EXAMINER                            Issue # 55      November 17, 1999

Monitoring Corporate Agribusiness From a Public Interest Perspective

A.V. Krebs

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Despite delays, postponements and a threat to shut the U.S.Senate down by its principal author, Senator Paul Wellstone (Dem.-Minnesota) his Agribusiness  Merger Moratorium Act of 1999 (S. 1739), co-sponsored by Senators Byron  Dorgan (Dem.-North Dakota), Tom Daschle (Dem.-South Dakota), Tom Harkin (Dem.-Iowa), Russ Feingold (Dem.- Wisconsin) and Tim Johnson (Dem.-South Dakota) is scheduled to be voted on Wednesday as an amendment to the bankruptcy reform bill now before the Senate.

Family farm advocates are urging people to immediately call their state's senators at the Capitol Hill switchboard: (202) 224-3121 urging a "YES" vote on the Wellstone amendment.

The amendment  would impose an 18 month moratorium on mergers and acquisitions of agribusiness firms where one party with revenues over $100 million and the other over $10 million would seek to merge. The moratorium would terminate before 18 months if Congress enacted legislation to deal with concentration in agriculture. The Act also establishes a 12-member review  commission to study the effects of agricultural consolidation and make recommendations for reform of the antitrust laws to promote more  competition.

Wellstone got his way on the moratorium vote after an eight-week push that climaxed with his threat to bring the Senate's business to a standstill for the rest of the year.

"We want to have some real competition in the food industry, and these  conglomerates have muscled their way to the dinner table and they've forced our producers out,"                            Wellstone argues. "And they have so much power that our family farmers don't get a fair price in the marketplace. I think this is one of the most important things that we can do."

"We are witnessing the biggest wave of mergers and economic concentration since the late 1800s," he said. According to the Securities Data Company in the 12 years of the Reagan-Bush presidencies there were 85,064 corporate mergers valued at $3.5 trillion. In the seven years of the Bill Clinton presidency there have been 166,310 corporate mergers valued at $9.8 trillion.

After Senate Majority Leader Trent Lott agreed to allow Wellstone a vote on the moratorium bill, Wellstone called it "the first shot of a much larger battle to change federal farm policy." Sen.Wellstone and other Democrats ultimate goal is to force an overhaul of the 1996 Freedom to Farm bill, or as it is otherwise known in family farm agriculture ---  the "Freedom to Fail" bill.

In corporate agribusiness in recent months the nation has witnessed an aggressive acquisition strategy employed by Cargill, Smithfield Foods, IBP, Cenex, Farmland Industries, Monsanto, and other large corporations literally tearing apart the economic fabric of rural communities while threatening the security of America's food supply.


In an expected move given their long-time intimate relationship with corporate agribusiness six of the country's major self-proclaimed "agricultural organizations" have petitioned Congress to oppose Senator Paul Wellstone's amendment calling for a moratorium of mergers for 18 months until the issue can be carefully studied.

National organizations like the National Cattlemen's Beef Association (NCBA) and the
American Farm Bureau Federation who claim to represent farmers and ranchers and who have in the past issued policy statements supporting anti-trust enforcement, nevertheless continue to oppose legislation that would benefit independent crop and livestock producers.

"Although they seem not to know it, the points that NCBA and the Farm Bureau raise in the their letter are arguments in favor of the Merger Moratorium Act, not arguments
against it," observes St. Francis, Kansas cattleman Mike Callicrate.

In their letter the NCBA and Farm Bureau along with the American Feed Industry Association, American Sheep Industry Association, National Milk Producers’ Federation and the National Turkey Federation state, "We welcome efforts to address the complex issue of concentration in the agriculture industry," but they add "we have serious reservations about enacting such an amendment without further opportunity for discussion and input."

As farmers and cattlemen have come to realize, Callicrate notes, "further discussion and input" is just another political and corporate word for "stalling action on the issue."

Their contention is that, "this amendment would provide the impetus for quick consideration of `fixes' to this problem," but Callicrate adds, we fear the opposite may be true. "An 18-month moratorium and a lengthy `study' would very likely prolong progress until both of the deadlines in the Wellstone legislation have passed. This is an entirely specious position. Who says nothing will be done until the deadline has passed? Obviously, only those who oppose any merger restrictions."

