August 22, 2002   #184
Monitoring Corporate Agribusiness
From a Public Interest Perspective

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PAUL BETTS, THE FINANCIAL TIMES: The operations of large food multinationals should be more actively regulated by developing nations heavily reliant on agriculture, the United Nations Food and Agriculture Organisation (FAO) said on Monday.

An FAO study, released Tuesday, warns that globalization "has led to the rise of multinational food companies with the potential to disempower farmers in many countries." Developing countries thus needed "the legal and administrative framework to ward off the threats while reaping the benefits." But it concludes that the overall benefits of globalization are likely to outweigh its risks and costs.

The call for greater regulation, contained in a lengthy study on world agriculture and food trends during the next 30 years, coincides with the growing debate on regulating big multinational enterprises expected to feature at the World Summit on Sustainable Development which opens in Johannesburg next weekend.

The report says the negative impact of globalization can be mitigated by a combination of measures, including openness, investments in infrastructure, promotion of economic integration and limits on market concentration and control, to make globalization work for the benefit of the poor.

Multinational companies, which have launched a big campaign ahead of the summit to show that their corporate goals are compatible with sustainable development, are lobbying the UN to endorse their plans for voluntary self-regulation.

But Jacques Diouf, the FAO's director-general, on Monday told the Financial Times that self-regulation was often based on the "immediate interests" of big business. He said the FAO also felt genetically modified organisms should be subject to international regulation. GMOs could prove a "good scientific tool" to improve life, but they had to be controlled.

Another issue likely to dominate the summit was the need for developed countries to make a greater financial effort to assist poorer countries. Although the latest FAO report predicts that there will be enough food for a growing population by 2030, "hundreds of millions of people in developing countries will remain hungry."

The FAO recently launched an anti-hunger program that would require an additional annual public investment of $24billion (15.6bn).

Mr Diouf argued the additional funding from developed countries was a modest amount considering OECD countries as a whole currently spent $1 billion a day supporting their domestic agriculture even at a time of low economic growth.

For Mr Diouf, the priority was to develop fresh water resources in poor countries, especially in Africa. "Fresh water is the number one problem," he said, adding that water rather than energy risked becoming the main source of conflict in the new millennium.

The world population will grow from around six billion people today to nearly 8.3 billion by 2030. "Unless we find a technology to use water of the seas, we will have serious problems of sharing scarce fresh water resources," he warned. About 40% of fresh water involved transboundary resources. This offered an opportunity either to bring countries together or to lead to conflict.

The FAO report also predicts a decline in the number of hungry people in developing countries from 777 million today to 440 million in 2030. It notes patterns of food consumption are becoming more similar throughout the world, shifting towards higher-quality and more expensive foods such as meat and dairy products.

Though many companies acknowledge risks to their reputations from failing to take social and environmental sustainability into account, fewer have much clue how to go about it, according to a new report, Alan Beattie reports from Washington.

PwC, the business services company, said that while nearly two-thirds of large U.S. companies rated sustainability as important, nearly three-quarters did not incorporate such risks into their formal project evaluation procedures.


MELINDA FULMER, LOS ANGELES TIMES: In a field near Salinas, [California] two teams of workers move through the muddy rows behind harvesters on a recent morning, scooping up heads of lettuce, peeling off the bushy outer leaves and chopping off their stumpy bottoms.

Both are picking iceberg lettuce for their employer, Dole Fresh Vegetables Inc. But while one team is carefully selecting the most eye-pleasing specimens, the other is grabbing just about everything in sight, even the smaller or misshapen heads that years ago would have been left in the field.

It's these leftovers that customers will eventually pay double for, once they are washed, cut and sealed into plastic bags for sale in the produce aisle as salad. Even as head lettuce prices recently hit 12-year lows --- the result of a flurry of new planting after the spring lettuce shortage --- bagged salad prices didn't budge.

Salad prices have held relatively steady for years, as companies such Dole Food Co. and its chief competitor, Fresh Express, which together control about two-thirds of the $1.6-billion bagged salad market, have determined how much consumers are willing to pay for convenience.

One of California's most volatile commodity crops is quickly turning into a consumer good whose consistency is as predictable and stable as floor wax or pretzels. "We're no longer in the farming business," said Tom Loveless, a senior vice president with Fresh Express's parent, Dallas-based Performance Food Group Co. Now, he said, "we sell a branded line of products."

A decade after the first bagged salads began landing on supermarket shelves, these products use 40% of the lettuce grown in the Salinas Valley, the nation's largest lettuce-growing region.

