The
AGRIBUSINESS
EXAMINER                            Issue # 31       April 26, 1999

Monitoring Corporate Agribusiness From a Public Interest Perspective
 

A.V. Krebs
Editor\Publisher
 

                                                 Editors Note
Although there is no subscription fee for THE AGRIBUSINESS EXAMINER, donations will, as always, be gladly  accepted. One of my subscribers says he pays $30 a year for 12 issues of a Health  letter, and my weekly will hopefully go up to 52 so he feels it is worth at  least the cost of a monthly newsletter.  I hope you agree. Checks made out to A.V. Krebs, P.O. Box 2201, Everett, Washington 98203-0201 [NOT to "Agribusiness Examiner"] will continue to be received with much gratitude.

To those readers of THE AGRIBUSINESS EXAMINER who have already sent donations I want to express my sincere thanks for your continued support and interest in this venture. A reminder also to those who might wish to receive a weekly
e-mail edition of THE AGRIBUSINESS EXAMINER, please provide your NAME and E-MAIL ADDRESS. At this time THE AGRIBUSINESS EXAMINER is not available in printed form.
 

WTO MEETING IN SEATTLE:
CORPORATE AGBIZ WRITES TO BILL CLINTON ---
"IT IS ESSENTIAL THAT THE STAGES BE SET PROPERLY"

A veritable who's who of corporate agribusiness has written to their "blank check" in the White House urging the launching, under the auspices of the World Trade Organization (WTO), a new and "comprehensive round of multilateral trade negotiations that includes all goods and services, continues to reform agricultural and food trade policy, promotes global food security through open trade, and increases trade liberalization in agriculture and food."

In a April 16 letter to Clinton, corporate agribusiness expressed not only its "strong support" for a new round of multilateral trade negotiations, but also indicated that it was essential that the Clinton Administration put the passing of a "fast track" bill high on its legislative agenda in the coming months.

"We would like to stay informed," the letter emphasized,  "of the Administration's preparations for the November 30, 1999 WTO Ministerial Meeting in Seattle. That meeting will set the stage for the new round and it is essential that the stages be set properly. A number of issues that will be dealt with in Seattle are critical to the ability of the United States to negotiate an acceptable agreement on agriculture and food."

The various corporate agribusinesses and their appropriate shills also noted that in "preparation for the upcoming negotiations," a Seattle Round Agricultural Committee (SRAC) has been organized "to serve as a vehicle for exchanging points of view on the negotiations, both within the agricultural community and with government, and, when appropriate, develop common policy positions."

While acknowledging that the Uruguay Round succeeded "in establishing a more effective set of trade rules for the agricultural sector and began the process of
reducing trade-distorting subsidies and import barriers" the letter's signatories indicated that the "reductions do not go far enough."

They, therefore, stressed that key to their "critical interest in the development and maintenance of strong and effective rules for international trade" process objectives of a new round of multilateral trade negotiations must include:

1) Conclusion with a single undertaking that encompasses all sectors (i.e., no early harvest).

2) Adoption of the Uruguay Round framework for the 1999 agricultural negotiations to ensure that there are no product or policy exceptions (i.e., no request/offer approach).

3) Establishment of a three year goal for the conclusion of the negotiations (by December 2002).

"The United States is the world's biggest exporter of agricultural products," they stressed,  "and U.S. farmers, agribusinesses and food processors are among the most efficient in the world. We, therefore, have a critical interest in the development and maintenance of strong and effective rules for international trade."

Those signing the letter included:

Agricultural Retailers Association
American Farm Bureau Federation
American Feed Industry Association
American Soybean Association
Animal Health Institute
Archer Daniels Midland Company
Biotechnology Industry Organization
Bryant Christie Inc.
Bunge Corporation
Cargill, Incorporated
Central Soya Company, Inc.
Chocolate Manufacturers Association
Coalition for a Competitive Food and Agricultural System
Continental Grain Company
Corn Refiners Association
Distilled Spirits Council of the USA
Farmland Industries, Inc.
Florida Phosphate Council
Food Distributors International Association
Grocery Manufacturers of America
International Dairy Foods Association
Kraft Foods
Louis Dreyfus Corporation
National Association of State Departments of Agriculture
National Association of Wheat Growers
National Barley Growers Association
National Cattlemen's Beef Association
National Chicken Council
National Confectioners Association of the United States
National Corn Growers Association
National Cotton Council of America
National Food Processors Association
National Grain and Feed Association
National Grain Sorghum Producers Association
National Grain Trade Council
National Grange
National Milk Producers Federation
National Oilseed Processors Association
National Pork Producers Council
National Renderers Association
North American Export Grain Association
North American Millers' Association
Northwest Horticultural Council
Pacific Northwest Grain and Feed
Pet Food Institute
Ralston Purina Company
Sunkist Growers
Sweetener Users Association
The Fertilizer Institute
The IAMS Company
Transportation, Elevator, & Grain Merchants Association
USA Rice Federation
U.S. Apple Association
U.S. Dairy Export Council
U.S. Grains Council
U.S. Meat Export Federation
U.S. Wheat Associates, Inc.
United Egg Association
United Egg Producers
 

CARGILL & CO.’S
"COMPARATIVE ADVANTAGE" IN "FREE TRADE"

Expressing their corporate concerns, "strong support" and wishes to "stay informed" in a letter to the nation's Chief Fugitive is but the tip of the proverbial iceberg when it comes to corporate agribusiness's role in influencing and formulating government farm, food and trade policies.

Today large, diversified multinational corporations, with their relatively easy access to credit, their tax advantages, their rapidly expandable manufacturing capabilities, and their deep pockets, have in fact become the dominant force in the production and processing of food and fiber in the U. S. and throughout the world. They have also become the dominant force in fashioning a variety of national farm and international trade policies that serve but their own voracious interests.

No better example of becoming  "the dominant force in fashioning national farm and international trade policies that serves but their own voracious interests" can be found than in two Cargill Corp. executives --- William R. Pearce and Daniel Amstutz --- who have played such a key and profound role in fashioning U.S. and world trade policies in the past 30 years.

When the U.S. entered the 1970's it was faced with an economic crisis as the nation's balance of payments was worsening and the value of the dollar was plummeting as Washington refused to redeem foreign-held dollars for gold. For the first time in the century, the U.S. began to register a trade deficit. In 1971, for example, the U.S. showed such a deficit of $2.02 billion, even though agriculture products were still registering a $1.8 billion surplus.

The Nixon Administration, realizing the need to respond to this crisis, appointed a Presidential Commission on International Trade and Investment Policy, headed by Albert L. Williams, head of IBM's finance committee. The committee, which reported to the President the following year, was composed of representatives from several major U.S. corporations, academics and two labor leaders.

Corporate agribusiness was well represented by Edmund W. Littlefield, head of the Business Council and a board member of the Del Monte Corp., and Pearce, then a vice-president of Cargill Corp., who would come to play a prominent role on the Commission and would be  responsible for writing much of its final repot.

The Nixon's Administration's New Economic Policy (NEP) soon came to incorporated the Williams Commission's analysis and policy recommendations. Recognizing that there were costs to maintaining the U.S.'s philosophy of "economic imperialism," the report pointed out "many of the economic problems we face today grow out of the overseas responsibilities the U.S. has assumed as the major power of the non-communist world."

A major section of the Williams report was devoted to outlining a strategy for expand- ing U.S. food exports. The basis for this strategy was the principal of "comparative advantage."  "Comparative advantage" was simply a means of describing an international division of labor structured around U.S. interests. As authors Roger Burbach and Patricia Flynn observe in their 1975 report, U.S. Grain Arsenal, the Williams Commission believed that the U.S. had a natural advantage in grain production due to highly favorable soil and weather conditions, combined with intensive application of technology and capital thereby making it a model of "capitalist efficiency."

In the interests of the rational use of the world's resources, the Commission argued, other countries should remove their agricultural trade barriers and end domestic policies that subsidized "inefficient" farmers. "In other words," Burbach and Flynn comment, "they should abandon policies aimed at self-sufficiency and allow the United States to become the world's granary."

By allowing "free trade," U.S. exports would be able to penetrate the Japanese and European markets while Third World countries could rely on their "comparative advantage" in producing labor intensive crops such as fruits, vegetables and sugar for export --- thus earning the necessary money to import vital U.S. grain products.

