August 6, 2002   #180
Monitoring Corporate Agribusiness
From a Public Interest Perspective

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DAVID BENNETT, FARM PRESS: Harvey Joe Sanner isn't one to let loose of an injustice. And don't tell him that time heals wounds. It's been 13 years since the Chicago Board of Trade (CBOT) approved an emergency resolution mandating large soybean contracts be liquidated thus sending soybean prices to a quick swirl around the toilet.

It's been 13 years of legal squabbles and appeals that ensued after Sanner brought a class-action suit against CBOT. It's been 13 years of repeated court dates, playing the underdog and being accused of jousting with windmills. Yeah, it's been 13 years and Sanner is madder than ever.

In 1988, the United States experienced a severe drought. A poor crop reduced soybean stocks to a 12-year low. The following year, market prices in east Arkansas were in the range of $7.50 per bushel. Many farmers were still holding 1988 soybeans expecting the prices to go higher. All indications were prices were heading skyward because of short supplies up and down the pipeline.

Sanner, a Des Arc, Arkansas, farmer and agricultural activist, claims it wasn't just farmers expecting soybean prices to soar. "There were some CBOT folk who said they expected soybeans to go for $9.50 per bushel unless something drastic happened. Quite frankly, I was expecting to forward contract my 1989 crop in the $9 range. Then, on July 11, CBOT decided to issue an emergency order. They claimed the market was artificial and they had to take steps to correct it."

CBOT mandated that anyone holding large contracts for soybeans had to liquidate them. As one would expect, the market turned upside down and soybean prices dropped 40 cents almost immediately. Companies holding those large contracts smiled and limped away. Farmers, eyes bugging and adrenaline pumping, demanded answers about why the emergency order was needed.

When satisfactory answers weren't forthcoming, Sanner and others filed suit. "Our lawsuit claims there was no emergency and CBOT was trying to help some big companies get out of a jam at the farmers' expense. Our experts will prove our contentions in a courtroom very shortly."

One thing that kept the suit alive --- "that kept folks like me with it for so long" --- was the "sheer arrogance and horrible attitudes" that the CBOT exhibited towards farmers, says Sanner.

An example of this, he says is that from 1989 to 1995, CBOT attorneys argued that farmers had no standing to sue CBOT regardless of their actions. Why? Because, according to CBOT, farmers deal in the cash market while they deal in futures. CBOT's argument was overturned twice in court. "It took the class six years of legal action to prove we had rights to bring a suit against CBOT."

Another CBOT argument was that they weren't subject to the Sherman Anti-Trust Act. The board claimed to be regulated instead through the Commodity Exchange Act and thus shouldn’t be beholden to anti-trust regulations. The class disproved that claim as well.

It hasn't been easy to get the case to trial. During the process, the class-action lawsuit was dismissed twice and twice reinstated by higher courts.

"Finally, after all these years, we get to the point where evidence will be seen by a judge, jury, Congress and the agriculture community. Congressional agriculture committees need to know how they've been mislead by CBOT executives. All we want is for the evidence to be looked at and a determination made by a jury," says Sanner.

CBOT's chief tactic has been to keep the evidence from being heard, says Sanner. "If they really believed they were right, they'd have gone ahead and dealt with it in 1989. Instead, they've done everything to keep the facts under wraps. They've spent tons of money doing that, tons of money on public relations and tons of money trying to explain actions. So far, they haven't."

To emphasize his frustration, Sanner often quotes, "Justice delayed is justice denied." It tears his heart out, he says, that men in Chicago are able to negatively affect rural communities by manipulating markets. Every farmer in the U.S --- whatever he produces --- needs a fair market with unsullied integrity.

"What these folks did with this bogus emergency order is take out the one key in the market system that must be present to have integrity: the threat of delivery. If you go into a market and promise to deliver a commodity on a given day, you must do it. And if you don't you've got to pay the difference. By issuing the emergency order they told people who'd made commitments to deliver that they didn't have to honor their freely made obligations. CBOT was being pressured by the huge players in the market that had made delivery commitments they wanted to renege on."

