The
AGRIBUSINESS
EXAMINER Premiere Edition
Monitoring corporate agribusiness from a public interest perspective
Editor\Publisher: A.V. Krebs
avkrebs@earthlink.net
WHEN WILL THE CHICKENS COME HOME TO
ROOST?
Much has been made recently in the media about President Bill
Clinton's
efforts to bolster the Federal Government's efforts
to insure the safety of the nation's food supply. He has even
asked
Congress to provide $101million to deploy more food
safety inspectors and new technology, expand research into the
causes of
and solutions to food-related illness, and educate
consumers and retail food outlets on the safest food handling
practices.
Nice try Mr. President, but once again the facts of the matter
suggest
still more "inappropriate behavior" by the nation's
chief executive and his Arkansas cohorts. For behind those recent
headlines still lurks a scandal that has been conveniently
obscured by Monica Lewinsky, Paula Jones, Ken Starr, Janet Reno
et. al.,
a scandal concerning violating the public's trust
in government relative to the health and safety of the food supply.
For while the Starr "investigation" has been the headline
grabber for
many months now it is the investigation by the "other"
independent counsel, Donald Smaltz, that many believe has the
White
House more concerned than a 21-year old intern
pleasuring the President of the United States in the Oval Office.
Pleading guilty to giving former USDA Secretary Mike Espy $12,000
in
illegal gratuities, Tyson Foods, the nation's
largest poultry producer, previously has plead guilt to paying
Espy
$12,000 in illegal gratuities and consented to pay the
federal government $4 million in fines and $2 million in costs.
Tyson
chairman Don Tyson and his son John Tyson were
also granted immunity from further prosecution.
While the media was reporting simply that Smaltz's investigation
centered on "favors from large companies with important
interests before the government," court papers stated that
at the same
time it was bestowing gifts on Espy, Tyson Foods
was urging USDA to go slow on imposing new meat and poultry handling
instructions.
Smaltz's office said prompt imposition of the new rule would have
cost
Tyson Foods $30 million, although ultimately a
court order blocked enforcement of the rule. It was also believed
that
Espy's coziness with Tyson was the reason he
hesitated to remove holdover appointees who were helping to block
stricter regulation of meat and poultry.
Although the White House at the time had no comment on the Tyson
plea
many of the Arkansas company's officials have
long-standing financial ties to Bill and Hillary Clinton. When
the Tyson
family appeared in court they were accompanied by
James Blair, Tyson's corporate counsel and a close friend of the
Clintons who "advised" Hillary Clinton in 1978 on
commodities trades that earned her $100,000.
THE DEPARTMENT OF JUSTICE????
In a 1995 meeting with U.S. Attorney General Reno and her top
aides
Smaltz sought to expand his probe of Mike Espy to
include an allegation that officials of Tyson Foods, the nation's
leading poultry producer, had delivered cash to
then-Arkansas Gov. Bill Clinton. Smaltz, however, claims he was
blocked
from doing so by the Attorney General.
Smaltz implied in an interview broadcast on a PBS "Frontline"
documentary dealing with the role of the Independent
Counsel that Reno had succumbed to political pressure in the matter.
"My
sense was that Tyson was putting a lot of
pressure on the Justice Department," he said. He claimed
that the
Arkansas poultry company got Rep. Jay Dickey (R-Ark.)
to go to the department to block his probe.
Smaltz first testified about his dispute with the Justice Department
at
a congressional hearing last December. While
attributing his problems not to politics, but to the department's
desire
to "rein in" the independence of the outside
prosecutors he declined to discuss the Tyson matter. A few weeks
after
the hearing, however, Tyson pleaded guilty to
giving $12,000 in gifts to Espy and agreed to pay a $4 million
fine and
$2 million to cover investigative expenses.
Smaltz's investigation of Espy has generated controversy ever
since his
appointment in September 1994. Yet, he has won
15 convictions and millions of dollars in fines. Espy was indicted
last
August on charges of soliciting gifts worth more
than $35,000 from companies he was supposed to be regulating,
including
Tyson.