The answers the six agribusiness organizations ask Congress to seek before any merger freeze is enacted are some of the very urgent issues which will be examined while the freeze is in place. They include:

* the sufficiency of current anti-trust laws and the Packers and Stockyards Act;

* adequacy of enforcement by both the Department of Justice and Department of Agriculture; and

* implications to the Capper-Volstead Act which exempts cooperatives from antitrust laws (although as it now stands; the Merger Moratorium Act does not apply to co-ops).

The Farm Bureau's opposition to the Wellstone amendment could well have its roots in what it describes in the letter as "implications to the Capper-Volstead Act which exempts cooperatives from anti-trust law."

In his 1971 book Dollar Harvest: An Expose of the Farm Bureau, Samuel R. "Sandy" Berger detailed how the Farm Bureau should be more accurately described not as a farm organization, but as a multi-million dollar business combine with interests ranging from insurance to oil, fertilizer to finance, mutual funds to urban shopping centers.

"The farmer has increasingly become the customer," Berger adds, "not the constituent of an organization that today regards agriculture largely as a market for its owns goods and services, as the cornerstone of a commercial empire."

The Bureau has also used its financial clout to expand into contract farming, driving independent millers, supply houses, oil dealers, warehouses, and grain elevators out of business while making its individual farm members captive of the Bureau's Co-op and/or its feed companies. Through this process the Co-ops, exempt from anti-trust statues through the Capper-Volstead Act, have been taking over the farm supply and commodity marketing business by buying up private independent companies and becoming gigantic business with management effectively insulated from the farmer-patron, who by now has little real voice in the decision making.

Berger also showed how the Farm Bureau's political power stems first  from its huge business earnings that are frequently siphoned off (while the Internal Revenue Service is busy elsewhere) into tax-exempt state and national Farm Bureau chapters to be used for lobbying and other political ventures.

The current head of Clinton's National Security Agency also details in his book how the Farm Bureau's political power has been enhanced by the public and the Congress's long-standing acceptance of the Federation as "the voice of American agriculture," when in fact a majority of its membership (4.9 million as opposed to 1.9 million farmers in the U.S.) simply joined the Bureau only as  prerequisite to buying its insurance.


Corporate agribusiness in the waning moments of 20th century is particularly fond of the mythological claim that independent family farmers are the mainstay of American agriculture and it often expresses that claim in terms that one  U.S. farmer is producing food and fiber for 129 people--94 in the U.S. and 35 abroad.

Addressing the question of how "independent" family farmers are under this system called agribusiness, A.C. Townley, co-founder of the Non-Partisan League at the beginning of this century, succicently once observed to a Northern Plains farm audience:

"I have been told all my life that you are independent American farmers. I know that you are independent farmers, because all those fellows that handle the wheat and potatoes say you are. They tell it from morning until night, that you are independent American farmers. You know they never lie. I heard a farmer the other day say that his interpretation of an `independent' American farmer was that he was `in' about as far as he could get, and `dependent' upon everything in sight."

But the claim of independence ignores the reality that today's farmer is just but one factor in a giant food production, manufacturing and delivery system called "agribusiness" for the term  has come to mean more than just owning and cultivating land to raise and produce crops and livestock (more, that is, than agricultural production). The term also covers financing agriculture and manufacturing, transporting, wholesaling and distributing farm machinery, fertilizers, chemical poisons, seed, feed and packaging materials. Agribusiness also manufactures, processes and markets food.
Yet, in the course of substituting capital for efficiency and technology for labor, corporate agribusiness has turned family farmers not only in the U.S., but throughout the world, into technological "junkies," endangering their own and their families' health and safety, converting "stewards" of the land into "miners" of the land, creating a class of corporate elite "welfare cheats" living off government subsidies and basing farm survival not on earned income but on borrowed capital and so-called "rural development."

The process by which corporate agribusiness has managed to create such conditions is basically through economic concentration where the aggregate of agriculture's new wealth has and continues to be consolidated in the hands of a few corporations and individuals. Thus, by examining the various forms of economic concentration, the economic inefficiencies of corporate agribusiness can plainly be seen.

