EXAMINER                            Issue # 36      June 2, 1999

Monitoring Corporate Agribusiness From a Public Interest Perspective

A.V. Krebs

                                                 Editors Note
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Dan Glickman's critics have been speculating lately what might be the result if the USDA Secretary were to spend less time trying to sell the world on genetically modified organisms (GMOs) and moaning and groaning about the dollar losses to our nation's cattle producers owing to the European Union's ban on U.S.hormone fed beef and more time doing some simple math.

Recently, Glickman was busy promoting GMOs to a two-day "World Congress" in St. Louis, Missouri sponsored by the the World Agricultural Forum, a St. Louis-based group founded in 1997 to examine agricultural issues. The group's primary sponsor is the Danforth Foundation, a philanthropic group funded by the family that founded the St. Louis-based Ralston Purina Co.

Leonard Guarraia, chairman of the forum's board of director, described the Congress "as the first ever meeting of all of global agriculture, from financing to the farm." Also sponsoring the event was Cargill and Monsanto. The group plans to hold a World Congress every two years in St. Louis, which is also world headquarters for the Monsanto Co. Regional meetings are also planned in Asia, Europe and South America.

Glickman told his fellow ag ministers that he saw a need for more public education on the biotech issue. "We cannot force GMOs on reluctant consumers," Glickman said. "Instead, we have to bring them along."

At the same time the former Kansas Congressman was promoting GMOs he was also decrying the EU's  unwillingness to abide by the decision of  the World Trade Organization (WTO) Appellate Body last year that the European's ban on U.S. imported hormone fed beef violates WTO rules. The WTO gave the EU until May 13 to comply with the ruling.

However,  on May 4, the European Commission at a meeting in Strasbourg, France, issued a written statement  stating that a new scientific study allegedly showing a possible link between hormone-treated beef and risk of cancer in humans was reason enough for the EU to maintain the import ban. [Issue #32] More than 90% of American cattle producers feed hormones approved by the Food  and Drug Administration to make cattle grow faster and bigger.

The EU Commission, however, said that "[t]here can no longer be any question of lifting the ban on hormone-treated beef since the risk assessment has identified risks to health caused by hormones."

The U.S. has prepared a final list of European products that will be hit with 100% import duties  with retaliation coming by mid-July.  A preliminary list covering imports worth more than $900 million a year, ranging from Roquefort cheese to motorcycles was issued on March 22.

Ironically, the threat of the ban comes at a time when the Europeans "mountain of beef"  is back. As the Journal of Commerce's Aviva Freudmann reports, "only a few years after the European Union had finally exhausted huge surpluses that resulted from overproduction due to internal price supports, it finds itself sitting on big, publicly owned stockpiles of beef." These inventories, known as "intervention stocks" in the lingo of the EU's farm subsidy program, currently amount to 480,000 metric tons. They are causing a lot of distress to the continent's meat traders.

"These stocks weigh heavily on the market," Manfred Hartl, chairman of the German Association of Meat Wholesalers and Retailers, told the 12th annual World Meat Congress. The intervention stocks -- called that because they are purchased under EU market intervention programs -- are sold off periodically or given away free, for example as food aid to Russia.

Undeterred by such European scientific studies and production figures, however, Glickman points to the fact that the EU ban on U.S. imported hormone fed beef is costing a potential $212 million in lost exports for U.S. cattle producers.


In the midst of Dan Glickman's fretting over the European's ban on U.S. hormone fed beef and the losses to cattle producers his own Economic Research Service (ERS) was releasing a January, 1998 completed study that analyzed annual data as to cattle price levels in the 1990's and concluded that the price levels during the cattle cycle of the 1990's were bad, but not the worst on record.

Curiously the report, released some 16 months after it was completed on May 4, 1999 and less than a week after the Pickett vs IBP price fixing suit received class certification, further concluded that there was no evidence of negative effects of packer concentration on cattle prices during the 1990's.

Rather than read his department's own economists conclusions, however, Glickman might well benefit from getting out pencil and paper and do some of his own calculations using his department's own statistics.

If the farm share of cattle, as reported by the USDA, is 44% and the average live price of an 1150 lb. steer is $63.00/cwt., or $724.50 per head, then the retail value can be calculated to be $1646.91 ($724.50 divided by 44% equals $1646.91) total retail value, not including the highest value cuts at HRI and export).

Likewise, the USDA shows the producer has lost 22% of the retail dollar. 22% times $1646.91 equals $362.32 loss to the producer  $362.32/head times 38 million live cattle produced annually equals $13.77 billion per year and the loss to U.S. cattle producers has been at these levels since the spring of 1994.