For PBS's interview with Smaltz:
http://www.pbs.org/wgbh/pages/frontline/shows/counsel/smaltz/henrickson.html
Independent Counsel Donald Smaltz's web site can be found at:
http://www.oic.gov/
WORTH REPEATING
Sam Smith, who is living testimony to the fact that muckraking
can be an
honorable profession publishes the weekly e-mail
PROGRESSIVE REVIEW. In his July 31, 1998 edition he reflects:
"The White House lawn party -- `sources here have told me'
-- is over.
The worst-covered story in modern American
history is about to become unraveled as the White House and the
media
are forced to confront the other side of the tale: the
evidence.
"The notion that the president is, at worst, guilty of sexual
peccadilloes and little white lies never fit the known facts,
but
with the special prosecutor saying so little, we have been treated
to
weeks of aggressive codependency between a culpable
White House and a gullible press.
"Were the central character not a president but rather, say,
a governor
or organized crime figure, what has happened would
fit easily under the purview of the anti-racketeering RICO statutes
-- a
criminal conspiracy to violate the laws of the United
States. Consider, for example, crimes amongst the Clinton organization
and those close to it for which convictions have
already been obtained: Drug trafficking (3), racketeering, extortion,
bribery(4), tax evasion, kickbacks, embezzlement (2),
fraud (12), conspiracy (5), fraudulent loans, illegal gifts(2),
illegal
campaign contributions(5), money laundering (6),
perjury, and obstruction of justice.
"In addition, possible crimes and issues investigated or
raised by
special prosecutors, members of Congress and/or
investigative reporters: bank and mail fraud, violations of campaign
finance laws, illegal foreign campaign funding,
improper exports of sensitive technology, physical violence and
threats
of violence, solicitation of perjury, intimidation of
witnesses, bribery of witnesses, attempted intimidation of prosecutors,
perjury before congressional committees, lying in
statements to federal investigators and regulatory officials,
flight of
witnesses, obstruction of justice, bribery of cabinet
members, real estate fraud, tax fraud, drug trafficking, failure
to
investigate drug trafficking, bribery of state officials, use
of state police for personal purposes, exchange of promotions
or
benefits for sexual favors, using state police to provide
false court testimony, laundering of drug money through a state
agency,
false reports by medical examiners and others
investigating suspicious deaths, the firing of the RTC and FBI
director when these agencies were investigating Clinton and his
associates, failure to conduct autopsies in suspicious
deaths, providing jobs in return for silence by witnesses, drug
abuse,
illegal acquisition and use of 1000 FBI files, illegal
futures trading, murder, sexual abuse of employees, false testimony
before a federal judge, shredding of documents,
withholding and concealment of subpoenaed documents, fabricated
charges
against (and improper firing of) White House
employees, as well as providing access to the White House to drug
traffickers, foreign agents and participants in organized
crime.
"Now, Kenneth Starr has clearly shown that he does not want
to deal with
all of this. He has, for example, turned his back
on the Arkansas drug connection and on the numerous anomalies
in the
Foster death. He does not -- and neither do the
Republicans in Congress -- wish to open up areas which might lead
to
bipartisan involvement, such as the drug trade,
BCCI, and organized crime. Instead, he appears to be attempting
keyhole
surgery: making a minor incision that will have a
big effect. Concentrating on crimes such as obstruction of justice
and
perjury allow the prosecutor to nail Clinton while not
opening up the Pandora's box of America's endemic political corruption."
The PROGRESSIVE REVIEW, "WashingtonÆs Most Unofficial
Source," is a
service of the Progressive Review: 1739
Conn. Ave. NW Washington DC 20009 202-232-5544 Fax: 202-234-6222
E-mail: ssmith@igc.org Editor: Sam Smith.
The Progressive Review On-Line and its archives are found on the
Web at:
http://emporium.turnpike.net/P/ProRev/
AFTA NAFTA!
A recent General Accounting Office (GAO) study stopped short of
concluding that imported foods are more dangerous than
those produced domestically, but noted that with the increase
in food
imports from around the world increasing by 50% in
less than a decade, inspectors are failing to keep pace.
