Monitoring Corporate Agribusiness From a Public Interest Perspective
IT'S THE FAMILY FEUD:
SMITHFIELD, TYSONS, PRIVATE INVESTORS
BATTLE FOR CONTROL OF IBP INC.
No better characterization of the epic financial struggle currently taking place between one of the nation's largest investment firms, the nation's largest pork producer and processor and the nation's largest poultry producer for control of the nation's largest beef processor than the Dow Jones Newswire's Monday headline "Tyson's IBP Bid Makes For A Battle Of The Behemoths."
By offering to acquire the meatpacker IBP Inc. for $2.75 billion in cash and stock plus assuming $1.4 billion in debt the Tyson Foods, Inc. offer exceeds recent bids submitted by Smithfield Foods Inc. and Donaldson Lufkin & Jenrette Inc. Tyson, headquartered in Springdale, Arkansas, said its offer represents a 42% premium over IBP's closing price of $18.31 on September 29, the last trading day before the company announced a management buyout.
"This is a rare point-in-time opportunity to acquire a company that will make us the world's leading marketer of beef and pork, in addition to chicken," John Tyson, the company's chairman, president and chief executive, said in a written statement.
IBP, by merging with Tyson, would create a company, according to the Associated Press, with 30% of the beef market, 33% of the chicken market and 18% of the pork market,
Under the proposal, IBP shareholders will receive $26.00 for each share of IBP common stock, with 50% of the consideration in cash and 50% in Tyson Class A common stock. The proposed transaction would have a total transaction value of approximately $4.2 billion, including the assumption of IBP debt.
Tyson in pointing out that "seldom do you get a chance to put the leaders together," believes that his company's offer for IBP is the best of the three. Not only does Tyson Foods offer more per-share value for stockholders, he notes, with half of the offer being in cash, but the poultry company's offer doesn't increase concentration in the meatpacking business because Tyson has no beef or pork processing plants.
"We are not faced with the problem of having to shut down overlapping production facilities," Tyson said in a statement announcing the offer. ". . . Our proposal has a far higher degree of certainty for IBP shareholders in that it is unlikely to draw the harsh criticism and likely regulatory scrutiny already being directed toward the Smithfield offer."
Nevertheless, Des Moines Register Farm Editor Editor Jerry Perkins reports that Iowa's U.S. Senators Tom Harkin and Charles Grassley have asked the Justice Department to look into Tyson's IBP offer for possible antitrust violations. Grassley said Monday that he would ask the Justice Department and the Federal Trade Commission to give "cautious consideration"of the Tyson offer.
"I'm concerned that the proposal will increase the amount of concentration in the meatpacking industry to the point where it will hurt the independent farmers
trying to get fair prices for their products," Grassley's statement said. "Tyson's already large presence in the retail market might also affect the prices consumers pay at the meat counter."
"I understand this may be a cause for celebration on Wall Street, but our country's hard-pressed family farmers and ranchers are not cheering one bit," said Sen. Paul Wellstone, Dem.-Minnesota. Tyson "has a long history of vertical integration" that "could be potentially devastating" to beef and pork markets, Wellstone said.
Tyson's proposal follows an October 1, 2000, announcement that IBP had entered into a definitive merger agreement for a leveraged buyout at $22.25 in cash per share by a group comprised of affiliates of Donaldson Lufkin & Jenrette, certain members of IBP senior management, Archer Daniels Midland (ADM) and Booth Creek Partners.
That was followed on November 12, 2000, by Smithfield Foods, Inc. making an
unsolicited proposal to the Special Committee of the Board of Directors of
IBP for a stock-for-stock merger in which shareholders of IBP would receive a fixed price of $25.00 per share in Smithfield common stock in the event that the average trading price of Smithfield's stock for an unspecified period prior to closing was within a range of $28.46 and $34.79, but subject to adjustment if Smithfield's stock traded outside that range.
Smithfield's proposal has been widely criticized by national farm groups, individual pork producers and farm-state politicians contending that it would increase concentration in the pork business, since IBP already is the second largest company in that industry whereas Tyson currently is only in poultry.
"The combination of Tyson and IBP is not a significant change in the `protein' landscape in terms of market share," John Tyson said on a conference call Monday. "We would seem to have an advantage" there. When asked about potential antitrust concerns from regulators, Tyson said, "We don't see that as an issue."
