EXAMINER Issue # 90 October 12, 2000
Monitoring Corporate Agribusiness From a Public Interest Perspective
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U.S TRADE REPRESENTATIVE, CHIQUITA
OPPOSES NEW EU BANANA REGIME
One thing that can be said for the current Clinton Administration is once bought, it stays bought!
The latest example of such selling out to corporate interests and staying sold out came last week when U.S. Trade Representative Charlene Barshefsky rejected an European Union (EU) proposal to resolve the current controversy over the U.S.-EU’s banana trade war.
On Friday Chiquita Brands International, Inc. announced it was not satisfied with the EU's latest proposal to resolve the longstanding dispute with the U.S. and Latin America. "The European Commission's 'first come, first serve' proposal does not conform with international trade law and therefore cannot be a legal basis to end the banana trade dispute," Chiquita President and CEO Steven Warshaw said in a statement.
Chiquita was joined by the U.S., Panama, Costa Rica, Colombia, Guatemala, Honduras, and Nicaragua in opposition to the proposed scheme. Ecuador, the world's largest banana exporter supports the plan, however, as its government believes the plan would greatly increase access for its exports.
Meanwhile, Dole Food Co., the world's largest grower of fruits and vegetables, expressed support for the EU's as the first-come, first-served proposal would result in a nondiscriminatory system for the importation of Latin American bananas to the E.U. while protecting imports from the African-Caribbean-Pacific countries. Dole also said the proposal is consistent with World Trade Organization (WTO) agreements.
Spokesmen for the EU and Ecuador, the world's biggest banana producer, said that the U.S. is favoring Dole Food's main U.S. competitor -- Chiquita.
The EU proposal could represent a turning point in the seven-year old banana war, which led to the U.S. imposing a $191 million of WTO-approved trade sanctions on EU products. Although the U.S. doesn't grow bananas, the Clinton Administration has been fighting for the rights of Dole and Chiquita to trade with the EU.
During these past seven years the two companies have been somewhat united against the EU's existing regime, which favors EU banana traders. Chiquita, however, prefers a system that would base how much a company can import on the size of its market share before the EU created the current regime in 1993. At the time, Chiquita's share was twice the size of its current level. Dole has now drawn ahead of Chiquita in market shares.
As the Wall Street Journal’s Geoff Winestock explains, “under the complicated plan, import licenses would be grouped into two classes. The first, for 2.2 million tonnes would have an import tariff of EUR75 per tonne, while the second class of 850,000 tonnes would face a tariffs of EUR300 per tonne. These quotas would be filled `first come, first served’ and possibly managed weekly. European imports of bananas from former colonies in Africa and the Caribbean would continue to receive duty-free treatment.”
Dole in supporting the EU’s plan also criticized Ms. Barshefsky's argument that the EU proposals are inconsistent with World Trade Organization rules. "We are puzzled as to why [she] did not consult with half of U.S. industry," said Frank Samolis, a Dole Food lawyer who met with senior trade officials Friday. "We cannot understand why the U.S. has thrown cold water on this proposal."
A spokesman for the U.S. Trade Representative declined to comment on Dole's complaints or give details on why it objects to the EU proposals.
As proof of the alleged bias favoring Chiquita, the EU points to the letter that
the U.S. trade representative's office sent to the 15 EU member governments that recommends continuing negotiations on the basis of the proposal backed by Chiquita but rejected by Dole.
Clearly the U.S. bias towards Chiquita stems from the facts show that there are no U.S. jobs here at stake here, that there is no danger of a further imbalance of trade, and there is no economic damage about to befall the U.S. It is simply a case of Clinton & Co. seeking to protect the financial interests of Chiquita’s Carl H.Lindner as opposed to the interests of thousands of small banana farmers in the Eastern Caribbean and in Jamaica. Chiquita employs most of its 45,000 workers in Honduras and Guatemala.