Yet, despite all  the "inefficiencies," that characterize the various forms of economic concentration, corporate agribusiness continues to employ them, seeking not only to standardize our food supply through the "manufacturing" process,  but at the same time forcing consumers to pay higher and higher quantitative and qualitative costs for their daily food as fewer and fewer corporations manufacture such food. In such a corporatist culture who profits? Who pays?

By deifying "cost benefit analysis" at the expense of the "common good" corporate agribusiness has also managed to annul the positive dimensions of the family farm system and eliminate its economic and environmental advantages, particularly as they relate to building genuine communities.

As social anthropologists Patricia L. Allen and Carolyn E. Sachs point out, any system built upon a foundation of structural inequities "is ultimately unsustainable in the sense that it will result in increasing conflict and struggle along the lines of class, gender, and ethnicity."  Corporate agribusiness has become just such a system.

Nowhere are the forms and characteristics of economic concentration better detailed and discussed than by John D. Blair, former Chief Economist for the U.S. Senate Anti-Trust and Monopoly Subcommittee in his landmark work Economic Concentration: Structure, Behavior and Public Policy  (Harcourt Brace Jovanovich, Inc.: 1972). Economic concentration within the food industry is not simply found in examining market shares or market concentration, but rather can also be found in vertical concentration, conglomerate concentration and aggregate concentration.


Clearly corporations possessing large market shares have become the most visible form of economic concentration in the latter half of the 20th century.

One has only to talk with the beleaguered independent cattle and hog producers in the U.S. facing a beef packing industry where three firms (IBP, Excel, Cargill's subsidiary, and ConAgra) control 81% of the industry and where five firms (Smithfield, IBP, Swift, Excel, Farmland Industries and Hormel ) control 75% of the pork slaughter to hear the dire consequences they face in trying to survive. In Canada alone, IBP controls nearly 66% of that nation's beef packing industry. Likewise, four firms now control 73% of the U.S. sheep slaughter while in the commodity markets four firms control 59% of port facilities, 62% of flour milling, 74% of wet corn milling and 76% of soybean crushing.

U.S. consumers, meanwhile, can testify to the consequences of four firms --- Kellogg, General Mills, General Foods (a subsidiary of Philip Morris), and Quaker Oats ---controlling 88.5% of the ready-to-eat cereal market and where they are forced to pay ever-escalating prices to a $7 billion annual market. Meanwhile, the average annual return on equity (profitability) from 1993-1997 for cereals' "Big Four"  was: Quaker Oats 28.9%, Kellogg's 24%, General Mills 25.2%, and Philip Morris 22%.

In any product line where a small number of corporations hold the dominant market share we see comparatively little genuine price competition for if one corporation makes a move, say like cutting its price, the consequence of such a cut by it, or any one of the companies in that product line, would more than likely lead to a decrease in the corporation's own profits. The result is that no one wants to initiate such action, although each corporation is independent, thus creating a similar situation that one would find if a monopoly agreement existed between them. Likewise, if any of the dominant market share leaders is able to sell their product at a higher price, it is highly probable that the others will do likewise.

But, even as the food industry becomes more and more concentrated, more "efficient" in its own eyes, past studies show that the greater the relative growth of an industry, the more likely it is to show a decline  in concentration while the greater the relative decline of an industry, the more likely it is to show an increase  in concentration.

John D. Blair in his book Economic Concentration: Structure, Behavior and Public Policy  (Harcourt Brace Jovanovich, Inc.: 1972) discusses some of the characteristics concerning the relationship of size to efficiency.

"All the industries in which the tendency was toward decreasing profitability are among the more concentrated sectors. Whether because of high capital entrance requirements, their control of scarce raw materials, their use of predatory practices to suppress competition, or other factors, they have enjoyed long periods of relative immunity from the rigors of price competition and thus from the competitive necessity of constantly lowering their costs. . .

"And the older a company grows, the more susceptible it becomes to the various forms of managerial diseconomies --- rigid and wasteful hierarchical structures, the impediments of red tape, `regular’ channels and `proper' procedures, conflicts between line and staff, internal struggles over advancement, status and budget, resistance to change and so on," Blair continues.

