EXAMINER Issue # 78 June 14, 2000
Monitoring Corporate Agribusiness From a Public Interest Perspective
The few sustaining the many!
That has been pretty much the story in the some 22 months since THE AGRIBUSINESS EXAMINER first began appearing on computer screens. During the course of its existence, a small, but financially loyal group of folks have provided me with most welcome support, but their number is small compared to the near 1000 folks who today receive THE AGRIBUSINESS EXAMINER.
In conceiving THE AGRIBUSINESS EXAMINER, this editor wanted to make it as
inexpensive to readers as he possibly could; hence, no subscription price, just
personally affordable contributions. Thus, donations will, as always, be gladly
accepted. Checks made out to A.V. Krebs, P.O. Box 2201, Everett, Washington
98203-0201 (NOT to the "Agribusiness Examiner") will continue to be received
with much gratitude. To those loyal folks who have sent me financial support in
the past my sincere thanks for your continued support.
"SUPERMARKUP TO THE WORLD":
ADM RACKS UP ANOTHER $45 MILLION IN FINES
Joining the United Sates and Canada the European Union last week levied combined fines of $105 million against Archer Daniels Midland Co. ("Supermarkup to the World") and four Asian companies --- Ajinomoto Co. and Kyowa Hakko Kogyo Co. of Japan; and Sewon Co. and Cheil Jedang Ltd. of South Korea --- for their involvement in a price-fixing scheme.
The EU's competition commission said it imposed fines of $45 million against
ADM and $26.9 million against Ajinomoto, the leaders of the
cartel. In addition, EU competition regulators imposed fines against
Kyowa Hakko Kogyo of Japan
totaling $12.5 million while Cheil Jedang Ltd. of South Korea was fined $11.6
million and the Sewon Corp. of South Korea was fined $8.5 million. The EU action was based on ADM's conspiring with four Asian competitors to rig the $650 million-a-year market for lysine, a popular livestock-feed additive made by ADM.
The investigation found that the five companies fixed lysine prices
including in the EU. The investigation also determined that the companies fixed sales
quotas for the EU market and exchanged information concerning those quotas from
"at least" July 1990 through June 1995.
ADM commented that it is considering whether to contest the fine levied by the European Commission, although it claimed that the size of the fine wouldn't have a material impact on its earnings.
The EU fines stem from a probe that began in 1997 when ADM disclosed
the EU was
conducting an inquiry into its European units and other companies. In 1996, the U.S. Justice Department fined ADM $100 million after the company pleaded guilty to fixing prices for lysine and citric acid. In 1998, ADM also paid a fine of US$10.83 million for price fixing on the Canadian market.
Scott Kilman in the Wall Street Journal reports that ADM's
total legal tab "for one of
the biggest global price-fixing scandals of the 1990s" has now climbed to more than
$250 million, including criminal fines, civil settlements and lawyer bills and that tab "will probably rise as more governments pile on" as "antitrust regulators in Mexico and Brazil are mulling whether to levy their own penalties."
Also, in 1999, a U.S. federal judge sentenced Michael D. Andreas and Terrance
S. Wilson to two-year prison terms and fined both former ADM executives
for their role in the price-fixing scandal. Mark E. Whitacre, an ADM
executive-turned-informant, who played the key role in the Federal Bureau of
Investigation's ability to crack open the price-fixing case was stripped of his
immunity in the case after prosecutors learned he
had allegedly embezzled millions of dollars from ADM.
Applauding the fines, Nicholas E. Hollis, president of the Agribusiness Council (ABC) pointed out that "Europe's action sends an unmistakable message that anti-competitive behavior such as practiced by ADM against consumer and farmer interests will not be tolerated. But simply fining predators like ADM, isn't enough to contain their apparent white collar brigandry.
"As we've seen in the U.S., we need to take the `Supermarket to the
World' and its management behind the woodshed ...I find it a bit ironic
that our Department of Justice
crows about dismantling one of our computer software giants while practically allowing ADM to walk with a fine, and permitting the company to maintain its business with the government, in spite of felony convictions," he added.
The European Commission action may "help remind policymakers where the real
problem is --- and it isn't in our software," Hollis continued, "rather it is in our food system and our farmers continue to suffer for it." Hollis observed that ADM was and is one of the largest campaign contributors to both U.S. political parties while Microsoft, until fairly recently had not been a major player in Washington.