And CBOT conflicts of interest are going to be easy to prove at trial, insists Sanner. He says of those that voted to issue the emergency order, there were as many as a dozen of the 26 board members that had direct conflicts of interest.

"That isn't a secret. It's been known from Day One. Much of the evidence about this stuff is still under court seal. The CBOT lawyers asked the judge to have all discovery held under seal. That order has been in effect for all these years. Even now, I must be careful with what I say because much of the information is under a gag order. CBOT doesn't want the public to see what was up."

Figures vary widely, but in Sanner's estimation, how much money did farmers lose due to CBOT actions? "In my estimation, the losses to the farm community ran into the billions of dollars."

How is a class member determined? "This is an example of justice delayed is justice denied. When the suit was first filed, we did so for every soybean farmer in the country. Through the years, the class has been narrowed to only those who sold soybeans in July of 1989. The damage window has shrunk but the facts are still going to come out."

Class attorneys haven't asked for a set amount of damages and there have been no settlement talks. The trial will be held in Chicago before Judge Wayne R. Andersen.

"I'm unsure of how long this trial will last. I hesitate to make any time predictions. In 1989, I was being interviewed by a reporter who asked me when this would come to trial. Our attorney, I told him, said we'd be at trial within a year. That was well over a decade ago."

It could be possible, of course that the delay might actually work to class members' benefit. Lately, corporate shenanigans are seemingly uncovered daily and a jury might be much more accepting of claims against CBOT.

"Right now, it seems that anyone would be less likely to doubt the farmers who brought this suit. After Enron, WorldCom, Martha Stewart and the rest, we surely won't be dismissed out of hand. Something is rotten inside much of corporate culture, and it's taken more than a decade to bring it out in out in our case. And we've got the facts to prove it."

Sanner says if he knew the class would never get a dime out of the suit, CBOT still had to be sued. "We simply couldn't sit back and allow them to do something as egregious and blatant as their emergency order. It had to be challenged. CBOT hadn't been sued by farmers before and they thought with stalling tactics they could get by with this with minimal damage. They thought we'd go away.

"But this is too important not to bring and I'm proud of our efforts and of the people who have hung in there with us. I'm disappointed it's taken this long to address the discrepancies in the market but anyone who thinks it's easy to take on moneyed, powerful folks like CBOT, let this be a lesson."

On July 15, CBOT attorneys, saying their expert witness had a conflict, filed a request for a 45-day continuance to the set court date. The judge denied their request and said the trial would begin, as planned, on September 9.

Farm Press asked CBOT attorneys for comments on the case. Citing pending litigation, they refused.


DAVID MIGOYA, DENVER POST: At least 68,000 pounds of E. coli-tainted beef linked to an 18.6 million-pound recall by ConAgra Beef Co. may turn up on dinner tables as ready-to-eat canned chili, meat spaghetti sauce, beef ravioli or some other meal. Or, it might end up as pet food. Or fertilizer. And no one has to tell you it's there.

A spokesman for the Greeley-based beef company said Thursday that meat returned as a result of the nation's second-largest recall in history will be cooked and turned into food for people or pets, or nonfood products. Or both.

That consumers might buy a meal containing recalled meat is legal --- and wholesome --- according to the U.S. Department of Agriculture. The federal agency must OK the company's plans for recalled meat. Cooking recalled meat is common practice in the food industry.

"I think we can say any product that is cooked per the guidelines established by the USDA and recommended by the Colorado Department of Health is perfectly safe for human consumption and to indicate otherwise is irresponsible," ConAgra spokesman Jim Herlihy said.

Consumers watching the ConAgra recall, however, may think differently.

"They're asking me to trust them again, and that's outrageous," said Lisa Scannell of Longmont. Her five-year-old son, Alec Scholhamer, was sickened last month after eating a hamburger made with ConAgra meat. "They always blame people for not cooking the meat even though they're the ones who put the E. coli there. I'm supposed to trust them now to cook it, too?" A Colorado health official said recalled meat shouldn't end up as human food again.

