EXAMINER                                                Issue # 62 January 20, 2000

Monitoring Corporate Agribusiness From a Public Interest Perspective

A.V. Krebs


Genetic engineering's once premiere corporate marriage, which not only recently ended in acrimonious separation, but failed to give birth to their sterile progeny --- the terminator seed --- has now occasioned the rejected partner to announce that it is suing its one-time suitor for at least $1 billion in "alimony" payments.

The lawsuit suit, filed by Delta and Pine Land Company in the Bolivar County, Mississippi circuit court contends that the Monsanto Corp. breached a May 8, 1998, agreement to buy the cotton seed company by failing to "use commercially reasonable efforts" to respond to requests from the U.S. Department of Justice's antitrust division when seeking regulatory clearance for the merger.

"We regret having to file this lawsuit, but we had no other choice in order to protect the interests of our company and our shareholders," Roger Malkin, chairman and chief executive of Delta Pine, told the New York Times' Carolyn Koo."At the same time, we will continue to engage in a dialogue with Monsanto and hope to achieve a resolution that is acceptable to both parties."

After announcing a $27 billion all-stock merger with pharmaceuticals firm Pharmacia & Upjohn just days before Monsanto announced on December 20 that it planned to withdraw from the Delta Pine merger and would pay Delta Pine a $81 million breakup fee.

In responding to the suit Monsanto has noted that "for a year and a half, we exercised every reasonable effort and a tremendous amount of time, energy and money to make this merger happen," according to Hendrik Verfaillie, Monsanto president. "After numerous attempts to reach an acceptable compromise with the Department of Justice, we concluded that the department's demands made no sense from a business point of view, and that to accept them would place both Monsanto and Delta and Pine Land at an unfair competitive disadvantage in the marketplace."

The suit, which will not affect existing contractual relationships between Monsanto and Delta Pine, came after two Delta Pine shareholders sued the company's board of directors for not seeking damages from Monsanto in the aftermath of the canceled merger.

"The main concern for the Delta Pine shareholder is that the market for the company in the last 20 months has deteriorated tremendously," analyst Gil Yang of J.P. Morgan pointed out to the Times. "If they had never locked themselves into an agreement with Monsanto, they could have been sold to someone else when the market was more receptive to seed companies. But now the valuations have deteriorated."

As Koo reports those valuations have deteriorated because the agricultural-biotechnology sector "has come under pressure from various environmental organizations in the past year over the production of genetically modified crops."

"That," Yang adds, "combined with the lack of clear-cut synergies so far [in the           agriculture-biotechnology sector] has created a situation where pharmaceutical companies prefer to separate agriculture from pharmaceuticals."


As the next session of the U.S. Congress prepares to consider the question of whether the U.S. will grant to China permanent Normal Trade Relations (NTR) status similar to that currently accorded to other World Trade Organization members, corporate agribusiness prepares a concerted drive to convince legislators that such action would be beneficial.

Don't count on it!!!! (see below)

In a January 6, 2000 letter to House Speaker Larry Combest some 68 corporate agribusinesses, their allies and the National Grange stated their belief that "this agreement, if fully and fairly implemented, will create huge opportunities for U.S. agriculture.

"The agreement with China is critically important. It will significantly improve market access for a wide variety of U.S. food and agriculture products, as well as for the tools of agricultural production. Indeed, the tariffs agreed to by China for many of these products are much lower than the corresponding tariffs in countries such as Japan and Korea. The agreement also will obligate China to reform its monopoly state purchasing agencies. It requires China to stop the subsidization of exports - no small feat given the vociferous opposition we face from the European Union and other countries when it comes to the elimination of agricultural export subsidies," they stress.

"With respect to sanitary and phytosanitary matters, a separate bilateral agreement concerning citrus, meat, and wheat resolves important technical issues with China. Finally, WTO membership will require China to play by the same rules and disciplines of the multilateral trading system as the United States. The United States will also have recourse to WTO dispute settlement mechanisms should China not live up to any of its obligations, an avenue of recourse we currently do not have."

They conclude that the agreement "plays an important role in U.S. agriculture's effort to rekindle its exports to Asia. China, our fourth largest trading partner, is broadly recognized as the most important growth market for U.S. agricultural exports. While the United States gains access to its growing market, China does not gain any greater access to the U.S. market under the negotiated agreement, making it a win-win for American agriculture."