At Dole, lettuce heads roll down an assembly line just like any other packaged food before they are cut to size, mixed with pre-measured spurts of other types of greens and cabbage, washed and vacuum-packed. Some analysts contend that fresh fruits and vegetables shouldn't be processed, sealed up and turned into slickly marketed products, but others say consumers can't get enough. They want fresh foods but expect it to be as convenient, safe and predictable as anything they get out of a can or box.

Big agricultural businesses that used to farm Monterey County's rich but expensive land now are processors, buying and maintaining expensive equipment and paying growers a set amount per season, per pound. In Dole's case, a million bags of salad leave its docks here every day, winding up in markets as far away as New York within five days of harvest.

It's a testament to how sophisticated the produce business has become and which direction some of California's agriculture industry could be headed as shippers of every commodity look for ways to cut, mix or otherwise enhance their crops to turn a higher profit. In the Salinas Valley, the business system has evened out the financial roller coaster for many growers.

But the stability has its price. These contract growers don't gain from big price spikes, such as those that benefited lettuce growers in the Imperial Valley in March when cold weather drove prices to a 15-year high, said Gary Lucier, an economist with the U.S. Department of Agriculture's Economic Research Service. "It kind of insulates you from both the good and the bad."

Some growers said they felt they had no choice but to turn to this type of contract production, unable to compete with the clout and marketing muscle of their larger competitors.

"As other companies started getting larger like Dole . . . .and gaining recognition all over the world, we found ourselves in a less-than-competitive situation," said Ross Merrill of 70-year-old Merrill Farms in Salinas, which sells all of its lettuce production to Dole. "We looked around and said, `How can we survive going forward?' One way was growing for Dole."

The ability to turn a predictable profit has made his bankers happy, Merrill says, and it has allowed him to focus more on boosting yields, rather than worrying about the timing of his crop and the supply of lettuce headed to market. But the concentration in the salad business also makes him a little nervous.

"I'd rather see [most of] the business in the hands of three to five people rather than two," primarily because it would provide other markets for his production if Dole or Fresh Express decides to lower prices paid to growers.

Initially a hard sell, bagged salads have become a favorite of supermarket retailers. The product is more lucrative than head lettuce, requires less labor to maintain on the shelves and can be kept on the shelf longer, thanks to its special packaging.

Because consumers who buy bagged salad expect to pay more for the convenience, manufacturers and retail chains don't feel the same pressure to discount the items as they do bulk produce.

At Colton-based Stater Bros. Markets there are 40 types of bagged salad on the shelf and 135 types of bagged cut-up produce products overall. "It's convenient," said Jack Brown, Stater Bros. chairman and chief executive. "It's good for smaller households." And unlike a head of lettuce, which can sit in consumers' crispers for six days and lose freshness, Brown says, a bagged salad can sit for a couple of weeks.

Shoppers routinely pay double for that kind of convenience. Dole officials say most shoppers don't look to see how the price of bagged salad relates to that of bulk lettuce. Dole's bagged iceberg typically sells for about $1.50 to $2 for a one-pound bag. But its focus these days is mostly on the exotic leaf lettuce blends, which retail closer to $3, sometimes for as little as a 5-ounce bag.

Dole and Fresh Express officials won't say how profitable the bagged salad business is or how much they spend on marketing. But competitors and government officials say they profit enough to aggressively market their lines, giving away cases of free products to stores and paying slotting fees to supermarkets to help their salads get the best real estate in the produce aisle.

These fees can range from $10,000 to a small retailer, according to one USDA report, to $2 million to get into one of the country's largest chains.

The business of marketing these salads has become almost as sophisticated as that of packaged foods, and just as secretive, given the intense competition between Dole and Fresh Express --- which both claim to be No. 1 (Dole by units sold, Fresh Express by dollar sales). Dole says that each year it introduces new blends, such as the baby spinach salad it will introduce this fall, while discontinuing slower-moving items so the number of items on supermarket shelves remains fairly constant.

But Dole Fresh Vegetable President Eric Schwartz acknowledges having more ambitious plans in development. "We're still looking at other ways to get our name on products in supermarkets."

Loveless of Fresh Express said the company plans to begin selling cut-up packaged fruit this fall, and he hinted at main-dish salads with meat and seafood or other items that might eventually be sold.

Some growers and brokers believe that the growth of these convenience products will continue to eat up more space in the produce aisle, leaving less room for inexpensive bulk fruits and vegetables. Although to some extent they may be right, economists say, those convenience products also are growing the market.