"By definition of the federal recall, it's not fit for human consumption," said Patti Klocker, assistant director of the Colorado Department of Health and Environment Consumer Protection Division. "We recommend that humans don't consume it and that it shouldn't be turned into something edible."

Herlihy said he did not know how much of the meat has already been cooked or processed. He could not say if it will be sold to outside companies or to ConAgra-owned businesses, or how much will become nonfood products such as fertilizer and tallow.

"Cooking would render any pathogen harmless," he said. The USDA agrees.

"An E. coli . . . contaminated beef product must not be distributed until it has been processed into a ready-to-eat product," according to federal regulations. The regulations do not require companies to disclose whether products contain cooked, recalled meat. There is no record of anyone getting sick from eating a product made with cooked recalled meat.

"Even though cooking it to 265 degrees makes it sterile, I still don't like poop in my chili," said Paul Johnson, acting chairman of the National Joint Council of Food Inspection unions. ConAgra issued a recall on June 30 for 354,200 pounds of ground beef contaminated with E. coli O157:H7, a potentially lethal variant. The company expanded the recall on July 19 after the USDA learned ConAgra made ground beef from untested meat on days the slaughterhouse found E. coli in meat it had tested.

ConAgra removed the tested meat - about 56,000 pounds of it --- from ground-beef processing. Because it was not recalled, ConAgra does not need USDA approval for how to use it. Of the original 354,200 pounds recalled, only 12,000 pounds have been returned. There are no figures yet for the amount returned from the expanded, 18.6 million-pound recall.

"If it was positive (for E. coli) and routed for cooking or rendering, that would be standard procedure," Herlihy said.

Federal records show that last year ConAgra intercepted 20 tons of E. coli-tainted meat from its Greeley plant that were destined to become hamburgers at a national fast-food chain. The meat was eventually reboxed, labeled "For Cooking Purposes Only" and shipped to International Home Foods Inc., a ConAgra-owned company in Pennsylvania.

IHF brand names include common products such as Chef Boyardee, Libby's Canned Meats, and PAM cooking spray. ConAgra officials would not say whether International used any of the 20 tons of meat in its food products.

In 1997, Hudson Foods planned to sell 25 million pounds of recalled ground beef to companies that made pre-cooked products such as TV dinners and burritos. The recall happened after 17 Coloradans were sickened with E. coli. It was unclear Thursday whether Hudson followed through. Tainted meat sometimes is destined for animals.

In early 2000, Callaway Packing in Delta took 3,750 pounds of meat recalled because of E. coli and sold it to Grand Valley By-Products in Grand Junction. Owner Melvin Seevers said his firm cooked the meat and sold it to companies that made pet food and animal feed out of it. Sometimes, recalled meat is buried in a landfill.

Whatever happens to the ConAgra meat, victims of food-borne bacteria say there's really only one solution to tainted beef: a clean slaughterhouse. "I know putting it into chili isn't something many people realize, but the focus needs to be on the safety of the meat coming from the plant," said Karen Taylor Mitchell, executive director of Safe Tables Our Priority in Burlington, Vermont. "We want meat and poultry to be safe in the first place."


ASSOCIATED PRESS: The national recall of 19 million pounds of contaminated meat, the second-largest in history, might have been averted if somebody had listened to John Munsell months ago. Munsell had been trying to tell the U.S. Agriculture Department since February that ConAgra Beef Co.'s meatpacking plant in Greeley, Colorado, had E. coli problems.

He knew because his Montana Quality Foods & Processing Co. here had received contaminated beef from the Greeley plant.

But the department's Food Safety Inspection Service did not order the huge recall until July 19. By that time, 17 people in Colorado had been sickened by the beef, and other cases have surfaced since. Other cases that may be related also have occurred in California, Iowa, Michigan, South Dakota, Washington and Wyoming, according to the Centers for Disease Control and Prevention.

"They will do everything they can to prevent a confrontation with a big packer," Munsell said Wednesday. "In other words, there is no one in USDA, with the exception of the field personnel, no one in the bureaucracy that has the intestinal fortitude to confront the big packers."