Tyson, on the conference call, also said he had "very nice conversations" with IBP chairman and president Robert Peterson and other top management in the past two weeks and gave the impression he was confident for a warm reception. Tyson said that under his company's plan Peterson would remain in charge at IBP. "Bob's a wonderful guy," Tyson said. Peterson is also a member of the DLJ investor group.
Asked also by analysts on the call about potential synergies between his company and IBP, Tyson said he foresaw numerous opportunities in dealing with major retailers and food-service customers.
Other cost savings --- and market share building potential --- is in the value-added meat business, he indicated, pointing out that Tyson has been a leader in developing branded, ready-to-cook chicken products and convenience foods for supermarkets and restaurants. IBP recently announced that it is getting into that business with branded beef products, and Tyson believes his company's experience could be a valuable asset in the rapidly growing that higher-margin business.
Dow Jones Newswire also reports that investment analysts believe Tyson's appearance knocks out the initial bidder for IBP, the investor group led by Donaldson Lufkin & Jenrette, a unit of Credit Suisse Group. Although bankers for the DLJ group have told Dow Jones Newswires they were confident of obtaining the necessary financing at $22.25 a share, others on Wall Street doubt that DLJ would try to up the ante.
"I don't think we'll hear more from Rawhide," Prudential Securities' Jeffrey Kanter said of the DLJ unit, formally called Rawhide Holdings Inc. That group includes IBP top management as well as Archer Daniels Midland Co. (ADM), which holds a 12.2% stake in IBP.
JOSEPH LUTER III:
WHAT'S GOOD FOR SMITHFIELD FOODS
IS GOOD FOR THE HOG INDUSTRY AND IBP
Undaunted by other bids for IBP Inc., Smithfield CEO and board chairman Joseph Luter III told skeptical delegates to the Iowa Farm Bureau Federation's last week that what's good for Smithfield Foods Inc. is good for the hog industry.
Luter, in defending Smithfield's proposed $4.1 billion buyout of rival meatpacker IBP Inc., said that the deal his company, the world's largest hog producer and the world's largest pork processor, would be better for farmers than the management offer that IBP, the nation's leading beef packer and number two pork processor, was making to stockholders.
"IBP is going to be sold," Luter said. "The question is, who will own it? . . . You will be better off if Smithfield buys IBP rather than the management-led group."
Upon learning of the Tyson Food offer Smithfield Foods said its bid for IBP is still "more attractive" than a higher offer from Tyson Foods now on the table. "It is by no means clear that the proposal Tyson made today represents superior long-term value over ours. Indeed, we believe that the Smithfield-IBP combination is the more attractive combination given our experience in the meat business, the synergies we can generate by combining our companies, our track record of successfully integrating management teams, and our history of creating shareholder value," the company said in a statement.
Luter asked to speak to the Iowa Farm Bureau, which opposes the Smithfield-IBP deal because the buyout will restrict markets for Iowa hog producers, to present his case for Smithfield. He was accompanied by former Iowa Governor Terry Branstad, who said he was acting as a Smithfield consultant and adviser. Luter III has also hired Joel Klein, former head of the antitrust division of the U.S. Department of Justice, to advise him on the buyout.
"I realize there is an awful lot of apprehension out there," Luter said in his opening remarks, but Smithfield as a $1.2 billion investment in hog production. Currently, the company owns about 700,000 sows in the U.S. making it the largest U.S. hog producer far ahead of Premium Standard Farms of Princeton, Missouri., which has about 200,000 sows, according to Successful Farming magazine.
"I want to see higher hog prices for selfish reasons," Luter said. "I own a lot of hogs."
In recent years Smithfield has consolidated its holdings in the pork industry by forming alliances with, and then buying out, many of the larger hog producers in the U.S. including included Carroll's Foods and Murphy Family Farms, both headquartered in North Carolina with contract feeding operations in Iowa.
Ed Wiederstein, Iowa Farm Bureau president of "60 Minutes" fame and a hog producer from Audubon, Iowa told the Des Moines Register's Jerry Perkins that Luter's speech didn't change many minds. "There was a great amount of skepticism about the deal before he spoke and there was still a great amount of skepticism when he was done," Wiederstein said.
"Our policy is clear on the issue," Wiederstein said. "We are against an unrestricted merger between Smithfield and IBP and what that would do" to cash hog prices. Smithfield's buyout of IBP threatens to lower hog prices by restricting competition for hogs, Wiederstein said.