The popularity of bagged salads has helped boost per-capita lettuce consumption in recent years to an all-time high last year of 33 pounds, just as the introduction of "baby" carrots as packaged produce lifted carrot sales dramatically in the 1990s.

Brown of Stater Bros. said he is expanding the size of the produce aisle in his new stores 25% to accommodate the growing number of items. In old stores, the chain is adjusting racks and fixtures to shoehorn in 450 fresh and packaged items.

"Produce is the No. 1 reason why people choose a supermarket," Brown said. "If we don't do it right, we have no reason for being," he said, noting the intense competition from discounters such as Wal-Mart Stores Inc. and Costco Wholesale Corp.

Items such as bagged salad and baby carrots, which have become lucrative products, were initially developed as a way to use produce that would have been discarded because it was the wrong size or shape. Trimmed down, cleaned up and bagged, these products look no different to consumers from the leaves of the fully formed heads harvested for the bulk-produce section. And unlike bulk lettuce, which is rinsed and wrapped in the field, lettuce for bagged salad moves through an impressive germ-killing gantlet.

Moving along a conveyor belt at Dole's plant [in Salinas], for example, the loose
salad first passes through a water and chlorine rinse, much like a car wash. Then it is shot across the plant in a huge liquid-filled tube before getting a third hose-down. It's tumbled in 250-pound metal drums to dry before being spit out in pre-measured amounts into its packaging, with most of the air sucked out and nitrogen added.

The system isn't perfect, analysts say. It leaves some room for contamination, and not all greens can endure the rigors of the assembly line and weeks in an oxygen-free bag. Arugula, for instance, still won't work for bagged salad, according to Dole research. "It just doesn't hold up," said Gil Oetzel, Dole's project manager for research.

Still, about 110 products are turned out of this plant, including iceberg and endive, and special romaine and leaf lettuce blends.

Not everyone is willing to be just a spoke in the Salinas processing hub Basil Mills, a grower-shipper in this valley for 45 years, still holds back about half of his production to sell on the bulk market. "We're at the mercy of the market," Mills said. But, he said, he prefers gambling on a bigger profit. "Year to year [the lettuce market] can be bad or good. But if over time it didn't turn a good profit, most of us wouldn't stay in this business."


ASSOCIATED PRESS: Meat-processing giant Tyson Foods Inc. plans to close its company-owned and leased hog farms and end contracts with 132 contract hog producers in Arkansas and eastern Oklahoma. The move to restructure Tyson's live swine division will result in about 200 job cuts, the company said Sunday.

"We've been running this division at an operating loss," Tyson chairman and chief executive officer John Tyson said. "Therefore, it is now time to do what we must to try and ensure the long-term viability of the remaining part of this business."

Tyson, the world's largest processor and marketer of beef, chicken and pork, has been in the live-swine business since the 1970s. The company left the pork-processing business in the mid-1990s, then re-entered it after acquiring meatpacker IBP for $3 billion in September 2001. The company said 159 farms would be affected.

The restructuring will begin this week, and should be completed in the second quarter of the 2003, Tyson said. The move will reduce fourth-quarter pretax earnings by $20 million to $30 million, but "it is expected to have a positive impact on the future earnings potential for the company's pork operations," Tyson said.

Tyson said transportation costs were a big factor in the decision to carry out the restructuring. Competing companies have pork processing operations closer to packing facilities, avoiding higher transportation costs for both finished hogs and grain, Tyson said.


ERIK AHLBERG, DOW JONES NEWSWIRES: The U.S. Department of Agriculture has initiated a probe of Tyson Foods Inc. after the company said earlier this week that it would restructure its hog business and discontinue relationships with 132 hog producers, a USDA spokesman confirmed Wednesday.

Jerry Redding said the agency will examine the "honesty" of the contracts between the company and the hog producers, all of which are located in Arkansas and eastern Oklahoma. The department oversees the Packers and Stockyards Act of 1921, which, among other things, prohibits deceptive and fraudulent business practices in the hog industry.

A so-called "rapid response team" consisting of about two or three investigators was sent to Tyson's headquarters in Springdale, Arkansas, late Tuesday. The group started work on Wednesday morning, Redding said. Probes of this sort are common given the size and scope of Tyson's plans for its swine operations, he said. "We go in with no suspicions," Redding said. "It was a substantial number of people and hogs involved --- anytime something is that large, we get involved.

"We're looking out for the producers," he said.

