EXAMINER                            Issue # 44      August 24, 1999

Monitoring Corporate Agribusiness From a Public Interest Perspective

A.V. Krebs

                                                 Editors Note
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French farmers , with the apparent support of the French people, have launched an aggressive campaign to not only protest U.S. trade sanctions against their country, but also to show their opposition to the increasing domination of multinational U.S. food and agricultural corporations.

Their latest protest came last Saturday in southern France where angry farmers driving tractors dumped peaches and six tons of manure in front of McDonald's outlets. The actions came after the arrest of five protesters who were charged with vandalizing a McDonald's restaurant under construction in Millau, Aveyron in central France. No one was injured in the latter attack but damage to the building was reported severe with protesters scrawling graffiti across the walls, proclaiming their locally-made strong blue cheese over U.S. burgers. "Roquefort first, McDo go home," one read.

Hours after the Aries 100 farmers in the southwestern town of Montauban dumped peaches in front of a McDonald's and a large supermarket. Also Saturday, 400 fruit and vegetable growers blocked access to a supermarket and a McDonald's in Martigues. Targeting McDonald's the farmers are seeking the corporation to drop charges against the five farmers arrested the previous week.

France's farmer's union, the Confederation Paysanne, has called for a wave of demonstrations at McDonald's restaurants to protest  U.S. sanctions on a slew of products, ranging from Roquefort cheese to certain brands of truffles to the foie gras made in the Aveyron region. The U.S. and Canada have imposed 100% tariffs on a number of luxury products made in the European Union, worth $124 million in annual sales to North America. The tariffs were levied after the EU bloc refused to lift a ban on North American hormone-treated beef.

"Globalization is creating absurd economic conflicts," the union said in a statement, adding that the protests aim to "allow farmers and others to feed themselves as they think best." McDonald's for the farmers has become a symbol of such globalization.

McDonald's, which has some 400 outlets in France, claims innocence and has accused the French farmers of dragging it into a conflict for which it is not responsible.

Also part of the farmers protest is that French supermarkets are depriving them of just  profits by paying low prices for their produce. Producers, the New York Times reports, are hoping that a new Government regulation requiring retail stores to post the wholesale prices they paid for the produce alongside the retail price -- which is always much higher -- will pressure wholesalers to pay the producers more.

Unlike most American  consumers, French consumers seeing the wholesale and retail prices on the shelves will likely, judging from past history, side with underdog farmers, just as they have with striking underdog railway workers, and show their solidarity by pressuring wholesale distributors to be fairer to producers, explained one farmer, Guy Savanier, from his apricot orchard and vineyard near Nîmes.

"The consumer," he told the Times, "will know that every product with two prices listed is a product in difficulty. We hope they will buy more, which will increase demand and raise prices. We also expect a civic attitude by distributors, in the sense that they will accept a more equitable sharing of profit margins," he said.

French supermarkets, who are the villains in Savanier's eyes, will thus pay producers more for French fruit and vegetables, but not raise supermarket retail prices. "We don't want consumers to pay more," he said.

The week before the McDonald's protest at Aries, 200 farmers blocked the center of the historic Rhone River city of Avignon with 2,500 shopping carts to protest falling prices.


In an apparent set back to enforcing federal anti-trust laws  the 8th U.S. Circuit Court of Appeals has struck down a 1998 administrative ruling by the U.S. Department of Agriculture (USDA) that ordered IBP Inc., the nation's largest beef packer, to revise its bidding procedures to avoid antitrust violations.

In a seven-page decision, the federal appeals court held that IBP's marketing agreement with nine Kansas feedlot operators "has not had the actual effect of suppressing or reducing competition"  and that meatpackers are free to create "contracting arrangements" with ranchers without violating the 1921 Packers and Stockyards law, which is aimed at keeping livestock markets competitive.