"The very factors which have made for a concentrated industry structure have enabled them not only to continue to exist but to retain their position as their industry’s dominant, though not particularly profitable, enterprise. Lower profit rates, however, are not the only symptom of what might be referred to as `corporate arteriosclerosis.' The same ailment would explain the manifest inability of leading firms, generally, to keep pace with their smaller (and usually younger) rivals in exploiting new developments in either supply or demand that bring about a rapid expansion of the industry's output," he adds.

For corporate agribusiness today the dominant principle behind the international economy has become simply the idea of money changing hands. Rather than perceiving money as an accepted medium of exchange making it easier for people to equitably satisfy their many needs and wants, of which food is the most basic, corporations have instead adopted a concept that the acquiring of money is an end in and of itself.

When raw materials are harvested from nature they are turned into money. This is done through a pricing system whose equation is production times price equals income. Any operating economy divides itself into two divisions: income and cost. Such income segments in our society include: unincorporated enterprise, corporations, agriculture, and rentals to persons. These four segments likewise have to earn every cent they can before being used to pay the costs of the economy: wages and capital costs (interest).
Producing goods for people requires a continuous supply of raw materials: food and fiber, minerals, timber and energy. As such raw materials are grown and extracted each year from the earth and sea they produce what we call "new wealth." Here lies the key to a healthy economy for it is here where the actual exchange of money begins. From this point on, throughout the entire process of producing our food, money is changing hands, but it is the raw material, not the money, which is the focal point of the process. Ideally, the money earned should not remain stagnant, but rather be used by the people involved to buy other goods and services.
Consequently, this money will be constantly multiplying as it makes its way through the marketing process. Because each part in this process depends to a very large extent on the other, a certain balance must be maintained if such an economic system is to function properly and  equitably.

A fair sharing of this income as it is progressively distributed among the various divisions of labor not only provides an equitable, reciprocal market for all of the goods and services produced, but these goods can also be paid for at the same time with the cash (earned income and profits) already received in the annual economic cycle.

The price, for example, that wheat farmers receive from the flour miller should properly correspond with the buying power of urban workers, which would include, of course, their production costs. If the farmer charges prices that are too high, then the farmer is existing at the expense of others. If, however, as is now the case, farmers receive too little for what they have produced, then they are being victimized by the other sectors of our economic system. It is here, from the farmer's perspective, that corporate agribusiness has become so grossly economically inefficient.

An equitable national income should not be based on simply the number of dollars one can accumulate, such as is the case in today's economically concentrated corporate world, but rather on the precision of the distribution of those dollars. The key to that distribution is dependent on economic equilibrium, and economic equilibrium is dependent

1) upon that amount of increase in raw material production needed annually to provide the needs and the wants of modest increases in population, and
2) the absolute necessity to price raw materials at a fair and equitable price that will provide farmers with the necessary cash to assure its production and consumption, without the injection of excessive  debt.

Since most "new wealth" begins with what is produced from our natural resources, of which farming is the largest, it is essential  that the creators of this "new wealth" receive their fair share of the income, for as their income rises or falls so too will that of all the other parties in the process.

But, as the U.S. Farmers Association long-time president Fred Stover, once noted "the biggest problem farmers have today is that they have to sell their products through a market place that is really a `raw materials procurement and distribution system,' a system that is designed to buy raw materials as cheaply as possible and resell the products on the basis of all the traffic will bear --- regardless of cost, efficiency, supply, demand or the fair market value."

At the same time Dr. John Helmuth, an Adjunct Associate professor and Assistant Director, Center for Agriculture and Rural Development at Iowa State University, points out "when fewer and fewer individuals make more and more of the economic decisions, whether those individuals are in government or big business, the result is anti-competitive, inefficient and harmful to the society as a whole; when more and more individuals make more and more of the economic decisions, the result is more competitive and more efficient and beneficial to society as a whole."

"There is even greater irony now in that the principal advocates of centralized economic planning --- the Soviet Union and Eastern European countries --- are abandoning it as an economic failure, at the very time American industries --- are becoming more and more centrally planned by those few firms with greater and greater economic power resulting from ever increasing industry concentration," Helmuth stresses.


