The
AGRIBUSINESS
EXAMINER                            Issue # 37      June 7, 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.
 

MONSANTO CO:
A BREEDING GROUND FOR U.S FOOD POLICY MAKERS

Just as Cargill has played a major role in shaping U.S. agricultural policy in the twilight of the 20th century (Issue #31) the evidence is becoming increasingly clear that the Monsanto Co. has been dominating policy decisions within the U.S. when it comes to bioengineering, genetically modified organisms (GMOs), and the health and safety of our food.

In Issue #34 THE AGRIBUSINESS EXAMINER reported that one of Monsanto's top lobbyists and political operatives --- Patricia Kenworthy --- is now working for the National Environmental Trust and that Carol Tucker Foreman, who in recent years has been an outspoken lobbyist on behalf of Monsanto's rBGH,  is now returning to the Consumer Federation of America (CFA) to become director of a new Food Policy Institute for CFA .

The CFA is a consumer organization currently with no members that represent a coalition of non-government organizations (NGOs), including farm and labor groups. According to the Washington Post, the industry-funded non-profit Public Voice is going to close up shop and be folded into CFA under Foreman.

As John Stauber of PR Watch has noted: "Carol Tucker Foreman spent a decade and a half as a lobbyist running her own firm with big paying clients like Monsanto (rBGH) and Procter & Gamble (Olestra).  Some people speculate the reason she has left her firm and moved back to CFA is that she can do the food industry a lot more good there while the growing trade fights unfold over beef hormones and biotech.  Supposedly she is going to stay away from biotech issues, but that's a ruse at best - after all, which international food issues DON'T involved biotech?

"One of her real coups in the past was to convince groups like Center for Science in the Public Interest to not oppose rBGH and to stay out of the fight over biotech foods.  It probably didn't take much convincing, since their top nutritionist is married to an FDA person whose job has been to oppose biotech labeling."

Recently the United States banned all European pork and poultry imports after what is being called the biggest "food scare in Europe since the “Mad Cow" outbreak in Britain in the early part of the decade. European Union officials initially banned the sale of chicken and eggs from Belgian farms that may have used livestock feed contaminated with dioxin.

The ban was then broadened to pork, beef and dairy products as the count of suspect farms hit 1,000. France has quarantined 146 cattle and poultry farms. In the midst of this European action, Art Jaeger of Foreman's Consumer Federation of America observed,  "Perhaps the Europeans ought to be paying more attention to the more immediate food safety problems than safety concerns about GMOs, which are much more theoretical."

It has also been reported by THE EXAMINER (Issue #34) that Rod Leonard, long-time consumer activist and current executive director of the Community Nutrition Institute in a April 23 issue of Nutrition Week, published by the CNI, explained how the discovery of drug resistant bacteria in poultry that puts at risk the health of  American citizens  is linked to a food safety decision in 1976 that most people never knew about and few remember today.

"Carol Foreman," he writes,  "a newly minted Assistant Secretary of Agriculture, approved that year a change in food safety procedures that would have far reaching consequences.  Foreman, one of only a few consumer advocates to reach so high a federal post, decided that poultry visibly smeared with fecal matter could be safely eaten after the feces was washed away."
 

CORPORATE FOOD POLICY MAKERS:
THOSE WHO PREY TOGETHER, STAY TOGETHER

It appears now that Monsanto, in addition to having Patricia Kenworthy and Carol Tucker Foreman in current key policy making roles in the environment and consumer areas is now also benefiting from U.S. policy decisions made earlier in the decade by one of its own.

Writing in the May 21 issue of Nutrition Week, published by the Community Nutrition Institute, Rod Leonard, its executive director, relates how "a carefully plotted decision by the Food and Drug Administration (FDA) in 1994 to block proposals that would enable U.S. consumer to choose between GM and non-GM foods has now triggered a trade war with Europe, threatens to bankrupt tens of thousands of American farmers, and could send the World Trade Organization (WTO) back to the drawing board."