Investigators were particularly harsh on the Food and Drug
Administration (FDA), which the study found was able to
inspect only 1.7 percent of 2.7 million shipments of fruit, vegetables,
seafood and processed foods under its jurisdiction.
Of the shipments that were inspected by the FDA, only 16,000 samples
underwent a laboratory analysis for
disease-causing organisms or other problems. Meanwhile, thousands
have
been sickened in high-profile incidents
involving imported foods, including Guatemalan raspberries, Mexican
cantaloupes and alfalfa sprouts from the
Netherlands.
The study by Congress's investigative and auditing agency showed
that
more than half of the fish and shellfish eaten by
Americans is now imported. At least one-third of fresh fruit and
12% of
vegetables also are from overseas.
For additional documents and studies of food and agriculture issues
see:
Government Accounting Office (GAO)
http://www.gao.gov/
THE PATCHWORK KEEPS GETTING MESSIER
Meanwhile, a recent National Academy of Sciences report shows
that while
food safety inspection in the U.S. has always
been a patchwork of programs and agencies as our food supply now
becomes
more global, as new bacteria emerge and as
American eating habits get more varied, the patchwork keeps getting
messier.
The report on the food safety system counts 35 major statutes
and 12
"primary" agencies involved in keeping food safe,
including the Food and Drug Administration, the Centers for Disease
Control and parts of the Agriculture, Commerce and
Health and Human Services departments.
As the WASHINGTON POST reports partly in response to this confusion,
the
president has just issued an executive order
creating a President's Council on Food Safety -- chaired by Health
and
Human Services Secretary Donna Shalala,
Agriculture Secretary Dan Glickman and science adviser Neal Lane
-- that
will try to pull all these threads together and
maybe even reallocate their famously lopsided and overlapping
budgets.
"But the president has another reason for pushing ahead on
food safety
issues," the POST rightfully points out, "they have
repeatedly proved to be a political winner, one of those areas
where
virtually no public sentiment can be detected for
weakening or dismantling government protections."
One long-standing complaint is the built-in conflict between promoting
and regulating the meat and poultry issues at
USDA, which has by far the most resources for inspection; the
FDA, with
a more varied industry to police, has fewer.
In its budget this year, the POST adds, the administration asked
for a
chunk of new money that the FDA and others could
use for food safety research and modernization. House and Senate
appropriations committees rebuffed the proposal, but the
Senate, in another surprise showing of the issue's appeal, added
$66
million of a requested $100 million in floor debate.
Whether or not new money comes through, the presidential council
could
offer some guideposts for the more scientifically
based system the science academy's report calls for.
For more information on food safety see:
National Academy of Sciences
http://www.nas.edu
Food and Drug Administration
http://www.fda.gov/
SPEAKING OF FOOD IMPORTS AND NAFTA
As each day passes it seems that the North American Free Trade
Agreement
(NAFTA) is not becoming the great "free
trade" panacea that its early supporters touted.
For example, the actual mechanics of trade between the three signatories
to NAFTA is becoming more costly precisely
because there aren't enough bridges, rails and docks to handle
the
goods, and existing structures are often in the wrong
places, mired in the traffic of busy downtowns. The result is
hours-long
delays for billions of dollars of goods crossing
North American borders.
"This infrastructure was built for a different era,"
James Giermanski, a
professor at Texas A&M International University in
Laredo, told the WALL STREET JOURNAL. "It's ham stringing
the trade."
In 1997 the U.S. had $477 billion in trade with Mexico and Canada,
up
13%from 1997 as a flood of goods sough to
squeeze through border bottlenecks spreads of all three nations
-- as
much as $2.5 billion a year. Originally NAFTA's
much-vaunted potential as a truly open-trading milieu, was the
main
selling point for the controversial 1994 pact as its
supporters once advertised, it would become a powerhouse trade
bloc of
three closely knit economies.
