The
AGRIBUSINESS
EXAMINER
December 6, 2002   #206
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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HARD LINE ON MEAT\POULTRY INSPECTION
BY USDA OPPOSED BY MEAT INDUSTRY,
CLAIMING BACTERIA IS "INEVITABLE"

LEILA ABBOUD, THE WALL STREET JOURNAL: Garry McKee's first        experience with the E. coli bacteria was as a state public-health official tracking down a 1998 outbreak in Alpine, Wyoming, that sickened 157 people. Its source: deer and elk feces that seeped into the aquifer supplying the town's drinking water.

Now, Mr. McKee is the nation's chief meat inspector. The 30-year veteran        public-health officer sees his mission clearly: tracking bugs such as E. coli, listeria, and salmonella to their source and insisting that slaughterhouses and meat-processing facilities eradicate them.

The meat industry sees the job differently. It expects the administrator of the Agriculture Department's Food Safety and Inspection Service to assure that plants follow good practice in slaughtering, sanitation and labeling --- but also to recognize that bacteria are inevitable.

"There needs to be a recognition that zero-tolerance level of pathogens in raw product is not a scientifically achievable objective," said Rosemary Mucklow, head of the National Meat Association.

If the meat industry expected the Bush administration to pick a business-friendly regulator, it was wrong.

In October, just two months into his new job, Mr. McKee stunned an American Meat Institute audience with a blunt message: "If a meat or poultry company is just doing the absolute minimum, then it is failing its responsibility to the public," he said, asserting that too many plants focus on recalling products once they detect a problem. If you have a testing program and are getting positives, then you are doing something wrong. Your system is broken, and it needs to be repaired."

The meat industry wasn't pleased. "If you are a public-health expert, then you'd think that you would focus on the public-health outcomes, which have all been improving," grouses one meat association spokesman. "Every year we see bacteria levels drop and food-borne illness associated with meat products declining. From our point of view, everything keeps moving in the right direction."

The chief meat inspector's job is getting a lot more attention lately because of two headline-making meat recalls, the largest in history in terms of weight. One was of poultry from a Pennsylvania plant linked to a listeria outbreak, and the other was of tainted ground beef from a ConAgra Foods Inc. plant in Colorado. At least eight deaths and three miscarriages have been attributed to the two episodes.

*********************************************
MEAT INSPECTION BACKGROUND

* Number of federal meat inspectors: 7,600

* Number of U.S. slaughter and processing plants: 6,500

* Annual spending on meat, poultry and eggs regulated by FSIS: $120 billion

* Fiscal-year 2002 FSIS budget: $892 million

* Number of deaths from food-borne illness annually: 5,000

* Known affected by tainted ConAgra ground beef this summer: 38 sick, one dead

* Known affected by listeria outbreak this fall: 53 sick, 8 dead, 3 miscarriages
                                       ..
Sources: Food Safety and Inspection Service; Centers for Disease Control

*********************************************

Mr. McKee says these "recent events repeatedly underscore the need to focus on prevention," not recalls, which have more than doubled since 1998 and which he considers "a failure in the system, not a cure or solution."

Mr. McKee, a Ph.D. microbiologist whose previous job was running Wyoming's health department, and his boss, Elsa Murano, undersecretary of agriculture for food safety, are backing up the tough talk with actions that are drawing industry criticism. A new policy on listeria, a bug that thrives in refrigeration and can cause miscarriages and death, has been particularly contentious. Two weeks ago, the inspection service urged producers of high-risk products, such as hot dogs and deli meat, to test plants for listeria and share results with the government. Producers that don't test for the bug will be subject to government tests. Previously, the agency only tested finished product.

The industry mounted an unsuccessful lobbying push against the guidelines. At an Agriculture Department scientific Garry McKee, the new top meeting that drew 250 people, industry federal meat inspector, is representatives maintained that listeria, drawing fire from the which comes from soil, is common in even industry. the cleanest plants, and doesn't always pose a food-safety threat. Calling the new policy a "regulatory nightmare," Alice Johnson, of the National Turkey Federation, said the government would discourage plants from testing for listeria by punishing those who find it. want the government to continue to leave plant-testing decisions to them.

