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WHO'S WHO IN CORPORATE AGRIBUSINESS???(3/4/97)

 

A revealing look into the world of corporate agribusiness can be had by examining three recent reports, two of which were featured in Forbes Magazine and the other in Worth: Financial Intelligence.

As part of its yearly publishing schedule Forbes reported on 1996's 500 largest private corporations. To little or no surprise the list was again led by Cargill, the world's largest grain trader. As a matter of fact five of the top ten privately held U.S. companies, according to the Forbes report are food or food related corporations. Together they have revenues of $119.6 billion, which is 16% of the total $752 billion that the top 500 private corporations recorded in 1996.

The magazine in its annual survey, defines a private corporation as one that either has too few shareholders to have to file financial reports with the Securities & Exchange Commission (SEC), i.e., Mars, or has enough shareholders, but restricts ownership to a narrow group, i.e., Cargill.

In leading the list Cargill showed revenues of $56 billion, followed by number two Koch Industries (oil & gas, chemicals, agriculture, minerals, real estate and finance) with sales of $25.2 billion. Continental Grain, which shares almost equally 50% of the world's grain trade with Cargill, is number four with sales of $15 billion. Mars, maker of candy, ice cream and pet food, rice, beverages and electronics, is number six with $14 billion in revenues and Publix Super Markets, which operates 525 supermarkets in Alabama, Florida, Georgia & South Carolina, is number nine with $9.39 billion in sales.

United Parcel (3), Goldman Sachs Group (5), Ingram Industries (7), Anderson Worldwide (8) and Bechtel Group (10) complete the list of the top ten private firms.

The second Forbes report was their Annual Report on American Industry. Here are listed how profitable the 1280 corporations that dominate the various industry sectors of the U.S. economy were in the past year and what their profitability was on the average for the past five years.

Unlike years past, where it has usually ranked in the top three, the food, beverage and tobacco industrial sector, the very soul of corporate agribusiness, did not fare as well as it has in the past. Ranked 12th among the top 20 it showed a 10.1% five-year average annual return on capital which, nevertheless, still put it above the all-industry median of 9.8%.Despite it's rather sluggish showing as a whole, however, there were some extraordinary results from both the highly concentrated U.S. cereal and tobacco market sectors.

Health services (14.1%), chemicals (12.3%), financial services (12.2%), consumer nondurables (12.2%) and insurance (12.1%) finished in the top five.

The third report, appropriately titled "This Land is THEIR LAND" by William P. Barrett lists "America's Top 100 Land Barons." In the introduction to the study it is noted that "taken as a group with number one owning 1.3 million acres (R.E. "Ted" Turner) and number 100 owning 95,000 (Taylor Family of Amarillo, Texas), they hold more than one percent of the country, a land mass the size of Kentucky."

While much of the land reported is both in the West and in timber there are some major corporate agribusiness land holdings among these 100 landowners.

Although many of these land barons refused to be interviewed for Barrett's article Ted Turner was quite open about his beliefs and philosophy when it comes to land ownership. In discussing land as an investment he notes:

"I could make a fortune developing my land, but I've chosen not to. Land only gives you a good return when you start subdividing it or building on it and charging rent. Or if you sell it. I won't do any of that. I didn't buy the land as an investment. I bought it because I liked it."

And commenting on land as impermanence he adds, "The Indians thought that they owned the land. We think that we own the land . . . The land will be up for grabs again."

CORPORATE AGRIBUSINESS'S PRIVATE TOP TWENTY-FIVE

 Corporation
 Revenues
(Millions)
 Net Profit
(Millions)
 Businesses
1  Cargill  $56,000  $902  International marketer and processor of agricultural and industrial commodities, financial services
2  Koch Industries  $25,200  $850  Oil and gas, chemicals, agriculture, minerals, real estate and financial
3  Continental Grain  $15,000  $240  Markets commodites, processes poultry, runs cattle feed lots, financial services and aquaculture
4  Mars  $14,000  $800  Makes candy, ice cream and pet food, rice, beverages and electronics
5  Publix Super Markets  $9,393  $242  525 supermarkets in Alabama, Florida, Georgia & South Carolina
 6  Aramark  $6,120  $110  Distributes food to hospitals and schools, health care and other services
 7  Meijer  $6,000  $170  General merchandise and grocery stores in the Midwest
 8  Borden  $5.944  -$366  Cracker Jack, soups, and food and dairy products, industrial products
 9  HE Butt Grocery  $5,800  $99  H-E-B and H-E-B Pantry Food Stores, milk plant and bread bakery in Texas
 10  Ralph's Grocery  $4,335  -$260  Supermarkets in California and the Midwest
 11  Alliant Foodservice  $4,226  $50  Distributes food to restaurants, hospitals and other nonretail outlets
 12  Pathmark Stores  $4,182  $33  Supermarkets and drugstores in eastern U.S.
 13  C&S Wholesale Grocers  $3,348  $40  Wholesales food to supermarkets, retail stores and military bases
 14  Hy-Vee  $2,800  $30  Hy-Vee Food stores, Drug Town drugstores and Heartland Pantry convenience stores
 15  J.R. Simplot  $2,700  $122  Processes potatoes, vegetables, chesse and other foods, fertilizer and livestock
 16  Randall's Food Markets  $2,400  $34 Tom Thumb Food and Pharmacy, Randall's Food & Pharmacy stores
 17  Schwan's Sales Enter.  $2,338  $111 Delivers frozen pizzas and other frozen foods to homes, hospitals and schools
 18  Giant Eagle  $2,160  $28  Supermarkets in Pennsylvania, Ohio, West Virginia, wholesale food
 19  Red Apple Group  $2,150  $37  Supermarket chain in New York City, refines oil, real estate
 20  Wegmans Food Markets  $2,130  $23  Wegmans Food Market stores, Chase-Pitkin home and garden centers
 21  Southern Wine & Spirits  $2,125  $43  Distributes wine and spirits
 22 Core-Mark International  $2,100  $21  Distributes tobacco products, candy and health and beauty aids
 23  Perdue Farms  $2,100  $58  Processes poultry
 24  TLC Beatrice Int. Holdings  $2,073  $15  Wholesales and retails food in Europe, makes ice cream and other desserts
 25 Specialty Foods  $1,975  -$270  Breads, cookies, specialty cheeses, premium snacks and other food products
         


PROFITABILITY: Corporate Agribusiness's Top Twenty


Five Year Average (Profitability*): 1-U.S. Tobacco (73.9%); 2-Coca-Cola (42%); 3-Quaker Oats (34.5%); 4-William Wrigley Jr. (34%); 5-Kellogg's (25.2%); 6-Lancaster Colony (24.6%); 7-Kroger (24.5%); 8-General Mills (24.4%); 9-Campbell Soup (22.8%); 10-Quality Food Centers (21.2%); 10-Albertson's (21.2%); 12-Winn-Dixie Stores (21%); 13-Pioneer Hi-Bred International (20.5%); 14-Philip Morris (19.9%); 15-Brown-Forman (17.9%); 16-CPC International (17.6%); 16-Hormel Foods (17.6%); 18-HJ Heinz (16.7%); 19-Ralston Purina (16.4%), and 20-Iowa Beef Processers (16.2%).

 

Industry Median (10.1%). All-Industry Median (9.8%)

 

Latest 12 Months (Profitability*): 1-U.S. Tobacco (117.4%); 2-Coca-Cola (50.9%); 3-William Wrigley Jr. (27.2%); 4-Kroger (25.9%); 5-General Mills (25.7%); 6-Philip Morris (24.8%); 7-Lancaster Colony (24%); 8-Pioneer Hi-Bred International (23.4%); 9-Albertson's (19.7%); 10-Southland (19.4%); 11-Winn-Dixie Stores (19.3%); 12-Campbell Soup (19.2%); 13-Ralston Purina (19.1%); 14-Hershey Foods (19%); 15-Safeway (18.2%); 16-Iowa Beef Processors (18.1%);17-Brown-Forman (17.8%); 18-CPC International (17.4%); 18-Shoney's (17.4%), and Richfood Holdings (17%).

 

Industry Median (9.6%). All-Industry Median (9.6%).

 

* Profitability: For return on Capital FORBES divides the sum of three items --- aftertax profits, the amount remaining if the interest paid on the long-term debt were taxed and minority interest --- by a firm's total capitalization.