JEANNE AND STEVE CHARTER:
MONTANA CATTLE PRODUCERS APPEAL USDA RULING,
CHALLENGE CHECKOFF PROGRAMS
In late April, USDA Administrative Law Judge Dorothea Baker levied a $12,000 penalty against Jeanne and Steve Charter, a Montana ranching family, for refusing to pay $250 in mandatory one-dollar-per-head fees on two cattle sales
Now, saying their case may be the only viable strategy left to eliminate or reform a multi-million dollar federal beef industry promotion program they believe is both illegal and destructive to the interests of independent cattle producers, the Charters are appealing the USDA ruling.
"We are appealing with the intent of getting this mandatory tax struck down as unconstitutional," says Jeanne Charter whose family ranches north of Billings, Montana. "What was supposed to be a self-help program has been perverted to by USDA into a program of self-destruction for independent producers like us. We intend to topple it if we can."
Known as the beef checkoff, the fee has been the focus of a nationwide battle within the cattle industry. Enacted by Congress in 1985 to fund beef promotion and research, the program has increasingly come under fire from producers since 1996, when USDA approved the merger of two existing industry groups to create the National Cattlemen's Beef Association (NCBA). USDA then designated NCBA as the primary recipient for most of the roughly $85 million in checkoff fees assessed annually.
"The merger's effect has been to turn the checkoff into a vehicle serving NCBA's controversial `unified plan' for the beef industry.NCBA's vision for our industry is to create a kind of corporate collective system similar to what's completely taken over in chicken and is rapidly taking over hogs,' said Jeanne Charter."We strongly object to being forced to provide financial support for this plan."
Many producers believe the lobbying efforts of NCBA's political arm and many of the projects that NCBA funds with checkoff dollars directly undermine their ability to receive a fair share of the consumer dollar.
NCBA has angered many producers by opposing a trade complaint filed
last year against Mexico by the Rancher Cattlemen's Legal Fund; by opposing
anti-trust enforcement against the three multinational corporations --- IBP
Inc. Excel Inc. and ConAgra --- that control some 81% of the beef
packing industry; and by supporting
controversial trade agreements like the North American Free Trade Agreement (NAFTA), which they say allow low-cost imports to be dumped on the U.S. market, but do nothing to boost prices received by domestic producers.
The Charters point to multi-million dollar checkoff funded product development and promotion partnerships between NCBA and retailing giants Sara Lee and SYSCO as examples of counterproductive checkoff spending. They say these projects subsidize increasing domination of the retail market by a handful of companies who are unlikely to pass profits on to producers.
Jeanne Charter says the Clinton Administration's USDA is strongly biased in favor of the abusive and undemocratic program it has created. "Producers thought they were creating their own program, but instead they gave USDA tremendous power over their industry," she said."The USDA ruling in our case has made it absolutely clear that this a government run, not a producer run program."
A ruling by the Sixth Circuit Court of Appeals in Nashville last year on the mushroom checkoff sets a strong precedent under which the Charters say they believe their appeal will eventually topple the $85 million-a-year beef checkoff program. The three-judge panel ruled unanimously that the government can only compel commercial speech in heavily regulated industries like tree fruit, where the government also administers collective programs controlling price and supply. It cannot compel payment in free market industries.Though the Charters' attorney developed a thorough brief of this opinion for the Judge Baker's consideration, her ruling did not mention the sixth circuit decision.
"That won't happen to us once we get before an independent judge," said Charter. "USDA was hoping we'd be too broke or too demoralized to keep fighting, but they were wrong. They may have won the first round, but we believe we'll be the ones to finally win the war --- thanks mostly to the sixth circuit decision."
Over 146,000 cattle producers have signed a petition circulated by the Livestock Marketing Association (LMA) calling for USDA to hold a referendum on whether the checkoff should be terminated. Across the country, many producers are growing increasingly frustrated that Secretary of Agriculture, Dan Glickman, has so far refused to announce a referendum vote, although the petitions were submitted to him seven months ago.