A policy change the U.S. Department of Agriculture announced this week indicates somebody finally may have heard Munsell. That, he said, is only because he "went public" despite fears of retaliation. "They may try something in the future," Munsell said.

Montana Quality Foods had to recall 270 pounds of ground beef late in January because of E. coli contamination, but Munsell's records didn't show which of several major packing houses it came from. Because of that, he said he made two changes in his operation: He began keeping specific records showing the origin of the meats he grinds, and he began holding his processed meats in storage until government laboratory test results are back.

That paid off in February, when three tests came back as contaminated by E. coli. The meat had not been distributed, so there was no recall. Montana Quality Foods' records showed that all the meat originated at the same place --- ConAgra's plant 969 --- in the same batch, on the same date.

Federal field inspectors relayed Munsell's information to the head of the inspection service's Minneapolis regional office in a letter March 1 written and signed by Dr. Daryl Burden, a veterinarian and circuit supervisor, and countersigned by Inspector-in-Charge Ronald Irvine.

The reaction, Munsell said, was silence, even after major newspapers around the country began reporting his experience.

In Washington on [last] Monday, Public Citizen and the Government Accountability Project released Munsell's e-mails alerting USDA and pleading for the agency to ask him for his documentation. Burden, the inspection service official who wrote the March 1 letter, notified Munsell of the policy change this week.

Munsell called that change "a 180-degree turnaround in FSIS policy," but added, "It is just a start. It's a scandal of immense proportions that I hope the news media and Congress bring to a head," he said.

"USDA itself has promulgated regulations and directives in recent years designed with the primary purpose to release them from responsibility for day-to-day, hands-on meat inspection." The new policy says information is to be collected about the source of meat going into a grinder, and if there is a positive E. coli test inspectors are to immediately inform the district office, which would then notify the supplying establishments and other district offices if they are involved.


PHILIP BRASHER, DES MOINES REGISTER: Tom Dorr's long-delayed nomination to a top job in the U.S. Department of Agriculture was declared dead by Democrats after a committee voted Thursday to send the Iowa farmer's name to the full Senate without a recommendation. "There are not the votes here for him. That's the end of it," said Senate Agriculture Committee Chairman Tom Harkin of Iowa.

Dorr's nomination to be the USDA's undersecretary for rural development has been on hold for more than a year, most recently because of disclosures about his violations of government subsidy rules.

Committees typically vote to approve or reject a nomination; voting to give a nominee no recommendation has happened just three times in the past decade. Two of those three nominees, including Supreme Court Justice Clarence Thomas, eventually won Senate approval.

But Harkin said Thursday's vote was a "strong signal" to the Bush administration that Dorr's nomination would not be approved this year by the Democratically controlled Senate. In a long, blistering statement to the committee, Harkin said Dorr was unfit for the USDA job, both because of his violations of farm subsidy rules as well as evidence that he was insensitive to the needs of rural areas and minorities.

An USDA official said the Bush administration wasn't giving up on his nomination. "We were pleased that he was out of committee. That's something that was a long time coming," said Mary Waters, the department's congressional liaison. As late as Thursday morning, Waters was still insisting that there were enough votes on the committee to approve Dorr's nomination.

One GOP senator showed up for the panel's voice vote, which was twice postponed during the day while Harkin tried to muster a quorum of committee members. The panel's senior Republican, Richard Lugar of Indiana, told the committee Dorr was an "able man of considerable scope and administrative ability." Later, Lugar told reporters that Dorr appeared "politically tone deaf."

Harkin and Sen. Kent Conrad, Dem.-North Dakota warned administration officials against giving Dorr a temporary appointment to the USDA job, an action that presidents sometimes take during congressional recesses to bypass the Senate confirmation process. Were that to happen during this month's recess, Harkin said, he would reopen his committee's investigation of Dorr's finances and issue subpoenas to the USDA for records that Agriculture Secretary Ann Veneman refused earlier this week to turn over to the panel.