On Sunday, Tyson said the restructuring moves within the company's hog division were needed to more effectively position the group for the future. In addition to the discontinued relationships with the hog farmers, the Tyson said the restructuring would result in the elimination of about 200 jobs and the closure of company-owned and leased hog farms. All together, 159 farms were affected by the announcement.

"We've been running this division at an operating loss," said Tyson Chief Executive John Tyson in a statement. "Therefore, it is now time to do what we must to try to ensure the long-term viability of the remaining part of this business." The move, which will reduce fourth-quarter pretax earnings by between $20 million to $30 million, will reduce the total number of sows by 30% to 70,000 from 100,000.

In a statement, Tyson Foods confirmed that USDA representatives were at the company's headquarters seeking information about the restructuring of the hog operations. Tyson said the activities were being described to them as a "fact-finding mission.

"While this visit has been characterized by some as an `investigation,' we are informed this is a normal course of business for this group any time there is a move of this scope and nature," the company said. "We are cooperating fully in a positive and productive exchange of information regarding the details of this restructuring."


August 2, 2002

Dear Senator:

The undersigned farm organizations would like to express their strong support for the nomination of Daniel R. Pearson to the position of Commissioner, International Trade Commission.

We believe Dan would do an excellent job representing the interests of farmers and of American agriculture at the Commission. Dan is the fourth generation in his family to farm. His great-grandfather farmed in upstate New York on less than 60 acres. His grandfather moved to Minnesota in 1920 where he eventually bought a 120-acre dairy farm and became president of the Minnesota Grange.

His father attended agricultural college at the University of Minnesota. By the mid1960s, he was farrowing and finishing 3500 hogs annually and was active in the Minnesota Farm Bureau and the Minnesota Pork Producers Association. As part of the Minnesota Agricultural Student Trainee program, his father hosted 35 student farmers from around the world on his farm when Dan was growing up, sparking Dan's interest in international trade issues.

Like his father, Dan attended the University of Minnesota where he majored in agricultural economics. During his years at college, Dan worked on a farm in California raising corn, barley, rice and tomatoes; as well as a farm and a slaughterhouse in Alaska. After finishing his Masters Degree, Dan spent the next 18 months traveling around the world working on farms in Europe, Africa, Australia, New Zealand and South America, giving him valuable insights into global agriculture. He then returned to Minnesota where he farmed 180 acres raising broilers as well as row crops.

Dan's long experience in farming guided his career as he worked on agricultural and trade issues for former Senator Rudy Boschwitz in the early 1980s. While with Senator Boschwitz, he worked on the 1985 farm bill, the lead up to the Uruguay Round, and on many agricultural trade issues.

Dan returned to farming for two years before joining Cargill, where he eventually became assistant vice-president of the company's Public Affairs Department. In that role, he has focused on trade policy issues including the multilateral agricultural trade negotiations, the accession of China to the WTO, the "level playing field" initiative for oilseeds, and many other agricultural trade issues. He currently represents the National Oilseed Processors Association (NOPA) on the USDA/USTR Agricultural Trade Policy Committee. He also sits on NOPA's International Trade Policy Committee, as well as on the Executive Committee of the US Grains Council.

We believe Dan's years as a farmer, coupled with his long legislative and corporate experience in international agricultural trade issues, make him an ideal candidate to serve on the International Trade Commission as it grapples with future agricultural trade disputes. We support his nomination wholeheartedly and urge Members of the Senate to expeditiously approve his nomination of Commissioner of the International Trade Commission.


American Beekeeping Federation
American Farm Bureau Federation
American Sheep Industry Association
American Soybean Association
National Association of Wheat Growers
National Cattlemen's Beef Association
National Chicken Council
National Cotton Council
National Corn Growers Association
National Milk Producers Federation
National Pork Producers Council
United Egg Producers
United Fresh Fruit and Vegetable Association
U.S. Apple Association
U.S. Dairy Export Council
U.S. Rice Producers' Group


ANDREW POLLACK, THE NEW YORK TIMES: The Environmental Protection Agency is threatening to fine two agricultural biotechnology companies for not complying with their permits for field trials of genetically modified crops.

In letters sent last week, the agency told Pioneer Hi-Bred International, a  DuPont subsidiary, and Dow AgroSciences, a unit of Dow Chemical, that they had not taken some of the steps required to keep genetically engineered corn from cross-pollinating with other corn on test plots in Hawaii.

The action comes amid concern that crops still not approved for commercial  use can slip into the food supply, causing recalls and hurting exports. The White House recently proposed regulations for genetically engineered crops undergoing field tests.