The Food Safety and Inspection Service, with its army of 7,600 inspectors, has long been torn between meat processors, for whom it administers the familiar USDA seal of inspection, and the meat-eating public, whose health it protects. Until the 1990s, few at the service saw it as a public-health agency. That changed after a deadly 1993 E. coli outbreak at a Jack in the Box fast-food restaurant that catapulted food-borne illness into the national debate.

The Clinton administration made reform of the meat-inspection system a priority. It appointed a Food and Drug Administration lawyer to head an agency traditionally run by veterinarians. In 1996 the agency adopted Hazard Analysis and Critical Control Points. Instead of relying on government inspectors doing carcass-by-carcass "poke and sniff" tests, HACCP required plants to implement preventive plans to reduce bacteria. The government then checked the plans' effectiveness with tests at the end of the line for salmonella.

Consumer groups initially supported the new system, but soon soured on it, complaining that it relied too much on the industry to police itself. The industry liked the self-policing, but not the salmonella tests --- and won a 2001 ruling from a federal appeals court in Texas that the Agriculture Department lacked authority to shut plants that failed the salmonella tests. The Bush administration decided not to appeal, alarming consumer groups.

But in his October speech, Mr. McKee said his agency would put more teeth into HACCP. [As of last Friday], the nation's largest meat processors will be required to control for E. coli (or show that such control plans aren't needed) and to prove to federal inspectors that their plans work.

The inspection service is also cracking down on plants with persistent problems: In mid-November it temporarily shut the ConAgra Foods slaughterhouse at the center of this summer's 18-million-pound beef recall for repeated violations of the zero-tolerance rule for fecal contamination. That plant now is owned by Swift & Co. The agency's action followed criticism in August from the congressional General Accounting Office that the agency had allowed plants to keep shipping meat even after repeated major violations.

Mike Taylor, the Clinton administration food-inspection chief who devised HACCP, praises Mr. McKee's zeal. "He is doing exactly what he ought to be doing and saying exactly what he ought to be saying."

Mr. McKee --- who admits he hasn't visited a slaughterhouse for at least ten years, but promises to tour one soon --- shrugs off industry complaints. "When you do a good job of protecting the public health and regulating an industry, you are going to have detractors on both sides," he said in an interview.

And he does eat meat: His favorite steak is a 10-oz. filet mignon, cooked medium.
 

IOWA'S SENATOR GRASSLEY
TO REINTRODUCE LEGISLATION
BANNING MEATPACKERS FROM OWNING
OR CONTROLLING LIVESTOCK

JERRY PERKINS, FARM EDITOR, DES MOINES REGISTER: U.S. Sen. Charles Grassley, Rep-Iowa, said Wednesday he will try again to get legislation passed that would prohibit meatpackers from owning or controlling livestock.

A provision that would have banned packers from owning the livestock they slaughter was deleted from the 2002 farm law because of opposition by meatpackers and their trade organization, the American Meat Institute. The U.S. Senate approved the measure, but it didn't survive a conference committee formed to reconcile different farm bills.

Supporters of a packer ban say it will help hog and cattle producers who face lower prices or who are restricted from selling their livestock at times because packers own or control their supply of slaughter animals.

Grassley said he didn't know how the packer ban would fare this time around in Congress. "We'll get it passed in the Senate again, but I don't know how it will do in the House," Grassley said.

Iowa's statewide ban on packers owning livestock is facing a constitutional challenge by Smithfield Foods Inc., the world's largest hog producer and pork processor.

Grassley has received endorsements for a national ban on packers owning livestock from two farm groups on opposite sides of the political spectrum.

On Tuesday, the Iowa Farm Bureau Federation's voting delegates tentatively approved a resolution favoring the ban. The Iowa Farm Bureau, widely viewed as a conservative farm organization, was successful in getting a similar resolution passed at the American Farm Bureau meeting last year.