As Michael Weiskoff reported in Time Magazine, “You wouldn't know how grateful Lindner was by checking records at the Federal Election Commission; he gave the Democratic National Committee only $15,000 in the final 15 months of the  campaign. Instead, D.N.C. officials instructed Lindner to give directly to state-party coffers, which are subject to far less public scrutiny than federal-election accounts. On April 12, 1996, the day after [then U.S. Trade Representative Mickey] Kantor asked the WTO to examine Chiquita's grievance, Lindner and his top executives began funneling more than $500,000 to about two dozen states from Florida to California, campaign officials told Time.”
A settlement of the banana controversy and the additional dispute with the EU over U.S. hormone-treated beef could help resolve another dispute, over tax subsidies to U.S. exporters, in which the EU is threatening billions of dollars of trade sanctions.
IBP PURCHASE EVOKES LAW SUITS;
INVESTORS SMELL SOMETHING FISHY
"Something smells fishy," Adam Friedman, a portfolio manager for the National City Investment Management Co.'s Armada Funds which owns 154,000 shares of IBP Inc. "I think management wanted to keep their job. They figured the shareholders would be happy with 20% premium."
Friedman’s observation to the Wall Street Journal’s Steven Lipin came after
Rawhide Holdings Corporation, a wholly owned subsidiary of DLJ Merchant Banking Partners III, L.P., a private equity fund affiliated with Donaldson, Lufkin & Jenrette, Inc., reached a recent agreement to purchase the outstanding stock of IBP.
For approximately $2.4 billion in cash plus the refinancing and assumption of approximately $1.4 billion in debt Rawhide Holdings Corporation, a wholly owned subsidiary of DLJ Merchant Banking Partners III, L.P., a private equity fund affiliated with Donaldson, Lufkin & Jenrette, Inc., has reached an agreement to purchase the outstanding stock of IBP.
Upon completion of the purchase, for approximately $2.4 billion in cash plus the refinancing and assumption of approximately $1.4 billion in debt DLJ Merchant Banking Partners III and affiliated funds will become the majority owner of IBP, the nation’s largest meatpacker. Other investors will include Archer Daniels Midland Company, a Booth Creek Partners and certain IBP management employees.
Some investors, Lupin reports, are upset, because they believe that the IBP board should have looked at alternative transactions, even though the
companies' special committee of directors retained their own investment
In a statement, IBP said: "We have gone to great lengths to make sure
shareholder interests are protected. For example, since IBP senior
management is an interested party, they were not involved in evaluating the
transaction from IBP's perspective. The price was arrived at through an
arm's length negotiation between DLJ, on one hand, and a special committee consisting entirely of independent directors."
Despite IBP’s defense it has been hit with a spate of lawsuits since the DLJ announcement. At least seven lawsuits, containing almost identical language, seek class-action status and accuse top IBP executives of placing their interests ahead of their obligations to shareholders, many of whom remained loyal to IBP when its share price languished.
The sale would compensate shareholders at a rate of $22.25 a share, well above the $18 range IBP shares were trading in at the time of the agreement, but short of its 52-week high of $25.38. Some analysts have placed the true value of IBP stock in the $30 range.
"The buyout group is using its members' positions of power and control, and their access to (internal financial) information, to benefit themselves in this transaction, to the detriment of IBP's public stockholders," read one lawsuit filed in Delaware by a shareholder Harriet Rand.
As Lupin notes, “leveraged buyouts create a natural conflict of interest. That is because if management continues to run the businesses with the new buyer, perhaps joining an investor group, as IBP's management did, they are actually better served by paying a lower price and thus reaping the rewards when the company later is resold or goes public.”
Meanwhile, ADM “Supermarkup to the World” as part of its agreement to help take IBP Inc., the nation’s largest meatpacker private, would double its stake in IBP while selling a portion of its current IBP stock for more than $67 million, while contributing no cash to the going-private transaction.