As Perkins notes just 25% of the hogs in the influential Iowa-Southern Minnesota hog market are sold on the "spot," or cash market and the rest are sold under some form of prearranged contract between producers and packers. By lowering prices in the cash market, packers can also drop the prices they pay for hogs paid under contract.
Smithfield has expressed a willingness to divest itself of some plants to reduce antitrust concerns raised by Iowa Attorney General Tom Miller. If Smithfield would acquire IBP, the two would have a combined hog market share of 37%.
As has been previously reported National Pork Producers Council (NPPC) leaders are interested in buying an IBP or Smithfield pork processing plant if one becomes available, in an effort to help satisfy potential government antitrust concerns, as a result of the buyout.
Luter told the Register's Perkins that he would finance the sale of a pork plant to producers, possibly two, to meet antitrust objections.
"If hog farmers want to buy it, fine," Luter said. "They'll be fools, but if they want it, I'll help them finance it. I'd ask for 10% down and I'd finance the rest . . . I know they'll be busted in two years' time, but if they think it's such a . . . good deal and they want to jump in, it's fine with me."
John McNutt, director of development for Pork America, a farmer-owned cooperative formed last year to market pork, said the group would consider buying one plant if the Smithfield-IBP deal were completed. "We'd certainly be willing to look at it, depending on the location, the condition of the plant and the price," said McNutt, former president of the National Pork Producers Council, who joined Pork America upon completion of his term of office.
NATION'S NUMBER ONE "CORPORATE OUTLAW"
EXECUTIVES FEARFUL OF "OUTSIDE"TAKE OVER
A two-year struggle to prevent IBP Inc. being taken over by outsiders, which led to the company's executives recently seeking to take the nation's largest beef packer private, is the latest chapter to be revealed in who will control a company which has been branded as the nation's number one "corporate outlaw."
As the Omaha World-Telegram's Victor Epstein reports a draft of a proxy statement to be sent to shareholders indicates the main obstacle to the executives' bid, original rival Smithfield Foods Inc., actually made the first offer to take over IBP. It also reveals that IBP's floundering stock price was the catalyst for the effort to sell the company.
According to the proxy draft, Epstein reports, a committee of five independent members of the board of directors noted that "IBP's stock price had been depressed for some time, that it was public information that the company had very little in the way of takeover defenses and that industry or strategic buyers could easily conclude based on publicly available information that an acquisition of IBP at a large premium was feasible."
IBP executives sought to privatize the publicly traded company through the $3.8 billion offer they made October 2, in conjunction with the company's longtime investment bank, Donaldson, Lufkin & Jenrette Inc., of New York, and several other major shareholders. Members of IBP's executives group, hold 36.5% of the company's 106 million outstanding shares. DLJ is the single largest shareholder, with 16.3%, while Archer Daniels Midland (ADM), which aligned itself with the investment groups, owns 12.2% of IBP stock with Smithfield, which publicly disclosed on August 23 that it had acquired 6.3% of IBP's stock as a "passive investment."
The IBP executives bid contains a bundle of financial payments to key members of the group, including $21 million in stock for CEO Robert Peterson.
The proxy statement, in addition to outlining the deal's financial payments to members of the executives group, also specifies payments including $84 million in fees for DLJ for organizing the transaction and arranging the financing even as it participates in IBP's acquisition through a subsidiary called Rawhide Holding Corp.; a $59 million cancellation fee, payable to DLJ should the merger offer not be approved by March 31; $6 million to be divided among other IBP executives; and $3.75 million in advisory services fees for Booth Creek Partners, another member of the executives group.
Some shareholders oppose the executives offer, which would buy them out and end their interest in the Dakota Dunes. South Dakota-based company. Fifteen have filed lawsuits opposing it, alleging that IBP officials failed them by not seeking a higher share price. The company board's special committee already has approved the offer from the executives group, which will be put to a shareholder vote early next year.
Epstein also reports that the 140-page document provides a glimpse into the train of events that led to the internal decision IBP could no longer stand alone. Management concern over lethargic food industry stocks --- largely forsaken by investors smitten by technology stocks --- served as the catalyst.
Another factor was the cost of transforming IBP from a wholesale meatpacker into a food company which also produces prepackaged individual cuts of meat, and precooked meals under its own Thomas E. Wilson retail brand name. The board of directors felt the investments required by the transition would adversely affect their already under-valued stock, making them an even more attractive takeover target.