No better example of the type of "corporate behavior" one finds in a tightly concentrated industry can be seen than when Archer Daniels Midland Corp.(ADM) was recently found guilty in the price fixing of the feed additive lysine in what has been called the "best documented corporate crime in American history."

Archer Daniels Midland Co., which bills itself as "Supermarket to the World" (or perhaps more appropriately "Supermarkup to the World") agreed to plead guilty to conspiring with competitors to fix domestic and world prices of lysine and citric acid, an organic acid used in various foods, and pay $100 million in fines.The plea and the fine was only one chapter, however, in four years of investigation which began when Mark E. Whitacre, a one-time ADM senior executive, acting as an FBI undercover spy, secretly taped hundreds of intracorporate conversations.

ADM, headquartered in Decatur, Ill., buys, stores, is the nation's largest agricultural commodity processor and sells agricultural products which generated sales of $16.1 billion for the year ended June 30, 1998. It operates 165 plants, 300 grain elevators, 10,000 railroad cars, 15,000 trucks and 2,000 barges. Its products include various oils and oil seed products, ethanol, additives for animal feed and syrup for soft drinks. Products that use one or more ingredients from ADM include Doritos corn snacks, SnackWells' cookies, Coca-Cola, Kellogg's Pop-Tarts, Ragu spaghetti sauce, Hamburger Helper and Premium Saltines.

ADM agreed to pay $70 million in fines for fixing lysine prices and $30 million for doing the same in citric acid. The Justice Dept. action also resolved all of the criminal investigations of the Company, including the accusation  that ADM used cash payments and other illicit means to steal technology from competitors. Including civil suits related to the price-fixing matter, ADM has already paid a total of over $200 million in fines and civil settlements.

In addition, Michael Andreas, 49, former executive vice president of ADM; Terrance Wilson, 60, retired head of ADM's corn-processing unit; and former ADM biochemist Whitacre, 41 were convicted by a Chicago federal jury of conspiring with competitors to fix the price of the feed additive lysine. In addition to currently serving time in prison they were each fined $350,000.  Andreas is the son of Dwayne O. Andreas, the long-time "friend" of the politically powerful and former chairman and founder of ADM.

"This was a crime of greed -- a crime by an extremely large corporation that wanted to make even more money at the expense of their customers," U.S. Attorney Scott Lassar told the Associated Press.

Michael Andreas' attorney, John Bray, throughout the trial continually reminded the jury that it is legal for competitors to "exchange information" about prices and quantities. In his closing arguments, Bray showed the jury several snippets of tape transcripts, culled from over 200 hours of audio and video tape, in which Andreas repeatedly said ADM "doesn't make deals." The rest of the conversations with competitors, Bray said, were a lot of "bluster and bluffing."

Lassar, his staff and prosecutors from the U.S. Justice Department using the tapes and documents from ADM and competitors, particularly the Tokyo-based Ajinomoto Co. Inc., contended that the three ADM executives used the same model that an ADM employee previously testified had been designed to fix prices for citric acid -- a model he said was masterminded by Wilson.  Lassar also showed the jury notes and charts that he said proved that ADM agreed that it would have a 27% share of the world's $600 million lysine market in 1994 -- a target that he says the company hit within tenths of a percentage point.

Reed Weingarten, Wilson's lawyer told the jury that his client met with competitors in order to get information from a tight-knit "Asian cartel" that had controlled the lysine market for years. He said Wilson may have offered information about prices and production and sales volumes, but said that on purpose much of that information was incorrect.  "This is not Business Ethics 101. This is how you deal in the real world," Weingarten said. "That's how Dwayne Andreas told Terry Wilson to do business."

At the same time, the greater dominance by a corporation like ADM in an industry like food manufacturing and processing where the market share is so highly concentrated, the greater the resources that firm has available to differentiate its product from those of its competitors, mount lavish advertising, promotional and selling campaigns and in- dulge in other forms of nonprice competition, all of which tends to enhance its market share and at the same time yield above-average prices and profits.

In all such instances, however, it is the consumer that pays for such "corporate efficiency" for as ADM's Mark Whitacre told it, one of his company's mantras was "the competitor is our friend, the consumer is our enemy."