Even though ADM now has a 12.2% stake in the meatpacker the DLJ-led group has agreed to buy 3,051,400 of ADM's 12,951,400 IBP shares at $22.25 each immediately before the merger is consummated, filing with the Securities and Exchange Commission (SEC) reveal.
ADM would then contribute its remaining 9.9 million shares in exchange for a 25% stake in the new IBP, the SEC filings show. ADM also would have one of nine seats on the new IBP board.
The same filings show that Robert L. Peterson, IBP's chairman and chief executive, who as of last February 29 held 725,002 IBP shares, would invest $2.5 million cash plus 467,200 IBP shares for a stake in the company he now runs.
Other investors with DLJ also will have a portion of their current share holdings in IBP bought out, the filing shows. Booth Creek Partners Ltd. III, LLLP, would sell 1,822,463 of its 3,644,923 shares for $22.25 each, or $40.54 million. Jeffrey J. Joyce, who holds 643,030 shares, would sell 321,514 of them, for an indicated total of $7,153,686.
“GE REPRESENTS NOTHING LESS
THAN A GOING-OUT-OF-BUSINESS
SALE ON GENETIC DIVERSITY”
Green Party presidential candidate Ralph Nader has joined a long list of farmers, consumers, environmentalists, and scientists demanding a moratorium on the use of genetically engineered (GE) products in food.
“Genetic engineering of food has far outrun the science that must be its first governing discipline. Many unknowns attend the insertion of genes across species, from ecological risks to food allergies. These unknowns beg for investigation,” stated Nader in a recent letter to the Sierra Club.
The call to action, initiated by the Genetically Engineered Food Alert --- a coalition of environmental and consumer groups --- demands that genetically engineered food ingredients or crops should not be allowed on the market unless:
1) Independent safety testing demonstrates they have no harmful effects
on human health or the environment;
2) They are labeled to ensure the consumer's right-to-know; and
3) The biotechnology corporations that manufacture them are held
responsible for any harm.
Nader suggested that a fourth condition be added to the list, that genetically engineered food ingredients or crops should not be allowed on the market unless “there are significant benefits for human needs not available outside this technology.”
“Genetic engineering represents nothing less than a going-out-of-business sale on genetic diversity,” said Nader.
Meanwhile, the Campaign to Label Genetically Engineered Foods has declined to endorse any particular candidate for president despite the fact that as a 501(c)(4) political advocacy organization it is legally able to endorse candidates, The Campaign's management has decided to remain neutral and simply inform people of the positions of the candidates.
To date it has only been Nader of the Green Party and John Hagelin of the Natural Law Party has supported the mandatory labeling of genetically engineered foods. Vice President Al Gore has sent out a form letter stating that he endorses voluntary labeling. Governor George W. Bush has not responded to the Campaign’s letters, but from comments he and his advisors have made, he does not appear to support mandatory labeling of genetically engineered foods.
In addition to outcry from consumers, a growing number of farmers and farm organizations have been voicing opposition to GE foods. In November of last year, the National Family Farm Coalition issued a ‘Farmer's Declaration on Genetic Engineering in Agriculture’ which calls for many of the same demands.
“For too long farmers have had their management practices dictated by corporate agribusiness. Consolidation in agribusiness has led to fewer options for seed and inputs and fewer markets for farmers to sell to.” said Nader.
“The Clinton-Gore Administration has been extremely cozy with the GE
industry and Bush promises only to be more so. Why is an inadequately tested technology—with so much potential for causing irreversible environmental harm—being imposed on an unwilling public and foisted upon a dis-empowered farming community? This is yet another example of corporate agribusiness interests pitting farmers against consumers,” added Nader.
Coalition members of the Genetically Engineered Food Alert include: the
State Public Interest Research Groups, the National Environmental Trust,
the Center for Food Safety, the Institute for Agriculture and Trade
Policy, the Organic Consumers Association, Friends of the Earth, and the
Pesticide Action Network of North America.