"The special committee believed that this (transformation) involved significant risks and would take considerable time to implement," according to the proxy statement draft. "There was no assurance (it) would be successfully executed or fully appreciated in the marketplace and reflected in IBP's stock price."
Meanwhile, the Wall Street Journal's Steven Lipin reports that a committee set up by the IBP board never discussed with any other bidders --- being afraid of leaks and disruptions, as well as a threat from DLJ to walk. They agreed to sell for $22.25 a share, or $2.4 billion, after negotiating with an investor group led by DLJ, IBP's management and current IBP investors George N. Gillett Jr. and Archer Daniels Midland Co.
IBP agreed to the DLJ offer even though Smithfield Foods, its chief rival in the pork business, had expressed interest in the company, as had another investor group, according to the recently released proxy statement. Smithfield since has bid $25 a share, or $2.7 billion, to break up the leveraged buyout.
DLJ has long been IBP's financial adviser while John Chalsty, DLJ's chairman until its recent sale to Credit Suisse Group's Credit Suisse First Boston, sat on IBP's board. Although Chalsty did recuse himself from the IBP talks some investors and others charge that the role that Chalsty's firm played was an obstacle to getting the best price for IBP. The DLJ investor group originally asked for a $100 million breakup fee, which comes out to nearly one-third of IBP's 1999 earnings, though that was cut back to $59 million, plus $7.5 million in fees.
Many investment analysts believe it is clear that the DLJ-led bid was at the very low end, compared with where IBP's rivals trade. According to the proxy, J.P. Morgan found that most of the companies in the sector sell for between five and 12 times cash flow. The DLJ group is paying 5.4 times cash flow, based on management's projections for 2000.
IBP's special committee actually did receive approval from the board to talk to other bidders, according to the proxy. But it never acted on it, in part because of DLJ's walk out threat, and because, the proxy says, "other than the October 1999 approach by Smithfield, no industry or strategic buyer had come forward."
Smithfield was an obvious strategic buyer; it purchased its 6% stake in IBP during the confidential buyout discussions. Still, it wasn't called. "The special committee determined that it was reasonable to conclude that industry or strategic interest in acquiring IBP was unlikely," the proxy said.
John McMillin of Prudential Securities is more direct, telling Lipin: "The bottom line, in our view, is that there are a lot of ulterior motives by all of the parties connected to IBP."
CARGILL INC. BUYS AGRIBRANDS INTERNATIONAL
After being criticized by some analysts and investors who claimed that Agribrands International Inc. and Ralcorp Holdings Inc. had little in common and that a proposed $450 million merger deal undervalued Agribrands, Cargill, the world's largest grain trader, announced this week that it will purchase Agribrands for $580 million.
Ralcorp and Agribrands, both of St. Louis, Missouri had previously been spun off by Ralston Purina Co. and shared a common chairman, William P. Stiritz, CEO of Agribrands. Agribrands, which markets its products under the Purina and Checkerboard names, produces feed for everything from hogs and rabbits to shrimp from 71 plants in 16 nations. Ralcorp makes breakfast cereals and crackers that stores sell under private labels.
Cargill, the nation's largest private corporation with 1999 revenues of $48 billion, has interests in everything from milling and meatpacking to steel and salt and operates about 100 feed mills in U.S. and several other countries with feed brand names that include Nutrena and Acco Feeds.
Wall Street Journal reporters Nikhil Deogun and Scott Kilman report that several weeks before the latest Cargill offer, it made an unsolicited offer by proposing to acquire Agribrands for $50 a share; a proposal Agribrands never publicized. After the companies dickered on the price, last Friday Agribrands' board decided that the Cargill deal was better than Ralcorp's. Agribrands is ending the deal with Ralcorp and is prepared to pay Ralcorp a $5 million termination fee.
Agribrands, which didn't talk with other bidders before entering into the Ralcorp deal, is permitted to solicit competing bids for 30 days. While another company could try to outbid Cargill, the current deal with Cargill carries a break-up fee of $10 million, which Agribrands would need to pay if it strikes an agreement with another buyer.