 

Return on Equity* (Latest 12 Months): 1-General Mills (154.2%); 2-US Tobacco Inc. (153.5%); 3-Foodmaker (63%); 4-Coca-Cola (62.5%); 5-Quality Food Centers (50.5%); 6-Safeway (47.2%); 7-Coca-Cola Bottling (45.8%); 8-Ralston Purina (45.7%); 9-Philip Morris (44%); 10-Foodbrands America (37.2%); 11-Triac Cos. (30.4%); 12-William Wrigley (27.9%); 13-Hershey Foods (26.5%); 14-Brown Forman (26.1%); 14-Lancaster Colony (26.1%); 16-CPC International (25.9%); 17-Campbell Soup (25.7%); 18-Albertson's (25.3%); 19-Anheuser-Busch (24.6%), and 20-Pioneer Hi-Bred International (24.5%).

 

Industry Median (14%). All-Industry Median (13%).

* Return on Equity: Calculated by taking primary earnings per share and dividing it by common shareholders' equity per share at the start of the fiscal year.

 

SOURCE: FORBES 49th Annual Report On American Industry, January 18, 1997

 

 

LAND BARONS: Agribusiness's Top Thirty

 

1-R.E. "Ted" Turner (Roswell, Georgia) - 1.3 million acres (New Mexico and Montana)

2-Henry E. Singleton (Beverly Hills, California) - 1.15 million acres (New Mexico and California)

3-King Ranch Heirs (Kingsville, Texas) - 860 thousand acres (Texas, Florida and Kentucky)

4-Lykes Family (Tampa, Florida) - 640 thousand acres (Florida and Texas)

5-Dolph Briscoe Jr. (Uvaide, Texas) - 600 thousand acres (Texas)

6-E.W. Biggs & A.B. Wharton III (Vernon, Texas) - 525 thousand acres (Texas)

7-East Family (Zapata, Texas) - 500 thousand acres (Texas)

8-Robert Earl Holding (Salt Lake City, Utah) - 500 thousand acres (Wyoming, Montana, Utah, Idaho and other Western states

9-O'Connor Family (Victoria,Texas) - 375 thousand acres (Texas and elswhere)

10-Clarence Scharbauer Jr. (Midland, Texas) - 355 thousand acres (Texas and New Mexico)

11-Anne Burnett Marion (Ft. Worth, Texas) - 350 thousand acres (Texas)

12-J.R. Simplot (Boise, Idaho) - 310 thousand acres (Idaho, California, Nevada, Washington, Oregon and Utah)

13-Bass Family (Ft. Worth, Texas) - 300 thousand acres (Oklahoma, Texas, Nebraska, California, New Mexico, Kansas, Hawaii and Colorado)

14- Lee Family (San Mateo, New Mexico) - 300 thousand acres (New Mexico)

15-Reynolds Family (Fort Davis, Texas) - 300 thousand acres (Texas)

16-Sugg Family (San Angelo, Texas) - 295 thousand acres (Texas)

17-Lane Family (Chicago, Illinois & Tucumcari, New Mexico) - 290 thousand acres (New Mexico)

18- Cogdell Family (Tulia & Floydada, Texas) - 285 thousand acres (Texas)

19-David L. Walker (Fort Pierce, Florida) - 245 thousand acres (Nevada)

20-Ellwood Heirs (Colorado City, Texas & Chicago, Illinois) - 240 thousand acres (Texas and New Mexico)

21-Gerald Lyda Sr. (San Antonio, Texas) - 235 thousand acres (Texas and Oklahoma)

22-Koch Family (Wichita, Kansas) - 220 thousand acres (Texas, Kansas and Montana)

23-John Irwin (New York, N.Y.) - 215 thousand acres (Arizona and California)

24-Philip Anschutz (Denver, Colorado) - 200 thousand acres (Wyoming, Utah and Colorado)

25- Lester Clark (Breckenridge, Texas) - 200 thousand acres (Texas and South Dakota)

26-Joe Finley Jr. (Encinal, Texas) - 200 thousand acres (Texas)

27-Garvey Family (Wichita, Kansas & Elsewhere) - 200 thousand acres (Nevada)

28-Killam Family (Laredo, Texas) - 200 thousand acres (Texas)

29-Gage Family (San Antonio & Marathon, Texas) - 190 thousand acres (Texas)

30-James G. Bowsell II (Los Angeles, California) - 185 thousand acres (California and Arizona)

 

SOURCE: Worth: Financial Intelligencer: America's Top 100 Land Barons, February, 1997.


 

 

THE HERFINDAHL-HIRSCHMAN INDEX: What Is It?(3/4/97)

Under the Department of Justice guidelines, any market with a Herfindahl-Hirschman Index ("HHI") above 1,800 is considered highly concentrated.

The HHI is a way to measure concentration.It has more or less replaced the four firm concentration ratio. It is calculated by taking the sum of the square of market shares. A monopoly is 100 squared, or 10,000. Ten firms, each with 10 percent, would be 10 times 10 = 1,000. A duopoly with equal shares would be 50 times 50 = 5,000. Because small shares don't add up to much, even when squared, it is pretty safe to ignore them.

The Department of Justice Antitrust guidelines consider an industry with an HHI of 1,000 or less to be competitive, and an HHI of 1,800 or more to be pretty concentrated. An increase in the HHI of 100 is considered important enough to trigger a merger review.

 


IBP, EXCEL, CONAGRA & NATIONAL BEEF & CO: Three's Company, Four's a Crowd (3/4/97)

The U.S. Department of Agriculture's recent and long-awaited study of who controls the beef packing industry revealed the following picture: Iowa Beef (38%); Cargill [Excel] (22%); ConAgra (21%) and National Beef (6%). Applying the HHI formula that would show: Iowa Beef 1444, Cargill (Excel) 484, ConAgra 441, and National Beef 36 for a total of 2355. If one goes back as recently as 1992 we see the Big Four in the meat packing industry with a HHI of 2128, an increase in just the past three years of 227!!!

In 1921 when the Packers & Stockyards Act (P&SA) was passed it was reacting to a slaughter market where four firms ---- Swift, Armour, Cudahy and Wilson --- controlled nearly 40% of the market. A 1916 study, requested by President Woodrow Wilson, by the Federal Trade Commission had found that there was no longer competition in the meat packing industry and saw the need for severe industry restructuring.


HAMBURGER, U.S.A.: "Captive Supplies" & Free Enterprise(3/4/97)

The Northern Plains Resource Council (NPRC), in alliance with the Western Organization of Resource Councils (WORC) have petitioned Secretary of Agriculture Dan Glickman to exercise his authority under the P&SA to restrict meat packers use of "captive supplies" of slaughter cattle. The petition asks for rules that:


1) Prohibit packers from procuring cattle for slaughter through the use of a forward contract, unless the contract contains a firm base price that can be equated to a fixed dollar amount on the day the contract is signed, and the forward contract is offered or bid in an open, public market.

2) Prohibit packers from owning and feeding cattle, unless the cattle are sold for slaughter in an open, public market.


Packers ownership and feeding of cattle for slaughter and their procurement of slaughter supplies through forward contracts have decreased prices paid to cattle producers. These practices unjustly have discriminated against some producers providing unreasonable preferences to certain producers over others, in violation of the P&SA.

From April 1994 to May 1996, the price of beef fell from $3.16 per pound to $2.97 per pound, or six percent. The packers' share increased 82%, from 23 cents to 42 cents/lb. The producer's share fell from $1.76 to $1.31 per pound, or 25 percent. If those trends hold for one year, consumers will save just under $5 billion dollars in reduced costs of beef; but producers will lose $11.25 billion, and a handful of packers will make an extra $4.75 billion.

The rule and its supplementary information was published in the FEDERAL REGISTER, January 14, 1997, pg. 1845-1859.

Here's what you can do before April 14, 1997:
Send an original and two copies of a letter of comment to:


Acting Deputy Administrator
Packers and Stockyards Programs
GIPSA, USDA
3641, 1400 Independence Ave,, SW, Room 3039-S
Washington, D.C. 20250

You can obtain a copy of the notice and the petition, more information, or help in writing comments, from WORC, 2401 Montana Avenue, #301, Billings, MT, 59101. Phone: 406-252- 9672. Fax: 406-252-1092. E-mail:
billings@worc.org.