Harkin said he would not object to Dorr being given a lower-level position in the department that did not require Senate confirmation. Dorr has been working at the USDA as a $120,000-a-year consultant since he was nominated last year.

Dorr initially ran into criticism because of his promotion of corporate agriculture and allegations that he was insensitive to minorities.  Then in March it was disclosed that he once repaid the government $17,000 for violations of government payment rules in 1994 and 1995. His family recently agreed to repay an additional $17,000 for those years.

The USDA said records were unavailable to tell whether the family owed more. Dorr managed his family's farming operations near Marcus [Iowa] before coming to Washington, D.C., last year.


REUTERS: The U.S. Justice Department said Wednesday it was reviewing Archer Daniels Midland Co.'s possible purchase of its chief competitor, Minnesota Corn Processors. "The [antitrust] division is looking at the proposed transaction," said a Justice Department official. The department did not elaborate on its review.

When talk of the deal first became public, a group of U.S. senators urged the Justice Department to review it closely on fears that the combination could come close to creating a monopoly.

The two companies combined would control almost half of U.S. production of ethanol, which is made from corn and blended into gasoline to make motor fuel burn more cleanly. Democrats from California, New York, New Jersey and Vermont feared the merger would have "severe repercussions on the price and supply of ethanol."

Decatur, Ilinois-based ADM, one of the world's largest processors of soybeans, wheat and corn, is the largest U.S. producer of ethanol, with about 41% of the market. Minnesota Corn Processors has about six percent of the ethanol market. The acquisition would add 120 million gallons of ethanol production capacity to ADM's current annual production of 950 million gallons.

In April, the Senate gave the go-ahead for nearly tripling the production of ethanol. In a debate that pitted the Heartland against the two coasts, Sens. Charles Schumer (Dem.-New York) and Dianne Feinstein (Dem.-California) led the fight to remove the ethanol provision from an energy bill, claiming it would increase gasoline prices by up to ten cents a gallon and create a virtual monopoly for major agribusinesses such as ADM.

The proposal calls for increasing the amount of ethanol used in gasoline from 1.7 billion gallons last year to 2.3 billion gallons by 2004 and five billion gallons by 2012. In addition, it would give gasoline producers immunity from suits claiming that increased ethanol use damages the environment. While ethanol is a cleaner-burning fuel than other additives used to meet federal environmental standards, opponents cited studies showing that it tended to increase smog.

Privately owned Minnesota Corn Processors agreed in July to be acquired by a unit of ADM for $396.2 million. ADM agreed to pay MCP shareholders $2.90 for each Class A share in the cash-for-stock deal, according to Minnesota Corn Processors. Marshall, Minnesota-based MCP had tentatively planned a shareholder vote for late August.


BLOOMBERG NEWS: Tyson Foods Inc., the world's largest meat processor, said . . .  that its quarterly profit jumped almost sixfold on higher chicken prices and the acquisition of beef and pork business from IBP Inc. last year.

Net income rose to $107 million, or 30 cents a share, in the three months ended June 29, from $19 million, or nine cents, a year earlier, Tyson said. Revenue, in the period, the third quarter of Tyson's fiscal year, tripled to $5.9 billion from $1.92 billion, reflecting the new IBP businesses.

Russia, the world's top poultry importer, halted purchases from the United States in early March, citing concern over the safety of disinfectants used in processing and the adequacy of testing for certain bacteria. Shipments have been slow to resume since the ban was lifted April 15, contributing to an abundance of meat.

Tyson's international chicken sales fell 17% during the quarter, the company said. Import restrictions in China also hurt foreign sales.

Improved chicken sales to supermarkets and restaurants and the addition of IBP's beef business helped offset weakness in international sales, analysts said.


ANNE FITZGERALD, DES MOINES REGISTER: Smithfield Foods' lawsuit against the state of Iowa provides a window into the way America's food production system is being reshaped.

The lawsuit, filed earlier [in July] in federal court in Des Moines, pits the world's largest pork producer and processor against the nation's No. 1 pork-producing state.