But "if we're really going to have free trade, you just can't
have a
truck waiting in line for five miles," says Bernard
LaLonde, professor emeritus at Ohio State University. "From
day to day,
you don't know what's going to happen. It's
contrary to the logic of NAFTA."
For U.S. auto companies alone, the JOURNAL reports, one study
put the
price of delays at Laredo at almost $3 million
annually in wasted time, higher labor costs and extra storage
expenses.
"There's not a flow-through process at the border,"
says Stephen Harley, a logistics manager for Ford Motor Co. Ultimately,
of course, those extra costs trickle down to
consumers; transportation accounts for 5% to 10% of retail prices.
Additional information on NAFTA, trade and pending "fast
track"
legislation see:
NAFTA & Inter-American Trade Monitor produced by the Institute
for
Agriculture and Trade Policy, Mark Ritchie,
President. Edited by Mary C. Turck. Electronic mail versions are
available free of charge for subscribers. For
information about fax subscriptions contact: IATP, 2105 1st Ave.
S.,
Minneapolis, MN 55404. Phone: 612-870-0453;
fax: 612-870-4846; e-mail: iatp@iatp.org.
http://www.iatp.org
In addition if you want to find out what jobs have been destroyed
by
NAFTA check out the NAFTA-TAA page on the
Global Trade Watch web site
http://www.tradewatch.org/nafta/naftapg.html
To join the Global Trade Watch list server and keep up to date
on trade
policy and politics subscribe to and send this
message: "SUBSCRIBE TW-LIST" [followed by your name,
your organizational
affiliation and the state in which you
live] to LISTPROC@ESSENTIAL.ORG
NAFTA: "A DEAL MADE IN NARCO-HEAVEN"
"For Mexico's drug gangs, the NAFTA was a deal made in narco-heaven,"
says Phil Jordan, a former high-level official
with the Drug Enforcement Administration (DEA). "But since
both the
United States and Mexico are so committed to free
trade, no one wants to admit it has helped the drug lords. It's
a taboo
subject. While I was at DEA, I was under strict
orders not to say anything negative about free trade. Now it's
come back
to haunt us."
Tracey Eaton of the DALLAS MORNING NEWS reports that sophisticated
drug
gangs are investing in everything from
trucking companies and rail lines to warehouses and shipping firms
to
shield their trafficking activities, according to a
confidential report by Operation Alliance, a task force led by
the U.S.
Customs Service.Drug traffickers are using
"commercial trade-related businesses . . . to exploit the
rising tide of
cross-border commerce," said the 63-page report,
"Drug Trafficking, Commercial Trade and NAFTA on the Southwest
Border."
NAFTA was aimed at wiping out all tariffs among the United States,
Mexico and Canada by 2008. Its supporters say it has
been a great success, doubling to $168 billion trade between Mexico
and
the United States.
But, Eaton points out "although many U.S. officials avoid
even talking
about potential free-trade/trafficking ties, Mexican
smugglers have been busy hiring consultants to learn how to take
advantage of NAFTA, some former drug agents say."
The Operation Alliance report says traffickers were so enthusiastic
about free trade that they began studying its intricacies
even before NAFTA was approved on Jan. 1, 1994.
"If you believe NAFTA has not adversely affected the fight
against drug
traffickers, then you must believe in the tooth
fairy," said Tom Cash, a former high-level DEA official.
CONSUMERS RIGHT TO KNOW
In recent Congressional testimony Mike Callicrate, who owns and
operates
a cattle feeding operation in Northwest Kansas
and is a member of the Cattleman's Legal Fund, representing cattle
producers fighting to restore free, open and competitive
markets in the sale of our cattle, asked some penetrating questions,
questions the American consumer should be asking
each day.
How can we say this food was safe? Do we really know where the
food came
from? Do we know under what conditions it
was produced? "The answer" Callicrate concluded, "is
NO to all these
questions, IÆm sorry to report."
"Shouldn't the consumer have the right to know where his
food comes
from, what exactly he is eating, how it is produced
and under what conditions it is grown and processed? I believe
consumers
do have that right.