CEREAL: What's For Breakfast? (3/4/97)

"Ralcorp Holdings Inc.'s exit from branded cereals is the latest example that in the breakfast-cereal business, big isn't just better. It may even be mandatory."

--- Richard Gibson, Wall Street Journal, August 15. 1996

The cereal business in the U.S. is an $8 billion annual market. Every one percentage point in market shares is equal to $80 million in annual revenues. Four major companies control 84% of the total U.S. cereal market: Kellogg's 33%;General Mills 25%; Philip Morris\Kraft General Foods\Post 17%, and Quaker Oats 9%. The concentration index for the industry, based on the HHI formula, in 1996 was 2084.

The U.S. cereal market is also probably THE most profitable sector of corporate agribusiness. The average annual return on equity (profitability) from 1992-1996 for the four largest cereal manufacturers was: Quaker Oats 34.5%, Kellogg's 25.2%, General Mills 24.4%, and Philip Morris 19.9%.

The 1992-1996 average median for the food, beverage and tobacco processing industry was 11.6%, for all U.S. industry it was 9.8%, and for U.S. agriculture the 1991-1995 annual average was 1.98%. Applying the HHI formula to other food products we see soft drinks (1992), 2793; beer (1992), 2698 and on and on it goes.

 


CARGILL: Dredging Up the Profits (3/4/97)

 

The Bolivian government has begun dredging activities at the grain port in Puerto Aguirre, Bolivia. The dredging is the first engineering work being carried out as part of a mega-project to alter the natural channel of the Paraguay and Parana Rivers to construct an industrial waterway for barge convoys called the Paraguay-Parana Hidrovia.

The dredging of Cargill's port is designed to open the Tamengo channel to convoys of 16 barges carrying soybeans and soymeal. The Tamengo Channel is Bolivia's 8-kilometer-long link with the Paraguay River, which flows downstream into the Parana River, and onward to the Atlantic Ocean. Dredging in Puerto Aguirre port is apparently being supported financially and politically by Cargill, and is being carried out without environmental safeguards, and against the recommendations of environmental impact studies funded by the Inter-American Development Bank and the United Nations Development Programme.

 

Independent studies indicate that even small changes in the level of the Paraguay River, part of South America's second most important river system, may cause irreversible damage to the Pantanal, the world's largest remaining wetlands ecosystem..

The Puerto Aguirre grain terminal was originally built with partial funding from the U.S. Agency for International Development. Cargill bought a controlling interest earlier this year, and took over operation of the terminal in September. With Bolivian soy exports growing as more land in Santa Cruz province is converted to soy monocultures, Cargill is in a position to profit handsomely if the Hidrovia moves forward by lowering its costs for exporting soy to Europe, at the expense of the Bolivian people who are paying most of the cost of altering the channel.

For more than three years, a coalition of environmental, social, and human rights groups, and indigenous peoples called Rios Vivos has pressed for transparency and public participation in the Hidrovia studies. The city of Puerto Suarez recently staged a general strike in protest of the planned dredging and rock removal in the channel.

 


 

CORPORATE AMERICA'S BOARD GAMES: Let's Play Monopoly!(3/4/97)

The WALL STREET JOURNAL reports (Nov. 12) that a panel created by the National Association of Corporate Directors has urged that corporate America limit chief executive officers and senior executives to no more than three public-company directorships and confine other directors to a maximum of six seats.

Only 49 of 775 companies limit the number of boards on which their directors serve, according to a recent survey by the American Society of Corporate Secretaries. Consequently, corporate America today has directors who serve on too many boards and often lack time to keep close watch on weak executives and poor business performance. About 120 directors serve on the boards of eight or more public and private businesses, concludes a proxy analysis conducted for The JOURNAL by newsletter Directorship in Greenwich, Conn. Another finding: The CEOs of 10 major U.S. corporations sit on six or more public-company boards.

The NACD's recommendation sparked immediate and considerable controversy. Panel members say the loudest protests over numerical limits came from Ann McLaughlin, a former U.S. Labor Secretary and a member of 10 corporate boards. "I do think the number limits are the tail wagging the dog," Ms. McLaughlin told a JOURNAL reporter.

Ms. McLaughlin voiced her objections to the commission by phone. She didn't attend any commission meetings in person because, she says, "they specifically conflicted with a number of [my] board meetings."

 


FIDUCIARY RESPONSIBILITY: Things Go Better With Coke(3/4/97)

In its report on the Blue Ribbon Commission on Director Professionalism (see above) the WALL STREET JOURNAL pointed out that John L. Clendenin, chairman, president and CEO of BellSouth Corp., finds time to hold board seats at eight big businesses besides his own, including Home Depot Inc., RJR Nabisco Holdings Corp. and Coca-Cola Enterprises Inc.

He says outside board meetings never occur more than twice a week, and on those days he arrives at BellSouth by 5 a.m. or earlier. An insomniac, he says he usually gets only five hours of sleep a night.

Mr. Clendenin believes his multiple directorships have helped him to transform the once-sleepy telephone utility into a marketing powerhouse. "I have plagiarized the living daylights out of the marketing expertise" at Coca-Cola Enterprises, the big Atlanta-based bottler, he noted.

 


SAFEWAY AND BOEING: And Then There Was One!(3/4/97)

 

Two major mergers in recent months have further consolidated the supermarket and commercial aircraft manufacturing industries.

In California Vons Cos. Inc. agreed to a takeover offer from Safeway Inc. who already owned 34.5% of Vons, which has most of its stores in southern California. The merger thus solidifies Safeway's position as the second-largest supermarket company in North America ranking it only second behind Cincinnati-based Kroger Co.

Safeway now operates 1,050 stores in the United States and Canada. The Vons' 325 outlets will enable Safeway to reenter Southern California, an area it abandoned eight years ago when it sold 172 stores to Vons. Vons also has stores in Nevada. The combination would result in a chain through 16 states, the District of Columbia and five Canadian provinces, with sales in excess of $22.5 billion.

Meanwhile, Boeing and McDonnell Douglas announced a major merger making Airbus, the European consortium, and Boeing virtually the only two major commercial airplane (100 plus passenger seats) manufacturers in the world. It is estimated in 1996 Boeing had a 64% world market share and Airbus a 36% share. The Index for WORLD commercial airline manufacturing would now this read 5392!!!


CONAGRA: How to Succeed In Business(3/4/97)

 

ConAgra Inc., the nation's second largest food manufacturer, has agreed to pay nearly $10 million in penalties, according to the Wall Street Journal, to settle the largest grain-adulteration probe in several decades. Charges, the paper claims, against some former employees of the company's Peavey Grain unit are also being pursued.

The five-year criminal investigation focuses on Peavey's practice of spraying water on grain stored in its elevators, particularly those located in the Terre Haute, Indiana area. ConAgra has said its practice of using the watering system is designed to repress grain dust which can and has fueled past grain elevator explosions. The water, however, also increases the grain's weight, and thus its market value.

Other recent actions involving ConAgra include:

* In August, 1996 ConAgra paid a $2.9 million settlement in a class-action lawsuit that accused the company of exaggerating the amount of debris in soybeans that it bought, lowering their value and allowing ConAgra to buy them for less. The lawsuit involved four of ConAgra's Indiana elevators. ConAgra denied any wrongdoing.

* In 1994-95 ConAgra abruptly canceled poultry producing contracts with over 250 independent contract growers in the U.S. South. In offering new and what one producer described as "abusive" contracts ConAgra demanded binding arbitration be included. Some 38 families refused to accept such terms, saying it was clearly a violation of their freedom of speech.

ConAgra's cancelation of contracts, many of the producers believed, came in retaliation for an earlier court suit brought on behalf of some 300 poultry growers in the region where a federal court jury awarded the producers some $17 million after they presented evidence of being cheated by ConAgra on the weight of their birds.

The Company's poultry-processing plant at Enterprise, Alabama had been deliberately making trucks seem heavier before they left the plant and then later tinkered with the scales when they returned loaded to make the trucks appear lighter. Growers were paid on the basis of the weight difference.

