EXAMINER                                                Issue # 84   August 11, 2000

Monitoring Corporate Agribusiness From a Public Interest Perspective

A.V. Krebs

                                                        EDITORS NOTE
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“20\20’s” JOHN STOSSEL:

Tonight, before a nationwide television audience, John Stossel, ABC News’ corporate apologist, reportedly will admit to “20\20” viewers that his earlier reports questioning the relative purity of organic produce were wrong and a mistake.

Stossel first reported on the program in February that tests conducted on produce for ABC News "surprisingly found no pesticide residue on the conventional samples or the organic” and were later repeated on July 7 in a comment made to anchor Cynthia McFadden: "It's logical to worry about pesticide residues, but in our tests, we found none on either organic or regular produce."

ABC News, in seeking to deflect criticism of Stossel, admitted this past week that his efforts to debunk the common belief that organic food is safer than regular foods because no chemical poisons are used was inaccurate due to the fact that he was relying on inaccurate information provided to him by a staff member. "We are reviewing the circumstances surrounding the error," the network said.

The Disney station executives said David Fitzpatrick, producer of the segment, was responsible for the error, and they were trying to determine how it appeared. According to an Associated Press network source, who asked not to be identified, ABC has reprimanded Stossel and suspended producer Fitzpatrick for 30 days.

The two researchers who were commissioned by “20\20” to do the testing --- Dr. Michael Doyle, a scientist with the University of Georgia, and Dr. Lester Crawford, director of Georgetown University's Center for Food and Nutrition Policy --- said they never tested produce for chemical poison residue for ABC.

 "All I agreed to do was test for indications of pathogens," Dr. Doyle said. "I didn't do tests for pesticides."

Dr. Crawford also indicated that while he did not test produce for chemical poisons, he did test chicken --- and found residue on the samples of conventional poultry but not on samples of organic poultry. The finding, favorable to the organic food movement, was not mentioned on the show by Stossel.

Despite Doyle and Crawford’s disclaimers, Fitzpatrick, producer of the segment, claimed that the chemical poison tests were done and that the results were forwarded to the Organic Trade Association, a group which spoke in defense of organic produce in the “20\20”segment. OTA’s executive director Katherine T. DiMatteo, however, said the organization had not received results from any tests for chemical poison residue on produce.

After complaints about Stossel’s report, the network sent out a form letter erroneously claiming that chemical poison tests had been conducted on produce, according to Mike Casey, a spokesman for the Environmental Working Group. "They absolutely didn't take this seriously," he said.

ABC said it was also investigating why the mistake was repeated despite the earlier warnings doubting the accuracy of Stossel’s earlier report.

Casey’’s organization also contends that Stossel's report had inappropriately implied that ABC's tests had detected dangerous strains of E. coli bacteria in the organic food when, in fact, the tests did not establish the presence of the dangerous type of E. coli. ABC executives responded that they were still examining that accusation.


Excel, the nation’s second largest beef packing company, is finding that it is a  “not welcome” business in a number of Iowa communities.

Recently, the Cargill subsidiary’s efforts to open a $100 million beef-packing plant in Story County’s town of Cambridge (pop. 800) was abandoned after what Iowa Cattlemen's Association leaders said was "a lack of support by local community leadership"

But, Story County Attorney Stephen Holmes told the County Board of Supervisors that locally agricultural-zoned property couldn't be rezoned for the plant because it didn't fit state criteria.

Subsequently,  as Excel  began to show an interest in locating their new plant that would process 540,000 cattle a year in Iowa Falls, Hardin County supervisors  threatened to reject necessary zoning changes, although they had taken no formal action.

The Iowa Falls community was split on the issue between  the Iowa Falls mayor, at least one City Council member and city leaders from neighboring towns who thought a plant could beef up the local economy and an increasing number of townspeople  who believed the town of 5,400 is too small to support a beef-packing plant.

While Cargill, the nation’s largest private corporation, claims the new plant  will generate 1,100 jobs paying from $9.85 to $11.85 an hour and that new technology would reduce pollution and odors, opponents of the plant both in Cambridge and Iowa Falls point to the fact that other Midwest communities have been made the same promises by the beef packing industry’s big three --- IBP, Excel and ConAgra.