USDA had brought the original case in August 1995, alleging that the Dakota Dunes, South Dakota-based IBP offered higher prices to some Kansas feedlots than to others, resulting in undue preferences and stifling market competition. Originally a USDA judge had said that IBP had a right to guarantee a steady cattle supply by paying higher prices to some Kansas feedlots than others.

However, the judge ordered an elimination of a section of the agreement in which the company got a second chance at buying cattle by matching any higher bid of a competitor. Such a practice, known as the right of first refusal, has the potential for stifling competition, the USDA judge said.The 8th Circuit Appeals Court has now reversed the USDA judge's order to eliminate that section of the agreement.

"The record demonstrates," the appeal court contends, "that the right of first refusal is an effort by IBP to have a more reliable and efficient method of obtaining a supply of cattle."

"This is not only a victory for IBP but also for everyone who supports efforts for more value-based marketing in the beef business," claims Richard Bond, IBP president and chief operating officer.  In Washington, Michael Dunn, the undersecretary of agriculture who oversees meatpacking industry laws, said he was "disappointed." The possibility of seeking a rehearing from the appeals court is being considered, he said.

Meanwhile, the Omaha World-Herald's Julie Anderson reports that the Environmental Protection Agency (EPA) has sent to the U.S. Justice Department allegations of violations under five environmental laws by IBP Inc.'s Dakota City, Nebraska, meatpacking plant and tannery. The laws involved govern air, water and hazardous waste. According to a letter the EPA sent to Rep. Doug Bereuter, Rep.-Nebraska., the matters are "undergoing comprehensive review" at the Justice Department.

The EPA letter, dated in late June, came in response to an inquiry by Bereuter into the status of notices the EPA issued last September. In the notices, the agency found IBP in violation of air-quality regulations for failing to obtain emissions permits before expanding three areas of its Dakota City plant.  In the June response to Bereuter, the EPA said it was "very concerned about this situation and is actively pursuing an enforcement investigation." The letter was signed by Dennis Grams, administrator of the EPA's regional office in Kansas City, Kansas.  The letter said that the agency had made "direct enforcement referral" to the Justice Department in September 1998 under three federal acts that deal with emissions reporting requirements and with hazardous wastes.

In December 1998, the EPA made a referral to the Justice Department based on alleged violations of the Clean Water Act. In April, the EPA forwarded alleged violations of the Clean Air Act relating to IBP's emissions of sulfur dioxide and hydrogen sulfide, according to the letter.


In the largest environmental settlement to date Premium Standard Farms, which processes two million hogs a year in six northern Missouri counties , has agreed to pay $25 million  to settle a suit  brought by Missouri Attorney General Jay Nixon accusing it of violating the state's Clean Water Act.

At the same time in neighboring Kansas, the State Health Department has announced that it is now requiring farms with more than 10,000 animals to line their waste pits with plastic, a measure designed to keep manure out of ground water and prevent it from contaminating drinking water.

Several states have also declared moratoriums on expansion of giant hog farms. Dozens of counties around the nation have likewised passed measures designed to limit or exclude big hog farms. Nebraska has kept the hog factories out by banning all corporate farming.

As the corporate hog industry has so rapidly expanded in recent years , in which the manure of thousands of pigs has been  concentrated in lagoons and then sprayed over fields the result has not only been a terrible odor being spread for miles around, but with spills occurring, the manure has swept into streams and killed fish.water, the pollution caused by such spills posing a major environmental threat.

In fact, the Sierra Club has labeled big hog operations as one of the most serious threats to the nation's environment., according to club spokesperson Ed Hopkins, as giant hog farms have degraded some 35,000 miles of rivers and streams in 22 states. "Hog operations are still classified as agricultural," Hopkins notes, "but they have turned into industrial sites."

In recent years Premium Standard has been accused of several spills that have killed fish and threatened ground water. While spraying animal waste on open fields has always been pretty much a standard procedure for family farms, the manure serving as fertilizer for the crops , large amounts of concentrated manure, such as has been dumped in recent years by hog producers like Premium Standard, are much too strong to serve as effective crop fertilizer.