For many of those families who refused to sign the new contracts with ConAgra their action meant that they would have to sell their facilities, despite the fact that many of them had only recently installed almost-new equipment to meet ConAgra's production requirements. But the giant corporate agribusiness wasn't through with these families just yet for they made it very clear that they will sign no contracts with anyone who subsequently might buy these same family farmers' facilities, thus making it increasingly difficult for the families to even sell their farms.

While the Exxon Valdez damage suits are still wending their way through the U.S. court system one revelation came to light which again illustrates the lengths which corporations like ConAgra will go to to protect their interests.

In 1991 the Exxon Corp. made a secret deal with seven Alaska seafood processors whereby the seafood processors settled claims with Exxon for about $70 million, but then promised to return to Exxon any money they received from awards of punitive damages.

After the jury awarded $5 billion in such damages against Exxon, the nation's largest oil company, the seven processors put in claims totaling $745 million, or 15% of the $5 billion. The seafood processors, however, had previously and privately agreed to "kickback" $745 million to Exxon if their claims were upheld, and in turn receive from Exxon $12.4 million.

One of those seafood processors was Trident Seafood Corp., a wholly owned subsidiary of the ConAgra Corp.

Presiding Federal Court Judge H. Russel Holland of the U.S. District Court which tried the case, in a June 13, 1996 decision, described the arrangement as an "astonishing ruse," saying Exxon had deceived the jury and acted as "Jekyll and Hyde" by "behaving laudably in public and deplorably in private."


 

 

COMMENTARY: "Profit for Few or Food for All"(3/4/97)

Shameful and scandalous as it was the U.S. position at the recent World Food Summit in Rome went largely unreported and considerably unnoticed by its own citizenry.

Despite the overwhelming expression from the governmental delegates representing most all nations of the world; despite the impassioned plea of the 1200 Non-Government Organizations (NGOs) from 80 countries attending the conference that the issue of hunger in the context of human rights be addressed in the framework of the economic, social and cultural rights guaranteed under the United Nations Charter, the Universal Declaration of Human Rights, and the Covenant of Economic, Social and Cultural Rights, this consensus position was in the end missing from the Summit's final official document.

One nation and one nation alone --- the United States of America --- refused to accept the concept of food security as a human right. Melinda Kimball, from the U.S. State Department, even ventured the argument that the recently enacted Welfare Reform Law, which President Clinton supported and signed into law, would not support the idea of food security as a human right.

In addition to opposing the concept on grounds that it would subject the U.S. to human rights violation scrutiny Secretary of Agriculture Dan Glickman lent his voice to the American opposition.

"The United States believes that the attainment of any `right to adequate food' or `fundamental right to be free from hunger' is a goal or aspiration to be realized progressively that does not give rise to any international obligation nor diminish the responsibilities of national governments toward their citizens." Anyone reading Brewster Kneen's fine book Invisible Giant: Cargill and Its Transnational Strategies will soon learn the genesis of such policy thinking.

All of this, however, has received scant attention in our nation's press.

Thus, the rest of the world has been left with the challenge of how to advance an agenda of directing global energies aimed at implementing the right to food, while defying U.S. opposition which seeks to release so-called market forces which it argues will give rise to such large increases in agricultural output that human hunger will like magic disappear.

As Mark Ritchie, executive director of the International Agricultural and Trade Policy group in Minneapolis, Minn. notes: "There is a near-religious fervor to U.S. government pronouncements about the need to unleash the corporations and technology, while most of the NGO's and other governments believe that this can only make matters worse."

Even entreaties by the Vatican have fallen on deaf ears in the U.S. It was almost a year before the recent Rome conference that Pope John Paul II, speaking before the 50th anniversary celebration of the U.N.'s Food and Agricultural Organization (FAO) in that same city addressed the fundamental issue relative to the causes of hunger throughout the world.

"FAO's action in recent years has shown that the provision of emergency help for refugees is not enough; this kind of assistance does not bring a satisfactory solution as long as conditions of extreme poverty are allowed to continue and become even more acute, conditions which lead to increased deaths due to malnutrition and hunger. "The underlying causes of such situation have to be addressed. Sufficient food can be produced. Why then are so many people threatened by starvation? "

The Pope went on to answer in part his own question. "The social and economic situation of the contemporary world makes us all aware of the extent to which hunger and malnutrition of millions of people are the result of evil mechanisms within economic structures, or are the consequence of unjust criteria in the distribution of resources and production, policies formulated in order to safeguard special interest groups or different forms of protectionism."

Despite such counsel, however, the essence of the U.S. position can be found in what is being called a "new international food regime" which is designed on a global scale to dismember the national self-sufficiency food systems established after World War II and which the U.S. has been systematically undermining through its so-called Food for Peace program.

This new "international food regime has three basic features:

a) the removal of national agricultural subsidies and protective tariffs in accordance with such regional agreements as the North American Free Trade Agreement (NAFTA) and the Uruguay round of the General Agreement on Trades and Tariffs (GATT);

b) under the guise of free trade and the accelerated flow of unrestricted foreign capital transnational capital is assuming a greater role in the globalized industrialization of agriculture and food production; and

c) through so-called "structural adjustment or stabilization programs" Third World economies and former Soviet bloc nations are being forcibly restructured. Such policies have and will continue to contribute and underscore export-oriented policies in agriculture creating ever more serious degrees of domestic and international economic inequality.

Researchers at the Institute for Policy Studies have calculated that the combined wealth of the world's 447 billionaires is greater than the income of the poorest half of the world's people. Their calculations also show that at least two-thirds of the world's people are left out, hurt or marginalized by globalization.

As a matter of fact, according to a 1992 U.N. report and economist David Korten, the increase of free trade and foreign investment in the past several decades has significantly increased inequality in the distribution of wealth. In 1950 the wealthiest 20 percent of the world's population had an average income that was 30 times higher than that of the poorest 20 percent. By 1989 this ratio had increased to 60, leaving the richest fifth of the population with 82.7 percent of the world's income while the poorest fifth received only 1.4 percent. Between 1980 and 1990, for example, the number of people living in poverty in Latin America increased by 42 percent, while the population grew by only 22 percent.As an IATP Summit document points out, "the power over agricultural policy is shifting to the World Trade organization (WTO) . . . Farmer, consumer and environmental organizations, as well as national governments, have lost many of the policy tools they once could employ to defend food security."

While the governments of the world and the NGOs expressed solidarity on the principal of "the human right to food" there were obvious disagreements at the Rome Food Summit between the NGO's and the government representatives.

As NGO critics pointed out most governments still think of hunger as a production shortfall problem, and thus their final recommendations dealt mainly with how to increase production shortfall problems. The U.S. and the Clinton Administration, as one might expect from a government which favors the interests of corporate agribusiness over the interests of the common good, pushed for more biotechnology, chemical poisons, irrigation, factory farms, etc., greater "freedom" for transnational food corporations, and faster de-regulation of the food trade.

The NGO's, by way of contrast, correctly showed that it is those very same elements which are "the evil mechanisms" which are causing so many of the world's food and agricultural problems. In a brief four-minute "Profit for Few or Food for All" statement they were allowed to make at the conclusion of the Rome Summit the NGOs pointed out that "the globalization of the world economy, along with the lack of accountability of transnational corporations and spreading patterns of over-consumption, have increased world poverty" and that "today's global economy is characterized by unemployment, low wages, destruction of rural economies and bankruptcies of family farmers."

As an alternative they presented a multi-point program as a "new model for achieving food security."

1) a call for strengthening family farms;

2) the recognition of the central role women play in food production;

3) the importance of information and communications systems for small producers to be competitive;

4) the need for agro-ecological principles tied to national and international research, and

5) the opening up of international institutions like the WTO, the World Bank and the FAO "to the participation of peoples' organizations and NGOs."

As colleagues Roger Burbach and David Bacon writing in the January 6, 1997 issue of In These Times, one of the only U.S. publications to offer any serious evaluation of the World Food Summit, conclude in their essay "Let Them Eat Trade."

"The World Food Summit makes clear that the issue of food security is too important to be left to the politicians, national governments or the marketplace. International, rather than merely national, policies that involve NGOs and small and medium-sized producers are needed to help coordinate the production and flow of agricultural products.

"A globalist perspective --- as opposed to globalization tied to markets and private gain --- is required to eradicate hunger. Hunger, like slavery in the last century and violations of basic political rights today, must be recognized as a human rights abuse that cannot be tolerated."