Vertical integration as a form of economic concentration has been for a number of years and continues to be clearly evident in agriculture and the food industry, particularly in the fruits and vegetable sectors with giant processors like Del Monte, Dole Foods, Campbells having seedling-to-supermarket control over a variety of agricultural commodities.

With more and more U.S. agriculture turning to contract farming vertically integrated companies and "strategic alliances" among corporate agribusinesses will assuredly dominate the nation's food and fiber economy.

No better current example of such vertical concentration exists today than ConAgra, the U.S.'s second largest food manufacturer, which boasts of "operating across the food chain in 35 countries around the world."

ConAgra spans the food system, literally from the ground to the table, with "agricultural inputs, crop protection chemicals, fertilizer and seed distribution; grain handling and storage; worldwide commodity trading and merchandising; flour, oat, corn milling and barley malting; natural spices, seasonings, flavors and food ingredients; food service and deli products; processed potato products; beef and pork products; branded chicken and turkey products; branded processed meets; branded table spreads, cheeses and dessert toppings; seafood products; branded shelf-stable foods, and branded frozen foods."

Each of the company's 25 branded foods has annual retail sales exceeding $100 million and its Food Service branch is the nation's largest provider of products for restaurants, fast-food outlets and other food service customers.

Garnering some six cents of every American food dollar the Omaha, Nebraska-based company unabashedly states  "Our mission is increasing shareholder value. Our job is feeding people better."

"Our past success is remarkable," ConAgra Inc. Chief Executive Bruce Rohde declares. "ConAgra has the best long-term earnings growth record among all major food companies in the world. Our 19 consecutive years of earnings-per-share growth at an average annual rate of 14.6%, excluding required accounting changes and non-recurring charges, is unequaled by any major food company."

In describing the consequences of vertical integration to a Congressional committee in 1963 Walter Adams pointed out that "vertical power consists of market control in successive stages of production and distribution. It enables a firm or group of firms to squeeze their non-integrated competitors, through a foreclosure of access to the market, denial of essential raw materials, or manipulation of relative prices so as to effect a simple or double squeeze.  It is rooted in the fact that giant companies perform the dual role of supplying raw materials to non-integrated independents, and then competing with these independents in the sale of the final products. This dual role gives the integrated giants a leverage that can be exercised with deadly effectiveness."

Additionally during periods of tight supplies integrated companies are able to absorb an increasing proportion of their production of raw materials for their own use whereas the nonintegrated firms are likely to find their sources of supply drying up. Likewise, in addition to denying them supplies, the integrated producer can impose "price squeezes" on their nonintegrated competitors by narrowing the margin between the price of the raw material and the price of the finished product.

Within many large vertically integrated corporations there exists a constant struggle between integration and specialization, referred to in the business community as "the make or buy issue."  All too often these firms manufacture goods they would be better advised to purchase from specialist suppliers, laboring under the illusion that by  manufacturing a product they will be assured of an adequate and reliable supply. They overlook the fact, however, that when shortages do appear they are usually of raw materials.

Thus while a vertically integrated corporation may be able to improve its position by curtailing supplies to their nonintegrated competitors, by imposing on them a "price squeeze," by preempting markets through ownership of important buyers, and by creating limited efficiencies through a better flow of materials from lower to higher stages of production at the same time it can be and often is the source of important diseconomies. It may forego savings derived from specialization and geographic plant dispersal as unnecessary and inflated costs, such as accumulating extra management and higher overhead costs, may "creep" into the corporation's accounts.


This form of concentration can be defined simply as the possession of a large share of a given industry's resources or activity by companies that are primarily engaged in other industries, but are not suppliers or users of the given industry's products. Two of the three largest food manufacturers in the U.S., the multinational tobacco companies Philip Morris and RJR Nabisco, are prime examples of this form of economic concentration.

For each company not only manufactures tobacco products but food items as well. Philip Morris, the U.S.'s leading food manufacturer, is also known to consumers as Kraft, General Foods, Miller Brewing Co., Oscar Mayer, and Oroweat, among others. Ten cents of every American food dollar is now spent on a Philip Morris product. RJR Nabisco, the U.S.'s third largest food manufacturer and which will soon become independent of its tobacco company parent R.J. Reynolds & Co., is known to consumers as Fleischmanns, Beech-Nut, Nabisco, and Standard Brands, among others.