Residents  note, however, as the lessons learned from other communities teach, to support such a plant, would require expensive upgraded sewer systems and roads in addition to the plant's adverse impact on local schools, the environment, property values and crime.

Iowa Governor Tom Vilsack, who attended a packed town meeting in Huxley recently where opponents decried putting the Excel plant in Cambridge, called the search for a site painful but necessary.  "I want to find ways to to make this happen, but it needs to happen right," Vilsack said. "The Huxley-Cambridge community helped us realize the questions that need to be answered."

While Vilsack asked residents not to be swayed by worries that the plant would draw immigrant workers, the fact of the matter is that the beef packing plants throughout the Midwest in recent years have become meccas for immigrant labor. Likewise, when the workers are incapacitated due to injury or health problems in the nation’s most hazardous industry, or they are dismissed for labor organizing activities it is the local communities that are left with the social and economic responsibilities for the companies’ discarded workers.

In addition to the labor problems the plant’s critics also point to environmental concerns.

A state-of-the-art plant could generate about $365,000 a year in property taxes for Hardin County after a 10-year tax exemption, say cattle producers, who would be part-owners.

"Why don't we try to negotiate some of these concerns instead of saying no?" Iowa Falls Mayor Dan Brown told the Des Moines Register’s Staci Hupp. "People aren't listening to the facts."

Iowa Falls' population has shrunk by 2,000 over the last 20 years, which means the town has room for new families, Brown said. "People keep talking as if we're going to be hiring brand new people, but that's not true," he said. "We have people here who would fill out applications."  Iowa Citizens for Community Improvement, a special-interest group opposed to large farming operations, has led the opposition in Iowa Falls.

In nearby Ottumwa, already home to an Excel pork-packing plant, officials have said they will welcome the project if other towns continue to balk. On Wednesday Wapello County officials publicly supported the state-of-the-art plant that Excel Corp. wants to build.

Wapello County officials estimate the plant could increase the area's tax base by 13%, meaning they claim more cash for schools, mental-health services and other programs. The city of Ottumwa has a population of 25,000 and a 100-year history of packing plants working in its favor, said county supervisor Steve Siegel. A beef-packing plant also could boost family-farm survival in the area, he said.

 "We understand packing plants. People here always have been willing to work in packing plants," Siegel said. "And maybe we're a little hungrier for the investment, jobs and development, too."


A Franklin County, Arkansas jury recently determined that Tyson Foods had lied about its intentions to Don Davis, one of its producers, and found the nation’s largest poultry producer guilty of fraud and ordered the company to pay $891,660 in compensatory damages to the Arkansas farmer.

In the mid-1990’s Tyson Foods ran out of finishing facility space for hogs in Missouri after the state began to refuse to permit them to expand..  Tyson's farrowing units were in nearby Holdenville, Oklahoma, a short drive from Franklin County, Arkansas.

Tyson decided to grow out the pigs on "bedded floors"  --- old poultry houses bedded down with shavings or rice hulls. Tyson promised former poultry farmer Davis, that the arrangement was a long term deal with Davis investing $174,000 in equipment to retrofit some old chicken houses on his farm.

One year later, after Tyson approached Davis about needing more growout facilities, Davis bought two additional poultry farms and equipped them for the pigs at a cost of over $300,000.  During the trial, Tyson Foods claimed   that farmers who set up their facilities to Tyson's specifications only had  “minimal” investments.

About the time they were negotiating to sell their swine division to Smithfield Foods,Tyson decided it wanted to abandon the bedded floor business and canceled Davis' contract to raise their pigs. In the trial Tyson attorneys claimed that the program was always intended to be short term, initially only a one year program until they could get traditional concrete facilities built.

Seven days before trial, Tyson Foods "found" about 40 memoranda which indicated that the bedded program was “experimental.”  The documents showed that Tyson Foods wanted to see if it could replace conventional floors (no permits needed, less odor, less cost, etc). Tyson wanted to use the bedded concept in their Philippine Island project and had even set up trials to compare the two methods of growing pigs.