Now Premium Standard, under the Missouri settlement,  must treat the waste before it is spread on the land, to guard against contamination.

While politicians in Missouri and other states have labeled the big hog producers, like Premium Standard, as threats to the environment as well as the rural economy, the Premium Standards in the hog industry contend that environmental rules are being used as a weapon to keep out an emerging industry that does not fit with the rural tradition of the family farm.

Mark Drabenstott, a vice president at the Federal Reserve Bank in Kansas City specializing in the rural economy recently told the New York Times Dirk Johnson that the hog industry has largely chosen to expand in the West, including the Oklahoma Panhandle and Utah, which is new territory for growing hogs. But, as the scrutiny of hog operations intensifies, Drabenstott notes, the differences in regulations between states became smaller.

"The industry is going to go where it feels welcome," Drabenstott said. "These days, the discussion is not so much whether we go to Iowa or Missouri -- it's do we stay in the United States or do we go to Mexico?"

Charlie Arnott, a spokesman for Premium Standard Farms, told the Times' Johnson that Missouri had been justified in "holding us accountable" on water pollution, but he quickly added that  the debate over large-scale hog production in the American countryside was often driven by emotion and nostalgia.

With the increases in technology, along with the global nature of markets, he noted  the face of agriculture had forever changed and that the big-scale hog producers were helping people survive in the countryside.

"What everybody is interested in is a quality rural way of life," Arnott concluded. "It isn't the same as the old style of agriculture. But there are a whole lot of people in Northern Missouri who now are able to live in the country, send their kids to a rural school and enjoy the neighborly quality of life," because of the 2,400 jobs created by the hog producer.

But Terry Spence, a 52-year-old cattle farmer and a sharp critic of factory hog farms, counters that the countryside is being sold down the river. He said the state did not win nearly a large enough settlement from Premium Standard Farms.

"I have grandchildren, and I don't like them to be outside when this odor gets so bad," Spence said. "This is not the typical farm smell. Animals have always roamed the land. But when you compound it like that, it's terrible. It isn't farming. Call it something else."


In the Department of Justice Anti-Trust Division's  original complaint against Cargill's purchase of Continental Grain's commodity merchandising subsidiary, the division asserted that competition for the purchase of grain and soybeans from farmers and other suppliers would have been harmed by combining Cargill's and Continental's competing port elevators in the Pacific Northwest, which purchase corn and soybeans from farmers in portions of Minnesota, North Dakota, and South Dakota. Currently, nearly 40% of Cargill's corn shipments abroad go through their Pier 86 elevator in Seattle.

Yet, in ordering the divestiture of Cargill's 4.2 million bushel terminal in Seattle, presently leased from the local port authority, the nation's largest private corporation will now operate in part the TEMCO three million bushel grain elevator at the nearly Port of Tacoma. TEMCO or Tacoma Export Marketing Corp. has operated the terminal as a joint venture for Continental and Cenex Harvest States Co-op, the latter recently announcing that it plans to merge with Farmland Industries, forming the nation’s largest agricultural cooperative. (See Issue #25)

What will happen to Cargill's Pier 86 elevator is now being speculated upon.

Since 1970 when the 68 white-silo elevator first became operative it has become a symbol of the working waterfront that has been so much a part of Seattle history ---  a waterfront dominated by ships and tugboats rather than the condos, seafood restaurants and office buildings that have sprung up on it in recent years. Now the future of the facility, and the 40 acres of prime waterfront land it occupies, is uncertain.

Cargill, which agreed last November to continue leasing the Seattle terminal through 2005, must find another tenant if the facility is to remain a grain terminal. If another operator cannot be found, then the world's largest grain trader would presumably, depending on the outcome of negotiations with the Port of Seattle, have to pay the balance of its lease or find a way to get out of it resulting in 40 acres of waterfront land where the terminal sits could be up for grabs.