"There has never been a time in our history that labeling
and source
verification is more important than today because of
this fact. With problems ranging from illness to death, from Jack
in the
Box to Hudson Foods, U.S. beef shipments to
Korea, Canadian beef shipments to Louisiana and most recently
the E.
coli outbreaks in Georgia and New York City,
consumers and government officials have been continually reminded
of the
expanded health risks in todayÆs new "global"
food economy. Months later, government officials have yet to determine
the source of many of the food-borne illness
outbreaks, yet producers and consumers continue to pay the price
of
these extremely emotional and volatile
market-breaking news releases.
"When visiting south of the border," Callicrate observes,
"we are told
not to drink the water and to peel the fruits and
vegetables prior to eating, while at home we unknowingly feed
our
children these same imported foods, potentially
contaminated in human waste water, from areas of poverty and worker
exploitation. U.S. producers are banned from using
slave-like labor, non-sustainable practices and unsafe chemicals,
while U.S. consumers unknowingly eat imported meats, fruits and
vegetables grown under these same illegal practices and
conditions."
Professor of Sociology at the University of Missouri, Dr. William
Heffernan says, "Powerful multi-national corporations
search the globe for the hungriest people who will work the cheapest
and
sell the production in the highest consuming
markets." Labeling, inspection, source verification, safe
and
sustainable practices are considered unnecessary costs and
barriers to corporate `free' trade. These companies don't care
about
people; they only care about profits."
Callicrate adds, "Global corporations, cooperating with food
distributors, blend and grind unsafe, low quality imported
product with domestically produced beef. They will fight to continue
this highly profitable fraud on the consumer. A
recent `Dateline' investigation exposed the practice of blending
and
hiding other species of meat in ground beef. This is not
only another example of food fraud but also a serious potential
heath
hazard, and reminds us of the urgent need for proper
labeling in domestic markets."
He concludes: "The power and influence of these powerful
corporations
extends beyond control of production agriculture,
processing and distribution to politics, government law enforcement
and
regulation. Government must work to benefit the
people instead of the huge multi-national corporations which have
usurped our health and freedoms with their influence and
power.
"Many of the needed laws, like border inspection that could
help insure
safe food, are in place but are not being enforced.
Mandatory labeling at the final point of sale must be adopted
to give
consumers the information they need to make their
own choices. U.S. producers have invested heavily in and are committed
to producing the safest, highest quality, most
consistent supply of food in the world. There will be problems
of
course. That's why the ability to identify the source is
critical."
WHAT A SPECTRE WE FACE
The BSE "Mad Cow" problem in Europe, resulting in the
destruction of 1.2
million cows and $800 million in losses, is a
recent reminder of the importance of knowing where our food comes
from.
When IBP meatpackers shipped E. coli tainted
beef to Korea during the last year, thanks to Korea's labeling
law, the
problem, when identified, was quickly isolated and
resolved. Otherwise Korean producers and
producers from other sources could have been seriously affected.
U.S
farmers and ranchers are denied the same protection
at home, thanks to our government's open border policy. Without
labeling, how would U.S. producers fare if faced with a
similar "Mad Cow" crisis?
Callicrate noted that IBP, the nation's largest meat packing company
packer, has the fastest chain speed, the most
inexperienced workforce with the highest worker injury and turnover
rate
in the business according to a recent U.S. News
and World Report article. "Thus contaminants and bacteria
don't just
sneak in," he adds, "? they're built in. Is it any
wonder why E. coli has nearly become synonymous with IBP? Labeling
and
source verification is important domestically
as well as globally!
"USDA is failing in its current responsibilities. Inspection
practices
are flawed. New programs like HACCP
(self-inspection) are irresponsible. Practices like irradiation
are the
wrong solution, essentially covering up problems while
being cost-prohibitive to most small processors, further reducing
competition and empowering the already too powerful big
packers. One Texas farmer commenting about irradiation explained,
`Whole Hog (literally) sausage is now a real possibility.' What
a
spectre we face!"
