legislation."

Smithfield claims the amended law restricts out-of-state commerce and impairs the company's ability to comply with existing contracts, violating the U.S. Constitution.

In a prepared statement, Attorney General Tom Miller defended the validity of the law. "The Legislature stated that the purpose of the statute is to preserve free and private enterprise, prevent monopoly and protect consumers, and we will defend the law," Miller said. Tim Bierman, president of the Iowa Pork Producers Association, said Iowa needs another pork processing plant.

The Iowa Pork Producers Association lobbied for passage of the amendment to the state packer law, Bierman said. "We were in favor of closing the loophole that allowed packers to finance hog operations, but we favored it for every one, not just Smithfield," Bierman said.
 

KROGER, TYSON AND CONAGRA FOODS SEEK
TO BOARD ORGANIC\NATURAL FOODS BANDWAGON

JOHN TAYLOR, OMAHA WORLD-HERALD: A sign of the times: The Kroger Co., a Cincinnati supermarket chain that owns Baker's Supermarkets in Omaha, plans to add 120 natural-food departments to its stores this year. Another sign of the times: Tyson Foods has been test-marketing for a year something called Nature's Farm Chicken, an organically grown chicken product.

And what times might these be? The era of the aging baby boomers, of course. As members of that generation born between 1946 and 1964 grow older and become more concerned about their health, they're demanding more of the food they put in their bodies.

Retailers like Kroger and food makers like Tyson and ConAgra Foods Inc. have come to realize --- although in some cases a bit late in the game --- the scope of those demands and the size of the market. The U.S. Department of Agriculture has estimated that over the last ten years, retail sales of organic-food products in the United States have increased 23% annually.

The federal agency quotes industry sources as saying that organic-food retail sales in the United States were estimated at $7.8 billion in 2000, with that figure expected to increase to $20 billion by 2005. Those numbers apparently do not include sales of other foods that are considered "natural" but don't fall within the strict definition of "organic."

The two terms are not interchangeable. Natural foods are made without additives or preservatives but can contain chemicals, pesticides or genetically engineered grain. The reason, according to Holistic.com, is that natural food may be produced using conventional growing methods, which can include pesticide use.

Organic foods are produced without pesticides, irradiation or genetic engineering, and are grown with a system of farming that not only doesn't use fertilizers and pesticides but enhances the environment.

Starting in October, the USDA will begin certifying and labeling as organic foods that meet a uniform, national standard that adheres to environmentally friendly farming practices.

Organic food advocates --- such as the Organic Trade Association --- make no claim that organically produced foods are more nutritious. Instead, they point to the absence of possible cancer-causing toxic insecticides, herbicides and fungicides in organically grown food. More healthy or not, sales of the food no longer are restricted to the so-called health-food store. At the end of 2001, Kroger stores, for example, had natural-and organic-food departments in 985 stores, spokesman Gary Rhodes said.

"It's safe to say that natural and organic foods comprise one of the fastest- growing parts of our business," he said. "It has grown in the double-digits over the last two to three years." . . . .

Depending on their size, the natural- food departments at Kroger carry 2,000 items, ranging from natural and organic cereals to soy milk, Rhodes said.

The list of items is expected to grow as large food companies become more active in the natural- and organic-food markets. The USDA said that "just as conventional supermarkets have muscled in on natural-food stores, so large food manufacturers have entered the supply chain, in many cases using brand acquisition to establish a foothold in the organic market."

ConAgra, the Omaha-based company that in 1988 revolutionized one part of the health-food industry with the introduction of its Healthy Choice brand of frozen food, dipped its toe in the natural- and organic-pond four years ago. The company introduced Advantage/10, a full line of vegetarian foods, in 1998. Then, two years ago, the company acquired Lightlife Foods Inc., a maker of refrigerated vegetarian food and soy products.

Lightlife, based in Turners Falls, Massaxhusetts, has annual sales of more than $25
million, selling meatless hot dogs, burgers, ground meat substitutes and tempeh, soybeans that are fermented with different flavorings. Some of the company's products already carry an organic label.

Susan Rolnick, director of marketing for Lightlife, said the organic and natural- food industries are more highly developed in the Northeast and on the West Coast, although they are growing everywhere. One thing that may help the industry grow is the widespread distribution of such mundane products as ketchup and chicken.

H. J. Heinz Co. last month began selling organic ketchup in the nation's supermarkets and health-food stores. There is "a segment of the population that values organic" that Heinz hadn't been servicing, a spokesman said. Another big company late in arriving on the organic scene is poultry giant Tyson Foods of Springdale, Arkansas, which also owns IBP, based in Dakota Dunes, South Dakota.

The company is test-marketing its Nature's Farm organic chicken at supermarkets in Dallas and Houston. "It has been successful in certain markets and not in others," said spokesman Ed Nicholson. "It seems to be a product that works better in more-affluent neighborhoods. It's more expensive to produce, so it's going to cost more than other products."

Officials of big companies like Tyson and ConAgra are realizing that they're going to have to find ways to compete in the organic- and natural-food markets. "It's a niche that's fast growing into a larger business, and anybody who is not on top of that is probably going to miss the bus," said Tim McMahon, a spokesman for ConAgra.
 

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 173 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/