In short, "Think Globally, Act Loco!"


Whitacre's Attorneys: Going in to
"take" ADM's "pants down"

Unwilling to accept an apparent massive government cover up of an international price fixing scandal in which his former employer Archer Daniels Midland Corp. instigated, participated in and now seeks to arrogantly dismiss while at the same time accusing him of fraud, one-time high level company executive Mark Whitacre is preparing to strike back.

In the wake of both public and stockholder outrage over the manner in which the Company conducted itself in entering guilty pleas in the price fixing case and the lack of severity in the U.S. Justice Department's issuing of fines, it is anticipated that Whitacre will soon file a lawsuit against ADM charging wrongful termination. Whitacre had worked for the FBI for over thirty months supplying vital and documented information concerning his Company's price fixing activities before being fired.

"Whitacre's new lawyers are going in and take ADM's pants down," ADM Shareholder's Watch Committee spokesperson David Hoech told the Corporate Crime Reporter's Russell Mokhiber in an exclusive October 30 interview.

"What the government tried to cover-up, these lawyers are going to uncover," Hoech added. "The lawyers are going to uncover the fraud and shine the light on the wrong doing."

"The Justice Department," he continues, "got their $100 million. The lysine people got $30 million, the citric people got $30 million and the [corn] derivative lawsuit $35 million. This isn't justice. This is justice denied. Corporate crime can only exist because the government is dirty. We are the laughing stock of the world when we call ourselves a democracy."

ADM pled guilty to two counts of price fixing in its attempt to eliminate world-wide competition and allocate sales in the lysine and citric acid markets agreeing to pay a $100 million criminal fine --- reportedly the largest such criminal antitrust fine in U.S. history.

In the Corporate Crime Reporter interview Hoech was questioned as to why at the Justice Department's press conference announcing the plea agreement the government's attorneys failed to come to Whitacre's defense when asked about his work and role in the case.

Hoech: "Most of those guys at the press conference, especially [Justice Department Anti-Trust chief] Joel Klein, must have had there undergraduate degrees in drama. They got up and boasted what a great job the Justice Department did. The Justice Department had this thing handed to them on a silver platter. This is the best documented corporate crime in history.

"Any other board of directors would have put every executive on leave right after the raid. But the ADM board is bought and paid for by Dwayne (Dwayne O. Andreas, chairman and long-time CEO of ADM). He controls the board the way he controls politicians. Dwayne uses shareholders money to undermine the democratic process."

CCR: "Why was Dwayne given protection by the Justice Department?"

Hoech: "I've never heard an elected or appointed official ever say anything bad about Dwayne Andreas."

CCR: "You believe that the political contributions from the company and from the Andreas family inoculated them from indictment?

Hoech: "Yes. And it wouldn't have been different if Republicans were in charge. Dwayne is not bigoted in his gifts to politicians."

Since 1979 Dwayne Andreas, family members, and ADM have contributed more than $4 million to congressional and presidential candidates, as well as to the national Democratic and Republican parties.In the two years before the 1992 election, ADM gave $772,000 to Republicans but only $136,500 to Democrats. But with the advent of the Clinton administration, according to the Wall Street Journal, "Andreas, whose personal contributions heavily favored Republican candidates in 1992, weighed in a mere six days before the presidential election with a $50,000 contribution to the Democrats' congressional campaign committee."

In 1992, according to the Center for Responsive Politics, Andreas, among Democratic party givers, ranked third and among Republican party givers, ranked first. Andreas-related contributions to individual candidates were also split in the November, 1994 mid-term elections: $461,500 to Democrats, $325,268 to Republicans. In the first 18 months of the Clinton administration, as Peter Stone of the National Journal reported, Andreas and ADM donated over $300,000 "in soft money to Democratic groups--roughly six times what they contributed to Republicans."

Hoech and his company Global Consultants Inc., based in Hallandale, Florida, for 25 years has been a consultant to major U.S. and Japanese companies. He, along with his wife, founded the ADM Shareholder's Watch Committee when they realized that the media was not going to print what it was learning from Whitacre and his undercover investigation.

Hoech estimates that the government has between 1200 and 1600 taped conversations documenting wrongdoing by ADM and its executives.

In response to a question concerning the tapes, their whereabouts, and how has Whitacre managed to keep all his information straight, Hoech pointed out:

"He is a very intelligent guy. He has pretty good recall."

CCR: "Did he keep notes?"

Hoeech: "If he did I've never seen them. One of the Justice Department's officials said, `anything Whitacre tells you is the truth. We haven't caught him lying once'."

CCR: "How high up is that official?"

Hoech: "That official is very high within the Fraud Division."

Hoech also believes that "the plea agreement tells me the Justice Department served the Justice Department, they didn't serve the people. From a stockholder's view, the Board of Directors took $100 million of the shareholder's money to buy Dwayne and Jim Randall [ADM's president] out of this. And now supposedly Mike Andreas [the company's "on leave" executive vice-president, the Company's thought-to-be heir apparent and son of Dwayne] and Terrance Wilson [until his recent "retirement," the head of ADM's corn processing division] are going to be indicted. If they are indicted, it will be after the inauguration of the President next year."

In a U.S. District Court in Chicago on August 27 criminal felony charges were filed against Ajinomoto Co. Inc. of Tokyo and its former general manager of the feed additives division, Kanji Mimoto; Kyowa Hakko Kogyo Co. Ltd. of Tokyo and its former general manager of the agricultural products department, Masaru Yamamoto, and Sewon America Inc., located in Paramus, N.J., and its president, Jhom Su Kim. Sewon America is a subsidiary of Sewon Company Ltd. of Seoul, South Korea.

It was charged that defendants conspired among themselves and with unnamed others to suppress and eliminate competition in the lysine market from June 1992 through June 27, 1995, a violation of the Sherman Antitrust Act.

In early 1992, Messrs. Wilson and Whitacre, according to reports in the Wall Street Journal, met in Tokyo with Ajinomoto and Kyowa officials, describing the idea of a "lysine trade association" that could solve the industry's problems, people familiar with the events allege. By that summer and fall, representatives of various lysine manufacturers, including ADM, were meeting in hotels in Mexico City and Paris to discuss price increases, sources claim.

By May 1993, at ADM headquarters, the first of two industry summit meetings took place, people familiar with the case report. Kazutoshi Yamada, a managing director of Ajinomoto, and Hirokazu Ikeda, then general manager of Ajinomoto's feed additive department, met with Michael Andreas and Messrs. Wilson and Whitacre to discuss sales volumes, the people say.

Hoech in his Corporate Crime Reporter interview relates how "the Justice Department said to Whitacre they didn't give a damn if they had Dwayne Andreas on tape at the meeting in Los Angeles --- they still couldn't indict him. They didn't have him at the meeting. But they had him at meetings at the Decatur headquarters. He was being briefed by Wilson, Whitacre and Mike Andreas. And Whitacre taped it. And the Justice Department has it. So, he wasn't aware of what was going on? He is in the meetings.

"He is also on tape at a luncheon," Hoech continues,"welcoming the Japanese. `The customer is our enemy and the competitor is our friend' --- let's have lunch."

In addition to the Justice Department duplicity in the case Hoech is also highly critical of the media. In relating why the ADM Stockholders Watch Committee was formed Hoech explains:

"Because the the board members had to know the truth of what was going on inside the company. The executives were lying to them. We knew that the shareholders were not getting the truth. And the board members were not getting the truth. But not once did any board member's lawyer contact Whitacre or Whitacre's lawyers to interview him..

"So the board was not interested in getting the truth out. They were interested in covering everything up. And we were not going to let them do that. We gathered the information and printed it."

CCR: "Your sources were Mark Whitacre . . ."

Hoech: "Mark Whitacre was one source. We also had other sources within the company who were getting information out. We had ex-employees who were talking with us. Some of our sources poured their hearts out to reporters, and the media didn't write about it."

CCR: "Why didn't the media write about it?"

Hoech: "You ask the Wall Street Journal. The Wall Street Journal is the worst one. They had the story. They had the information . . . I know Mark Whitacre spent hundreds of hours with the Wall Street Journal. But they didn't use it. They also had the Watch Committee information. And I said to them, `the people from the Journal must be writing a book, because they damn sure haven't been reporting the details'."