The letters was signed by:
Ag Processing Inc.
Agribrands International, Inc.
Agricultural Retailers Association
American Crop Protection Association
American Farm Bureau Federation
American Feed Industry Association
American Frozen Food Institute
American Meat Institute
American Seed Trade Association
American Soybean Association
American Sugar Alliance
Animal Health Institute
Archer Daniels Midland
Biotechnology Industry Organization
Blue Diamond Growers
Bunge Corporation
Cargill, Inc.
Cenex Harvest States
Central Soya Company, Inc.
Cerestar USA
Chocolate Manufacturers Association
ConAgra, Inc.
ContiGroup Companies, Inc.
Corn Refiners Association, Inc.
Distilled Spirits Council of the United States
Farmland Industries, Inc.
Florida Citrus Mutual
Food Distributors International
Grocery Manufacturers of America
Independent Community Bankers of America
International Dairy Foods Association
Kraft Foods
Land O'Lakes
Louis Dreyfus Corporation
Miller Brewing Company
Monsanto Company
National Association of Animal Breeders
National Association of State Departments of Agriculture
National Association of Wheat Growers
National Cattlemen's Beef Association
National Chicken Council
National Confectioners Association
National Corn Growers Association
National Council of Farmer Cooperatives
National Food Processors Association
National Grain & Feed Association
National Grain Sorghum Producers
National Grain Trade Council
National Grange
National Milk Producers Federation
National Oilseed Processors Association
National Pork Producers Council
National Renderers Association
National Sunflower Association
National Turkey Federation
North American Export Grain Association
North American Millers' Association
Northwest Horticultural Council
Philip Morris International
Pioneer Hi-Bred International
Snack Food Association
Sunkist Growers
United Egg Association
United Egg Producers
United Fresh Fruit and Vegetable Association
USA Poultry & Egg Export Council
USA Rice Federation
U.S. Apple Association
U.S. Canola Association
U.S. Dairy Export Council
U.S. Grains Council
U.S. Meat Export Federation
U.S. Wheat Associates
Wheat Export Trade Education Committee


U.S. farmers and their elected representatives who have any delusions that according China permanent Normal Trade Relations (NTR) status similar to that currently enjoyed by other World Trade Organization members will result in a boom for U.S. agriculture exports might well want to pay attention to two reports recently emanating from China itself.

In a January 7 report published in the South China Morning Post China's Chief WTO negotiator Long Yongtu, in the Guangzhou Daily, said that although Beijing had agreed to allow 7.3 million tonnes of wheat from the United States to be exported to the mainland each year, it is a "complete misunderstanding" to expect this grain to enter the country.

In its agreements with the US, Beijing only conceded a theoretical opportunity for the export of the grain. Beijing, according to the report has the right to import 7.3 million tonnes of grain from the US, but it also has the right not to import this grain, Long said.

"When we ended the ban on wheat exports from seven states in the U.S. northwest, this caused a great stir in the US. Our 'concessions' gained support from the seven states' senators, congressmen and farmers. The political results were very positive,  but canceling the ban will not actually harm China," Long said.

He also said concessions to allow 6,000 U.S. "meat factories" to export to the mainland amount only to a change in terminology, while the country has not made material concessions allowing U.S. meat into the domestic market.  "Diplomatic negotiations involve finding new expressions. If you find a new expression, this means you have achieved a diplomatic result. In terms of meat imports, we have not actually made any material concessions," Long said.

Meanwhile, a white paper --- "The Grain Issue in China" --- released on October 24, 1996 --- reveals that China, contrary to what many in Western world agricultural circles have been telling farmers and the public, produces enough food to feed its 1.2 billion people, a full 22% of the world's population, while working just seven per cent of the world's arable land.

The white paper says that over the past four decades, China's significant achievements in developing grain production have not only basically eradicated the problem of hungry people, while gradually raising the nation-wide standard of living, "but have also made great contributions to worldwide efforts to eliminate starvation and poverty."

In 1996, China ranked first in total grain output in the world, with the per capita share of grain reaching approximately 380 kilograms (including legume and tuber crops), which was the global average. The per capita output of meat, marine products, eggs, fruits and vegetables  reached 41 kilograms, 21 kilograms, 14 kilograms, 35 kilograms and 198 kilograms, respectively, which were all higher than the world average.

Statistics from the U.N. Food and Agriculture Organization show that China produced 31% of the world's grain output in the 1980s.