Originally, Ralcorp was attracted to Agribrands' cash flow, Deogun and Kilman note, which Ralcorp hoped to spend on expanding its stable of private-label grocery products. Generating so much more than it spends Agribrands held about $175 million on August 31, the end of its fiscal year. Under terms of Ralcorp's deal, Agribrands shareholders would have received three shares of Ralcorp for each Agribrands share.
"Some Agribrands shareholders cried foul, saying the company could get a higher price through an auction. Others, however, said that by announcing the merger and placing few restrictions for another suitor to step forward, the company intentionally put itself in play," they add.
The Cargill agreement requires approval of two-thirds of Agribrands stockholders, a ruling from the Internal Revenue Service that the merger will not affect the tax-free treatment of Agribrand's 1998 spin-off from Ralston Purina and regulatory approval.
While the Cargill-Agribrands merger probably won't create much of an antitrust challenge in the U.S., since Agribrand's business is principally overseas, the livestock-feed business, is currently being hampered by a capacity glut as some livestock producers are growing so big and sophisticated that they make their own animal feed, depriving Agribrands and Cargill of a large market.
Yet, as the Journal points out Agribrands "sits on a mountain of cash because its management sees little worth buying in its industry," while Cargill "has been shopping for agricultural assets despite the battering its own bottom line is taking from the sector's downturn."
BECOMES A "CATEGORY CAPTAIN"
IN NONCARBONATED BEVERAGES;
PURCHASES OUAKER OATS AND GATORADE
After being pursued for months by its chief rivals, PepsiCo.has agreed to acquire Quaker Oats in a $13.8 billion stock deal that will give the giant beverage company control of Gatorade, the world's best-selling sports drink.
As the combined company will be 83%-owned by PepsiCo shareholders and 17% by Quaker shareholders it will continue to be called PepsiCo, with annual revenues of approximately $25 billion.. Should Quaker terminate the deal or be sold to another company, PepsiCo would receive a $420 million breakup fee..
For Pepsi, Gatorade was a worthy prize accounting for $1.8 billion in sales last year which brought in 44% of Quaker Oats' income in the first three quarters of this year. Gatorade alone accounts for 84% of the sports-drink sales in the United States. Its sales increased by more than 15% over the past year.
PepsiCo, already owns the best-selling bottled water brand, Aquafina, as well as the leading iced tea and iced coffee. With Gatorade, PepsiCo moves far ahead of the field, nearly doubling its share of the noncarbonated market, to 33% from 18%, compared with 21% for Coke, according to Sanford C. Bernstein & Company. Coke, however, still dominates the soft-drink industry with 40% of the market --- despite Gatorade. Pepsi is runner-up, with 32%.
The transaction is subject to regulatory approval, and some analysts have questioned whether PepsiCo will encounter problems because it owns All-Sport, the number three sports drink brand, with a three percent share, compared with 83% for Gatorade and 12% for Coca-Cola's Powerade. PepsiCo has agreed to dispose of All-Sport if regulators require it do so.
The take over of one of the nation's top four cereal makers came after weeks of financial jockeying between PepsiCo, Coca-Cola Co. and France's Danone Group. PepsiCo had held earlier talks with Quaker Oats about a $14.8 billion stock deal that valued Quaker Oats stock at about $103 a share, but Pepsi backed away because it was reluctant to specify a floor for its stock price.
CocaCola then stepped into the biding picture but its board of directors soon abandoned an attempt to orchestrate a $16 billion stock swap on November 21, after some investors warned that the price was too high.
Roger A. Enrico, the chairman and chief executive of PepsiCo, also announced that Steve Reinemund, the company's president and chief operating officer, would succeed him, as planned, when the deal is complete.
"We're delighted," Enrico said in a conference call, adding that the deal squares well with the "lion's share" of the company's goals for sales and profit growth. He said the acquisition will add as much as 2 cents a share to PepsiCo earnings in the first year. "This will be a truly outstanding combination," he said in a statement. "Bringing together Quaker and PepsiCo creates a wealth of exciting growth opportunities as well as important cost and selling synergies."
"The combination gives us a terrific second brand in Quaker itself, and a great business in snacks --- rice cakes and granola bars," he said. Those products cater to a changing consumer lifestyle where people increasingly eat "one-handed meals," according to Enrico.
Pointing to the growth potential in food bars, he added, "We see this market migrating into a ... legitimate way for people to get part of their nutrition . . . We see bars as an ideal way to `smuggle nutrition' into more daily diets." He also noted that Pepsi isn't now in the snack bar business, but that Quaker gives it "legitimacy overnight."