CCR: "Who broke this story/"

Hoech: "The Wall Street Journal on July 10."

CCR: "So you are saying that since then, the Journal hasn't done the job in reporting the details."

Hoech: "That's right. Whitacre has told them everything that he has told me. The FBI asked Whitacre to try and see if Cargill [the world's largest grain trader and the nation's largest private corporation] was involved. And ADM executives are on four of five different tapes complaining that Cargill would in no way involve themselves with price-fixing, even though they wish they would, because it would make it easier."

In a signed and notarized October 2 affidavit Whitacre reports that when he was asked by the FBI to "determine whether Cargill was involved in price fixing" -- presumably in the high fructose corn syrup and citric acid market --- he approached Michael Andreas with a turned on hidden tape recorder.

"I commented,", Whitacre relates, "that it would be easier to work with Cargill than the Japanese" when attempting to fix prices. "Mr. Andreas replied that it would be nice if Cargill would cooperate, but they are the cleanest run company in the country. Mr. Andreas also stated that if you mentioned price to Cargill they would hang up the phone."

Whitacre added, "I recorded Mr. Andreas's comments, and turned copies over to the FBI." He also details in his 39-paragraph affidavit how prior to one price-fixing meeting with competitors "I asked Michael Andreas how I could help. He instructed me to just sit down and keep quiet. He stated that he had been fixing prices for 20 years."

But by no means does Whitacre believe that only two people were involved in the price fixing at ADM as Hoech explained to the Corporate Crime Reporter. How many people were involved?

"Probably thirty. Who knew about it! Probably everybody. ADM has a disease. Price fixing is only part of the problem.

CCR: "How is Whitacre going to get even here?

Hoech: "I am sure he is going to sue ADM. That is evident. ADM sued Whitacre last month for $30 million --- that was a smokescreen for the shareholder's meeting."

ADM has alleged that Whitacre embezzled anywhere from $6.5 million to $9 million,

Hoech explains that the alleged embezzlement involves money that "was definitely approved by a senior executive at ADM as compensation, off the books bonus, which was the modus operandi over there. One ADM executive told Whitacre --- `the best thing about it is the bitch don't get the money --- if you get a divorce, it's protected and also it is all tax free.'"

CCR: "That's according to Whitacre?"

Hoech: "Yes, And it is on the tapes."

It was at the ADM's October 29,1995 annual stockholder's meeting that Dwayne Andreas told a standing room only crowd how Whitacre had stolen some $2.5 million from the Company and how because he had forged bonus vouchers it had taken the company so long to discover his thefts. Sources close to the Department of Justice inquiry and documents that Whitacre supplied in answer to the lawsuit filed by ADM against him would later refute Andreas's explanation.

"It was fiction," said one insider, "and there's no doubt in my mind that he knew it."

In his September 3, 1996 "Farm and Food File" syndicated columnist Alan Guebert details a sequence of events showing how within a mere few hours after it was discovered that Whitacre had spied for the FBI, ADM executives were plotting on how to get revenge.

A bout 11 a.m. on the second day after the June 27, 1995 raid by the FBI on ADM headquarters Whitacre received a page while in the FBI's Decatur office. Seeing the telephone number to contact for the page, Whitacre asked an FBI agent to listen in on his return call.

In the call a close friend at ADM warned Whitacre to stay away from the office. "Dwayne was just in here saying `Whitacre is a FBI informant. He's been taping us for years. He spilled his guts to [James M.] Dowd [a law partner and colleague of ADM Board member Robert S. Strauss and who had been Whitacre's company-assigned attorney].

"`We're gonna make his life miserable'."

Andreas and ADM's campaign to make Whitacre's life "miserable" would culminate on the day of the stockholder's meeting when the Wall Street Journal carried a highly detailed story on how Whitacre had embezzled Company funds.

Now the amount, the story claimed, was $9 million, the bogus bonus vouchers became phony contracts with a Swedish company and a Ukrainian company used to pull off what the Journal called "two multimillion scams." The Company had therefore filed a complaint against Whitacre in Switzerland, where the money was hidden, for "fraud and deceit."

After Andreas finished making the Company's case before the stockholder's meeting, board member Brian Mulroney, former Canadian prime minister and now a member of ADM's board, read a lengthy, very carefully worded chronology of the Company's actions since the FBI raid.

But, as columnist Guebert points out, "not surprisingly, neither Mulroney nor Andreas touched on what sources now firmly allege was ADM's then-successful cover-up within a cover-up: The Company's use of phony vouchers to first conceal overseas bonus payments to executives and then its attempts to use those vouchers to discredit Whitacre as a government witness while hoping to divert the public spotlight --- and government inquiry --- away from ADM."

According to Guebert sources say that the Justice Department has irrefutable proof --- more tape recordings --- that show that ADM's executives hatched the Whitacre-is-a-thief plan on June 29 within hours after the discovery that he had been an FBI informant and months before the annual meeting.

Throughout the entire price fixing investigation, however, ADM has been quite successful in diverting the public spotlight --- and government inquiry --- away from itself as Guebert points out in a October 22 column.

"The only thing larger than the record-setting $100 million fine of Archer Daniels Midland for its role in global food and feed price-fixing is the continued arrogance of the ag processing giant . . . in full display last week.

"Knowing it would be in federal court Tuesday, Oct. 15, to enter its guilty plea --- while the same day Attorney General Janet Reno would meet the press to explain the charges and penalties --- ADM officials sucker-punched the Department of Justice by leaking the plea information Sunday.

"Since Monday was a federal holiday," Guebert adds, "preemptive actions permitted it to spin the story a full day before the scheduled government action. Justice Department officials were furious."




"A Corporate Agribusiness
Thanksgiving Day Meal"

Soon many of us will once again be sitting down with our families to celebrate Thanksgiving. We will all be looking forward with mouth-watering anticipation to the bounty that will be spread before us.

But for most Americans the turkey is not likely to be from Uncle Ray's farm, nor the potatoes from Aunt Jean's recipe, nor the dressing from Grandma's stove, nor the biscuits from Mom's oven, nor the dessert from Aunt Belle's kitchen.

No, more than likely for most Americans the turkey might well be from Butterball or maybe a ham from Cook Family Foods; someone might suggest that a few Singleton Butterfly Shrimp be put on the "BarB" before dinner, the grill already hot from the Just Light Charcoal Briquets underneath; we might also want some Jack Rabbit Long Grain Rice; maybe potatoes from Golden Valley Foods, and someone might note that the flour in the bread is from Peavey Grain.

We also might want to enjoy some of our favorite private label pasta from the local supermarket; tomatoes from Hunt's; perhaps a touch of Oriental from La Choy; the pudding from Swiss Miss, or the frozen dairy dessert from Healthy Choice, topped perhaps with some Reddi Whip; the salad oil from Wesson; the cheese from Miss Wisconsin; the canned beans from Van Camps; some spices from Armour Dairy, and the tomato or apple juice cocktail from Mott's.

While watching the traditional Thanksgiving Day football game on television we might want to dip into the popcorn bowl for some Orville Redenbacher's, putting another handful on one of our Budget Buy paper plates for future munching, or we might also want to "partake" of the barley malt in a bottle of Carlsberg Beer as we watch the game.

All in all it will be quite a day and quite a meal, a testimonial to the cornucopia of food that most of us now living in America have come to take for granted in the land of Freedom of Choice and the Home of the Private Entrepreneur.

But wait one minute here, let's take a little closer look at that meal. True, we saw a wide range of different products that composed this Thanksgiving Day feast we so heartily consumed.

Yet, the reality of the matter is that all that food, all those products and all those brands came in fact from just ONE company --- ConAgra Inc. --- the nation's second largest food processor and manufacturer, where six cents out of every American food dollar is today spent.

Here is a company which now operates in many different markets where it totally dominates the market shares and where it reaps enormous profits at the expense of family farmers, workers and consumers. For example, if one had invested $30,000 in ConAgra stock in 1982, the day its former CEO and Chairman of the Board Charles M. "Mike" Harper joined the company (he would later become the CEO and Board Chairman at RJR Nabisco, the nation's third largest food company), that stock would have been worth $5 million when he left ConAgra ten years later.

So, let's not forget that when we sit down to our modern day Thanksgiving Day dinners we are making an increasingly small handful of American and international corporate agribusinessmen exceedingly wealthy.