The USDA's  own 1996 industry concentration study acknowledged that the beef packing industry is highly concentrated, with three packers -- IBP (38%), Excel (22%) and ConAgra (21%) -- controlling 81% of the market. Calculating a $13.77 billion annual loss to U.S. cattle producers and using the aforementioned market share figures cattle producers loss at the hands of IBP could be estimated at $5.23 billion, Excel (the Cargill subsidiary) at $3.02 billion and ConAgra (the nation's second largest food manufacturer) at $2.89 billion alone.

Meanwhile, IBP recently reported earnings up 307% over the same period last year for the first quarter of 1999 which comes on top of the company's second best ever year in 1998. More than 80% of the IBP's huge earnings came from its fresh meats division, which had triple the earnings of the previous year.

At the same time ConAgra's profits for its fiscal third quarter were $171.4 million, up 44% from a year earlier. Company CEO Bruce Rohde said ConAgra's refrigerated foods segment, which includes its Monfort meatpacking and processing operations, was "driving earnings growth this year." Likewise, Cargill's net income of its fiscal third quarter was $192 million, up 53% from the previous year, and like its "competitors" claimed that its beef and pork operations were key to its profit picture, yet furnished no details.

Commenting on these figures, Mike Callicrate, a St. Francis, Kansas feedlot owner, charged that "the abusive market power of the packer is the reason for the loss. With concentration, cooperation and captive supplies, it is easier for the packer to buy cattle cheaper that to sell meat higher to the also powerful retailers. Retailers are doing less today for their share."

The ERS study was also challenged by agriculture economist Dr. John Helmuth,  former chief economist to Rep. Neal Smith's House Committee on Small Business. Noting that the current ERS methodology was only suited for comparing present cattle cycles with past ones, he charged that it is "negligently misleading" for the ERS to even address the further question of negative packer concentration effects because the publicly available annual data are in no way suited to address that issue.

Or as he concluded rather sardonically: "Asking USDA researchers to address the question of the exercise of market power in the beef industry using annual, public data is the equivalent of asking NATO air forces to hit precise military targets in Serbia using only National Geographic maps from five years ago."

Or current CIA maps!!!!!


In what can only be described as the exercise of blatant corporate power IBP, the nation's largest meatpacker, recently withdrew from the effort to get legislation which would seek, even though already a flawed attempt , to establish a price reporting consensus in livestock sales. The company claimed that such reporting would be too burdensome, particularly in the case of pork.

While turning its back on what both independent cattle producers and farm state legislators believe a must law requiring complete and timely price transparency in an effort to restore a fair and equitable market for cattle and pork, IBP left Senate Agriculture Committee Chairman Richard Lugar holding the bag on this vital issue, although he has vowed to get some form of federal legislation in place in the near future

Even before IBP's action, however, livestock producer, Bob Mack, Watertown,South Dakota testified before the committee that he and many fellow producers were not even supportive of the reporting proposal essentially drafted by IBP and the National Cattlemen's Beef Association (NCBA) and its proposed modifications.

"We continually hear talk about the `market,'" he observed. "But the cattle market is not a market at all. It is just a price that the big packers have arbitrarily forced upon producers, and which the packer-biased media have conditioned them to accept. The market today is only an illusion. It's essentially whatever IBP, ConAgra, Cargill, and others say it is, whatever they think they can get away with paying."

It is evident, say the cattle producers, including Mike Callicrate, St. Francis Kansas feedlot owner, that price reporting must be made mandatory. It should not be compromised, as was the proposed bill, and most certainly the big meatpackers should not have a say in their own regulation by government.  The producers again emphasized that today the situation is one of thousands of separate and disorganized cattle producers at the mercy of prices set by a monopoly of a few big, well organized packers. Without true price reporting there is no way, they believe, that they can  possibly know what their cattle are really worth

The Cattleman's Legal Fund has also called the present "Packer-NCBA proposal a disgrace and disservice to cattle producers and should be completely discarded. In some ways this proposal is worse than the current voluntary reporting system. Today, sellers have immediate access to whatever voluntary information is available. Under the Packer-NCBA proposal, information would be old news, and would be available only at the packer's control, most likely after the week's trade is over. The Packer-NCBA proposal still maintains secrecy of the terms of formula, contract and other possible anti-competitive packer supply control methods."