On Wednesday, Grassley met with the Campaign for Family Farms, a coalition of four farm organizations more liberal than the Farm Bureau. The group said it applauds Grassley's plan to introduce packer ban legislation next year. "Grassley and Harkin know that banning packer ownership is in the best interest of independent livestock producers," said Kurt Kelsey, a livestock producer and spokesman for coalition member Iowa Citizens for Community Improvement, in a statement.

Grassley also attended the Wednesday afternoon session of the Iowa Farm Bureau's annual meeting at the Polk County convention complex. Speaking at an afternoon seminar on packer ownership of livestock and other livestock issues was J. Patrick Boyle, president of the American Meat Institute.

Boyle, who also attended the Campaign for Family Farms meeting with Grassley, said cattle and hog packers need to own or enter into long-term contracts with producers to guarantee a consistent, high-quality meat supply for consumers.

The chicken industry has captured a significant market share from beef and pork over the past 30 years because poultry processors have been allowed to own chicken production facilities and enter into contracts with chicken producers who can supply them with birds that meet their quality specifications.

"The beef and pork industries have been successful in recent years in regaining some of the market share they lost to poultry," Boyle said in an interview. "To be successful, they had to enter into partnerships with producers or own their own livestock. It was necessary for their survival." National legislation banning packer ownership of livestock would force packers to sell their livestock production facilities, Boyle said.

That would cause a fire sale that would devalue the asset values of all livestock producers, he said.

Boyle said the U.S. Department of Agriculture estimates that one-third of the cattle in the United States are owned by packers or raised by producers who have contracts to sell their livestock to a specific packer. About 80% of hogs in the United States are either packer-owned or raised under contract with a packer, he said.
 

TYSON FOODS CHAIRMAN OPPOSES
MANDATORY U.S COUNTRY-OF-ORIGIN
LABELING AS AN EXPENSIVE TRADE BARRIER

REUTERS: Mandatory U.S. country-of-origin labeling for food is nothing more than a trade barrier that is too expensive to administer and ought to be repealed, Tyson Foods Corp.Chairman John Tyson said on Wednesday.

The U.S. farm law enacted this year established a voluntary labeling program that becomes mandatory on October1, 2004. The law's initial $2 billion cost, mostly record-keeping on where livestock is born and raised, will be shouldered mainly by cow-calf producers and feed lot operators in the United States, Tyson said.

Tyson Foods is the largest U.S. meat producer, accounting for 27% of beef sales, 23% of chicken sales and 19% of pork sales in the United States. It also operates in five foreign countries. The country-of-origin labeling idea was pushed through Congress last year, mainly by Democratic senators from northern plains states and some U.S. farm groups, which wanted to boost the profile of U.S. products on store shelves.

Republicans wrested control of the U.S. Senate in the November elections. But it is not yet clear whether they will revisit the controversial labeling law next year.

In remarks to a Farm Journal forum, Tyson said, "We should not, in my opinion, throw up our own trade barriers to foreign agricultural goods. In this category, I have to say that the country-of-origin labeling mandate in this year's farm bill truly puzzles me," Tyson added.

He said such trade barriers "distort the market and invite retaliation" from U.S. trading partners. "This country of origin labeling requirement .. . . .is something that I think must be revisited," Tyson said.

Under the new law, only animals, fruits and vegetables raised and processed in the United States can be labeled as a U.S. product. Some food items, such as ground beef, often are derived from animals born, raised and slaughtered in more than one country. The label for those products would have to list all the countries.
 

UNILEVER'S RECENT FOOD ACQUSITIONS
APPEAR SUCCESSFUL ALTHOUGH BROKERS
QUESTION LONG-RANGE RESULTS

DEBORAH BALL, THE WALL STREET JOURNAL: When Unilever bought        U.S.-based Bestfoods for $24 billion two years ago, the deal was supposed to add zip to the Anglo-Dutch company's laggardly food business.

The good news so far is Unilever seems to have absorbed the purchase without suffering indigestion. By bringing in a skilled management team and such powerful brands as Hellmann's mayonnaise, Knorr soups and Skippy peanut butter, the acquisition has helped Unilever raise profit margins and speed revenue growth.