Michael Taylor, a highly successful Washington lawyer at King and Spaulding, a premier D.C. law firm representing corporate clients, had recently left the firm, where he represented Monsanto, Inc., to become associate FDA commissioner for policy.

Among the first issues facing Taylor was  whether to permit food labels to say, "Contains no GM product" or more specifically No "BST," a hormone drug produced through genetic technology by Monsanto and other drug companies.  When injected into milk cows, BST was claimed to raise output by up to 20% in the treated milk cow.

"Opponents," Leonard continues, "charged the studies supporting the safety of BST were rigged, a claim that FDA rejected, clearing the way to approve the use of BST as safe for consumers.

Interestingly, Canada looking at the same studies found the safety data to be flawed, and refused to license the product, as did the European Union.  U.S. consumer groups then petitioned FDA to allow labels on milk carton to identify BST milk from non-BST milk.  Taylor said BST milk was not materially different from non-BST milk; and said non-BST label would provide false information, and discriminate against producers using BST.

"The decision, while controversial among consumer groups, was vital to the then unfolding trade strategy of U.S. biotechnology companies, particularly Monsanto," Leonard adds.  "Following the industry lead, the Clinton administration insured that the same scientific methods that permitted the use of GM substances in the U.S. would be incorporated in the WTO procedures, and agreed to blocked consumer labeling standards.

The goal was to insure that by accepting WTO trade rules countries could not block exports of GM commodities and foods containing GM ingredients, all produced in the U.S., even if public opinion opposed the imports."

The U.S. Department of Agriculture (USDA) swung heavily behind the development of GM commodities, giving strong support to Monsanto and other biotechnology companies.  USDA refused to segregate corn, soybeans and other crops produced from GM seeds, an action which insured that GM and non-GM grains and soybeans would be indistinguishable for both domestic and export markets.

"In the peculiar way of Washington," Leonard concludes, "Michael Taylor has been well rewarded for having launched a potential trade war with a food labeling decision.  He climbed the policy ladder within the Clinton administration, moving from FDA to USDA where he sought to end federal inspection of meat and poultry.  He left USDA after advising Vice President Gore on how to reinvent government, and rejoined his old law firm.  Within months Monsanto hired Taylor to direct corporate strategy in Washington."

DEPARTMENT OF JUSTICE ACTION:
"SO INCREDIBLE THAT IT BORDERED ON BEING LUDICROUS"

While berating the U.S. Justice Department for failing to prove how much lysine, an amino acid that speeds muscle-growth in livestock, was affected by the Archer Daniels Midland's (ADM) scheme to fix prices on the feed additive, U.S. District Judge Blanche Manning surprised everyone last week and fined two former ADM executives --- Michael Andreas and Terrance Wilson --- no more than $350,000, far less than the $25 million sought by the government.  Judge Manning didn't address prison time in her ruling.

Federal prosecutors had sought a $25 million fine and three years in prison, the maximum allowable, against Andreas, saying the fine reflected the amount of money allegedly reaped from the price-fixing scheme, which spanned from 1992 through 1995. Andreas and Wilson claimed that the $25 million figure didn't equate  with the amount of lysine produced in the world during the scheme and sought proof from overseas lysine  producers who allegedly participated in the conspiracy.

But Judge Manning said the government merely wrote letters to the lysine producers "informing them that they were not obliged to produce documents." She called the government's action "so incredible that it  bordered on being ludicrous."

Although the Justice Department spokeswoman wouldn't discuss its strategy  following Judge Manning's order, spokesperson Jennifer Rose did comment simply that  "we are disappointed with the judge's decision and we are prepared for the sentencing on July 9.".

Mick Andreas, son of former ADM CEO and Chairman of the Board Dwayne O. Andreas, Wilson and Mark Whitacre, who acted as an FBI mole for several years documenting the case against ADM ("Supermarkup to the World") and who expects to be also fined $350,000, could still receive prison terms of up to 36 months at their July 9 sentencing.

Meanwhile,  U.S. District Judge Michael Mihm has ruled that some of the tape recordings, made secretly by former ADM vice president Whitacre, can be subpoenaed and released to attorneys for possible use in forthcoming civil cases.