For information on the Cattleman's Legal Fund Headlines see:
http://www.nobull.net/legal/right.htm
"IT'S A FLU; IT'S CATCHING; IT'S
DOMINOES"
Writing in the August 28, 1998 edition of the NEW YORK TIMES business
reporter Jonathan Fuerbringer notes that while
global stock markets recently have been plunging, a major index
of
commodity prices, on products from oil to cotton have
fallen to their lowest level in 21 years which he concludes may
be more
worrisome for investors in the long run than the
dramatic decline in the Dow Jones industrial average.
Already, he reports commodity prices have fallen 20% in the last
year
and heightened concern about the economies and
markets of developing nations that began with Asian currency selloffs
in
the second half of 1997. "It's a flu, it's catching;
it's dominoes,"said William Byers, director of futures research
at Bear,
Stearns & Co. "Not only is the psychology
spreading, but the economic weakness is spreading."
But, he notes, "for the American investor worried about the
strength of
the economy, which by all current signs is still
strong, and corporate earnings, which have been weakening, so
far the
fall in commodity prices and the drop in interest
rates have been good news. The lower prices for commodities, while
tough
on emerging-market and other producing
nations, have lowered corporate costs here and spurred
consumer spending. And the damage that had been done to
commodity producers in the United States has not had a big impact
on the
economy."
Two forces, Fuerbringer reasons, have been pushing commodity prices
lower and will continue to do so. "One is the
falling demand from Asian nations, which, for example, were major
consumers of copper for new construction. The other
is that countries in deep trouble, like Russia, are expected to
sell
what they can to raise money, adding to the supply in an
already weak market. . . . This all means that commodity prices
-- and
the pain that they are bringing to already troubled
economies -- still have a way to go before they hit bottom. `I
don't
think we are there yet,' Richard Berner, chief economist
of Mellon Bank in Pittsburgh, said."
A NEVER ENDING SCANDAL IN THE FIELDS
A federal Commission on Agricultural Workers estimates that there
are
2.5 million farm workers in the U.S., up from 1.8
million in 1960. About 800,000 of the current workers lack adequate
shelter, according to the Housing Assistance Council,
a Washington-based consulting group that studies rural housing.
Because the nation's agricultural work force in recent years has
changed
so dramatically it now makes it more difficult for
the government to improve the workers' living conditions, whether
by
providing housing itself or pressuring growers to
improve the housing they provide. Once composed mainly of U.S.
citizens,
the work force is now largely composed of
immigrants from Mexico and Central America, 40% of them here illegally.
Many of these workers leave their families
behind, coming with the goal of returning home as much of their
earnings
as possible.
Because it is possible for them to earn up to ten times what they
can at
home, these workers are willing to tolerate living
conditions and wages that few American workers would accept. Such
an
economic imperative is so powerful that it has
assured a plentiful supply of migrants even as real farm wages
have
fallen by more than ten percent in the last 20 years.
"The root of the problem is there is an oversupply of farm
workers,"said
Bruce Goldstein, executive director of the
Farmworker Justice Fund, a Washington-based advocacy group, told
the NEW
YORK TIMES.
In the past decade, the TIMES reports, the federal and state
governments, working with growers, have built tens of
thousands of housing units for migrants. But those units usually
go to
families, citizens and legal immigrants, rarely
benefiting several large groups facing the worst circumstances:
single
men and women, illegal immigrants and workers
who move from harvest to harvest.
For more information on the plight of the nation's farmworkers
see:
Farmworker Justice Fund, Inc.
1111 19th Street N.W., Suite 1000
Washington, DC 20036
(202) 776-1757 voice / (202) 776-1792 fax
Shelly Davis and Bruce Goldstein, Co-Directors
A national farmworker advocacy organization which provides policy
analysis and technical assistance to migrant health
centers, policy makers, researchers, and attorneys on farmworker
occupational health issues.
BILL'S BILLS
Speaking of housing for the poor as of August 30, 1998 Microsoft's
Bill
Gates wealth was at $58.06 billion, that billion
with a "B." Habitat for Humanity estimates that it costs
them $30,000 to
build a four-person home (labor being
volunteered). With Bill's bills they could construct some 1,935,314
homes housing 8,708,914 persons.