But some analysts aren't convinced it was the right kind of deal to raise the company's long-term growth. Instead of brands in such mature categories, they say, Unilever should have gone after a lot more small acquisitions of fast-growing lines.

Nearly everyone agrees Unilever's food business needed an overhaul. Although the company had a few major international brands --- notably  Lipton teas and soups, Bertolli olive oil and Ragu sauces --- its food business was mostly splintered among lots of local brands of margarine and ice cream. Its food revenue was declining, in contrast to growth at rivals, including Bestfoods, of 4% to 5% a year. Unilever wanted to replicate the success it had achieved on the detergent and personal-care side of its business, where it has fostered global brands such as Dove, Pond's and Lux, and extended some of them into new categories.

Toward that end, Unilever during the past two years has disposed of about $1.99 billion of lagging food operations to concentrate on such global brands as Hellmann's, Knorr and Lipton. The closure of 30 factories and 800 million in cost cutting have pushed the food division's operating-profit margin from 10% in 1999 to this year's estimated 15%. Through the integration, Unilever has managed to retain many of Bestfoods' well-respected executives, who have helped marry Unilever's traditional research-and-development strength with a sharper focus on consumer trends.

"There has been a transformation of the food business in terms of profitability and mindset, and all this has been done in the midst of the integration," says Patrick Cescau, a French-born Unilever veteran who became head of the food division after the Bestfoods purchase.

But a major challenge remains: delivering the revenue growth needed to take Unilever beyond the end of its current restructuring, give it the scale to raise margins further and justify the Bestfoods price tag, considered quite hefty. The company's overall targets are for revenue growth of five percent to six percent a year and operating margins in excess of 16% by 2004. While the home and personal-care division has done most of the heavy  lifting in recent years, with revenue growth of five percent to seven percent, the food division must quickly start doing its part or Unilever will fail to hit is overall target.

Mr. Cescau's plan hinges on copying the company's success in extending        personal-care brands into richer categories. The model is Dove, which has made a successful jump from soaps to shampoo and deodorant. Mr. Cescau wants to move brands such as Hellmann's, Knorr and Bertolli beyond pedestrian products such as mayonnaise, bouillon cubes and olive oil.

Hellmann's innovations include flavored mayonnaise, dipping sauces and ready-to-eat potato salad. Knorr and Bertolli are being stretched to frozen meals, sauces and meal kits in order to tap the on-the-go eating market in Europe and the U.S. Unilever's R&D strength, fresh perspective on the brands and its global reach, particularly in the developing world, will help spark growth where Bestfoods' former management couldn't, says Mr. Cescau.

The first results are encouraging: In the third quarter, when many of the first innovations hit the shelves, revenue growth for Unilever's leading food brands (excluding those earmarked for disposal) jumped to 4.8% from 2001's pace of 3.7%. "My primary objective is to establish [the food division] comfortably in a five percent to six percent [sales-growth] range," Mr. Cescau says.

But some analysts say the early successes are a spike, destined to fade along with the marketing push to a medium-term pace of 2.5% to 3%. They question Unilever's capacity to produce winning innovations, pointing to recent disappointments as Enjoy meal kits in the U.K. and Take Control cholesterol-lowering margarine in the U.S. More critically, even after Bestfoods, Unilever lacks brands powerful enough to carry across new categories, they say, particularly in areas such as prepared meals, where rivals such as Nestle SA and ConAgra Foods Inc. have a strong head start.

Andrew Wood, consumer-goods analyst with Sanford C. Bernstein, says that all the innovation in the world won't transform low-growth categories such as margarine and other spreads, culinary ingredients and condiments into high-profit products. "Innovation is good to keep a good category bubbling, but it's never a cure for a fundamentally low-growth category," he says.

Some analysts say Unilever needs to rethink its portfolio further --- either through further disposals or acquisitions --- if it hopes to hit its growth targets. Sylvain Massot, head of consumer goods for Morgan Stanley, says the frozen-foods division, which produces such low-margin products as frozen vegetables, "could be one-fifth the size it is today."