The white paper says the tasks which confront the Chinese government include "the need to ensure continued increase in grain output, vigorously promote diversified food production, readjust food structure, and continue to improve quality of life beyond the subsistence level to a relatively well-off and comfortable life nationwide."

The Chinese government predicted China's grain consumption would reach 500 million tons by 2000 and about 640 million tons by 2030. It also predicted that by 2000 the population would reach 1.3 billion and the total demand for grain would be 500 million tons, based on 385 kilograms per person; by 2010 the population will approach 1.4 billion and the total demand for grain will be 550 million tons, based on 390 kilograms per person; and by 2030 the population will peak at 1.6 billion and the total demand for grain will be approximately 640 million tons, based on 400 kilograms per person.

The white paper says that in the years to come a scientific and moderate food consumption pattern which keeps pace with national economic growth and conforms to the situation of the nation’s agricultural resources should be urged upon both urban and rural residents as the Chinese government will strive to avoid a rapid increase in grain demand beyond supply capacity through guided grain consumption, and by tapping both grain and non-grain food production potential.

The white paper says since 1984, though the per capita share of grain has been relatively stable, the average satisfaction of nutritional requirements for Chinese people has markedly improved because of the increased supply of meat, dairy and other food products.

Food supply per person per day was 2,727 kilocalories, including 70 grams of protein and 52 grams of fat. That exceeded average figures in countries with a per capita GNP comparable to China's suggesting that it was reasonable to conclude the food supply in China had basically reached average world levels.


While the bottom ten percent of Iowa's 118,000 farm subsidy recipients, under the so-called 1996 "Freedom to Farm" legislation received an average of just $200 over a three year period, nearly half of those subsidies --- about  $900 million --- went to just ten percent of the total recipients, according to a recent report by the Environmental Working Group EWG).

The public interest group's study was based on information from the U.S. Department of Agriculture's records center in Kansas City, Missouri, under a Freedom of Information Act request.

"Freedom to Farm" subsidies were designed reportedly to help farmers with the transition to a new policy passed by a Republican Congress and signed by Bill Clinton ending government production controls and price supports. "Freedom to Farm," or as it is more accurately known in family farm circles as the "Freedom to Fail" act sought, during a seven-year transition period to achieve free-market agriculture by guaranteeing it fixed payments and letting farmers plant  whatever they wanted.

"The level of concentration these figures show reflects what people see and feel: that there is this incredible level of consolidation in row-crop operations," Neil Hamilton, director of the Drake University Agricultural Law Center in Des Moines told George Anthan, the Des Moines Register's long-respected agricultural columnist

"It means that even though farm programs have various forms of payment limits to maintain some connection with family farmers, the most recent versions (of farm programs) have continued to find ways to get around the limits," he said.

Iowa State University economist Michael Duffy said the analysis "is indicative of the kind of farm program that supports commodities, not people. This just kind of quantifies what we already assumed.This is why we need to kind of back up and ask, `What is the real purpose of our farm programs?'" Duffy told Anthan. "Do we support commodities or people?"

John Whitaker, a Hillsboro farmer, Van Buren County, Iowa supervisor, and president of the Iowa Farmers Union also observed that family farmers "obviously aren't necessarily getting the benefit out of these programs."

Seventeen farmers or farm-related entities, the EWG study show, received an average of $322,000 over the three-year period with the leading Iowa recipient of subsidies over the three years receiving more than $630,000. Names of top subsidy recipients were not included in the EWG report until such time as it can verify individual checks issued by the USDA.

Whitaker told Anthan that he supports a plan by former Iowa Democratic Congressman Neal Smith to utilize price-support mechanisms and a strategic food reserve as the chief federal farm program.  Under this setup, benefits would be limited "to only a certain number of bushels," Whitaker said. "Those who are bigger then could live with the world market."

Since "Freedom to Farm" was enacted commodity prices have dramatically dropped, and Congress has been forced to approve two farm bailouts: $6 billion in 1998 and $8.9 billion last fall. Under the act, Iowa got $441 million in 1996, $646 million in 1997 and with the 1998 bailout, $929 million. The state's three-year total of $2 billion was $243 million more than was received the previous three years.

But neither bailouts, nor the EWG's study, according to the Wall Street Journal, captures the government's "generosity" toward Iowa, the nation's No. 1 corn producer and a major player in soybean and hog production. In total the state received $1.54 billion in 1998, including special aid to hog farmers, disaster payments, crop-insurance indemnities and conservation payments, according to updated U.S. Department of Agriculture figures. The final tally is expected to show that Iowa agriculture got even more money in 1999.