On its face, the case focuses on whether the government can block meatpackers from owning livestock, and specifically whether Iowa can prevent Smithfield from feeding hogs in this state. More broadly, however, the case points to a national debate over an issue that goes to the heart of U.S. agriculture and to the core of the Midwest, the world's biggest breadbasket: Who is going to control agriculture --- mammoth, multinational corporations or independent producers?

The issue is not unique to agriculture. Consolidation has swept through many businesses, including banking, insurance, manufacturing and the media. But many people believe the battle is more intense this time, in part because of:
* Growing wariness of big business, heightened by ongoing corporate accounting scandals in the United States and the crumbling stock market;
* Increased sentiment against so-called globalization;
* A growing social, political and economic divide between rural and urban interests.

Consolidation affects the entire food chain, from the grower to the consumer, but farmers are especially at risk, agricultural economists and other experts say. Despite multibillion-dollar farm subsidies from the federal government, net farm income in the U.S. is shrinking.

"Farmers are in many ways where laborers were 100 years ago," said Neil Harl, a lawyer and Iowa State University Extension economist who has written extensively about the changing structure of agriculture.

At the same time, the number of companies supplying farmers and buying their products is shrinking. The trend can be seen throughout agribusiness. Seed companies, grain processors, railroads, exporters, even food retailers are consolidating.

In meatpacking, four companies control more than 80% of U.S. beef processing, while four control 59% of pork processing, according to an annual report commissioned by the National Farmers Union. Agriculture is consolidating in a variety of ways, said William Heffernan, one of the authors of the report and a University of Missouri rural
sociologist who has spent decades studying the changes.

The number of farms is shrinking and the remaining farms are becoming larger, and food processors are taking a larger role in growing the foods they process. The poultry and dairy industries are already highly integrated; the hog industry is fast following suit.

Smithfield takes pride in leading the way. The company has pursued that strategy to expand in such states as North Carolina and Virginia, as well as in countries such as Poland. But as Smithfield moves into the Midwest, the company is encountering resistance to its desire for more control over the production of hogs.

The resistance is coming from independent, family-owned farms and some other unusual allies, including politicians from opposing parties and farm trade groups with differing philosophies.

Nine states, primarily in the upper Midwest, including Iowa, restrict to some degree corporate control of agricultural production. Four --- Iowa, Nebraska, Minnesota and South Dakota --- have implemented bans on meatpacker ownership of livestock. Only South Dakota's law has been overturned by a court, but Harl and others do not expect that ruling, issued only recently, to stand on appeal.

Iowa's law prohibits beef or pork processors such as Smithfield from owning, controlling or operating livestock operations. An amendment enacted last spring banned packers from financing farmers' livestock operations, too. The Iowa law also says a meat processor cannot enter into a contract-feeding arrangement with a hog producer in the state.

Smithfield contends that such so-called vertical integration of meat production and processing ensures a steady supply of hogs with uniform characteristics for its processing plants. Company officials also have said that the system provides a steady income for hog farmers because producers can lock in profitable prices well ahead of the time they actually deliver livestock to the market.

Smithfield executives believe that is good for producers, and they point to an abundance of farmers who want to feed hogs for the company. "It just puzzles me why this is bad," said Richard Poulson, Smithfield's executive vice president and general counsel.

Critics, however, point out that there are various types of vertical integration, and the version Smithfield seems to prefer --- integrated ownership --- maximizes corporate control over farm operations. The critics contend that such moves only add to a growing power imbalance between producers and processors that is putting farmers out of business and threatening to make survivors serfs on their own land.

Richard Levins, a University of Minnesota Extension economist, cites as an example the U.S. grain export industry, in which two companies --- Cargill Inc. and Archer Daniels Midland Co.--- control two-thirds or more of all corn and soybean exports.

"We've got thousands and thousands of farmers on the one side, and two (companies) on the other," he said. "Now that's very unbalanced." He and others see growing interest in collective bargaining among grain and livestock farmers.