Ironically, only last year Cargill threatened to leave Seattle for Tacoma if the Port did not reduce the cost of the lease. The Port waived docking fees for six months, and Cargill agreed in writing to sign a new lease through most of 2005.

In choosing to leave Seattle, Cargill gave little explanation for the choice, saying only that it was a "complex decision." However, in shifting its operations to the Tacoma elevator Cargill likely expects a more favorable lease agreement since Continental was paying about $1.3 million a year to lease its facility Cargill was paying more than $1 million a year for the Seattle facility plus docking fees for the ships. In 1997, those fees cost Cargill about $1.5 million in addition to the lease payments.

Port of Seattle officials say they would like to keep operating a grain terminal on the land since the Port built the $14 million facility specifically for Cargill and it could cost up to several million to tear it down.

"Our lease remains in effect," said William Friedman, general manager of cargo piers and industrial properties for the Port of Seattle. "Our feeling right now is that the burden is on them to continue with our lease."

A clue, however, to the fate of the elevator, came to light in an August 22 report by the Seattle Times  business correspondent Patrick Harrington. He noted:

"With Cargill now planning to shift operations to Tacoma after all, it remains to be seen whether there is a player big enough to fill its shoes.

"Cargill, even before it acquired Continental last month, was the nation's largest exporter of grain; Continental was the second largest. Illinois-based Archer Daniels Midland (ADM), another large grain company, had earlier expressed interest in the facility, according to Port of Seattle officials, but spokesmen for the company refused to comment."

Slightly over 100 miles to the south of Tacoma, Mitsubishi Corp. a leading Japanese trading company, recently announced it has acquired about a 10% stake in the Kalama Export Company LLC equally owned by ConAgra Inc. and  ADM ("Supermarkup to the World").  Kalama Export Company LLC operates a grain elevator along the Columbia River in Washington State, with hourly shipping capacity of around 3,000 tons and storage capacity of about 50,000 tons. It also plans to increase storage capacity to 90,000 tons by the end of 2000.

Yet Cargill spokeswoman Lori Johnson said the Justice Department was concerned that her company would have too much business concentrated in the Pacific Northwest because of Continental's leasing of the Tacoma grain-storage facility. "We fought the Justice Department not to include Seattle," said Johnson. "We still need to sit down with Port officials and talk about the options and make it work for everyone," she said. "But we do have an obligation under the lease."


In a loud and clear message to corporate agribusiness food manufacturers the Berkeley, California school board recently unanimously passed a measure designed to encourage students not only to eat their organic vegetables, but to grow them.

With this new policy, Berkeley schools will have gardens and will incorporate eating, gardening and nutrition into the curriculum, i.e., a garden planning session might be a math exercise calculating the area of vegetable plots.

"We want the cafeteria to be a learning experience," said Tom Bates, a former state assemblyman who now heads the Berkeley Food Systems Project, which has been working with the district on the new food policy.

Reviewing current food serve in the schools,  Bates notes that "calling it airplane food would be a compliment. School kitchens and cooks are disappearing, and instead you're seeing cafeterias with warmers to heat prepackaged food. We want to break that."

"Most kids don't even know what organic means," Berkeley High junior Coriale Areceneaux told the San Francisco Chronicle's Meredith May. "For lunch, they walk off campus for Burger King or $1 Chinese food."

The Berkeley plan stems from school Supt. Jack McLaughlin's desire to do something about school lunches and student health, district spokeswoman Karen Sarlo told the Associated Press. "School lunches are horrible, not only in our school district," Sarlo said. "Would it cost that much more to make the food good and fresh?"

The school district first started looking at what it serves for lunch in response to complaints of bad cafeteria food and parental worries about chemical poisons and nutrition.