The Fund stresses that "the goal of a mandatory price reporting bill should be to establish special rules and regulations for only the big packers now controlling the markets, and to dissipate that control," such as:

* Restoring price discovery and a more fair and equitable distribution of the consumer meat dollar back to the producer.
* Providing full and complete, timely, on the spot market information on a daily basis of all purchases or sales of cash cattle, beef and beef by-products whether imported, exported or domestic.
* Providing full and complete, timely, on the spot market information on any and all contract, formula, captive or otherwise packer controlled cattle supplies beyond seven days of delivery.
* Providing all details of the agreement to the public on any captive supply, formula, contract or otherwise packer controlled supplies of cattle.
* Providing the public and law enforcement officials better access to information, enabling more effective enforcement and prosecution of applicable antitrust laws.
* Providing enforcement officials with clear and mandated orders to guarantee strict adherence to the law.
* Providing strong penalties and deterrents for noncompliance.


"America's permanent agricultural crisis," symbolized by gross inequities in the cattle and pork producing industry, the demise of the nation's family farm system of agriculture, the ever-creasing corporate concentration in agribusiness, and the economic and environmental reckless industrialization and globalization of agriculture have all occasioned the recent launching of a "Campaign to Reclaim Rural America."

Composed of a broad and diverse coalition, according to Lewistown businessman, Dale Pfau, of grassroots agricultural organizations, local businesses and banks, labor unions, churches and concerned individuals, the Campaign has announced the staging of protest rallies and temporary blockades of U.S.\Canadian ports of entry across Montana and North Dakota starting at noon on Friday, July 9th.  The blockades will turn back any trucks carrying agricultural products.

The Campaign is calling for an investigation into the causes of the current farm/ranch depression, including: a full investigation of market competitiveness in livestock and crops; reexamination of trade agreements; and the initiation of actions that will stabilize the nation's food producers, main street businesses and Rural America as a whole.

"This rally should not be seen as an action against Canadian farmers, since their markets are being dominated by the same multi-national forces that have manipulated ours," cautioned Sharon Kindle, Past President of Montana Women In Farm Economics (WIFE).

"We're organizing this event to protest low grain and livestock prices and farm policies that have allowed a few giant corporations to use one nation's production to depress prices elsewhere.  We're sending a message to our Congressmen that, `This is something we can do if you won't'," adds Hank Zell, a Shelby, Montana area farmer.

Montana's Congressional Delegation has been invited to the Sweetgrass port north of Shelby, where Campaign representatives will present them with thousands of signatures on petitions calling for an eight-point plan to implement an emergency price safety net for producers, as well as reforms of agricultural commodity markets and international trade policies.  The petitions also call for increased border inspections to ensure that  agricultural imports meet minimum U.S. standards for food safety, environmental and worker protections.

"I see unrest and anger in the countryside.  We are tired of all the unproductive talk," said Helen Waller, representing the Northern Plains Resource Council and past president of the National Family Farm Coalition. "For decades we've talked with our Congressmen here in Montana.  We've talked at field hearings and we've talked at Congressional hearings in Washington, D.C., testifying repeatedly before numerous empty seats.  And what has it brought us but more shamefully low prices.  It's time for action."

"Lawmakers take the U.S. self-reliance in major food products for granted and are sacrificing America's farmers and ranchers with flawed trade agreements which favor multi-national corporations," warned Ken Maki, President of Montana Farmers Union.  "Stable, diversified U.S. farms are needed for America's future food security."

The Campaign originated last spring in Lewistown, Montana.  Pfau says that since then it has gained strong momentum and continues to receive increasing support in at least two dozen other states across the country.  "We hope organizations and individuals in other states will plan their own rallies on July 9th, so a unified message can be sent to Congress," he said.

"This is a call to everyone who believes there is value in retaining the integrity of Rural America," Pfau concluded. "Be at one of the border events on July 9th.  Stand in protest of the economic and trade policies that have caused the demise of rural communities all over America.  Our Senators and Representatives will be home on summer recess.  Find out if they will aggressively support legislation and other appropriate action to address these concerns.  The time is long overdue to take a Kansas lady's advice to `Raise less corn and more Hell'.  Let's Reclaim Rural America."

Generally, the Campaign is requesting that an emergency price support and safety net system be put in place and lifted only when international and domestic markets are reformed in such a manner that they are open, public, and competitive; and domestic prices are above the cost of production as calculated by USDA.