The tapes, made over two and a half years, contain conversations of executives discussing business practices. Lawyers for several food companies and soft drink bottlers that buy the high-fructose corn syrup sweetener, want the tapes introduced as  evidence to show a pattern of price fixing. Customers of ADM and its competitors in the corn syrup market allege they were harmed by price fixing and are the plaintiffs in more than two dozen class-action lawsuits being heard by Mihm.

The companies which are being sued for such damages include ADM and A.E. Staley           Manufacturing Co., Cargill Inc. and American Maize Products Co. In 1995, ADM agreed to pay a $100 million fine after pleading guilty to price-fixing involving lysine and citric acid.

As the Chicago Tribune’s Greg Burns  reports, “Nearly four years after FBI agents raided its Decatur, Ill., headquarters in a massive price-fixing bust, Archer Daniels Midland Co. remains deeply troubled. From vegetable oil to corn sweeteners, ADM's important business lines are beset by overcapacity, low selling prices and soft demand.

In addition to the upcoming sentencing of Andreas, Wilson and Whitacre retirement has claimed other key members of ADM's ruling clique: President James Randall and political domineering Chairman Dwayne O. Andreas.

"Since the scandal erupted," Burns adds, "ADM has become a poster child for ineffective corporate-governance. Even its past successes have come into question: Outsiders can't tell for sure how much of its impressive growth stemmed from criminal activity, corporate welfare and other dubious sources."
 

CARGILL'S CONTINENTAL GRAIN PURCHASE:
PAYING TOO MUCH, GETTING COLD FEET, STAY TUNED

As rumors continue to circulate about the status of the investigation it appears that the Cargill Inc. may be having second thoughts about the purchasing of Continental Grain Co.'s grain merchandising division as the U.S. Department of Justice continues its anti-trust study of the announced acquisition.

Daniel Rosenberg of Dow Jones Newswires reports that "some say the Minnesota-based Cargill Inc. chafed recently when the U.S. Justice Department identified several entities the company would be required to divest to have the deal approved. It's unclear if the Justice  Department has taken this step, and the facilities in question are unknown. Justice has been reviewing the proposed deal for months."

"I hear Cargill may not be as interested as it once was," said Robert  Wisner, of Iowa State University's Department of Economics, who earlier  this year co-authored a study examining the implications of the Cargill/Continental deal (Issue #19).  According to the study, Cargill's proposed acquisition of Continental's grain operations would give it control of its largest competitor in the exporting of grain. Together, the two companies account for roughly 35% of  corn, soybean and wheat export volume.Earlier this year, Cargill indicated it expected the deal to meet Justice Department approval by March or April.

A no comment on the rumors came from the DofJ while Linda Thrane, a spokeswoman for Cargill, said, "We're continuing to work with Justice to get this settled. It's an ongoing process and we're working away at it; nothing has changed" and a spokesperson for Continental said the company is still working with the Justice Department and also declined to comment further.

With Cargill owning Continental's grain operations irate farm groups and Midwest politicians claim that  two companies --- Cargill and Archer Daniels Midland (ADM) - would control a large chunk of Midwest grain elevators and barge terminals, limiting competition and pressuring prices.

Dan Basse, vice president of Chicago consulting firm AgResource Co., told Dow Jones that he thinks problems arose recently in negotiations between the Justice  Department and Cargill. "I've heard that Justice told Cargill it would have to sell four or five properties it really wants," Basse said, declining to speculate on which  properties might be in question. "There are some sizable cracks --- no doubt about it. Cargill now wants to back out, thinking it paid too much."

Rosenberg also reports that "lack of export demand also could tighten profits for Cargill." The U.S. Department of Agriculture said this week that in the fiscal year  1999, which ends September 30, U.S. agricultural exports would drop 8.5% from  fiscal year 1998.  "There's a rather dismal export outlook, with no increase expected in  demand," said Basse of AgResource. "That may also be something Cargill is considering as it negotiates with the Justice Department."