Dr. Jean Mayer, former president of Tufts University and head of the White House Conference on Food, Nutrition and Health in 1989 observed:

"I find it alarming that some of the country's largest food companies are being acquired by tobacco and liquor companies. The first line of quality control for our manufactured food has been the professional conscience of chief executives of independent food companies. Tobacco companies are by their nature indifferent to health considerations. To have our food supply in their hands is something to which the United States people and Congress should give attention."

In 1957 testimony before the U.S. Senate Anti-Trust and Monopoly Subcommittee, University of Oregon Professor Corwin D. Edwards described the "mutual forbearance" often found when confronted with conglomerate concentration.

"When one large conglomerate enterprise competes with another, the two are likely to encounter each other in a considerable number of markets. The multiplicity of their contacts may blunt the edge of their competition. A prospect of advantage from vigorous competition in one market may be weighted against the danger of retaliatory forays by the competitor in other markets. Each conglomerate competitor may adopt a live-and-let-live policy designed to stabilize the whole structure of the competitive relationship. Each may informally recognize the other’s primacy of interest in markets important to the other, in the expectation that is own important interests will be similarly respected.

"Like national states," he added, "the great conglomerates may come to have recognized spheres of influence and may hesitate to fight local wars vigorously because the prospect of local gain is not worth the risk of general warfare."


Aggregate concentration, as John Blair shows, has a distinct effect on market behavior since it is based on what can be referred to as "communities of economic interest."

"Through such communities revolving around powerful family and financial groups, clusters of great corporations are said to be related by interlocking directorates, inter- corporate stock holdings, historical relationships, and other means," he points out.

Such aggregate concentration in agribusiness, because it relies so heavily on natural resources such as land, water, energy, etc. and increasing amounts of capital, is widespread, if not endemic.

In 1978 THE AGBIZ TILLER published an examination of 21 major U.S. corporations involved in corporate agribusiness ("The Club 21") and discovered an incredible concentration of decision-making power and a significant pattern of mutual corporate ownership. The figures were derived from a study by the Corporate Date Exchange Center of New York for the U.S. Senate Committee on Government Affairs' Subcommittee on Reports, Accounting and Management.

To comprehend the relationship between these corporations, whose combined 1977 assets totaled more than $25 billion, it is necessary to understand the terms "direct interlock" and "indirect interlock through an intermediate corporation."

A "direct interlock," for example, is John Buck who sits on the board of directors of Bank A at the same time he serves as a board member for Corporation B and C. An "indirect interlock through an intermediate corporation" is John Buck sitting on the board of Corporation D along with Mary Doe of Bank B. Thus, there is an "indirect interlock" between Bank A and Bank B through the "intermediate corporation" Corporation D.

Examining all the agribusiness corporations in the "Club 21," THE TILLER found an astonishing total of 53 "direct interlocks" and 1,038 "indirect interlocks" through 801 intermediate corporations.

Perhaps no statement better explains and captures the frame of mind that enables aggregate concentration to exist not only in terms of corporate power, but also in influencing political power, than a commentary made by Robert M. Strauss, former U.S. Ambassador to the Soviet Union. The remark came in a 1992 PBS "Frontline" TV documentary titled "The Best Election Money Can Buy." The program's narrator Robert Krulich was seen standing in front of a large condominium in Bal Harbor, Florida and was asking himself "why am I standing here?"

He went on to explain that in the condo behind him lived Dwayne O. Andreas, Strauss, Senator Robert Dole,  and TV commentator David Brinkley among other political and business notables. After explaining their relationship, Andreas being the then chairman and CEO of ADM, Strauss being  a former ADM board member and stockholder, Dole, a long-time political and personal friend of Andreas and soon to be U.S. Senate Majority leader, and Brinkley, hosting each Sunday morning a TV news and commentary show on ABC-TV, sponsored in part by ADM, the camera then focuses on Strauss who observes:

"It has nothing to do with being Democrats or Republicans. These are people that have common values. You know I have a theory about that, that you have to keep in mind. The good guys  all manage to get together and have a communication. And the bad guys  that don't fit in at all fit outside of that. And the good guys  get together. It doesn't have anything to do with race or creed or color or political philosophy or sex or anything else. They're just decent, nice people and have good sets of values  that are comparable to your own and you're friends. Those are `after dark friends.' In Washington, maybe, you might be on the opposite sides during the day, but we’re all good social friends and personal friends."