While some analysts praised the deal, saying Pepsi will be able to take advantage of a global beverage-sales network to market Gatorade, making it the "category captain" in non-carbonated beverages, through vending machines at sports facilities, schools, gas stations and elsewhere, others remained cautious, if not skeptical.
"It's sort of dubious logic by everybody that bigger is better," Fariborz Ghadar, a merger specialist at the Smeal School of Business at Pennsylvania State University, told the Washington Post's Robert O'Harrow Jr., adding that because Gatorade already dominates the sports-drink market, Pepsi will have a tough time reaping as much in profits from it as the company hopes."It is doubtful they can grow Gatorade bigger than it already is and is growing by itself."
Other analysts also question what Pepsi will do with Quaker Oats' $3 billion food business, which includes such labels as Cap'n Crunch, Rice-a-Roni and Aunt Jemima --- foods that have little to do with the core of Pepsi's beverage and snack business. Under accounting rules that govern the transaction, Pepsi will have to hold on to those parts of Quaker's business for at least two years.
Although PepsiCo includes snackmaker Frito-Lay, industry analysts question
whether the company can absorb the diverse Quaker Oats products, and whether those holdings will be a drag on Pepsi's earnings per share. "If there's concern over this deal, that's where the concern lies," Timothy Swanson, an analyst at A.G. Edwards & Sons Inc., told the Post.
ALL-STAR LEGAL TEAM TO LAUNCH
BROAD ASSAULT AGAINST CORPORATE HOG INDUSTRY
Environmentalists, family farm activists, and animal welfare advocates will announce this afternoon at a Washington, D.C. press conference that they have recruited an all-star team of private bar attorneys and law firms to launch a broad legal assault against the corporate hog industry.
Citing the government's failure to prosecute industry practices that shatter rural communities and contaminate public waterways, the public interest groups said they will work with prominent plaintiffs lawyers to reform the industry, restore damaged ecosystems and reinvigorate America's family farms. The new coalition has already initiated the first series of lawsuits in North Carolina and is hosting a national meeting of hog activists to support the effort.
The environmentalists argued today that "hog factories" are having disastrous impacts on America's natural resources and are exposing humans to a variety of health risks. Industrial meat factories discharge the waste from millions of hogs along with toxic disinfectants, antibiotics, chemical poisons and other poisons untreated to the environment.
Hog factory odors make life unbearable in adjacent communities. Spills from vast feces lagoons have aggravated fish kills involving billions of fish and poisoned soils, rivers, aquifers and public waterways. Disease outbreaks linked to these illegal practices have sickened fishermen and river users with respiratory injury, brain damage and other afflictions. By saving money through illegal disposal practices, hog factories have artificially lowered the price of pork, driving hundreds of thousands of family farmers off their land.
Environmentalists complain that despite the clear illegality of such practices, government has abrogated its enforcement duties. "Federal environmental prosecution against the meat industry has effectively ceased because Congress has eviscerated the Environmental Protection Agency's enforcement budget while the political clout of powerful pork producers has trumped state enforcement efforts," according to Water Keeper Alliance President, Robert F. Kennedy, Jr. "This collapse of environmental enforcement has allowed corporate hog factories to proliferate with huge pollution based profits."
Water Keeper Alliance, Sierra Club, and farm and animal advocates have assembled leading national class action law firms to implement litigation strategies to reform the industry. The firms are the successful veterans of legal wars against big tobacco and the asbestos and Dalkon Shield industries. As in the tobacco wars, the public interest groups are turning to the private bar to defend the public interest because federal and state regulators are moving so slowly.
"This historical assemblage of legal talent will fill the vacancy left by government's failure to prosecute and confront these polluters with the most formidable threat they have ever faced," Kennedy said. "The failure of government has forced us to find champions outside the regulatory community. We are grateful that the private bar has risen to the challenge," he added.
Richard Middleton, the immediate past president of the American Trial Lawyers Association, is one of the leaders of the group organized by Water Keeper Alliance. "Using its wealth and political power, this industry has illegally seized public waterways for its waste disposal," said Middleton. Jan Schlitchtmann, of Leiff, Cabraser, Heimann & Bernstein, L.L.P., whose prior environmental exploits were recounted in the best selling book A Civil Action, is among the group's organizers. Schlichtmann pronounced that, "Our objective is to civilize this industry."