Jim Schaub, a USDA economist who has reviewed the proposed transaction, said the acquisition could reduce competition at several points along the Illinois River where Cargill and Continental operate grain terminals. At other scattered locations, Schaub said, Cargill and Continental facilities are miles apart but a Cargill takeover would leave some farmers with fewer choices as to where to market their grain.

Schaub noted that the Cargill\Continental deal also poses other antitrust questions, such as whether Cargill's expanded grain operations would prompt it to enlarge its already sizable barge operations.  And Cargill and Continental could face antitrust questions overseas, he said, pointing to reports that both have large operations in England and Argentina.

According to one account, as reported by Greg Gordon of the Minneapolis Star Tribune, Cargill agreed to negotiate in mid-May only after the Justice Department ordered a staffer to fly to Fargo, North Dakota, to file an antitrust suit seeking to block the deal. Department officials then scurried to recall the staffer before the plane departed, said a government aide familiar with the matter. A senior Agriculture Department official said the antitrust division may have selected North Dakota as the venue for the suit in the belief that judges there would be favorably disposed to the antitrust complaint.
 

CONAGRA\MONSANTO PACT:
"IDENTITY PRESERVED" CORN; SUDDENLY NO COST

In continuing its relentless drive to force bioengineered crops down the throats of U.S. farmers and consumers Monsanto Co. has announced that it has signed a marketing agreement with ConAgra Inc. whereby the nation's second largest food manufacturer will accept and separate bioengineered corn from standard corn.

Prior to the ConAgra agreement the A.E. Staley Manufacturing Co. announced that it wouldn't  accept biotech corn that has not been accepted by the 15-nation European Union. Likewise, at processing plants serving export markets, Archer Daniels Midland also has said it will not accept corn that hasn't been approved by the EU. But it will accept such biotech corn at plants serving domestic markets.

While corn experts say biotech corn will account for 33% of this year's U.S. corn crop corn exports to the European Union have dropped dramatically, the National Corn Growers Association points out.. The EU bought less than one percent of U.S. corn exports in 1997-98, down from five percent in previous years.. About 80% of U.S. corn is used domestically, and Europe represents a small market for corn exports.

According to Randy Krotz, a spokesperson for Monsanto, ConAgra believes it is  saying to farmers that it wants their corn "because they support the enhanced technology and see it as part of agriculture's future."

ConAgra "wants all producers to have a choice in the kinds of crops they will grow," Jim Anderson, president of the company's grain subsidiary, told the St. Louis Post Dispatch's Robert Steyer. "Growers should have the freedom to plant hybrids which give them the highest quality and maximum yields for the lowest costs."  Although ConAgra has signed a deal with Monsanto, it will accept biotech corn using other companies' technologies, said Lynn Phares, vice president for corporate relations at ConAgra.

Curiously, ConAgra says that at no extra charge, it will separate or  "identity preserve" corn for sale in markets that have approved the use or import of corn with traits developed through biotechnology. ConAgra also said in a news release that it was approached by Monsanto with the marketing deal. Terms were not disclosed.

As Charles Margulis of the Greenpeace Genetic Engineering Campaign comments "isn't this the same industry that's been saying how costly it would be to separate crops? Now suddenly they can do it for nothing!"
 

TRIDENT SEAFOODS:
CASTING ITS CORPORATE NET

In a major move that further increases the growing concentration in the fishing industry Seattle, Washington-based Trident Seafoods has announced that it plans to purchase Tyson Seafood Group and thus become one of the largest seafood companies in North America.

Trident would receive Tyson's sizable fishing rights, worth millions of dollars in the biggest single-species fishery in the world and would allow it to expand its operations --- primarily buying and processing fish into products --- to catching fish as well as it would gain about a dozen fishing, processing and freight vessels from Tyson Seafood, also based in Seattle.

The agreement, which was announced on May 28 and is subject to government approval, would also add five processing plants throughout the Pacific Northwest to the eight plants in Alaska and Washington already owned by Trident.