The jury believed that Tyson Foods had lied about their intentions to Davis  and found in his favor awarding him the largest settlement ever delivered in the small rural Franklin County . Attorneys Clay Fulcher and Jim Lingle of Rogers, Arkansas represented Davis.

Meanwhile, Tyson’s recently announced that its quarterly earnings fell 41% percent, in line with lowered expectations, as it was hurt by oversupply in the poultry industry. The world’s largest poultry producer also said that earnings could be even worse in the future, with the fourth-quarter possibly coming in at half the third quarter results.

"The burdensome industry supply continues to create a difficult operating environment that unfortunately will take more time to resolve,” John Tyson, chairman, president and chief executive of the Springdale, Arkansas corporation, said in a prepared statement.


Conceding that the conflict has created "a difficult image problem for us" the agriculture and  pharmaceutical giant Novartis A.G. , while continuing to aggressively sell genetically engineered products to the nation’s farmers, also recently announced that it is eliminating such ingredients from the foods it sells.

The policy was disclosed in a letter sent by a company official to the environmental group Greenpeace, but later the company said that its food division, Novartis Consumer Health, had always intended to make this move, so that Greenpeace's announcement was not new.

"For the past year," the company said in a statement from its Swiss headquarters, "Novartis Consumer Health, in light of consumer sentiment toward genetically modified organisms, has taken practical steps to avoid the use of G.M.O. in its nutrition products throughout the world, taking account of local supply options and regulatory requirements."
Novartis, a member of a coalition of agricultural biotechnology companies that is spending $50 million to defend the safety of such crops, had announced last year that it would  eliminate genetically modified ingredients from its Gerber baby foods and now has confirmed that its food-processing subsidiary has initiated steps to avert using biotech ingredients in all of its products. The company also makes Ovaltine, Wasa crackers and several items that are sold as health and diet foods.
"They are promoting something that they won't buy back," Mike Yost,  who farms near Murdock, Minnesota, and serves on the boards of directors of the  Minnesota and national soybean growers' associations, told the Associated Press.
Yost has joined other soybean growers in meetings with Novartis officials  in recent months to argue that it's also inconsistent for the company to  sell drugs made with genetically engineered ingredients while rejecting foods made with the same technology. “Where they are saving lives every day with biotech pharmaceuticals, nobody has a problem," Yost said.
Novartis Seeds Inc.’s U.S. spokesman Tony Minnichsoffer acknowledges that he has had to spend half of his time facing criticism and questions from farm groups since Gerber publicly rejected biotech crops last year. Novartis' food-processing unit answers to a consumer market that takes its cues from Europe, and the seed business answers to farmers, Minnichsoffer said.

Consumers, especially in Europe, are  boycotting genetically engineered foods despite assurances from government officials who claim that there is no scientific evidence that the products aren't as safe as conventional fare.
"We run our business, and they run theirs," he said. "It's not easy for us in the agricultural divisions in North America to deal with that. We don't agree with their decisions, but we can't control what they do. Farmers may see that as a betrayal by the company, but it isn't by the company. It's by a part of the company."
Crop-marketing experts, according to the Associated Press, say that farmers' losing Novartis as a customer  would have little impact on overall sales of biotech crops. “The company's  niche in food processing is relatively small compared with giants such as  Kellogg Co. and Campbell Soup Co., which have said they will not sort  biotech varieties from the rest of the harvest unless there is a scientific reason to do so.”

Gene Grabowski, a spokesman for the Grocery Manufacturers of America, which represents brand-name food companies, told the New York Times Andrew Pullack that the Novartis move would have no effect because the company is not a big a food supplier in this country. "We're talking about a minuscule amount of food," he said. "Greenpeace has taken the letter and trumpeted it as if this is a big announcement."

Novartis's annual food sales in the United States total $1.2 billion, according to Grabowski  and more than half of that is in Gerber products, and much of the rest is in special diet food. So the only food affected by the policy with significant sales in the United States to the broad category of consumers is Ovaltine, he said.