"It's a matter of figuring out a mechanism that would provide the farmers doing the contract a measure of countervailing power," or at least a way to negotiate on more even footing with processors, said Darryl Ray, professor of agricultural economics and director of the Agricultural Policy Analysis Center at the University of Tennessee in Knoxville. "Without it, then you are, to an extent, at their mercy."

Numerous groups have sprung up in recent years to address the growing imbalance. One such group, the Organization for Competitive Markets, is a network of economists and other agricultural experts who see two possible solutions --- increased regulatory pressure on corporations or formation of collective bargaining units by farmers.

Additional signs are emerging of farmers' growing concerns:
* Levins has been bombarded with requests for copies of a paper he wrote on collective bargaining for farmers;
* Farmers are flocking to meetings regarding efforts to organize cooperative ventures and other such collective attempts to push for a more equitable share of the income generated by the commodities they produce;
* Increasingly, state officials and farm groups are cautioning farmers about the pitfalls of production or marketing contracts.

U.S. Sen. Charles Grassley, R-Ia., helped lead a bipartisan effort to include in the new federal farm bill a ban on meatpacker ownership of livestock. That effort failed in the conference committee despite Senate approval twice.

Grassley has drafted a new proposal that would require major meatpackers to buy at least 25% of the livestock they slaughter daily on the open, or spot, market. The legislation, which Grassley intends to introduce ahead of the congressional August recess, is aimed at boosting the mandatory livestock price reporting system and, in turn, competitive bidding for independent producers.

The farm bill, signed into law earlier this year, requires that farmers be able to discuss the terms of production contracts with their bankers and lawyers --- "a step in the right direction," Ray said. "Everybody should go into these contractual arrangements with their eyes open," he said. "There should be plenty of light shed on those contracts. Is that enough? Probably not, but I think it is a step in the right direction."


DOW JONES NEWSWIRES: Union leaders, politicians and other critics Friday blasted the charitable trust that controls Hershey Foods Corp. for considering selling the nation's largest candy maker at a lunch-hour protest rally inthe town square.

"This is wrong, and this is not how you treat people," said Bruce Hummel, business agent for Chocolate Workers Local 464, whose 2,700 members stageda six-week strike against Hershey Foods earlier this year. But the unionis united with the company's management in opposing to any sale.

"We may have disagreed at the negotiation table, but today we agree that the sale of such an icon would devastate the community and disrupt lives," Hummel said.

A "Derail the Sale" banner hung on the railing of a large gazebo where speakers addressed several hundred people who gathered in sweltering heat. Children passed out lists of phone numbers and e-mail addresses for boardmembers of the Hershey Trust Co.

The trust company manages the $5 billion Milton Hershey School Trust, which finances the school for disadvantaged children that chocolate baron Milton S. Hershey and his wife established nearly a century ago. The trust owns 77% of the voting shares in Hershey Foods.

"The problem is not Hershey Foods. It's the Hershey Trust Co.," said Ric Fouad, a New York lawyer and president of the Hershey school's alumni association, which clashes frequently with the school's current administration."Milton's dream has become a nightmare," read one protester's sign.

The trust company disclosed last week that it is considering selling Hershey Foods in an effort to diversify its investment portfolio. Analysts say Phillip Morris' Kraft Foods and Swiss candy maker Nestle would likely be among the prospective buyers in a deal that could be worth$10 billion.

Following Friday's rally, the trust company issued a statement saying it shares the residents' concerns about the effect a sale would have on the community, but that board members have concluded that "diversification is the best way to fulfill our responsibility to the trust."

"We all have an opportunity to solidify the relationship between the community and potential purchasers by showing them there is not a better place in the world to make chocolate than Hershey, Pennsylvania," the trust company said. "We believe this can best be accomplished by working together, and we will do our part to facilitate a cooperative and constructive approach."

Residents who attended the rally said they were mystified by the trust company's actions. Sherry Walker, 46, a production worker in the chocolate-syrup section of Hershey Foods, blamed the decision on the influx of board members who do not live in the Hershey area and who, she said, do not understand that the company is the core of the community "They don't know the history of Milton S. Hershey," she said.


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* 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.