The Williams Commission also believed that to carry out such "free trade" policies, U.S. agriculture would have to be converted into an efficient export industry, phasing out domestic farm programs designed to protect farm income and move to a "free market" oriented agriculture. This approach was widely supported by corporate agribusiness and would become the cornerstone of the Nixon Administration's farm policy.

By devaluing the dollar in August, 1971 the U.S. took the first step in implementing its new export policies. As the president of the National Grain and Feed Association described it: "the NEP was very important in giving U.S. agriculture an advantage due to the devaluation of the dollar."

A crucial element in expanding food exports was the multilateral trade negotiations carried out under the General Agreement on Tariffs and Trade (GATT), a multilateral institution which had grown out of post-war efforts to restructure the international economic system, to serve as a forum for negotiating trade liberalization and to provide a framework for consultation and dispute settlement and negotiations on trade issues among the governments of its signatory nations.

In 1972 as Peter Flanigan, the head of Nixon's Council on International Economic Policy, was imploring the USDA to develop a strategy for the upcoming GATT negotiations, Cargill's Pearce was appointed the White House's special deputy trade representative. Flanigan's principal target (which would remain the basis of the U.S. negotiating position throughout the GATT negotiations) was the Common Agricultural Policy (CAP) of the European Common Market countries.

Burbach and Flynn explain why. "The CAP has been a thorn in the side of U.S. grain exporters since its inception in the mid-sixties. The U.S.was . . . demanding the removal of the Common Market's protective tariff system which effectively prevents U.S. grain exporters from being competitive in the European market . . . The U.S.was also demanding the end to domestic farm support policies in Western Europe which, in the view of the Flanigan report, was sustaining millions of small and inefficient farmers.

The subsequent passage of the Trade Reform Act of 1974, engineered through the Congress by Pearce, directed U.S. negotiators to trade off concessions from  the U.S. in the industrial sector in exchange for concessions to the U.S. in the agricultural sector. Many believe this action only accelerated the decline of many long-time U.S. industries, like steel, which soon left an unseemly residue in the jobless and abandoned communities of the so-called "rust belts" scattered throughout the northeastern U.S.
 
By the end of 1971 the U.S. dollar was floating,  setting off a major realignment of international currencies. Poor growing conditions plagued the Soviet Union, drastically cutting its grain crop. Drought set back grain production in Argentina and Australia. India's monsoon dropped below normal, a serious set-back for that nation's efforts to achieve self-sufficiency in cereal crops; Peru's anchovy catch was a disaster; rice and corn crops in the Philippines were severely damaged by typhoons; and wet fall weather in 1972 seriously delayed corn and soybean harvests in the U.S., followed by a spring of similar weather which delayed plantings.

By July, 1973, in the aftermath of what would become known as the "Great American Grain Robbery" when both the Russians and Chinese purchased massive amounts of heavily subsidized U.S. grain, an effort was made by the Nixon Administration to limit rapid commodity price increases. The U.S. instituted a series of highly-controversial export controls on soybeans and soybean products. The Congress also enacted the Agricultural and Consumer Protection Act, which ultimately belied its title for it brought little, if any, protection to either consumers or farmers.

In the ensuing years both the Reagan and Bush Administrations repeatedly sought to end domestic price supports for U.S. farmers, putting them at the mercy of the so-called "free market."

As Walter B. Saunders, Cargill's vice-chairman, told a 1985 National Grain and Feed Association convention in New Orleans: "The fundamental problem with farm policy goes back nearly 50 years to the belief that the best way to protect farm income is to link it to price. That has required us to set up elaborate mechanisms to cut production to meet residual demand. It has led to price support policies that divorce U.S. agriculture from the signals of the market whenever competitive pressures intensify.

"But if the 1980's have taught us anything so far, it's that we can't solve the economic problems of the marginal farmer through price protection. And  attempts to do so spread those financial problems to otherwise viable producers . . . Income must become less dependent on unit prices and more dependent of production efficiencies, diversification of income sources, better marketing and greater volume. Each farmer will have to find the mix that best fits his situation. These changes place increased stress on farm incomes and equity in the short run. Some of the stress must be relieved in fairness to farmers who cannot bear the full load themselves. Such relief should focus on the farmer earning most or all of his income from farming.”
 
The fact that the Reagan and Bush Administrations sought to further weaken the U.S. farm economy and invest even more economic control in the hands of corporate agribusiness was clearly evident in their concerted efforts to utilize GATT in eliminating necessary U.S. farm programs and preventing Congress from exercising any future control over production or the pricing of agricultural products.