Others say Unilever should have used the $24 billion spent on Bestfoods for smaller acquisitions, along the lines of its 2000 purchases of SlimFast Foods and Ben & Jerry's Homemade. They also cite Nestle's recent acquisition of Chef America Inc., a maker of hand-held pastry snacks, which posted growth of 18% during the first half of the year and will help the Swiss giant make up for lower-growth categories such as chocolate and coffee.

"Unilever will have to have a recognized failure in the next 12 to 24 months in generating sustainable top-line growth before it decides what [the next reorganization] will be," Mr. Wood says. "That will mean moving into faster-growing areas through smaller, bolt-on acquisitions" like SlimFast and Ben & Jerry's.

For the moment, Unilever's . . . . debt makes further acquisitions difficult, while Mr. Cescau says his stable of brands can easily sidle into richer pastures such as health foods, frozen dinners and pasta sauces. "Nestle paid a very handsome price for Chef America," he says. "We already have the technology, the know-how and the brands to grow in frozen foods. At this point, I'm much more interested in leveraging what we have than thinking that the grass is greener somewhere else."
 

PRINCE CHARLES ANGRY
AT BRITISH SUPERMARKET CHAINS
FOR SOARING PROFITS WHILE
ORGANIC AND MAINSTREAM FARMERS
SUFFER FROM POOR RETURNS

VICTORIA FLETCHER, THE EVENING STANDARD [LONDON]: Prince Charles has called in the heads of all the major supermarkets for crisis talks on the way they are treating Britain's struggling farmers. It is understood the Prince is furious that farmers are still being given poor returns for both organic and mainstream produce while supermarket profits soar.

In a dinner at Highgrove [November 25] he met the head of Tesco, Sir TerryLeahy, Sainsbury's Sir Peter Davis and Asda's chief executive Tony DeNunzio. There were also executives from Marks & Spencer and Dalepak, the meat processing firm. Sir Don Curry, who wrote a report on the future of farming after the foot-and-mouth crisis, had also been invited as well as one local farmer and his wife.

Prince Charles wanted the wives of each chief executive to be present as well so that they could hear the complaints firsthand. It is thought Charles will repeat his calls for supermarkets to provide better returns to farmers for their produce as well as stocking more foods which are made by local cottage industries.

As a farmer himself, selling his Duchy Original range of organic products throughout Britain, he will be only too aware of the practices imposed by grocery giants on their suppliers. A supermarket insider said that executives were expecting the prince to talk about their relationship with farmers and that there may be some awkward conversations.

"Charles has met supermarket heads before, mainly to talk about organic farming and the issues around that. They are expecting that sales of organic food as well as their relationship with farmers will come up in conversation and that they may have some questions to answer."

At present, there is a growing body of evidence to suggest that supermarkets have failed to make any improvements in the deals they offer farmers. Despite a new code of conduct which was supposed to prevent supermarkets from bullying farmers over prices, many are still being forced to sell their produce for next to nothing or face being blacklisted as a supplier.

Oliver Dowding, the president of the organic wing of the National Farmers' Union, said that supermarkets chains had done little, if anything, to help farmers. "I would hope that Prince Charles will be tackling these bosses on the way they treat farmers and the prices they pay them," he said. "They are all competing with one another to charge customers the lowest prices but it is farmers who are paying."

In the past few years there have been a series of attempts to bolster the position of farmers when dealing with supermarket chains. In 2000, a Competition Commission investigation into the prices charged by supermarkets found them not guilty of ripping off consumers. However, it found they did rip off farmers, forcing them to drop their prices, cancelling contracts even after they had grown the order and charging them the cost of designing and manufacturing packaging for their produce.
 

SPANISH FARMERS AND FOOD PRODUCERS
OUTRAGED OVER HUGE RETAIL MARK UP DISPARITY
AS FRUITS AND VEGETABLES AVERAGE 227%
WHILE MEAT PRODUCTS AVERAGE 154%

FOOD PRODUCTION DAILY: There is a huge disparity between the price paid by Spanish retailers for a wide range of agricultural products and the price at which they are eventually sold on to the consumer, according to a new survey by the Spanish farmers' organisation, COAG.