A more cynical appraisal of Strauss's characterization might be in the words of Adam Smith in his Wealth of Nations: "People of the same trade seldom meet together even for merriment and diversion but the conversation ends in a conspiracy against the public or in some contrivance to raise prices."

It should be added that in accepting Smith's "conspiracy" theory we must also keep in mind Blair's observation that "to ignore the pivotal role played by particular individuals who are in positions of power is to do violence to historical accuracy. A recognition that the course of economic events can be influenced by individuals who have the imagination and the power to take advantage of prevailing conditions does not constitute acceptance of a `conspiracy' theory of history."
For, as Blair further notes, "the effect of such communities of economic interest, it is contended, is to bring about greater cohesiveness and unity of action than would otherwise be the case. Control is sufficient to prevent any member of a community from undertaking a course of action which, though beneficial to itself, would be harmful to other members of the community. The inevitable result is a lessening of the potential  for independent, competitive behavior."


As promised the "remodeled" Corporate Agribusiness Research Project (CARP) web site has now been posted on the World Wide Web featuring: THE AGBIZ TILLER, THE AGRIBUSINESS EXAMINER and "Between the Furrows."

THE AGBIZ TILLER, the progeny of the one-time printed newsletter, now becomes an on-line news feature of the Project. Its initial essay concerns one Hillary Rodham Clinton, the almost declared candidate for a U.S. Senate seat in New York State.

In his recent book, Shadow, Bob Woodward recounts that Hillary Clinton reportedly told close friends after it was revealed that her husband had sex with a young White House intern: "I have to take this punishment. I don't know why God has chosen this for me. But He has, and it will be revealed to me. God is doing this, and He knows the reason. There is some reason." This bit of Hilliarism occasioned the Progressive Review's Sam Smith to report that "reached at his celestial headquarters, God told this reporter,`That'll teach her not to rig cattle futures'."

In "HILLARY RODHAM CLINTON'S $99,537 MIRACLE: IT'S THE PITS!!!" now available through THE AGBIZ TILLER you'll learn some of the messy details behind her cattle futures "miracle." You will also find in this section the archives for past editions of the THE AGBIZ TILLER.

By popular reader demand THE AGRIBUSINESS EXAMINER  section includes not only an issue-by-issue and verbose index of this weekly e-mail newsletter, but an archive of all the past issues. Thanks to Todd Gantzler who not only volunteered but did the outstanding job of creating (and will be maintaining) THE AGRIBUSINESS EXAMINER indexes and archive file. Be sure and visit his excellent website at:

In "Between the Furrows" there is a wide range of pages designed to inform and educate readers on the inner workings of corporate agribusiness. In addition to CARP's "Mission Statement," "Overview" and the Project director's "Publication Background," the viewer will find a helpful "Fact Sheet" on agriculture and corporate agribusiness; a "Fact Miners" page which is an effort to assist the reader in the necessary art of researching corporations; a "Links" page which allow the reader to survey various useful public interest, government and corporate web sites; a "Feedback" page for reader input, and a page where readers can order directly the editor's The Corporate Reapers: The Book of Agribusiness.

On a personal note,  this web site would have been impossible without the fine design and  production skills of the staff of ElectricArrow of Seattle, Washington.

Pride necessitates that I should also note that ElectricArrow's President David Arevalo and Client Relations Director Leigh Arevalo are my son and daughter-in-law. Also to be acknowledged are Jennifer Donohue of Seattle, Washington for her beautiful graphic site designs.

Now, simply by clicking on either of the addresses below all the aforementioned features and information will be yours to enjoy, study, absorb and sow. Bon appetit !!! --------------C886AEAF9326E02D06D20B60--