Specifically, it is  requesting:

* An emergency price support and safety net system be implemented for all agricultural products.
* The start of vigorous anti-trust investigations into the concentration of ownership in meat  packing, grain handling, and retail.
* A block of the proposed merger between Cargill and Continental, the nation's two largest grain exporters.
* Country-of-origin labeling on agricultural products and use of the USDA approved stamp on U.S. products only.
* Mandatory price reporting of livestock and grain.
* A shift of responsibility for regulation enforcement of the Packers and Stockyards Act from U.S.D.A. to the Justice Department.
* Inspections of imported agricultural products to ensure they meet standards equivalent to U.S. standards for food safety, environmental, and worker protection.
* Actions to ensure that farm and ranch producers are represented at the 1999 World Trade Organization negotiations in Seattle, Washington.


Efforts by the U.S. Department of Agriculture  (USDA) and the Food and Drug Administration (FDA) to railroad the non-labeling of irradiated of food products, including meat, have apparently ran into a major roadblock --- consumer outrage!!!

Associated Press reports that  "hundreds of consumers have deluged regulators with letters, e-mails and faxes demanding that ground beef irradiated to kill illness-causing bacteria be clearly labeled so shoppers know what they are buying." At the same time, on May 21, the FDA announced it would extend the deadline to July 19, 1999 for comments on its proposed regulation to allow all labeling requirements for irradiated food to expire. The FDA has already received over 21,000 letters and petition signatures, almost all of which supported continued labeling.

Although it received no press coverage, the FDA was directed to propose such a label-free regulation by an amendment to the FDA Modernization Act of 1997, the amendment being  sponsored by Senators Tom Harkin (Dem.-Iowa), James Jeffords (Rep.-Vermont) and Mitch McConnell (Rep.-Kentucky), and Representative Greg Ganske (Rep.-Iowa).

In February, 1998, a meeting was convened with government and industry representatives attending on the topic "Identifying, Addressing and Overcoming Consumer Concerns: A Roundtable on Food Irradiation.". The 40 or so attendees included members from such groups as Public Voice for Food and Health Policy, National Food Processors Association, the American Farm Bureau, International Food Information Council, the FDA, USDA  and National Consumers League.

In their roundtable report, they stated:

"ALL ROUNDTABLE PARTICIPANTS WHO ADDRESSED THE ISSUE SUPPORTED LABELING OF IRRADIATED FOODS, [emphasis added] with the exception of the National Food Processors Association which questioned the legal and scientific basis for requiring labeling of irradiated foods and felt that the current labeling requirement would deter some consumers. Most participants felt that labeling  should be required to inform those who seek to purchase irradiated foods as well as for those who want to avoid them. Eliminating the label, they felt, would eliminate consumer choice."

Meanwhile, even though meat companies, public health officials and many consumer groups have agreed that irradiation rules should be adopted as quickly as possible to protect the public they are at sharp odds over how--or even whether--to inform grocery shoppers about irradiated packages of meat. Industry representatives argue that if packages of ground beef are required to carry a label with the universal radura symbol for irradiation, some shoppers may interpret it as a warning label, the companies contend.

"Many consumers do not understand the concept or process of irradiation," said Stein Hordvik, a vice president of ConAgra Inc., the maker of Eckrich hot dogs, Healthy Choice frozen dinners and other foods. A labeling requirement will only add to this confusion and may cause consumer concern and prompt them to avoid irradiated meat products," Hordvik added in a letter to the USDA.

The meat industry, AP reports, has been lobbying the USDA for permission to use instead the phrase "cold pasteurized" because shoppers are used to seeing that on milk cartons. Yet, more than 700 consumers have sent letters to the USDA insisting that shoppers have a right to know that food is irradiated before buying it.

Currently, the Campaign for Food Safety is urging all activists to contact Representatives in Congress and ask them to send a letter to the FDA supporting permanent, prominent labeling. If planning to comment to Congressional representatives also mail such comments to the FDA before July 19, 1999 indicating  permanent, prominent labeling of all irradiated foods.

Dockets Management Branch (HFA-305)
Food and Drug Administration
5630 Fishers Lane, Room 1061
Rockville, MD  20852

Re: Docket #98N-1038, "Irradiation in the Production, Processing and Handling of Food"


Titan Corp., a small San Diego, California defense company, which depends on the U.S. government for 80% of its revenue, has drawn the attention of stock investors by the applying its military technology to zapping the food supply with irradiation.

By applying the expertise it acquired in developing electron-beam technology for Ronald Reagan's Star Wars missile-defense program the company hopes to establish itself as a major provider of the necessary means to irradiate food products.

Already, the company found in 1981, has sold its SureBeam technology to Hawaii Pride LLC, Hilo, Hawaii, to X-ray fruit-fly infestations of fruit  and flowers and in April it entered into exclusive agreements with IBP Inc. of Dakota City, Nebraska, and Cargill Inc.'s Excel Corp. unit in Wichita, Kansas, for irradiating ground beef. The two latter contracts, whose value was not disclosed, will cover the producers of about 75% of the ground beef sold in the U.S.