"Our members collected thousands of signatures for the petition drive, but it's becoming increasingly obvious that Glickman never intends to hold a vote," said Custer, Montana rancher Bill Mackay, who heads a Northern Plains Resource Council (NPRC) fund raising campaign to help cover the Charters' legal expenses.
"If there is a vote, we don't trust USDA to ensure that it's fair.
Glickman has made a defacto policy decision to allow millions of our
checkoff dollars to be spent on a partisan, pro-checkoff media campaign against
the referendum, despite the fact that the law says such use of checkoff funds is
illegal. USDA is clearly not a neutral party," Mackay adds. The NPRC legal
defense fund that Mackay chairs has raised approximately half of the Charter's
$15,000 in legal expenses to date.
"Charters' fight is about basic civil rights, about being free to speak for themselves and not being compelled to finance opposing corporate views or fund creation of a quasi-governmental corporate collective in the beef industry," said Mackay.
Informatiuon concerning the Charter's suit and their defense fund can be
IFBF BOARD MEMBER BEING FORCED OUT,
AFTER QUESTIONING BODY'S FINANCIAL DEALINGS,
LEADERSHIP "HAS BEEN PREFERRED SECRECY"
Don Narigon, both a board member of the Iowa Farm Bureau Federation (IFBF) and a member of the organization's state budget committee, has charged the state organization's president Ed Wiederstien and his staff with not providing sufficient information about the IFBF's business interests and "rather than complying with my wishes, they have now undergone a systematic campaign of misrepresentations and innuendo seeking to persuade delegates to vote me out of office."
Wiederstein was recently featured in a "60 Minutes" essay on the American Farm Bureau Federation as an example of the generous and often times not reported executive compensation packages that are part of the AFB's bureaucratic culture while the essay was noting at the same time the irony of such profits being in contrast to the steady and persistent erosion of family farmers income.
Narigon has also charged that "Ed Wiederstien asked me to take some money and
step down but I was counseled to consult an attorney. I did so and IFBF took the money off the table. In discussions with my attorney, I did not agree succumb to the pressure to resign."
Steve Morain, general counsel of Iowa Farm Bureau, said in a June 7
statement that delegates from the 12 southwest Iowa counties Narigon represents
had asked for his resignation because of "internal matters detrimental to
Farm Bureau caused by Mr. Narigon." Narigon, 65, said he was told at a
May 2 meeting of Farm Bureau's 12-member board of directors that he had
48 hours to resign. He declined and hired an
In a June 2, 2000 letter to his fellow members Narigon outlined some of the "facts regarding my efforts to represent the interests of members of the Iowa Farm Bureau Federation. I have been diligently seeking proper facts about the proper management of IFBF and its subsidiaries to carry out my duties as a board member.
"First, I have a legal duty to the IFBF organization, not the leadership, to be an informed director. According to the Article X of the IFBF articles state that `the business and affairs of the Federation shall be administered and managed by a board of twelve directors, . . .' This duty requires directors to stay informed about corporate developments and to make informed decisions. If I breach that legal duty, and there are improprieties found, I can be sued for breach of duty," he adds.
"I also have a moral duty to those who elected me to reveal any problems that I may find," Narigon continues. "The IFBF membership have the right to know what is happening in this organization. The leadership of Farm Bureau has been preferred secrecy. President Ed Wiederstein and IFBF staff --- General Counsel Steve Morain and Executive Director Jerry Downan --- are placing considerable effort into removing me as the only board member to vigorously seek proper information.
"In fact, their campaign for impeachment has resulted in at least two meetings with my delegates which were called, to my understanding, illegally. The meeting held on May 18 was not authorized by the bylaws and, even if it was, proper 10 day notice was not given to me. This June 2 meeting suffers from the same deficiencies. Staff does not convene a meeting of the delegates. I hereby object to any lawful business being conducted at either meeting."
Narigon outlined his concerns
"Generally, a board of directors has the power to make policy decisions with respect to products, services, prices, wages and labor relations. Documents presented to voting delegates concerning 1997 showed that the president's salary was set at $90,000, along with compensation related to the Farm Bureau Federation and affiliated companies, the president's compensation equaled approximately $180,000. However, the number reported to the IRS was $308,102, plus expenses. Despite their request, the voting delegates were never able to review the total compensation package of the president."