Principally a pharmaceutical company, Novartis plans to merge its agricultural business with that of AstraZeneca of Britain with the combined business then being spun off into a new company called Syngenta.


J.R. Simplot Company, one of the world’s largest potato processors has announced that it has purchased Nestle USA FoodServices Divison's processed potato business, including three potato processing facilities  located in Nampa, Idaho; Moses Lake and Othello, Washington.

In a released statement Joe Weller, Chairman and CEO, Nestle USA, said, "After an extensive evaluation of our potato business, we determined that future opportunities for long-term profitable growth would be greater in other sectors of the food and beverage categories in which we compete."

Terms of the agreement were not disclosed and the sale is subject to regulatory approval.

James Munyon, Simplot Food Group President, said, "The Nestle facilities and employees will complement our commitment to high quality products  and operational excellence. This acquisition supports the growth of our domestic and export potato business."

Simplot is a privately-held agribusiness company based in Boise, Idaho, with 12,000 employees and annual revenues of $2.7 billion and since the 1950s,  with 23 direct and affiliated processing plants in the U.S., Mexico, Canada, Australia and China, has been a leader in the frozen potato business.  In addition to food processing, the firm is principally engaged in fertilizer manufacturing, cattle feeding, farming and turf products.

Headquartered in Glendale, California, Nestle USA has 19,000 employees, $8 billion in sales and is part of Swiss-based Nestle S.A. --- the world's largest food company.

In the U.S., Nestle's well-known brands include: NestleToll House,  NesQuik, Carnation, Coffee-mate, Stouffer's, Lean Cuisine, PowerBar, Nescafe, Libby's, Juicy Juice, Buitoni, Taster's Choice, Ortega, Nestle Crunch, Butterfinger, Wonka, Friskies, Fancy Feast, ALPO, and Mighty Dog.


Technology policy has been left in the hands of increasingly powerful multinational companies, but technology policy is not farm policy, according to University of Minnesota economist Richard A Levins.

Writing in the current American Agricultural Economics Association publication, Levins expresses alarm that the goals of "powerful" agribusiness firms are in direct opposition to those of farm policy. He says instead of large farmers doing in small farmers, powerful agribusiness interests may be doing in both.

He points out that companies such as Pioneer, Monsanto and Cargill went from relative insignificance in the World War I era to international dominance by the 1960s due to the technological revolution in agriculture.

"The goals of large agribusiness companies --- more production, lower farm product prices and fewer farmers --- were in direct conflict with those of farm policy," Levins emphasizes. "Farm policy devolved into ways of cleaning up the mess, of making the best of a bad situation, and of convincing people that the wreckage lying before them was all for the better."

Scorning the current Freedom to Farm policy that governs farmers Levins characterizes it as "completely wrongheaded. It set out to more completely level the playing field for farmers. But if the government's goal was to strengthen the farm sector, it set out to level the wrong playing field.

“Meanwhile, the multinational processors and input suppliers went on about their business of mergers and acquisitions in an all-out effort to become less competitive. Competition lowers profits, while economic concentration has the opposite effect."

A new approach is needed if the public chooses to continue its long-standing commitment to the independent family farmer, Levins warns. "The farm sector can no longer be viewed as acting independently of wealthy processors and input suppliers," he says. "We must realize there's a new generation of economic power that poses a great challenge for U.S. food and agriculture policy."

One “new” approach. long advocated by family farm activists, was recently reiterated by  Willard Cochrane, professor emeritus with the  Department of Applied Economics at the University of  Minnesota.

There’s a better option for family farmers than  “folding their tents and stealing away into the night,” he observed.  “Farmers could form a national association and  call it the National Trade Association of Family  Farmers (NTAFF),”

In an article in the  Minnesota Agricultural Economist, published by the  University of Minnesota Extension Service, Cochrane points out that "agriculture is a high-risk, unpredictable and  unstable industry. History tells us  that boom times are the dangerous times for farmers --- they tend to get carried away.  They expand their operations with generous applications of credit and forget that boom times have  always been followed by hard times --- times when  those who have over-extended their credit, unfortunately, go broke.”