If you want to track Bill Gates' wealth on an hour-by-hour basis
go to:
http://www.quuxuum.org/~evan/bgnw.html
"THAT'S THE WAY TO GET THERE
IN ONE BITE!"
"Every indication we have is that it is very, very close,"
said one
stock trader. "We are 1,000% sure. Smart people do
believe it a lot - a lot."
Judging from such comments of stock traders, options strategists
and
securities analysts strength in recent trading sessions
indicates that a major merger is eminent in which the Pleasanton,
Calif.
headquartered Safeway Stores, Inc. would buy the
larger Cincinnati-based Kroger Co.
"The market's telling us this is a done deal," says
Jonathan H.
Ziegler, an analyst who follows the supermarket sector for
Salomon Smith Barney. "I'm thinking that any day there could
be an
announcement."
Safeway's buying up of Kroger would be the latest - and largest
- in a
string of supermarket mergers which has recently
seen Albertson's Inc. announced plans to
buy the bigger but weaker American Stores Co. for $11.7 billion
which
pushes the Salt Lake City, Utah market chain
ahead of Kroger in terms of sales.
That merger immediately prompted other major grocery chains, including
Safeway, to take a harder, closer look at their
long-term plans, some observers said. Such wide-spread consolidation
comes at a time when supermarket chains are
seeking to increase their buying power. A Safeway-Kroger merger
would
also enable the slightly smaller Safeway to build
a national brand, which it has long sought to do.
With more than 2,100 grocery and convenience stores, Kroger, the
nation's second-largest food retailer, has expected
sales of $28 billion this year. Compare that with Safeway, which
arguably is the No. 3 player, with $23.8 billion in
estimated sales from almost 1,400 supermarkets in the U.S. and
Canada.
Kroger would offer Safeway market leadership
in areas like the Southeast, Dallas, Houston and Michigan. There
would
be severe overlap in markets such as Colorado
and Phoenix, but together they would cover about 70% of those
markets.
"If it does want to be the biggest supermarket in the country,
Safeway
would have to buy Kroger," said Ziegler, the
Salmon Smith Barney analyst."That's the way to get there
in one bite."
Additional corporation information on Safeway Inc. and Kroger
Inc. can
be seen at:
Safeway Inc.
http://www.sec.gov/Archives/edgar/data/86144/0000950149-98-000481.txt
Kroger Inc.
http://www.sec.gov/Archives/edgar/data/56873/0000950131-98-001893.txt
PERSISTENT RUMOR
Recently Cargill Inc., the nation's largest private corporation
and the
world's leading grain trader, and Monsanto Co.
announced the signing of a letter of intent to form a worldwide
joint
venture to create and market new products enhanced
through biotechnology for the grain processing and animal feed
markets.
The 50-50 joint venture would draw from
Monsanto's capabilities in genomics, biotechnology and seeds and
from
Cargill's global agricultural input, processing and
marketing infrastructure to develop and market new products.
Subsequently, Cargill would announce that it was selling its
foreign seed operations to Monsanto for $1.4 billion.
Even more stunning news, however, came soon after the Cargill-Monsanto
agreement when it was announced on June 1
that American Home Products, the East Coast-based drugs and
pharmaceutical group, will, in effect, take over Monsanto
in a $34 billion merger thereby creating a broad-based "life
sciences"
megacomplex encompassing pharmaceuticals,
agricultural products and food ingredients. The combined stock
market
valuation of the two companies is $96 billion.
Hope Shand of Rural Advancement Find International in Pittsboro,
N.C.,
has been relentlessly tracking developments in
the biotech industry for several years. She observes that when
Monsanto's other seed company acquisitions are added up -
the
"Monster" may now occupy the number two position in
the sale of all crop
seed worldwide. The merger with AHP in June
also instantly created the world's largest crop chemicals company.