Family farm activists joined in announcing the assault on industrial hog producers.
The National Farmers' Union (NFU), with over 300,000 members, represents the nation's family farmers. NFU President, Leland Swenson, said family farmers should take an aggressive stand against corporate farming. "Industrial hog production is not farming. The practices of these corporate giants have nothing to do with traditional agriculture and are forcing many farmers out of business."
In the past decade, a handful of major corporations have been positioning themselves to completely control hog production and wipe out independent family hog farmers. "Over 70% of independent family hog farms have been pushed out of business by corporate hog giants over the past decade," Swenson noted.
"These massive industrial hog operations are fouling our air and water and driving family farmers off the land," stated Carl Pope, Executive Director of the Sierra Club. "These are not farms. They are industrial operations and need to be held to the same standards as any other industry. Thousands of miles of our nation's rivers and streams have been contaminated by runoff of animal feces, and the foul stench makes life miserable for those who live nearby."
Animal welfare advocates also belong to the coalition. "The treatment of pigs in hog factories is nothing short of barbaric," stated Diane Halverson of the Animal Welfare Institute. The group, which supports humane family farming, has long worked to expose the suffering of animals at corporate hog facilities where sows are confined continuously on metal or concrete floors, crammed into narrow crates that prevent them from walking or even turning around.
The new coalition is launching its legal campaign in North Carolina and plans to announce new cases in other states over the coming months. In June, the Alliance was among plaintiffs filing a nuisance lawsuit against the country's largest hog producer, Smithfield. During the past two weeks, the Alliance has initiated lawsuits against a half dozen additional hog factories in North Carolina, accusing them of violating the Clean Water Act and other federal environmental laws.
Water Keeper Alliance and the North Carolina Hog Roundtable will also host a national gathering of environmentalist, farmers, scientists, attorneys, religious leaders, labor leaders, and animal welfare advocates in New Bern, North Carolina on January 11, immediately following the industry's North Carolina Pork Council annual meeting. The event's agenda reads like a "who's who" of hog activists from around the country.
Water Keeper Alliance is the umbrella organization for the fifty-eight River, Sound and Bay Keepers located throughout North and Central America and Europe. Headed by Robert F. Kennedy, Jr., Water Keeper Alliance protects and restores waterways using a variety of methods, including litigation.
Ohio State agriculture economist and occasional USDA consultant Luther Tweeten, a long-time outspoken opponent of family farm agriculture in the U.S. has now added the “alternative agriculture movement,” to his list of those who threaten to derail the world’s march toward food security.
ANTI-FAMILY FARM AGRICULTURE ECONOMIST
CASTIGATES "ALTERNATIVE AGRICULTURAL ADVOCATES"
Ohio State agriculture economist and occasional USDA consultant Luther Tweeten, a long-time outspoken opponent of family farm agriculture in the U.S. has now added the "alternative agriculture movement," to his list of those who threaten to derail the world's march toward food security.
Writing in Choices, a publication of the American Agricultural Economics Association, Tweeten labels those involved in alternative agriculture as "anti-globalists, radical environmentalists, small farm zealots, organic food advocates, autarkists, neo-Luddites and animal welfarists."
Calling them "alternative agriculture advocates (AAAs)," Tweeten, echoing his anti-environmentalist soul-mate Dennis Avery, claims it was the AAAs who spearheaded the demonstrations against trade and global economic development in Seattle during the November, 1999 World Trade Organization (WTO) ministerial talks.
"They are mostly not of farm background. Conspiracy theories bind them together. They largely view corporate America, including the commercial agriculture establishment, as the enemy."
These AAAs, Tweeten writes, have rejected rational, motionless thought and have embraced the assertion that "emotion is an absolute necessity for reason."
Tweenten asserts that AAAs are "educated," "articulate," "sincere," "savvy" and affluent enough that "they don't have to worry where their next meal is coming from." The AAA "shock troops," he adds, include suburban housewives and student activists "who have time and other resources to devote to such issues."
They're actually ultraconservatives who long for the old way of life, he believes.
Leroy Hushak and Frederic Hitzhusen, professors of agricultural economics at Ohio State, told the Des Moines Register's farm columnist George Anthan that while their colleague Tweeten is correct in some of his criticisms, "there are also legitimate economic questions" underlying many AAA concerns.