The U.S., for its part, sought to have all agricultural programs put "on the table," meaning that all government farm programs that impact price, production, consumption, or trade in any way be eliminated. That included dairy and commodity programs, import restrictions on agricultural products and existing conservation programs. Throughout the 80’s and early 90’s these programs were the mainstay of net U.S. farm income.

What the Reagan, Bush and Republican administrations sought and finally achieved in the 1996 "Freedom to Farm"  bill was a plan to "decouple" so-called welfare-type pay-ments to farmers for a seven year period while they "adjusted" themselves to a "free market" or more accurately what could be described as a "transition" out  of agriculture.
 
One need look no further than the drafter of that original U.S. proposal --- Daniel Amstutz, another former Cargill vice-president and one-time chief agricultural trade negotiator for the United States --- to learn who its major beneficiaries were intended to be. The measure was also promoted around the globe by Cargill, the Fertilizer Institute and other corporate agribusiness groups who now stand to substantially benefit from a return to full-scale agricultural production and a cheap raw materials policy.

It should also be noted that when Pearce and Amstutz left the government they both returned to the Cargill corporate structure.
 

CARGILL:
"NOR ARE WE ANXIOUS TO MAKE MORAL JUDGMENTS
--- OR MORAL DEFENSES --- OF OUR OWN . . ."
 

As one views the operations of a corporation like Cargill, the world’s largest grain trader, and their crucial role in feeding people at home and abroad important questions need to be asked. In 1982 the Joseph Project, a public policy research group sponsored by the Senate of Catholic Priests of the Archdiocese of Minneapolis-St.Paul, sought out such answers from Cargill to some of the fundamental moral and economic questions relating to hunger, grain and transnational corporations.

Interviewing three Cargill executives --- William R. Pearce, vice president for public relations; Robin Johnson, assistant vice president for public relations, and John McGrory, corporate counsel --- for their report, Daily Bread: An Abdication of Power, Dee Elwood, the Joseph Project coordinator, asked the trio:

"You function in three main areas: world market, domestic market, the general area of morality; and therefore, you influence the world economy, the national economy, and starvation in the world. This is an awesome responsibility. What are your priorities among these three? Are they the same in your future plans?
 
Cargill's answer to these questions in part not only exhibits a very real side of corporate agribusiness's attitude toward the life-and-death question of who gets fed and who doesn't, but also underscores the general amoral perspective toward basic human needs that prevails in many corporate board rooms today.

"The assumption that there are moral priorities that are offended in serving world or domestic markets as economically and efficiently as possible rests on a confusion about economic facts. It is also a highly objectionable characterization of business's role. Before one makes moral judgments and advocates economic actions, one should understand the economic issues  that are involved.
 
"The business of making moral judgments is both hazardous and potentially irresponsible unless one is fully satisfied that all the facts and causal relationships have been explored . . . We are not in a position --- given time and other constraints --- to provide all the relevant background. Nor are we anxious to make moral judgments --- or moral defenses --- of our own . . .

"I think the evolution of this [free] marketing system and Cargill's role in it have also played an important role in reducing the incidence and severity of periodic famine or chronic malnutrition. Private entities, however --- whether farmers, grain companies or food manufacturers --- are not in a position themselves to subsidize food consumption in order to relieve famine.

"Such subsidies must come from public institutions (national or international) or from voluntary relief agencies. The private sector can help the world food system work more efficiently and productively, which yields important benefits in reducing the incidence of hunger and malnutrition. The burdens of inequality by and large must be altered or offset by public rather than private institutions." (emphasis added)

Efforts, however, by nations to make Cargill and its fellow grain traders more responsible when it comes to such questions as world hunger and famine have failed mainly because the grain trade has managed to capitalize on the division of national and private interests, by circumventing government regulations.

As Richard Gilmore, author of Poor Harvest: The Clash of Policies and Interests in the Grain Trade observes, "governmental efforts to regulate or control grain exports have been frustrated by contradictory policies designed to promote exports, by American agriculture's increasing dependence on foreign demand, and by the oligopoly that dominates the grain trade."