"Put
this together with the `Monster's' number two post
in seeds, its number seven rank in pharmaceuticals, and its fifth
position in veterinary medicines, and the Life industry will
never be the same. It is only a matter of time before DuPont,
Novartis,
or Glaxo-Wellcome strike back."
Well, Shand's prediction may soon come true for since the announcement
of the Monsanto-Cargill joint marketing
agreement rumors persist among investors that DuPont, Monsanto's
arch-rival, is seeking a possible merger-acquisiton
with Cargill's chief competitor, ADM, corporate agribusiness's
"Supermarkup to the World." Meanwhile ADM has
recently increased its stock holdings in IBP, the nation's largest
meatpacker to 13.33%.
"Seed Industry Consolidation: Who Owns Whom ?" the Rural
Advancement
Foundation International's (RAFI) RAFI
Communique July/August 1998 which includes a gigantic new industry
consolidation chart, listing over 275 companies
and their subsidiaries, showing who owns whom and features new
industry rankings based on the latest wave of mergers
and acquisitions can be viewed at:
http://www.rafi.ca/communique/
"AGRICULTURE IS ABOUT
TO GET VERY SMALL"
Systemically still suffering the consequences of the 1980Æs
"farm debt
crisis," victimized once again by the devious and
hollow promises of a "get rich" export policy, unpredictable
weather,
below cost of production commodity prices, a
corporate-engineered federal farm policy that enslaves family
farmers
rather than frees them to farm, all have effectively
conspired to dim if not totally darken farm yard lights throughout
our
land.
But, if we are to believe Steve Baker, Vice-President of Marketing,
Research and Development for Agribank, a large
Midwestern co-op bank consortium with multibillions in farm credit
assets, things within the next three to five years are
going to get a lot worse for the majority of America's family
farms and
a whole lot better for a small , very small, number
of corporate agribusinesses.
In a May teleconference before extension agents attached to Clemson
University in South Carolina, Baker outlined in an 60
minute presentation, "Agribusiness Is About to Get Very Small,"
how in a
very few years three giant megacomplexes will
totally dominate corporate agribusiness and agriculture and those
involved in agriculture will fall into three distinct
categories:
1. Reinventors - those who will "reinvent" their businesses
to keep up
with the changes or start new enterprises based on
"new opportunities."
2. Disllusionists - those who will make cosmetic changes, but
continue
to do business as usual.
3. Hospice care group - the walking dead, those denying that "change"
is
happening, who will linger on in some niche
group or else just give up and get out of agriculture.
The new model of farming --- contracting with large megacomplexes
to
produce crops with a specific design for a specific
purpose --- by the year 2000, Baker notes, will see from 50% to
60% of
all crops in the Midwest under contract; 88% of
hogs, 65% of dairies, and 44% of all beef.
Baker also sees, based on interviews his bank conducted with some
60,000
farmers and over 300 CEO's from
agribusinesses up and down the food chain, the current 400,000
agribusinesses which supply the farmer (feed, seeds,
chemical poisons, consultants, etc.) being eliminated or coming
under
the umbrella of three megacomplexes --- Monsanto,
DuPont and Novartis. He believes that the domination of these
three in
research, while spending billions each year, means
that no one else will be able to keep pace. In 1990, he notes,
there
were 30 biotech companies, today there are seven ---
"primary intellectual capital" --- ones.
Baker believes the key implications of what he sees as something
"far
more exciting" than agriculture --- "life sciences"
or
"prescription agriculture" --- are:
1. Massive flows of capital coming into play; currently $80 billion
is
being annually spent on food and life sciences
research in the U.S. alone.
2. Food chain consolidation will continue to happen rapidly.
3. The key players will have to get their solutions to market
and get a
return on those "solutions" as quickly as possible to
satisfy their stockholders.
4. There will be "the blood of `middle men' in the streets
in all
sectors."
Video tape copies of "Agriculture Is About to Get Very Small"
are
available through Telemedia, 153 Grace Drive, Easley,
S.C. 29640; phone: (864) 269-7744 or 1-800-76VIDEO; fax: (864-269-7618.
Bon appetit !!!