"For example, viewing corporate America as the enemy relates to the failure of international corporations to be subject to the laws of any nation."
Who, ask Hushak and Hitzhusen, "is examining the costs imposed by the ability of international corporations picking and choosing which laws to obey and which to ignore?" Also, they said, "people want to understand the world in which they live. They object when they are told that products are safe and in their best interest."
Most important, they emphasize, "is the growing inequality of wealth or income-earning capacity and its perceived relationship to technology and policy." Why do AAAs have political power, they ask? "Because economists are not addressing key economic issues."
For Tweeten, a former Oklahoma State University regent professor of agricultural economics, destroying the nation's family farm system has been a holy and righteous crusade.
In 1987 he wrote: "That farmers are poor, that they could not survive without governmental programs, that food supplies would be inadequate without the programs, that corporations would take over farming without the programs, that the family farm has got to be preserved because it is essential for democracy, or that programs are essential to preserve the rural community: All of these things, all of it is myth. All myth."
Also writing in the Winter, 1987 issue of Agriculture and Human Values, Tweeten denounces farm activist groups "on the left" who "eschew violence, but espouse conspiracy theories, scapegoating and onerous forms of farm fundamentalism, " declaring that "democratic principles do not inherently extend to any sector the right to vote on its economic destiny."
And he admonishes farmers that "their social contract with society" demands that they "accept without violence and with respect for due process, a system that alternatively may provide rich rewards and at other times economic setbacks, even bankruptcy."
He also sought to portray what he called the "farm political activist movement" as a small group of protesters ("mostly family farmers rather than large industrial-type farmers or part-time small farmers") enslaved to what he termedthe myths of the "dark side of the farm personality" which he contended, exhibits "a psychological and ideological climate where paranoia, scapegoating, violence, armed confrontation and fear have come together."
Ignoring the increasing corporate economic concentration in the farm and food sector and the failure of the "free enterprise" system to maintain a fair price for commodities, Tweenten offers his definition of "farm fundamentalism."
"Farm fundamentalism is the belief that farming is not only a superior way of life, but also represents the highest ideals of the nation . . . [it] holds that the nation's political and social system cannot survive without the type of person the farm way of life produces. In economic philosophy, the ideal holds new wealth derives only from raw materials and that the farmer must prosper for the nation to prosper."
"I have found widespread support among farm people for two propositions: 1) Washington and the market perennially have not favored them, and 2) they need more political and economic bargaining power to serve the needs of farmers and society. Each point has dubious validity."
Tweeten dismisses as "overblowen and inconsistent rhetoric" that unless the family farm system is preserved the nation's food production will fall into the hands of a small number of large corporations with the ability to control production, availability and food prices.
He believes that such an "incorrect assertions often prefaces the assertion that family farmers must organize to control production, raise farm prices, and in general find their ultimate economic security in greater economic bargaining power."
Such Tweeten rhetoric occasioned Iowa farm activist Denise O'Brien to recall that in 1986 she was a presenter at a conference at Iowa State University called "Is There a Moral Obligations to Save the Family?" Family farm writer and poet Wendell Berry and Luther Tweeten were also presenters.
"I sat with Berry during Tweeten's lecture. What I remember most about his lecture was his saying that "the government should give farm families assistance to move off the farm." His answer to the current farm crisis. Wendell looked over to me and said, `You know what I think? I think Luther wanted to be a farmer and since he couldn't, he's trying to ruin us."
APPEAL FOR CONTRIBUTIONS
While THE AGRIBUSINESS EXAMINER is a subscription free e-mail newsletter
it still welcomes contributions. However, such contributions in recent months
have been few and far between. Thus, plans to purchase new computer
equipment in an effort to improve the production and distribution of THE
AGRIBUSINESS EXAMINER have been unfortunately postponed due to said
lack of such contributions. Nevertheless, it is hoped that readers still value THE
AGRIBUSINESS EXAMINER to such an extent that they will willingly and
generously financially support its continued circulation as it enters its third year.
Checks should be made out to A.V. Krebs and sent to P.O. Box 2201, Everett,
CORPORATE AGRIBUSINESS RESEARCH PROJECT
WEBSITE SEARCH ENGINE NOW AVAILABLE
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 TILLER, THE AGRIBUSINESS EXAMINER and "Between the
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, now the junior U.S. Senator-elect from 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.
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 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 designed 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.