Trident would process almost 25% of the Bering Sea pollock harvest, which in 1999 is set for roughly two billion pounds. Once considered a trash fish pollock has become a valuable commodity not only because of its sheer volume but also because it can be easily processed into fish fillets for fast-food chains and surimi, a fish paste used in imitation crab and other fish products.

Currently, Trident handles millions of pounds of salmon, crab, halibut, cod andpollock and is primarily owned by former crab fisherman Chuck Bundrant, who started in the industry as a $1.47-an-hour fish processor and became president of a company that employs 2,800 employees in Washington and Alaska and is one of Washington's largest private companies, and three other former fishermen. ConAgra, the nation's second largest food manufacturer, also owns a ten percent stake, according to Bundrant.

"Adding Tyson's seafood facilities will allow us to provide a more constant supply of product to our customers as well as expanding markets for the independent fishermen who deliver to us," Bundrant told the Seattle Times business reporter Helen Jung.

The announced agreement also will allow the Arkansas-based Tyson Foods to cut loose from a seven-year-long fishing venture that some stock analysts termed disastrous, according to Jung. The company jumped into the North Pacific fishing industry in 1992, buying Seattle-based Arctic Alaska Fisheries for $243 million in cash and stock. Tyson also sold its surimi operations in Minnesota and Canada to Bumble Bee Seafoods Inc., a unit of International Home Foods Inc., Parsippany,  New Jersey acquired the surimi-products division, which sells goods under Louis Kemp, Captain Jac and other brand names.

After speculation that Tyson would sell its assets to Bernt Bodal, former president of fishing rival American Seafoods (see below), but when that deal fell through, Bundrant said, Tyson approached him.

Terry Gardiner, president of Seattle-based NorQuest Seafoods, has likened Trident to Microsoft and allegations that the software empire has leveraged its dominance in computer operating systems into new business segments. Gardiner was part of a team who also sought to buy Tyson, but he noted that he and Seattle fishing companies Icicle Seafoods and Ocean Beauty Seafoods have argued for more than a year that government policies in the fishing industry were chasing out smaller companies, which threatens to squelch competition.
 

AMERICAN SEAFOODS, TYSON'S FOODS, CONAGRA:
TRANSFORMING THE FISHING INDUSTRY
"INTO A GLOBAL EXTRACTION INDUSTRY"

Just as the fundamental nature of American agriculture has been changed by corporate agribusiness, factory-type farms, vertical integration, and forward contracting  so to has the world fishing industry been transformed by transnational corporate control, factory travelers, value-added commercialism, and Individual Transferable Quotas (ITQs).

While corporate agribusiness has managed to successfully eliminate "excess human resources," i.e., family farmers from agriculture through a series of policies and price manipulations so to are the large corporations that today dominate seafood production destroying this nation's fishing industry through promoting the privatization of the marine commons through the use of ITQs.

Under such a system participants, usually large corporate interests and in many cases the very same corporations that dominate corporate agribusiness, are allocated and own quota shares in the total annual catch of a given fishery. Quota holders can also "transfer" --- buy, sell, lease --- shares on the open market, as with private property or futures contracts.

With each passing year it has become more and more apparent that the fate of the North Pacific fisheries industry need only to look at the demise of this nation's family farm system of agriculture in recent decades to fully comprehend its own fate.

The consequences of such action, as Greenpeace has noted, is that companies such as American Seafoods, Tyson's,  and ConAgra have transformed the fishing trade into a "global extraction industry dominated by multinational corporations and industrial economies of scale." They have thus made  fishing "not about a way of life," about feeding people and providing economic sustenance for local coastal fishing communities, but rather about "making a good rate of return on their global investment capital."

There are other striking parallels between what has been taking place in agriculture and is currently underway in the fishing industry.

Just as banks and farm management companies have been seizing more and more control of bankrupt and foreclosed farms so to have the corporate giants of the fishing industry been pursuing more debt-laden factory trawlers. In recent years American Seafoods, the world's largest seafood company which is neither owned nor operated by Americans, but rather is of Norwegian origin and registry, has been buying such trawlers to the extent it now has a total of 15 of the largest factory trawlers in the Northern Pacific, completely dwarfing its competitors.