We can be forgiven, therefore, if we begin our holiday meal with the prayer: "Bless us O Corporate America that these thy `Healthy Choice' foods which we are about to receive, through the bounty of corporate agribusiness and ConAgra Inc. Amen."

Happy Thanksgiving, America!



 

Ag Biz Dollars At Work

NESTLE AND UNILEVER IN GERMANY and other major European soy buyers have begun to cancel orders for U.S. soybean exports, according to Pure Food Campaign and Foundation on Economic Trends spokespersons

"THE PUBLIC IS LESS ANGRY and less willing to identify with populism," is the way Thomas Mann, director of governmental studies at the Brookings Institution in Washington evaluated the November 5 election results to the New York Times. To sustain a healthy economy, he added, "there's a certain sobriety out there -- a new understanding that we need a strong private sector."

FIVE OF THE TOP TEN FINANCIAL CONTRIBUTORS to the two major U.S. political parties between January 1, 1995 and June 30, 1996 were food or food-related corporations.
WINNING OVER THE HEARTS, MINDS AND STOMACHS of the nation's young children and teenagers has in recent years been a central focus of corporate America. Now, Cover Concepts Marketing Services of Boston, Mass. has inaugurated an ambitious new program designed to sell preschoolers on the advantages of doing business with the McDonalds and Kelloggs of the business world.

EXCESSIVELY HIGH RETAIL MILK PRICES are being charged to Southern California consumers by big supermarket chains who are gouging the customer, according to Consumers Union, the publisher of Consumer Reports magazine.
THE UNITED FARM WORKERS (UFW), whose obituary has been written quite often in past years in the news and editorial pages of the New York Times received a well deserved resurrection in an October 4, 1996 editorial.


NESTLE, UNILEVER & OTHER EUROPEAN BUYERS REFUSE RRS SOYBEANS

Nestle and Unilever in Germany and other major European soy buyers have begun to cancel orders for U.S. soybean exports, according to Pure Food Campaign and Foundation on Economic Trends spokespersons

The cancellations are due to consumer backlash against the controversial US government policy allowing unlabeled and relatively untested genetically engineered soybeans to be mixed together with ordinary soybeans and sold on domestic and international markets.

Unilever and Nestle announced respectively on Oct. 24 and 25 that they are canceling orders amounting to over 650,000 metric tons of unprocessed U.S. soybeans--equivalent to 7.1% of last year's 9.1 million metric tons of U.S. soy exports to Europe.

"As we predicted on October 7," Ronnie Cummins, National Director of the Pure Food Campaign told a November 5 press conference, "Monsanto's genetically engineered 'Roundup Ready' soybeans (RRS} have sparked a major trade confrontation between the US and our trading partners in Europe.

"The latest data show that U.S. farmers and the U.S. economy have already lost $150-450 million dollars in soybean sales to Europe, with the controversy growing more intense with each passing week, " Cummins noted.

Nestle and Unilever's announcement came in the wake of similar actions taken by other European soy and soy oil buyers, including leading supermarket chains, baby food manufacturers, dietary food producers, and the natural foods industry in Germany, Switzerland, Norway, Sweden, Austria, the Netherlands, and other EU nations.

It was Eurocommerce--the umbrella trade\association representing wholesalers and retailers in 20 European countries-- which pointed out in a Oct. 7 press conference, that recent European surveys indicate that up to 90% of consumers insist upon mandatory labeling of genetically engineered foods.

Since October 7 over 300 consumer, health, farmer, and environmental organizations from 48 nations have pledged to boycott Monsanto's "Roundup Ready" herbicide resistant soybeans, citing potential human health hazards and adverse environmental impacts.

In Germany alone more than 100,000 people have signed petitions demanding a ban on the RRS variety. It is in fear of such a consumer backlash that companies such as Nestle SA and Unilever NV have canceled multi-million dollar soybean orders within the past month because their U.S. suppliers refuse to identify the true nature of their beans.

On November 5 in the late afternoon when the freighter "Ideal Progress" docked in Hamburg's harbor with a 67,000-ton cargo believed to include the RRS beans, Greenpeace and other environmental activist groups illuminated its hull with protest messages denouncing U.S. policy.

"We are pleased to see that major businesses are ready to adjust to the views of consumers even if governments are afraid to do so," Joerg Naumann, leader of the Greenpeace campaign told the Washington Post. "I think these companies are smart enough to realize that consumers will go elsewhere unless they know how and where these foods are grown."

The consumer protests have continued even though the German government and its European Union partners have approved sale of the gene-altered beans and declared them safe. Some observers speculate that the current uproar over bio-tech food reflects Germany's acute sensitivity to genetic manipulation of any kind largely due to the legacy of grisly eugenic experiments under the Nazis.

Meanwhile, German government officials acknowledge that the issues are so politically sensitive in their country that they would prefer to leave the choices to the private sector.

"We would like to see the food industry voluntarily label all products that include genetically modified ingredients," Juergen Ruettgers, Germany's minister for science and technology, told the Post's William Drozdiak. "If that is not possible, then we should introduce labels for all foods that do not include changed genetic material. We hope this would calm down any panic or conflicts."

The U.S. has adamantly opposed all such labeling, contending that it would likely become a trade barrier that would distort the market. U.S. government and food export companies also claim that such product discrimination would cause a sharp increase in costs and jeopardize future business. Soybeans, which are used in nearly 60 percent of all processed foods, would put at risk nearly $2 billion worth of exports to Europe.

"This whole issue has really touched a nerve, but the problem is, where do you draw the line?" notes George Pope, chief agriculture officer at the U.S. mission to the European Union. "What many Europeans do not realize is that the barn door has been blown wide open and the horse is gone. Genetically modified enzymes are now present in all cheese, yogurt and yeast products that they consume.

"There is a slew of new products out there, everything from corn to tomatoes to the ink in ballpoint pens, that have genetically changed material," Pope said. "The point is that it would be just about impossible to label everything. And if Europeans just try to single out soybeans, it would look pretty much like an anti American ploy."

A controversy similar to the RRS one has also erupted over Swiss-based Ciba Geigy's genetically engineered Bt-spliced corn, presently approved for marketing in the U.S., but banned in Europe.

According to Dan McGuire, former executive director of the Interstate Grain Commission in Lincoln, Nebraska, "An Oct. 24 export sales report by the USDA documents that cumulative U.S. soybean exports to Europe this marketing year are only 69.3% of year ago levels.

"The lack of flexibility [on refusing to separate and label genetically engineered soybeans and other grains] combined with the indifference and arrogance of some of the U.S./multinational grain companies toward our European customers flies in the face of the very 'market-oriented' farm and export policy that these same grain traders and commodity groups pushed through the U.S. Congress in 1996."

McGuire also points out that "If the U.S. grain industry really believes it is the 'supermarket to the world,' it better start acting like it. With cumulative U.S. exports off a full 20-30% and soybean prices at the farm gate dropping steadily, the negative impact on farmers and the rural economy from this export issue is very serious indeed.

"And let us remember," he concludes, "that although U.S. farmers and the U.S. economy are losing export sales to Europe, this does not mean that the multinational grain companies are losing sales--since they are quite willing to sell European buyers the grains and oil seeds produced by the U.S.'s foreign competitors."

Despite the Clinton Administration's refusal to require special pre-market safety testing or labeling of genetically engineered foods and crops, consumer concern over gene-spliced products, both in Europe and the U.S., is growing.

Consumer polls over the past decade indicate that 80-95% of the American public wants mandatory labeling. An April 17th poll by the Associated Press found that 22% of Americans have changed their dairy food purchasing habits because of concern over Monsanto's controversial genetically engineered Bovine Growth Hormone (also known as rBGH or BST).

An earlier boycott against rBGH has resulted in heavy financial losses for Monsanto during the first two years of the product's introduction onto the U.S. market. In addition the international boycott against rBGH has successfully blocked approval in Canada, Australia, and the European Union.

"The message from consumers worldwide is clear. Unless genetically engineered foods and crops are properly safety-tested and labeled, consumers and socially responsible businesses are left with no other alternative but to boycott them," said Jeremy Rifkin, FET President.