Two separate recent studies have once again confirmed the dangerous work and health conditions posed by the use of chemical poisons that face the men, women and children who harvest our nation's food supply and the danger posed by the use of such poisons in our schools.

In Washington State a Fred Hutchinson Cancer Research Center survey, reported by the Associated Press, found that a quarter of those workers questioned don't wear protective gear for such poisons, and about half do not promptly remove and wash contaminated clothing when they go home. The survey of 571 Yakima area adults who worked in the fields and orchards last summer is part of a five-year, federal study of chemical poison exposure among the workers and the effect on their children.

Urine samples from children and dust samples from farm workers' vehicles were used to assess children's exposure, the samples screened for organophosphates, a class of chemical poison that at high doses has been linked to cancer and can seriously affect the central nervous system, Gloria Coronado, senior research specialist at the Hutchinson center in Seattle points out.

The study project is part of a $6.75 million University of Washington study of environmental health issues and children -- one of several such studies under way around the country financed by the Environmental Protection Agency and the National Institute of Environmental Health Sciences.

"The exciting thing about this is that we will be able to do some intervention," Coronado adds. "What's exciting to me is not only getting the information but being able to make a difference." Researchers are working with a local advisory board that includes growers, health-care workers and farm-worker advocates, she said.

"We want to see if we were able to change people's practice and reduce their exposure to pesticides," Coronado said.

"The contamination is so bad in the industry, it doesn't end in the fields. They bring it home in their shoes, cars and clothes," said Guadalupe Gamboa, Sunnyside-based regional director of the United Farm Workers of America. "I think the Fred Hutchinson study is going to be very important in showing the extent and seriousness of the problem."

Occupational health authorities agree that low-level contamination seems pervasive in workers who enter a field or orchard after chemical poisons have been sprayed and that chemical residue can be taken home on clothing or shoes.

The survey found only about 45% of people entering recently sprayed fields reported wearing boots, gloves, respirators and coveralls. Nearly 80% of those directly involved in the mixing, loading and application used such gear. Overall, the survey found workers failed to use personal-protection equipment about 25% of the time, though it was unclear whether the equipment was required.

Laws governing use of safety gear vary widely depending on the chemical in use and the task being performed, Mike Gempler, executive director of the Yakima-based Washington Growers League, which represents about 800 growers on labor issues, told the AP.

"That 20% hole looks like non-compliance where there might not be," Gempler said.

In its annual report to the Washington State Legislature, the state Department of Health reported investigating 365 incidents of pesticide poisoning in 1997 affecting 441 people. More than half the incidents were agricultural, and four resulted in serious health problems.

Meanwhile, a congressional study has concluded that far too little is known about  health risks facing children from exposure to chemical poisons in school and has called upon the EPA to carefully examine the issue.

"This information gap is troubling," Connecticut Sen. Joe Lieberman, ranking Democrat on the Senate Governmental Affairs Committee, told a news conference last week. "We know that children are particularly vulnerable to risks associated with pesticides, including elevated rates of leukemia and brain cancer, so we have every  right to be concerned."

Lieberman also released a General Accounting Office (GAO) report that said its investigators could find no credible statistics on the amount of chemical poisons used in the nation's 110,000 public schools, nor information about students' exposure to chemical poisons or the impact on their health.

Despite the claims of chemical poison manufacturers that such chemicals are safe and are used in accordance with EPA requirements and without their use students could be exposed to dangerous, disease-carrying pests, the National Coalition Against the Misuse of Pesticides (NCAMP), maintains that students frequently are exposed to unhealthy levels of chemical poisons in classrooms and on playgrounds because of spraying by pest-control companies.

Lieberman believes that the EPA should establish federal guidelines on parent notification and on the use of pesticides in school environments, and begin a survey to determine whether children are at risk because of the accumulated exposure to chemical poisons. He and Senators Patty Murray, Democrat-Washington and Robert Torricelli,Democrat - New Jersey have authored legislation that would require schools to notify parents before chemical poisons are to be used on the grounds and require schools to adopt pest-management plans that rely less on such toxic chemicals.


ConAgra, the nation's second largest food manufacturer, and its ConAgra Poultry subsidiary have been barred from using certain sales and marketing trading secrets belonging to Tyson Foods Inc., the nation's largest poultry producer.