Food producers have been coming under increasing pressure from the supermarket sector for many years, and not just in Spain, but the COAG research shows to just what extent the retail sector is apparently marking up its products.

A report in the Cinco Dias newspaper, COAG and its members fear that the situation is getting out of hand, so much so that it could destroy the already precarious economic balance in the food sector and force some companies out of business.

The paper cites the survey of prices at four supermarket and hypermarket operators in Spain --- Carrefour, Mercadona, Eroski and Caprabo --- which were then compared with the prices paid by the chains to the food producers.

The mark up on fresh fruit and vegetables such as mandarines, oranges, lemons, grapefruits, aubergines, marrows and lettuce was found to be substantial, varying from 111%  for clementines to a massive 667% for marrows. The average mark up was 227%

For meat products, the mark ups were less dramatic but nonetheless significant, ranging from 122% for pork to 191% for veal, and with an average of 154%.

COAG and its members are calling for all segments of the Spanish food industry to reach an agreement similar to that brokered recently in France, where supermarkets and producers have agreed to a number of measures, such as improved transparency and the setting of a minimum price for certain products during crop shortages.

But this agreement was reached only after food producers blockaded stores run by the major supermarket groups, and it could take similar action in Spain before all the parties are prepared to sit round the table --- action that COAG and its members seem prepared to take.
 

OBESITY AMONG CHILDREN
DOUBLES SINCE 1980, TRIPLES AMONG TEENAGERS
AS HIGH PROFILE FOOD COMPANIES
COMING UNDER INCREASING LEGAL FIRE

NAT  IVES, NEW YORK TIMES: Health advocates and lawyers are increasingly trying to blame food companies for the country's growing obesity problem, borrowing tactics that anti-smoking advocates have used successfully against tobacco companies and their addictive products.

While marketers and others may scoff at lawsuits like the one two New York teenagers filed against McDonald's, accusing it of failing to provide  necessary information about health risks associated with its meals, some analysts and brand experts assert that food companies have ignored the  developments at their peril.

"It is very possible that tighter advertising restrictions will eventually follow from the gathering pace of concern surrounding the spread of the obesity epidemic," a report from UBS Warburg, the investment bank, said last week . "There will probably be more lawsuits and pressure from consumer groups to change practices."

To head off any repercussions, many brand experts are urging the food industry to act before it is permanently tagged "Big Food" in the public  eye. The suggested actions include posting more nutrition information more prominently, offering smaller portions, developing healthier menus and generally expressing more concern over obesity. "They have a tremendous problem," said Alan Siegel, chairman at Siegelgale, a brand consulting company in New York.

The medical community has increasingly focused on obesity, Mr. Siegal said. "The natural link, in the media, has been to the high-profile fast-food  companies, which are now being depicted as villains."

Although dieting fads and body worship have long been staples of pop culture, obesity as a health concern received new attention last December when the surgeon general reported that obesity among children had doubled since 1980. Among teenagers, obesity has tripled.

In July, the first lawsuit citing fast-food companies for obesity problems was filed by Caesar Barber, a 56-year-old New Yorker with a history of  heart attacks, diabetes and high blood pressure. The lawsuit accused  McDonald's, with a history of heart attacks, diabetes and high blood  pressure. The lawsuit accused McDonald's, the Burger King unit of Diageo the KFC unit of Yum Brands and Wendy's International of deceptive  marketing. The lawsuit has been delayed, but a second one was filed in August, this one on behalf of the parents of two teenage girls, who each weigh 200 pounds or more.

As in the tobacco wars, the fight is partly driven by lawyers like John F. Banzhaf, a professor at George Washington University Law School and an experienced litigant against tobacco companies. He asserts that incomplete disclosure of health risks is unacceptable corporate behavior, and his position seems to be gaining ground more quickly than occurred in the battle against tobacco companies; he and his allies filed more than 700 tobacco lawsuits before one reached court, he said.

The parallels go only so far. Unlike tobacco, fast food and high-calorie snacks are not addictive. But any echoes of the battles over tobacco must be taken seriously, brand consultants said.