An E.P.A. spokesman [August 13] said that the warnings were the first instance of the agency's considering action against companies conducting field trials. Each violation carries a fine of up to $5,500, the spokesman said, and each company is accused of two violations. The companies can respond before any action is taken.

The letters were made public . . . . by the Center for Science in the Public Interest, based in Washington, which got them by filing a Freedom of Information Act request. The group, which does not oppose biotechnology crops but wants stronger regulations, called upon the E.P.A. to increase its inspections, saying companies "cannot be trusted to meet their obligations."

The agency told Dow in the letter that it did not have the right kinds of buffers around the genetically modified crop. It said Pioneer's plot was in the wrong spot and too close to other crops. In both cases, the corn contains a bacterial gene that has not yet been approved for commercial use and is intended to kill rootworms.

Pioneer said it thought it had followed the rules and was looking forward to clarifying the issue. Dow said it wanted to resolve the agency's  concerns. There is no risk to human health or the environment, Dow said, because other measures to prevent the spread of pollen were used, like putting bags over the pollen-producing parts of the plants.


NEWSMAX: The Washington, D.C., powerhouse law firm Williams & Connolly has stopped trying to collect on an estimated $9 million of outstanding legal debt run up by Bill and Hillary Clinton since 1994, the New York Post reported over the weekend.

Williams & Connolly "long ago wrote off 80% of what President Bill Clinton owed," Post gossip columnist Cindy Adams contended, adding, "The lawfirm has already written off the majority of its $11 million outstanding." The Post said the former first couple had paid just $2 million of the amount owed.

"Williams & Connolly loved its p.r. and what [the Clintons] did for p.r. they got back in spades," Adams explained as justification for the lawfirm's generosity.

The report, if accurate, raises question about what the Clintons did with the $7 million they collected from their legal defense fund, which they established in 1994 to handle the crushing legal debt they expected as a result of a myriad of scandal investigations. In a July financial disclosure report mandated by Senate rules, Sen. Hillary Clinton put the couple's outstanding legal debt at between $1.5 million and $6.5 million. But it's not clear whether those figures reflected any Williams & Connolly write-offs.

In June, a report in the Washingtonian Online put the Clintons' outstanding legal tab to Williams & Connolly at $3 million, but maintained they continued to make regular payments. The same report, however, claimed the former first couple had halted payments on a million-dollar-plus legal tab still owed to Sexgate lawyer Bob Bennett because they were unhappy with his work.

EDITORS NOTE: It was the politically powerful law firm of Williams & Connolly who also represented Archer Daniels Midland (ADM) unsuccessfully in its multi-million dollar price fixing suit, in addition to representing President Bill Clinton in his 1999 impeachment trail before the U.S. Senate.

Williams & Connolly, including Clinton's personal attorney David Kendall, has likewise been one among several attorneys representing FOX Television interests battling investigative reporters Jane Akre and Steve Wilson in their suit against their former employer Rupert Murdoch's FOX 13 TV station in Tampa Bay, Florida.

The couple charged that they were fired for refusing to broadcast state-ments which they considered to be untrue about bovine growth hormone (rBGH), manufactured by Monsanto, a major FOX advertiser. A six-person jury eventually awarded $425,000 in damages to Akre after finding enough evidence that proved FOX took retaliatory personnel action against her because she threatened to blow the whistle to the Federal Communications Commission that FOX Television pressured the husband-and-wife team to broadcast "a false, distorted or slanted news report." Efforts by Williams & Connolly attorney's to set aside the jury's verdict have three times been unsuccessful.

One can only wonder if ADM and Fox will be accorded some what the same treatment as the Clintons by the Washington law firm, or whether Williams & Connolly prefers that the less publicity giventheir roles in defending corporate criminality and attempts to suppress freedom of speechthe better ???


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

Since the AGRIBUSINESS EXAMINER first appeared some 183 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
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As part of a major effort to keep those committed to bringing economic and political
democracy to rural America informed, educated and updated the Corporate
Agribusiness  Research Project is happy to point out that its web site has been updated
and  streamlined.

Among the sites many features are:

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

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

> In "Between the Furrows," besides a modern "Search" engine, there is a wide range
of  pages designed to inform and educate readers on the inner workings of corporate
agribusiness. They include:

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

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

*  "Quotable Quotes" pertaining to agribusiness and corporate power

*  "Links," a page which allows the reader to survey various useful public interest,
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* "Feedback" an opportunity for reader input:

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

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

Simply by clicking on the address below all the aforementioned features and information
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