LA VIA CAMPESINA:
URGES FARMERS AROUND THE WORLD
COME TOGETHER AGAINST
GLOBAL CORPORATE AGENDA
Some 110 delegates (men and women) from 40 countries around the world representing hundreds of farm and indigenous peoples' organizations recently gathered for the Third International Conference of Via Campesina in Bangalore, India.
Immediately prior to the Conference the women of the Via Campesina held their First International Women's Assembly. The rural women from around the world agreed on the following:
* The Via Campesina women denounce before the national and international institutions the severe war and conflict situations that force us to abandon our land.
* We oppose the unjust neo-liberal model. This in an inhuman and destructive model which does not respect our lives, our cultures, our biodiversity.
* Women around the world grow food for our families and pass on our cultures to our children; for this reason we will keep struggling for a new and more human world.
* We seek to build an alternative rural development model that meets our interests, satisfies our needs and respects natural, cultural and ethnic diversity.
* We will struggle for comprehensive and democratic agrarian reform to prevent the concentration of land ownership into the hands of a few and guarantee food sovereignty and sustainable production.
* We also defend indigenous people rights to their ancestral territory. We
also support indigenous people who struggle for self-determination and the
right for diverse development models.
* We resolve to strengthen our struggles and our solidarity, and to clearly
demonstrate our opposition to injustice and inequality.
The Third International Conference of Via Campesina sought solutions for the numerous problems facing peasants, family farms and rural communities around the world and listed their most pressing problems:
* Lack of access to land.
* The repression of farm leaders and farm movements.
* Prices below the cost of production for agricultural products.
* The imposition of an industrial model of agriculture based only on profit
rather than food quality and food safety.
* Displacement of local production..
"We all suffer from the same agenda of globalization. It is affecting us all. We are losing our farms as a few corporations are taking control," a spokeswoman for La Via Campesina said. "It is of utmost importance that all the farmers around the world come together against this global agenda," she said.
Paul Nicholson, a representative from a European farmer's body, said small
farmers were being hit by cheap food imports, which have increased under World Trade Organization (WTO) regulations.
"There has never been a crisis for family farmers like they are facing today. The crisis is not confined to US or Europe. It is the same in Asia and Africa. Cheap food imports are destroying local economy everywhere," Nicholson said. "We must make a world campaign as we have common problems. We can create hope only by fighting the battle unitedly," he added.
On October 2, 2000, Via Campesina delegates from around the world joined thousands of Indian men and women farmers in a demonstration in Bangalore organized by the Karnataka State Association (KRRS), an organization affiliated to the Via Campesina.
At this demonstration the delegates denounced economic and agricultural policies designed by the World Trade Organization (WTO), the World Bank (WB) and the International Monetary Fund (IMF) which force millions of farmers (men and women) all over the world off their land.
FDA ENDANGERS PUBLIC’S HEALTH
BY LEGALIZING IRRADIATED FOODS
Public Citizen, the Washington, D.C.-based watchdog group, says the Food and Drug Administration (FDA) has endangered the public’s health by allowing the legalization of irradiated foods and ignoring its own safety regulations and relying on tests the agency’s own experts had dismissed as invalid during the approval of such foods.
Currently, spices, vegetables, fruit, poultry, eggs and meat can be irradiated and must carry the Radura label and wording such as "treated with radiation."
The Public Citizen report, based on its analysis of decades of FDA internal documents, was supported at a joint news conference joined by representatives of the Cancer Prevention Coalition and the Government Accountability Project.
“For 17 years the FDA has knowingly and systematically ignored its own testing protocols that must be followed before irradiated food can be legalized for human consumption,” Public Citizen spokesman Mark Worth said.