McDonald's asserted last month that the lawsuit against it should be dismissed. A spokesman for McDonald's, Walt Riker, said yesterday, "McDonald's is doing what we've done for decades: offer a menu of quality food and real variety to all of our customers, backed by detailed nutrition information about our products."

Even before the lawsuits, some food companies were moving to address obesity. McDonald's, for example, has pledged to cut the trans-fatty acids in its French fries by almost half by early 2003. PepsiCo, which owns Frito-Lay, introduced low-fat Doritos this fall and plans to begin selling reduced-fat Cheetos, a product intended to address schools' concerns about selling fatty snacks to children, said Richard Detwiler, a spokesman for the company, which is based in Purchase, New York.

At the same time, the Center for Consumer Freedom, a group representing restaurants and food companies, asserts that blaming food companies for obesity is a mistake.

John Doyle, a spokesman for the center in Washington, said obesity is being exploited and exaggerated by groups that want the government to become a nanny for its citizens. "The rest of this," he said, "is a bunch of special interests jumping on the bandwagon," like animal-rights and anticorporate groups.

Momentum, in the end, may matter as much as the merits.

Jason Streets, a research analyst at Warburg, said the lawsuit against McDonald's might be a long shot, but it symbolized changing attitudes toward food companies.

Mr. Siegel agreed, saying the lawsuit, once laughed at, is now being taken seriously. But for food companies, addressing the problems of obesity or public relations may not hinge on changing advertising strategies, he said  Companies must reposition their brands, he said, to represent healthier choices, smaller portions, or more transparent health information. And in  doing so, the food companies may actually strengthen their businesses.

"They can't duck it," said Steve Lawrence, executive vice president at Straightline International in New York. He said one company, the Subway Restaurants' sandwich chain, has aggressively courted health-conscious  consumers.

Consumers say they want healthier food, said Robert Passikoff, president at Brand Keys, a brand and consumer loyalty consulting company. But marketers cannot rely on what people say, or on successfully introducing health-consciousness to brands that never had it before, he said, noting  the bumpy introduction of no-fat products, using Olestra, by Procter &  Gamble.

"You're talking about brands where their equities and their images are fairly well entrenched," he said. "The best bets, especially for McDonald's, is to look to its heritage and adapt to the situation, rather than trying to be something that they're clearly not and never will be."
 

CALIFORNIA GROWERS AND UNION OFFICIALS
TO DRAW UP GUIDELINES FOR MEDIATORS
FOR BREAKING DEADLOCKS BETWEEN
EMPLOYERS AND FARM WORKERS

LESLI A. MAXWELL, FRESNO BEE: State officials who must oversee a controversial farm-labor law are calling on growers and union leaders to help write the rules that will govern how appointed mediators break contract deadlocks between employers and farm workers.

United Farm Workers leaders,other union officials and grower representatives are expected to bombard the Agricultural Labor Relations Board with input on what regulations for the contract-mediation law should be. The agriculture industry lost a pitched battle to defeat the UFW-sponsored legislation when Gov. Gray Davis signed the measure in September.

"The regulations could make the law more draconian," said Richard Matoian, president of the Fresno-based California Grape and Tree Fruit League and a member of an informal committee that will advise the labor board. "The rules that are adopted will be just as important as the law itself." Said UFW spokesman Marc Grossman: "For us, the regulations have to ensure farm workers are going to get the union contracts they have voted for."

The law, which takes effect January 1 and expires in 2008, uses mediators and the five-member labor board to decide the terms of a contract when normal negotiations between farm workers and growers fail to result in a deal. Under the law, if a 30-to 60-day mediation period fails to produce an agreement, the mediator would draft the terms of a labor contract in a report to the labor board.

The labor board, whose five members are appointed by the governor, would review the recommended contract and change it only if either side can prove the mediator was corrupt or used bad facts. Either side could appeal the board's decision to the California Supreme Court.

Right now, both sides are focused on how the labor board will put the law to work. A 17-member committee of growers, union officials and farm-worker advocates will meet in Sacramento this month to hash out their positions.