Taking a page from corporate agribusiness's book the giants of the fishing industry have in many ways duplicated those conditions which have been the hallmark agriculture's "harvest of shame" --- the treatment of its migratory labor force.

Like corporate agribusiness factory trawler companies have also been using lax labor laws to maintain their operations resulting in the fact that shipbuilding jobs have not been going to American shipyard workers, factory trawler workers have been excluded from federal minimum wage and overtime laws while some make no  money at all, crews are often cheated out of wages, and these workers have less rights to file wage claims. At the same time trawler companies have a history of opposing labor unions, usually do not hire local workers but rather frequently hire foreign workers in addition to breaking numerous laws.

But these parallels should come as no surprise for, as noted earlier, some of the same companies that today dominate corporate agribusiness have also become major forces. Right behind American Seafoods, within the corporate fisheries industry, is ConAgra, the nation's second largest food manufacturer, and until recently Tyson's, the nation's leading poultry producer.

Tyson's, long-time friends and confidants of Bill Clinton, were questioned whether they would have any influence over the President's appointments to positions such as head of the National Oceanic and Atmospheric Administration (NOAA), of which the National Fisheries Service is a part. Son John Tyson responded "I would be irresponsible to my company and my industry if I didn't have any input."

That same year the U.S. Department of Commerce, using recommendations from its own scientists at NOAA as well as from the Pacific Fishery Management Council, issued a rule proposal regarding allocation of the year's whiting harvest, setting aside a significant amount of the allocation to smaller Pacific Coast fisheries who do business with local shoreside processors.

Within a month, however, the Commerce Department, many believed due to the intervention of the White House, reversed itself, ignoring the recommendations of its scientists and of the Council and gave the allocation to Seattle-based factory trawlers, including Arctic Alaska, the Tyson subsidiary. Marine biologists said there was no scientific justification for such a reversal, that the new ruling would cause more harm to the fish stocks because of the trawlers’ large bycatch and that the rule could well cost the local communities between $35 and $40 million in income.

Thus, as our nation's small fisheries are becoming subsumed in the hulls of giant corporate factory trawlers,  they are joining those thousands of family farmers who already have been lost to corporate agribusiness’s grim reapers.
 

NPPC:
AN ODORIFEROUS AWARD ???

This week's "Whose Gonna Believe It!!!" award goes to the Association of Metropolitan Sewage Agencies (AMSA) who at their recent Environmental Policy Forum in Washington, D.C. awarded the National Pork Producers Council (NPPC) its 1999 National Environment Achievement Award  for its "innovative and proactive On-Farm Odor\Environmental Assistance Program."

NPPC Past President Donna Reifschneider,  a pork producer from Smithton, Illinois, who spearheaded the development of the On-Farm program, in accepting the award noted that "I am honored to be able to accept this award on behalf of America's pork producers, who are working every day to demonstrate our commitment  to protecting the environment while producing the highest quality meat  protein in the world. AMSA members ensure the health and safety of millions of Americans every day, so to be singled out for praise by AMSA is truly something to cherish."

Under the On-Farm program, pork producers volunteer to have their farms assessed by teams of trained professionals.  Over a two-day period, all key environmental aspects of production are scrutinized, including facility and equipment maintenance; manure storage structure integrity and operation; manure handling; land application practices; and manure nutrient management and contingency planning.

America's pork producers provided $1.5 million for the development of the assessment protocol and an additional $8 million is earmarked for implementation. The site assessment protocol, which was developed by professional engineers and consultants from USDA's Natural Resources Conservation Service, Extension Service AND private industry, was verified for "thoroughness" by a third-party verification firm and by the Environmental Protection Agency (EPA).

The pork industry is also reportedly committed to a multi-million dollar program to test the effectiveness of "innovative odor reduction technologies." Under the Odor Solutions Initiative, "mechanical, biological and chemical odor treatment technologies" will be tested in laboratories and on farms.