A powerful trade association of family  farmers could bargain with Congress, state  governments, suppliers and processors.

Cochrane  suggests that  family farmers could bargain with:

* Congress for new farm legislation that favors small farms and reduces the amount of support that currently goes to corporate farms.
* State governments to implement favorable tax provisions for family farmers.
* Suppliers for the kinds of inputs that meet the requirements of small family farmers
* Handlers and processors to find new market outlets and buyers for products of the family farm. They could also “negotiate contracts with suppliers that benefit family farmers, such as giving  them the same discounts enjoyed by corporate farmers.”

“Trade associations have worked well for other  sectors of the agricultural industry,” Cochrane reminds his readers. “Sugarbeet growers, cotton producers and wheat farmers all formed trade associations that clearly benefited members.

“A strong trade association of family farmers  would give them real market power and real political power,” Cochrane concludes.  “By organizing, family  farmers could once again become a vital and thriving part of our nation’s economy.”


Charging that current laws create a double standard for children in agriculture and non-agricultural work,  a June, 2000 Human Rights Watch report declares that “farm-working juveniles have second-class status ---  they enjoy fewer rights than their nonfarm-working peers, and they are exploited while the government looks the other way.”

The report points out that children in nonagricultural jobs are not allowed to work more than 40 hours a week but there is no such limit for children doing agricultural work and current law does not prohibit 14-year-old farmhands from working 70-hour weeks.

While Federal laws prohibit children under 18 from doing hazardous work in           nonagricultural jobs, the law allows 16- and 17-year-olds to do hazardous work on farms.

"Agricultural employment for kids is bloody dangerous," John Fraser, director of the Department of Labor's wage and hour division, the main agency overseeing child labor laws, told the New York Times Steven Greenhouse. "Only six to seven percent of the jobs that young people take are in agriculture, yet 40% of the work-related fatalities that young people suffer are in agriculture."

Child farm workers are divided into three groups: unaccompanied migrants, usually teenage illegal immigrants from Mexico or Guatemala; children of migrant farm workers, who often force their teenagers to work and sometimes take children as young as seven into the fields to pick alongside them; and, last, about 40,000 minors who are the children of farm owners and who start milking cows and harvesting at an early age to learn how to operate the farms that they may someday inherit.

Fraser claims that the government was increasing its investigations into improper use of child farm workers. In 1999 it cited 46 farms for violations involving 102 minors. There are 1.9 million farms in the United States.

Farm worker advocacy groups have long charged that  many child farm workers are exploited because they are vulnerable, scared to speak up and desperate to hold onto their jobs and because many are illegal immigrants. They are eager to help their families or to pay back the smugglers who sneaked them across the border.

As Greenhouse reports, child farm workers are often paid less than the $5.15 minimum wage, sometimes receiving $2.50 an hour.

“Growers often do not provide them with toilets and drinking water, and some child pickers say growers occasionally order them to resume picking even when the 24 hours required by law have not passed after pesticides are sprayed.”

 "When people think of agriculture, they think of the agrarian myth and what a wonderful, nurturing, safe, wholesome environment to raise a child," said Diane Mull, executive director of the Association of Farm Worker Opportunity Programs, told Greenhouse.

"In some cases, that's true, but it's certainly not true for migrant farm worker kids. They're often breathing pesticides, they're often not paid the minimum wage and they often end up dropping out of school."

Many farmers claim children often provide them with fake ID's stating that they are 18 while denying  they exploit these children, saying that they do not overwork them and train them in dealing with chemical poisons.


The Corporate Agribusiness Research Project (CARP) web site now contains a
streamlined search engine which will not only allow viewers to  find needed  information by simply using key words, but they will be able to also access  Issues #1 through #77 of THE AGRIBUSINESS EXAMINER.

The CARP web site, which is now posted on the World Wide Web, features: THE  AGBIZ

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 Democratic Party 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

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  page of "Quoteable Quotes" periaing to agribusiness and corporate power; 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 design and  produced by ElectricArrow of Seattle,

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