Narigon notes that he questioned some details concerning IFBF subsidiaries, the Equitrust Assigned Benefit Company and the FBL Financial Group and was denied any information despite the fact he had certain questions about the relationship of these companies to the IFBF. He points out that as a director, he had the duty and responsibility to discovery the details of those entities so that he could make well-informed decisions as a board member.
It was not, however, until he was forced to hire a lawyer that General Counsel Morain agreed to allow him to come to the IFBF office to inspect the documents, although Morain would not allow him to make copies of the documents. "These restrictions are a part of the secrecy surrounding IFBF affairs which hamper the board of director's ability to properly manage the organization," Narigon charges.
"When it became clear that I would continue seeking the information denied me on the financial affairs of Farm Bureau and the salaries of Mr.Wiederstein and my staff, Mr. Wiederstein took the unconscionable step of denying me access to any staff member at the Iowa Farm Bureau without his consent. This hindrance makes it impossible for a director to gather the information required to properly manage the affairs of the IFBF."
Narigan states that while he has documents which seem to show that
has received compensation far in excess of that authorized, he still has questions about the pay of Dick Harris and Morain.
"From what I have been allowed to see, the numbers vary between what has been legitimately set by formal procedures and what is reported to the IRS. I am concerned about where the additional money is coming from. It is possible that another corporation exists that is not legitimately controlled by the IFBF and that fails to report to the board or delegates. Mere access to information would clear up these questions." Narigon also notes that he has requested a Form 990, a tax form which is supposed to be publicly available, from IFBF but it had yet been delivered to him.
The IFBF board member, in his letter, recounts that to his
understanding at the May 18 meeting, some at the state office alleged that "the
Board cannot function with" me
there."I have yet to find a requirement," he relates, "that every board member follow the directives of the president or staff. It is more accurate to say that the Board cannot function while being denied, by the president and staff, basic information required to carry out its duties."
In conclusion, Narigon declares, "I understand that some have said that I should resign for the `good of Farm Bureau.' I do not believe that it is proper to resign when I have followed the duties I have to the membership in this way. Especially when it is unlikely that any potentially improper activities will go undiscussed after I am gone."
The question of whether Narigon will be removed as a Farm Bureau
director will be decided by 100 voting delegates of the Iowa Farm Bureau,
who will meet June 15-16
in West Des Moines. A two-thirds majority will be needed to remove him from the board.
U.S. SENATOR CHARLES GRASSLEY:
WARNS AMERICAN MEAT INSTITUTE
THEIR OPPOSITION TO HELP FAMILY FARMERS
MIGHT NOT BE WORTH THE COST TO THEM
Promising that the American Meat Institute (AMI) will regret their actions in mitigating legislation that "gets the family farmer a few crumbs off the table of the mega-processors," U.S. Senator Charles Grassley (Rep.-Iowa) recently outlined in a Senate speech his plan for retaliatory measures.
"If you thought I was pushing hard for my agri-industry concentration legislation before, hold on to your seat," Grassley warned the AMI.
First, as the Des Moines Register's George Anthan reports, Grassley plans to publish a list of the AMI's entire membership so that "every independent producer in the nation takes a good look at who is trying to limit . . . opportunities for family farmers.
"I just want the leadership of (the institute) to know that I was very aware of (their) efforts and I hope that (the institute's) successful opposition to my request . . . to help America's family farmers was worth it to them," Grassley, a conservative farmer from New Hartford, Iowa, warned.
Grassley has sponsored a proposal --- the Agriculture Marketing Equity Fund --- to help independent producers develop ways to capture for themselves the value added to their commodities through processing into consumer-ready products. Initially, Anthan reports, Grassley first proposed a $50 million fund to help producers "address the loss of competition in agricultural markets, to combat concentration in food production and processing and create new value-added business opportunities."
While he initially wanted 75% of the money to be earmarked to help producer-owned co-operatives build or buy processing facilities, including meat and poultry packing plants, following the AMI's lobbying effort, the Iowa senator's marketing equity proposal was cut to $10 million, none of which can be used to help producers build or invest in processing facilities.
The American Meat Institute has taken credit for the weakening of Grassley's plan, reporting to its members that the organization "was successful in making certain that these funds are prohibited from being used for" planning, acquisition or construction of food processing facilities or equipment.