Adding organic items should not cost too much more than buying the old standbys, according to school officials as the healthy alternatives will be purchased with grant money, as well as a portion of the $650,000 the district currently spends on cafeteria food. The organic foods will be phased in with the traditional pizza, burgers and Taco Bell burritos as grant money comes in to pay organic farmers. The Berkeley Food Systems Project has to date raised $245,000 portions of which will go to buy organic food, help create new school gardens, and teacher education.

Berkeley school officials also soon hope to have an all-natural menu, where even the milk comes from cows not injected with bovine growth hormones.


In a move to fill a much needed void and counter corporate agribusiness's desperate efforts to deny consumers the right to know whether their food is genetically engineered or not, Consumer Reports magazine this week will provide a list of food products that contain bioengineered ingredients.

The new issue will identify for its 4.7 million readers which of their favorite tortilla chips, muffin mixes and even baby foods contains genetically modified ingredients. By naming such foods by brands the magazine is certain to increase the growing debate in the United States over policies that allow Americans to routinely eat genetically modified food without knowing it.

Efforts by the government and corporate agribusiness to deny the people's right to know contrast sharply with the 15-country European Union, as well as Australia and New Zealand,  which has ordered the labeling of foods with modified DNA while the Japanese government has just published a list of 30 modified foods, including tofu, that soon must carry labels.

Meanwhile, in the U.S. people are now already consuming an array of modified whole foods and processed foods derived from 50 gene-altered crops approved by at least 60% of the nation’s processed foods -- from soup to nuts -- contains gene-altered ingredients.Roughly half of this year's soybean crop and one-third of the corn crop has been genetically modified either to kill pests or to help the plants withstand weed killers.

In its tests Consumer Reports found that grocery shelves are increasingly stocked with genetically modified products due to the fact that so much soy protein and so many corn derivatives such as high-fructose sweetener are currently used in processed food.

The magazine's list comes only a week after Rep. Dennis Kucinich, Dem.-Ohio, disclosed that he is finishing and prepared to introduce legislation that will allow labels on packaging that indicate whether food is free of genetically modified ingredients.

"At this point, which I think is very early in the discussion of this technology, it seems the most rational and safe thing to do is to label something free of genetic modification and let consumers make up their minds if it concerns them or not," Kucinich, a two-term House member and a former mayor of Cleveland, recently told the St. Louis Post-Dispatch's Bill Lambretch.

"Bioengineering is producing changes in food that are coming so fast that they've overtaken the regulatory structures," Kucinich added. "Until such time that we can make a complete and independent determination as to the safety of genetically modified food, the public has a right to know whether food has been modified or not."

At the same time Craig Winters, executive director of the newly formed Campaign to Label Genetically Engineered Foods, stressed that he and his organization intend to "open the floodgates of information to Congress." In addition, the Sierra Club declared  last week that it is joining the debate on genetically engineered modified food. In a letter to President Bill Clinton, the group's president, Carl Pope, said that his 550,000-member organization wants mandatory labeling of genetically altered products.

Meanwhile, Grocery Manufacturers Association spokesperson Gene Grabowski worries that labeling "would imply that there's something wrong with food, and there isn't." He said that changing the science-based labeling system now in use could let "any special interest group agitate and create monstrous encyclopedias and attach them to products."

But as the chorus of protests concerning the non-labeling of genetically engineered food escalate in Europe and other countries abroad biotechnology companies, like Monsanto and other "life science" corporations plead with  the U.S. government: Defend American rules that keep genetically modified foods unlabeled or risk a consumer backlash at home.

"We said to them that we really needed their voice because we don't want this to spread to the United States,"  Mike Phillips of the Biotechnology Industrial Organization told Lambrecht.

It has also been revealed that in a June 11 meeting of the World Trade Organization’s (WTO) Committee on Technical Barriers to Trade, the United States and Canada expressed concerns to the WTO about the increased use of mandatory labeling measures for genetically modified foods.

Canada complained about recent measures proposed by the governments of Australia and New Zealand on labeling requirements for genetically modified foods, measures that Canada claims will apply to foods that are no different, essentially, from their conventional counterparts.