Public Citizen spokeswoman Wenonah Hauter says chemicals created when food is zapped with radiation may cause cancer, but the FDA failed to perform tests to measure the potential effect of consuming such radiation byproducts. Although irradiated foods comprise a small percentage of the current food supply, Hauter warned that more radiation-treated products could soon be on the market soon, and the labeling of these products could become more innocuous.
The report, “A Broken Record: How the FDA Legalized --- and Continues to Legalize --- Food Irradiation Without Testing It For Safety” follows in the wake of a government report on the same subject, issued by the General Accounting Office (GAO) “Food Irradiation: Available Research Indicates That Benefits Outweigh Risks.”
The GAO report admits food irradiation results in a loss of nutritional content, including thiamin (B1), Vitamin C, and Vitamin E. However, it singles out irradiation for its potential to kill en masse pathogens in food, like Listeria monocytogenes, which contribute to an estimated 76 million food borne illnesses and 5,000 deaths a year in the United States.
Currently the FDA is considering whether to approve the use of irradiation technology for processed foods, such as luncheon meats and peeled vegetables. Such products make up a substantial portion of the nation’s food supply.
Congress also has asked FDA to consider new labeling for irradiated food “so the public would not perceive the label’s presence as a warning.” Food-processing industry advocates are calling for new wording such as “cold pasteurization” or electronic pasteurization.
“A Broken Record,” which compiled and analyzed documents from the FDA, the Federal Register, peer-reviewed scientific journals, and congressional testimony, concludes FDA “has legalized high-dose radiation `treatments’ of [food]…all without certifying that any of the scientific studies they used to justify these decisions” met modern, scientific standards.
For example, a FDA panel in 1981 that reviewed 409 studies on the toxicity of food irradiation declared all but five “deficient.” None of those remaining five, however, met FDA’s own agency standards. Those same five studies “formed the foundation of FDA rulings to legalize the irradiation of spices in 1983; pork in 1985; fruit, vegetables, and spices in 1986; poultry in 1990; beef and lamb in 1997; and eggs this past July.”
Public Citizen is calling for the revocation of all food irradiation permits and a congressional investigation into FDA’s role in regulating irradiated food. FDA defends its record on irradiated food, saying irradiated products are safe.
Rhona Applebaum, a spokeswoman for the National Food Processors Association, which represents the $460 billion food-processing industry and supports irradiation, called Public Citizen’s allegations “irresponsible.” “Irradiation is particularly important because it can offer greater food safety precautions for the most vulnerable populations.”
EX-AFBF PRESIDENT DEAN KLECKNER:
HEADS “TRUTH ABOUT TRADE” GROUP
DECRIES “FREE TRADE,” GE CRITICS
Fighting what he feels are distortions regarding agriculture and trade in the United States ex-American Farm Bureau Federation (AFBF) president Dean Kleckner wants farmers to band together with an election approaching.
"Farmers could hold the balance of power in the next election. Agriculture and rural America needs to have a voice," he said. "Neither Bush or Gore are saying much about agriculture yet. We're going to have to force candidates to talk about trade," he said.
Kleckner who now heads a new organization, Truth About Trade, which is attempting to promote both trade and biotechnology
"The group was organized in Iowa earlier this year by farm leaders and
producers disgusted about the disruptions at the World Trade Organization meeting (last December)," Kleckner recently told the Peoria Journal Star’s Steve Tarter and that he's on the stump to provide facts about groups who have protested trade and biotechnology issues.
"We have researched the protesters and where they get their money. What we find is that there aren't a lot of people involved but they're loud, well- organized and well-funded," he said. Some get funds from "many reputable foundations," said Kleckner. He said Ted Turner's Turner Foundation was behind San Francisco-based Ruckus Society, one of the groups involved in the World Trade Organization demonstrations in Seattle.
"This group does its training in California. They know how to disrupt meetings," he said.
"Truth About Trade will continue to dig and ferret out information on these and other anti-agriculture groups. We intend to shine a very bright light on these groups and hold them accountable for their actions," said Kleckner.