"Our concern is with his effort and efforts of others to use government taxpayer dollars to buy or build food processing plants," according to AMI's vice-president Sara Lilygren. "That would be the fastest way to kill private investment" in the meat industry.
"We do not begrudge him his or other efforts to help farmers find added value for their products," so long as federal money isn't used to compete with private firms. "He was misguided in his attack on us for fighting his proposal," she said.
Grassley, however, said the organization's actions clearly demonstrate "that
I must be doing something right."
FARMLAND INDUSTRIES CLOSES SAUSAGE PLANT
BOSNIAN REFUGEES AMONG 1100 WORKERS LAID OFF
FDL Foods, a former Farmland Industries unit, which was recently purchased by Smithfield Foods, the world's largest hog producer and fresh pork processor, has closed its Dubuque, Iowa sausage processing factory. Smithfield will invest $10 million in upgrades for the facility.
"This action is the first step in an overall plan to strengthen our pork operations," said Bill Fielding, Farmland executive vice president. "Due to the age and configuration of the Dubuque plant, we have determined that our farmer-owners' capital will be better spent on improvements and expansion at other Farmland facilities."
While Farmland is offering the plant's 100 administrative employees a severance package, its 1100 production workers will have a choice between moving to another plant, where they will receive a transfer signing bonus, or a severance package.
But as the Associated Press's John Biemer reports for 111 refugees from Bosnia-Herzegovina who lost some of the best years of their lives to the war and then lost their homeland and who were making a new life for themselves in the town along the Mississippi River, the loss of their jobs in the meatpacking plant is devastating.
When Mirsad Causevic, one of those refugees, was asked the question he has faced far too many times: what he and other refugees plan to do next, he grimaced. "Who knows?" he said. "That's very hard to tell. . . . My generation is a lost generation," Causevic said. "They had no chance to get jobs because of the war."
"By Dubuque's standards of diversity, this is a major paradigm shift," Joe Featherston, who works in refugee resettlement with Catholic Charities in Dubuque, told Biemer. "I've been working in this organization 21 years and it is the most diverse this community has ever been."
Causevic, 27, is among about 107,000 refugees from the former Yugoslavia who
have come to the United States since 1992, according to State Department
estimates. About 220 Bosnians had moved to the Dubuque community by 1999. As of last year, 4,611 Bosnians were registered with Iowa's Bureau of Refugee Services. State officials don't know how many additional refugees have moved to Iowa from other U.S. cities.
Causevic moved to Dubuque in 1998, Biemer reports, to work for Farmland
Industries, the second Bosnian to do so. He started on the production line,
but his efforts and rapidly improving English earned him a promotion to manager,
as well as
interpreter, trainer and recruiter for other Bosnians.
Featherston said changes were required in the city's medical and social services, courts, law enforcement and schools to accommodate the newcomers. Yet, just as this community of 58,000 had begun adjusting to its new members, Featherston said, Farmland announced it would lay off up to 1,100 workers to retool the factory.
While the Bosnians are considering their options: trying to find new jobs in
Dubuque, or waiting for the renovated plant to reopen next year and hoping to be
or moving to other towns with meatpacking plants, the pattern in recent years throughout the Midwest packing plants has been after an established company opens a closed or renovated plant they usually hire the workers back at a considerable lower wage rate than they were earning previously.
Judy Bernau, an employment consultant for the Greater Dubuque Development
Corp., told Biemer that officials hope to keep the laid-off workers, especially since unemployment has dropped below two percent in the Dubuque area.But as refugee Mehmet Dojic, 26, observes, staying in Dubuque depends on where his next
paycheck comes from. "If I find a new job, I will stay," he said. "If not, I will go."
FRANK PERDUE FARMS INC.:
SEEKING TO REPLACE CHICKEN CATCHERS
WITH MACHINES SEEN AS UNION BUSTING PLOY
Chicken catchers, mostly African-Americans men, who grab chickens out of their houses to be slaughtered by the likes of Frank Perdue Farms Inc., the nation's number three poultry producer, are coming under siege by automated chicken catcher machines in the hope that the company will eventually be able to replace its 150 or so human chicken catchers.