The two North American countries have criticized the adoption of GMO labeling plans, arguing the labels are a potential barrier to trade and that there is no scientific justification for treating genetically modified foods differently from conventional foods.

The two countries are particularly critical of European Council Regulation 1139/98, which entered into force last year requiring products containing modified corn and soybeans to carry information on the food label or ingredient list stating that the product contains genetically modified material. Washington and Ottawa claim that their exports of corn and soybeans to the EU are being adversely affected by the labeling requirement.

Despite the United States government and its agriculture, food and health regulatory agencies  refusal to recognize possible adverse health effects from eating genetically engineered foods,  two of the world's three largest food companies — Nestle and Unilever — have agreed to phase out sales in the United Kingdom of products made from such ingredients.

Likewise, most major food retailers in the U.K. and Europe, including Cadbury, Sainsbury, Safeway, France's Carrefour, Spain's Pryca and Italy's Migros, have pledged to eliminate such ingredients from their brands in recent months.

Public concern in Europe has been building against GE foods for several years, encouraged by a strong grassroots movement against genetic engineering and a distrust of food safety measures that has persisted since the mad-cow scare two years ago. That effort was furthered in February, 1999, when an international group of scientists validated earlier research showing that rats raised on a modified potato variety — not commercially grown at present — suffered from shrunken internal organs and suppressed  immune function.

A British poll conducted in March found that "nine out of 10 shoppers would switch supermarkets to avoid genetically modified food," and would be willing to travel "up to double the distance" to a supermarket that banned such foods.

In the United States, an estimated 70% of food already contains some genetically modified ingredients. Transgenic foods are now likely to be on the shelves in many nations that do not even grow modified crops, as the three nations with sizable transgenic harvests — the United States, Argentina, and Canada — are all major food exporters.

Even as the U.S. government turns a deft ear to such protests as is being heard in the U.K., Europe, and India a survey conducted in June by Time magazine found that 81% of Americans want genetically engineered foods to be labeled as such.

In the U.K. not only are consumers concerned about genetically engineered food, but they also are responding to the nation's farmers setting up  traditional markets in every British town to sell their fresh produce direct to consumers. The number of such markets has shot up from single figures to around 75 in the last year alone, according to the nation's National Farmers Union. said.

British farmers complain that while they are forced to accept low prices when selling their produce to supermarkets such prices are not reflected in the prices that supermarket customers have to pay.

National Farmers Union President Tony Pexton predicts that the markets could provide a vital lifeline at a time when farm businesses are struggling. "Most farmers, particularly given the incredibly low prices and incomes being suffered at the moment, would jump at the chance," he adds..

A union survey showed 98% of farmers favored the concept and it said in a statement: "There could soon be a market in every major town as farmers go `back to the future' using this traditional route."


From Progressive Farmer magazine

What do you think of Europe's controversy over genetically-modified crops?

I'm not concerned with their opinion or policy --- 4%

More research is needed, but they should agree to imports in the meantime --- 21%

They're wrong --- there's nothing to worry about --- 28%

They're right --- more research should be done on environmental and health impact. --- 47%


In James Bender's  book How to Talk Well (New York: McGraw-Hill Book Company, Inc., 1994)  he relates the story of a farmer who grew award-winning corn.

Each year he entered his corn in the state fair where it won a blue ribbon.One year a newspaper reporter interviewed him and learned something interesting about how he grew it. The reporter discovered that the farmer shared his seed corn with his neighbors.

"How can you afford to share your best seed corn with your neighbors when they are entering corn in competition with yours each year?" the reporter asked.

"Why sir," said the farmer, "didn't you know? The wind picks up pollen from the ripening corn and swirls it from field to field. If my neighbors grow inferior corn, cross-pollination will steadily degrade the quality of my corn. If I am to grow good corn, I must help my neighbors grow good corn."