The U.S. food-irradiation market currently totals less than $50 million a year in revenue. But if irradiation takes off, Titan Chief Executive Gene W. Ray figures the market could be worth as much as $12 billion over ten years. Competitors, however, the Wall Street Journal's Frederic M. Biddle reports, say the potential long-term market is more likely in the low billions.

"The next generation will no more have their children eat food -- hamburger, for example -- that hasn't been pasteurized, than we would have our children drink milk that hasn't been pasteurized," Dr. Ray told Biddle.

Titan's SureBeam electron accelerator was originally developed in the 1980s, when Reagan, Edward Teller, the Pentagon & Co. envisioned lasers zapping incoming enemy  missiles. Later, in 1992, the device was adapted to the sterilized packaging of medical instruments which accounted for just $10 million of Titan's 1998 revenue. Each machine now costs about $5 million to $6 million, but Dr. Ray and other Titan executives now foresee another use for the beam, which disrupts the DNA structure of the microorganisms it hits, rendering them sterile on any food.

SureBeam is "very precise, very consistent in killing the food-borne  bacteria and protecting the integrity of the product," IBP spokesman Gary  Mickelson assured Biddle. "While we are convinced that irradiation is safe . . . we will continue to be guided by the wishes and demands of our customers," Tyson Foods Inc.,  the nation's largest poultry processor, told the Journal.

"The e-beam suits itself well to uniformly sized products, such as hamburgers," says Daniel Engeljohn, who heads regulations development at the USDA. But the  process is less ideal for large, irregularly shaped carcasses of meat, Biddle reports.  Also, irradiation can affect the texture of some vegetables, and fruits such as strawberries, although Titan points to the Hawaiian deal as  evidence that its version of the technology overcomes the problem.

In the fall of 1998 the island of Hawaii voters narrowly rejected a proposal to ban  commercial irradiation. A coalition of antinuclear forces, doctors, and  pure-food advocates had rallied against a plan to build a Cobalt 60  facility to irradiate fruit. Titan's recently announced agreement with Hawaii Pride followed that vote.

Cobalt 60, a radioactive substance has already been approved in some countries to irradiate foodstuffs. A rack of Cobalt 60 rods is lifted from a water bath into a chamber with the food, which absorbs a dose of  radiation over several hours, sterilizing whatever organisms contaminate it.

Titan's electron-beam technology, however, doesn't involve such dangerous materials,  so processors will not need clearance from nuclear regulatory authorities to use it. Cautiously the meat industry still remains skittish about irradiation. "The food industry perceives the consumer to be reluctant," says Spencer Stevens, president of APA Inc., Omaha, Nebraska, a consultant to Titan.


Taking into account the plight of thousands of family farmers and the demise of family farm agriculture in the U.S. and reading the news how  Bt (short for Bacillus thuringiensis, the name of a naturally occurring soil bacterium that produces a toxin capable of killing some insects while leaving others unharmed) is now available to conventional farmers in genetically modified versions of potatoes, cotton and corn and how researchers at Cornell University have discovered in a laboratory study that the pollen from Bt corn spread on milkweed leaves, when eaten by larvae of monarch butterflies, killed nearly half and stunted the rest, one Midwest farmer ruminates:

"Today I was out mowing roadsides (gasp, you say), but I was doing it for a good reason.  I am trying to help the Monarch butterfly.  Here is my reasoning:  If the Monarch butterfly eats milkweed tainted with Bt corn pollen this summer, they will die a slow, painful death.  So I figured I would use the Cargill, IBP, Monsanto method to help them out.  Mow the milkweeds off now and let them slowly starve to death.  If too many die all at  once, people will get concerned.  But if we spread the deaths out over time, no one will care."


From friend and valued colleague Sam Smith's Progressive Review "Undernews"

"New York Times foreign journalist Thomas Friedman has gotten a lot of mileage out  his claim that no two countries hosting McDonald's restaurants have ever gone to war with each other. This is no longer the case. Three McDonald's in Yugoslavia have been attacked by local mobs angry with the NATO bombings.

"Actually, Friedman's idea was a variation on one long proposed by your editor, namely the Wal-Mart solution. The principle: where one finds civil conflict and ethnic unrest, simply build a Wal-Mart. It has been proved conclusively that Wal-Mart destroys whatever culture is in its vicinity,  which in the case of societies dedicated to killing each other may be just  what you want."

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