Introduction of the machines comes, however, at a curious time when the
current chicken catchers are organizing a union and battling Perdue in
court over how
much overtime the company owes them. The catchers see Perdue's attempts to automate as an effort to intimidate the union organizers.
"It's designed to scare the workers and chill the union," declared Rev. Jim
member of the Delmarva Poultry Justice Alliance. "It's more fear and intimidation by Big Chicken."
Because Perdue has contracted the work out, chicken catchers are no longer Perdue employees and therefore have no health benefits, safe working conditions or decent wages. The catchers have signed cards to become members of a union but Perdue at this point is unwilling to acknowledge their desire to become United Food & Commercial Workers members.
"Over the past two years" Rev. Lewis notes, "the Delmarva Poultry Justice
tried to call attention to the plight of the Perdue chicken catchers. Last December television's "60 Minutes" made the chicken catchers' work visible. Since then a huge support has grown around their plight.
“What we are asking people to do to is make a phone call to Perdue
(1-800-473-7383) or go to
and send them an e-mail. Tell Perdue to respect the chicken catchers' right to form a union. It's as simple as that," Lewis adds.
As the Rural Advancement Fund International-USA's Mary Clouse notes: "The struggle here is all part of the larger struggle for justice in the poultry industry. When you include the work for justice for the family farmers caught in the poultry industry trap, the catchers, the plant workers, the company truck drivers, the hatchery crews, and the company environmental policies, you are beginning to get a handle on the sum total of abuse being foisted on the tax payers and consumers in the name of cheap chicken. The chicken catchers are often an overlooked part of that struggle."
Jim Dennis, vice president of roaster operations at Perdue, told the Associated Press's Christopher Thorne that the company simply wants to automate another part of its process and has been shopping for a chicken-catching machine for a while."Long term, we'd like to be able to go to total automation," Dennis said. "The reason being we want that job easier on our people. It's a very hard job."
According to Perdue spokeswoman Tita Cherrier the five chicken-catching machines Perdue plans to buy will cost the company millions of dollars. While the machines are slower than catching chickens by hand, Cherrier points out, they aren't as rough on the birds."We've found 14% less bruising, which means we can sell more of the product."
Thorne reports that Perdue has said that it intends to offer
processing plant jobs to the
human chicken catchers who will no longer be needed.
SEARCH ENGINE FEATURE TO ACCESS
CORPORATE AGRIBUSINESS RESEARCH PROJECT
WORLD WIDE WEB SITE INTRODUCED
Another new feature has been added to the Corporate Agribusiness Research Project (CARP) web site. A streamlined search engine which will allow viewers to find needed information by simply using a key word. While the search engine will soon become a fixture within the current site, it can presently be accessed at:
The CARP web site, which is now posted on the World Wide Web, features: THE AGBIZ TILLER, THE AGRIBUSINESS EXAMINER and "Between the Furrows."
THE AGBIZ TILLER, the progeny of the one-time printed newsletter, now becomes an on-line news feature of the Project. Its initial essay concerns one Hillary Rodham Clinton, the candidate for a U.S. Senate seat in New York State.
In "HILLARY RODHAM CLINTON'S $99,537 MIRACLE: IT'S THE PITS!!!" now available through THE AGBIZ TILLER you'll learn some of the messy details behind her cattle futures "miracle." You will also find in this section the archives for past editions of the THE AGBIZ TILLER.
By popular reader demand THE AGRIBUSINESS EXAMINER section includes not only an issue-by-issue and verbose index of this weekly e-mail newsletter, but an archive of past issues #1 through #51..
In "Between the Furrows" there is a wide range of pages designed to inform and educate readers on the inner workings of corporate agribusiness. In addition to CARP's "Mission Statement," "Overview" and the Project director's "Publication Background," the viewer will find a helpful "Fact Sheet" on agriculture and corporate agribusiness; a "Fact Miners" page which is an effort to assist the reader in the necessary art of researching corporations; a "Links" page which allow the reader to survey various useful public interest, government and corporate web sites; a "Feedback" page for reader input, and a page where readers can order directly the editor's The Corporate Reapers: The Book of Agribusiness.
The CARP web site was design and produced by ElectricArrow of Seattle, Washington.
Simply by clicking on either of the addresses below all the aforementioned features and information are yours to enjoy, study, absorb and sow.