Dow Jones Newswires reports that an Arkansas judge has ruled that  two former Tyson employees who went to work for ConAgra cannot sell or market poultry products at ConAgra for one year. He also prohibited a third employee from having contract with certain poultry customers for one year because the three former Tyson employees retained certain trade secrets upon leaving Tyson for ConAgra.

On August 8, 1999, Tyson Foods sued ConAgra, claiming the company raided Tyson of personnel to obtain trade secrets and alleged that between May 28 and July 30, four employees, including three senior vice presidents, left the company to work for ConAgra.On October 11, 1999, Tyson dismissed pending claims against  former employees Jerry Dowd, Mike Hamblin and David Purtle and made an offer to dismiss John Curran as well. Tyson says it will now seek unspecified damages in a second trial scheduled to begin February 1.

Meanwhile, the California Public Employee's Retirement System (CalPers) wants to remove Tyson's board of directors and void dual class shares. The 13-member board, stocked with three Tyson family members and five former and current executives, isn't accountable to shareholders, CalPers charges. Although insiders hold less than eight percent of the Tyson's publicly traded class A shares with its class B holdings, they control 90% of shareholder votes, according to a recent company filing with the Securities and Exchange Commission (SEC).

In its SEC filing Tyson claims that it needs two classes of stock to retain financing flexibility, attract key employees and preserve its tax status as a family-owned farming business. Without two classes, Tyson would owe $127 million in taxes now instead of deferring payments over 20 years.

The Tyson board includes former CEO Don Tyson; his son, John; and Barbara Tyson, widow of Don Tyson's brother, Randal. Former company executives Leland Tollett, Joe Starr and Gerald Johnston, CEO Wayne Britt and President Don Wray also are directors. Don and John Tyson are no longer involved in the day-to-day management of the company but appear to be "excessively compensated," Jamie Heard of Proxy Monitor, a shareholder adviser supporting CalPers, told USA Today's Gary Strauss.

Don Tyson, a long-time Bill Clinton friend and political contributor, resigned as CEO in 1991, however, as senior chairman, he received a salary and bonuses of $910,000 in 1999 and nearly $330,000 for travel and entertainment expenses. John Tyson was rewarded $1 million as board chairman and $124,000 for travel and entertainment costs.

The upper tier of Tyson Foods' management, Strauss reports, which includes a CEO, president and chief operating officer, also appears bloated, critics say. Britt got $900,000 in 1999 pay and bonuses; Wray, $655,000; and COO Greg Lee, $530,000.


In a move imediately denounced by the meat packing industry, but welcomed by consumers, the U.S. Department of Agriculture has announced that henceforth it will notify the public every time meat processors recall products, even when there is no health risk involved or no way for consumers to tell whether they've purchased them.
Previously USDA has issued  press releases only for meat which might be contaminated and that goes to stores in its original packaging, the packaging carry numbers that can be easily checked by consumers. In 1999 USDA issued press releases on 41 of the 62 recalls that took place.

"We've decided that erring on the side of getting more information to consumers is the           approach to take," Margaret Glavin, associate administrator of USDA's Food Safety and Inspection Service told the Associated Press.

Even with the new policy of announcing recalls it will remain difficult, if not impossible,           for consumers to know whether the recalls will  affect them since the USDA releases only the geographic region affected by the recall, not the names of stores or restaurants that receive the meat. That task still remains with the meat processors to divulge because it is considered "proprietary information" under government regulations.

Processors have branded the additional press releases as unnecessary claiming that they may lead to "public apathy" about recalls. "What we're fearful of is that when you really want to send a strong message, then it isn't heard as well," Dane Bernard, vice president of the National Food Processors Association told AP

There's no point, he adds, of publicizing recalls, which are done voluntarily by processors, when consumers have no way of telling whether they've bought the meat, since processors don't like to release the names of the stores and restaurants where their products go for competitive reasons.

"You don't always want your competitors to know who your customers are. If you're having trouble it's a tendency of the sharks in the business world to go to your customers and say we're not having a problem," he said


The Corporate Agribusiness Research Project (CARP) web site is now 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 "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.

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.

The CARP web site was designed and produced by ElectricArrow of Seattle, Washington.

Simply by clicking on either of the addresses below all the aforementioned features and information are yours to enjoy, study, absorb and sow.

Although there is no subscription fee for THE AGRIBUSINESS EXAMINER, donations will, as always, be gladly accepted.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. 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. --------------22196B306F1288B892FB05FB--