For the labor board, a major question is whether it should set standards for mediators to follow when they write contracts. The board also is asking for input on how to calculate the size of a farm's work force; the law exempts growers who employ fewer than 25 farm workers.

"There are just so many details that have to be worked out," said Mike Webb, a lawyer and lobbyist for Western Growers Association.

After collecting input, labor board officials will draft regulations that will then go through a 45-day public review and comment process before they are formally adopted by the agency.
 

UFW'S CO-FOUNDER DOLORES HUERTA RECEIVES
PRESTIGIOUS PUFFIN/NATION AWARD, WILL USE
$100, 000 PRIZE TO ESTABLISH "ORGANIZING INSTITUTE"

ASSOCIATED PRESS: United Farm Workers co-founder Dolores Huerta was honored by supporters Tuesday at the formal announcement that she has won the 2002 Puffin/Nation Prize for creative citizenship and $100,000 for her work on behalf of migrant workers, women and the poor.

Huerta, 72, is the second recipient of the annual award from the New Jersey-based Puffin Foundation and Nation Institute, a New York City foundation of owners of The Nation magazine. The prize and cash award will be presented in New York Sunday.

The Puffin/Nation prize honors an individual who has "challenged the status quo through distinctive courageous, imaginative and socially responsible work of significance" with the cash award intended to encourage continued work in the winners' career.

Huerta said the money would be used to help form an "organizing institute" to train people with leadership abilities.

The late Cesar Chavez recruited Huerta in 1962 to help unionize California's predominantly Hispanic farmworkers. She organized a mid-1960s grape boycott which led to a UFW labor contract with grape growers five years later. The UFW's nonviolent protests paved the way for a state law approved in 1973 on the right to organize.

"Cesar said she is totally fearless both mentally and physically," UFW President Arturo Rodriguez said of Huerta. He noted that this past summer Huerta walked every step of a 150-mile farmworker march to the state Capitol on behalf of a Legislature-approved measure to force growers into mediation when negotiations fail. Over objections from agribusiness, Gov. Gray Davis signed the bill into law in October after a weeks-long vigil by its supporters.

Huerta, now first vice president-emeritus of the UFW, left a teaching job in Stockton in 1955 while in the midst of a divorce and caring for seven children, to help found a community group that organized voter registration drives and campaigned against police brutality.

Nation Institute President Hamilton Fish said last month when it was first made public Huerta would receive the prize, that the "judges recognized that she represents exactly the qualities which this prize was originally designed to honor --- courage, an unyielding social commitment, a generous spirit, an almost unparalleled track record on behalf of her constituency." The 2001 recipient of the inaugural Puffin/Nation Prize was the civil rights pioneer and founder of the Algebra Project, Robert Parris Moses.

                                         EDITOR'S NOTE

Preparing to post this 206th edition of THE AGRIBUSINESS EXAMINER it is
gratifying to know that over 1100 people throughout the world are currently receiving it

on a regular basis and judging from comments received feel it is a valuable source of
information. However, it is also quite troubling to realize that less than 4.5% of that
readership has ever seen fit to make any contributions toward its continued existence.

To that small cadre of contributors this editor can only express his profound gratitude
and appreciation for I realize that in some cases even a small donation was a sacrifice for
them.

From the outset it was never the purpose of THE AGRIBUSINESS EXAMINER to
charge a subscription fee for the original intention of this newsletter was to get it into as
many hands as possible as a vehicle for monitoring corporate agribusiness from a public
interest perspective, just as was the establishing of a web site
[http://www.ea1.com/CARP/] to provide facts, background, analysis and educational
information on corporate agribusiness.

Thanks to the generosity and creativity of the editor's oldest son David and his business
colleagues at ElectricArrow in Seattle, Washington that sight is being maintained on a
virtual pro bono basis.

Having said all this, may I repeat CONTRIBUTIONS FROM READERS are always and
will always be most welcomed for editors of such publications as THE AGRIBUSINESS
EXAMINER can not always live on bread and water alone. Such checks made out to
A.V. Krebs can be sent to P.O. Box 2201, Everett, Washington 98203.