"Protesters have done a good job in establishing a fear of the unknown," he said, referring to groups opposing biotechnology in agricultural.
"It's so irritating to see headlines saying we haven't run enough tests yet. The broad middle ground of science agrees that biotechnology is safe," Kleckner told Tarter.
"Will science say something different in five years? Possibly, because science is always evolving," he said.
Kleckner, who was ousted as AFBF president last year after a 14-year reign, is troubled that more attention is paid to what he calls "suspect tests" regarding the effect genetically engineered crops may have on the Monarch butterfly than on the fact biotech crops require less chemicals. "More butterflies are killed by trucks delivering pesticides than through the use of GMO corn," said Kleckner.
Kleckner claims Truth About Trade receives no money from chemical
companies that have bankrolled biotechnology in agriculture. "If they'd give us some, we'd take it," he said.
E&J GALLO AND WAL-MART TEAM
TO MARKET ALCOTT RIDGE LABEL
While Gallo will “be squishing the grapes'' and bottling the wine, it will be sold under the Wal-Mart label as the nation's largest retailer announced recently that it has signed a deal with Gallo to produce a new global wine brand that will sell for $6 to $7 per 750-milliliter bottle at more than 1,300 Wal-Mart stores in the United States and abroad.
The Cabernet Sauvignon, Chardonnay, Merlot and Zinfandel wine will carry the made-up Alcott Ridge Vineyards label and will be available at about 500 Wal-Mart stores and Neighborhood Markets in 38 states . The label will at the same time be available at about 800 stores in China, Germany, Mexico, the United Kingdom and South Korea and, by the end of the year, Argentina and Brazil.
“Many of our customers are demanding a greater selection of wine products at prices they can afford,'' John Ryan, senior vice president of Wal-Mart global sourcing, said in a statement.
Currently Gallo produces and sells a number of brands such as Turning Leaf and Gossamer Bay that don't advertise the family name, but a Wal-Mart spokesman said this marks the first time Gallo has produced a wine brand for a partner.
Gallo is the world’s biggest winemaker selling about 50 million cases of wine
last year, or about one-quarter of the U.S. market. Its average price per bottle of wine in 1997 was a cheap $3, compared with the $5.30 industry average, according to Impact Databank. Jug wines and other generic wines still account for about 55% of Gallo's shipments.
SUPREME BEEF CHARGES USDA CAMPAIGN
OF HARASSMENT, INTIMIDATION, DISINFORMATION
FILES CHAPTER 11 BANKRUPTCY PAPERS
Supreme Beef Processors and Packers which supplied millions of pounds of beef to the nation's school lunch programs and has fought against tougher food safety regulations has filed for bankruptcy recently filed for Chapter 11 reorganization in U.S. Bankruptcy Court.
Supreme Beef chief executive Steve Spiritas said the company could not continue to operate under a "campaign of harassment, intimidation and disinformation" by the U.S. Agriculture Department.
The filing for bankruptcy is the latest chapter in what has become a test case between Supreme Beef and USDA over federal salmonella inspection standards adopted in 1995. The science-based system for inspecting meat and poultry replaced "poke-and-sniff" methods used for decades.
USDA last fall pulled its inspectors from the Dallas plant --- effectively shutting it down --- after the plant failed to meet the new safety standards. A federal judge tossed out the new food safety rules, saying it was not a fair measure of a plant's sanitation The USDA has appealed to the U.S. 5th Circuit Court of Appeals in New Orleans.
Earlier this year, Supreme Beef voluntarily recalled 2 million pounds of beef that were sent to 16 states for distribution to schools. The USDA also asked the meatpacker to voluntarily halt ground beef production and take
CORPORATE AGRIBUSINESS RESEARCH PROJECT
WEBSITE SEARCH ENGINE NOW AVAILABLE
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In "HILLARY RODHAM CLINTON'S $99,537 MIRACLE: IT'S THE PITS!!!" now
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