Given such conditions some critics doubt that there can ever be any compatibility between the private control of grain flows and stability in its supply and price. Former Senator George McGovern, in a preface to a report by his Senate Select Committee on Hunger and Malnutrition argues:

"The contention that the world can have [food] reserves held in private hands is fallac- ious on its face. Private traders are in business to turn investment into profit as rapidly as possible. To expect that a multiplicity of private traders would or should manage the acquisition and release of food and feed grains in a manner which will meet the goals of a conscious reserve policy --- to flatten the widest upward and downward fluctuations in market prices and to maintain a steady supply against times of shortage --- would be contradictory. In reality, a [food} reserve in private hands is no reserve at all."

Or, as the German dramatist and poet Berthold Brecht put it in a much more candid  fashion: "Famines do occur; they are organized by the grain trade."

We should also remember, as author Gilmore stresses, that grain in today's world takes on real value when it is marketed, not when it is harvested. Its value in our present economy is more an expression of interacting political and economic forces than its intrinsic worth as food. Thus, no importing or exporting country can operate independent of the U.S. since an oligopoly of traders, the major two --- Cargill and ADM ("Supermarkup to theWorld") --- being headquarted in the U.S., now controls the flow of grain and grain-related products throughout the entire world market.
 

LAUNCHING THE PEOPLE'S MILLENNIUM,
CHALLENGING CORPORATE CONTROL
OF FOOD & AGRICULTURE

Who will control the nation's and the world's food supply in the coming millennium?

What will happen to family farms, farm and food workers and our rural communities as agriculture and our food system are threatened to become more globalized, centrally controlled and highly industrialized?

How safe are genetically modified organisms (GMO) in our food and what economic, environmental, health and safety risks do they present to the family farmer and the consumer?

What role will local sustainable agriculture food systems play in an increasingly globalized industrial agriculture and food system?

These and related subjects will be discussed and responded to during an all-day April 29, 1999 conference, "Launching the People's Millennium, Challenging Corporate Control of Food & Agriculture," sponsored by the Alliance for Democracy as
a prelude to the movement's four-day national convention  (April 29-May 3) at the College Inn Conference Center, University of Colorado at Boulder, Boulder, Colorado.

"In attempting to deify their own myopic view of efficiency," AfD National Council member A.V. Krebs, the conference's program coordinator points out, "corporate agribusiness has brought family farming, the democratic control of the people's
 food supply, and a wholesome and healthy natural environment to the brink of a crisis that unless recognized, confronted and reversed will inevitably lead to a worldwide economic, political, social and environmental disaster unlike any seen in human history. This one-day conference will seek to show how people can challenge this corporate agribusiness view."

In an effort to take back the control and responsibility for the intrinsic safety of our food supply, free from contaminating and health-threatening toxics, the conference will focus on the Food Circles approach as offering a practical, hands-on, sensible, grass roots means of working for and attaining a sustainable food system.

Ben Kjelshus, the AfD's Food and Agriculture Task Force Coordinator, explains:

"Food Circles, as an alternative to the current global, faulty, environmentally and socially destructive and unsustainable food system, links consumers, farmers, retailers, environmentalists and other concerned citizens in a creative and comprehensive effort to deal with the critical problems of our present food system. Food Circles are a key to developing an integrated, decentralized, sustainable food system.

"They and other grass roots projects working for a sustainable food system are vehicles with considerable potential for effecting social change," he adds.

The all-day conference, beginning at 8:30 AM will be highlighted by three panels, composed of nationally and internationally prominent agriculture and food specialists and activists, and a series of subject-related afternoon workshops

The objective of the workshops will be to draft recommendations for a "Boulder Agrarian Populist Agenda" and prepare recommendations for presentation and deliberation at the Alliance for Democracy Third Annual National Convention 
scheduled to begin later the evening of April 29.

The Alliance for Democracy, currently with over 50 local chapters and 2000 members, is a three-year old national populist movement that seeks to end the domination of the nation's economy, government, culture, media and environment by large
corporations. Believing that piecemeal reform has been rendered ineffective the AfD has united in examining ways in which various economic interests either enhance or harm the health of democracy, focusing its resources on creating basic change.

For additional registration information contact:
Alliance for Democracy
P.O. Box 683
Lincoln, Mass.  01773     (781) 259-9395
http://www.afd-online.org/index2.htm
Peoplesall@aol.com