CORPORATE AMERICA THANKFUL FOR NOVEMBER 5 VICTORIES


"The public is less angry and less willing to identify with populism," is the way Thomas Mann, director of governmental studies at the Brookings Institution in Washington evaluated the November 5 election results to the New York Times. To sustain a healthy economy, he added, "there's a certain sobriety out there -- a new understanding that we need a strong private sector."

While appearing to support such analysis, the Times Peter Passell observes, "what stood out for corporate America was the defeat of a host of state ballot initiatives that were designed to circumscribe the ability of business to operate freely."

In California, voters not only overwhelmingly rejected a proposition fought vigorously by Silicon Valley that would have made it easier to sue companies for misleading investors, they also allowed health-maintenance organizations to remain virtually free to set their own rules.

In Maine, voters choose a timber-industry-sponsored alternative over an outright ban on clear-cutting; in Florida voters defeated a penny-a-pound tax on sugar for restoring the Everglades, which environmentalists argued were being destroyed by fertilizer runoffs from the cane fields to the north; in Montana, they rejected tougher anti-pollution standards for waste water from mines, and in Oregon voters rejected new regulations designed to reduce livestock waste out of streams and rivers.

"All this suggests," Passell proffers, "that the on-again, off-again flirtation of Americans with anti-business causes is off again." But, he adds, "business, while successful in playing defense, did not win any great victories for its own causes, either."

Most analysts, however, saw the rise in the post-election stock market as an indicator that Wall Street was generally pleased that the status quo --- a Clinton White House and a GOP Congress --- was left intact in Washington and that no clearly defined political or economic ideology was established for at least the next two years.

The issue that probably most alarmed corporate America was California's Proposition 211, the shareholder measure that was one of the highest-profile ballot initiatives in the country. While a simple explanation for the result, Passell observes, is that the proponents, a handful of law firms specializing in securities suits, were outspent by business interests, which raised more than twice as much as the lawyers managed to collect for advertising.

Yet, "the extent of its defeat -- it went down by a vote of 74 percent to 26 percent -- indicates that voters found no good reason to change the rules of the game governing business," he adds.

Likewise, spending a fortune in campaign advertising, corporate agribusiness's big sugar interests, successfully persuaded conservative Florida upstate voters that others were responsible for damage to the Everglades and that thousands of jobs in the sugar industry were on the line.

"When business gets its act together," concludes Lester Brickman, a professor at the Cardoza Law School in New York, "it can win."
 





THE BEST(?) POLITICS MONEY CAN BUY

Commentator Robert Krulwich: "Some of you might have missed this on television this fall, but it was a prime time broadcast of a gala fund raiser from Ford's Theater, the place where Lincoln was shot, and in the front row is the President of the United States and up on the stage was the comedian Paula Poundstone and she was trying to figure out who gets to sit next to the President?"

Paula Poundstone: "What determines who gets which seat? Do you do the whole seating chart?" (Laughter) "Do you know who that is behind your head very well? Who is that?"

Gala Hostess Seated in the Audience Next to the President: "Carl Lindner"

Paula Poundstone: "Carl Lindner, I'm sorry I'm not familiar. Alright, what made you give him that seat?" (Laughter) "Alright now, tell us who it is."

Hostess: "A whole lot of money!" (Laughter)

Paula Poundstone: "A whole lot of money!" (Applause and laughter) "Carl, I'm sure it was much deeper than that, sir. It was money and love little buddy, don't you worry. (Laughter) What's Carl's role in the community? Carl, why do you have so much money?" (Laughter) "Is that rude to ask?" (Applause) "Sir, what do you do for a living, I know I should know, but since I don't know, would you tell me? Mr. President, do you know who Carl Lindner is?" (Laughter)

President Clinton: (Nods yes)

Paula Poundstone: "Would you mind telling me!"

President Clinton: "It's a secret!"

Paula Poundstone: "It's a secret!!!" (Laughter)

President Clinton: "He's in bananas, sort of like you are."

Paula Poundstone: "He's in bananas! Is that true, sir? He's what? He's the Chiquita Banana guy! Gee sir, without the fruit on your head, sir, I didn't recognize you." (Laughter and applause) "Is that true? Why does the President know the banana guy?"

Robert Krulwich: Now, there is an interesting question: why does the President know the banana guy? . . . "

- "So You Want to Buy A President," FRONTLINE, PBS, January 30, 1996.



Five of the top ten financial contributors to the two major U.S. political parties between January 1, 1995 and June 30, 1996 were food or food-related corporations.

Leading the way, based on figures compiled by the Federal Election Commission, Common Cause and the Center for Responsive Politics, was Philip Morris Co. Inc and RJR Nabisco, Inc. who contributed a combined total of $1.982 million and $1.143 million respectively to the Democrats and Republicans.

Philip Morris is the nation's leading food manufacturer (ten cents of every American food dollar is spent on the Company's products) while RJR Nabisco is the nation's third largest food manufacturer, behind number two ConAgra.

The other three agribusiness firms were Seagram & Sons\MCA ($1.055 million), American Financial Group ($909 thousand), and Anheuser-Busch Inc. ($621 thousand). American Financial is the parent company of Chiquita International).

Philip Morris, while contributing a comparatively small $350,200 to the Democrats gave the GOP a staggering $1.632 million. Likewise, RJR Nabisco parted with only $173,107 to the Democrats while showering $970,450 on the Republicans.

Both Seagram and Anheuser Busch's political contributions weighed in in favor of the Democrats. American Financial Group, however, gave some $115,00 to the Democrats while rewarding the Republicans with $794,000.

 




CORPORATE AMERICA'S THREE R'S: "READING, 'RITING AND RETAILING"


Winning over the hearts, minds and stomachs of the nation's young children and teenagers has in recent years been a central focus of corporate America. Now, Cover Concepts Marketing Services of Boston, Mass. has inaugurated an ambitious new program designed to sell preschoolers on the advantages of doing business with the McDonalds and Kelloggs of the business world.

Through a network of some 22,000 day-care and preschool centers, reaching over two million children, Cover Concepts is distributing product samples, coupons and other promotions to toddlers and their parents. In exchange the Company gains access to valuable demographic data relative to the childrens' family-income levels, gender, age and ZIP codes which it in turn passes along to its corporate customers.

According to staff reporter Paulette Thomas, in the October 28 edition of the Wall Street Journal, Cover Concepts is simply building on its success in its current business of injecting advertising into the classroom. Its free textbook covers are available in 31,000 schools, representing 21 million students from grades one to 12. The book covers display, among other images, Calvin Klein models embracing over a scratch-and-sniff cologne sample and Kellogg's Pop-Tarts springing out of toasters.

Many financially-strapped school, far from resenting the mix of commerce and education, point out that they appreciate the chance to protect textbooks, which can cost as much as $50 each.

According to the two Boston friends, Michael Yanoff and Steve Shulman, who founded the Company seven years ago "Cover Concepts offers a medium which penetrates an almost advertising-free environment -- the public school." School children, the Company explains in a promotional brochure amount to "a captive audience."

The Journal account notes that "because preschools and day-care centers don't use textbooks needing covers, company executives talked to day-care directors in search of an alternative ad medium." The result: a 16-page quarterly magazine, "SafeSteps," distributed free to preschoolers which features safety tips for parents and coloring pages for the preschoolers, in addition to ads for products like ConAgra's Mott's applesauce, Golden Books and Plymouth Grand Voyagers.

Based on Audit Bureau of Circulation figures, the magazine delivers to advertisers a valued readership: 87% of its one million readers are female, 80% are between 25 and 49 years old, 65% have a household income of more than $30,000 and 53% are college graduates. Advertisers, Mr. Yanoff points out, "know they are reaching parents of preschool-age children."

Some educators have criticized the Cover Systems campaign. "The three R's don't include retailing," observes Melinda Anderson, spokesperson for the National Education Association. "We see the problem as getting worse," not only in reference to the advertising itself, she added, but also the class time some schools devote to answering Cover Concepts' marketing questionnaires.

Some preschool directors, however, have welcomed the free products offered by Cover Concepts and its clients. Childtime Children's Center in Baldwinsville, N.Y., for example, included the free samples of Nutri-Grain bars it received from Kellogg Co. in the breakfasts it serves. After the children began requesting more such bars, the preschool began buying the Kellogg product as a regular snack treat.

As Thomas reports, "the preschool program, launched a year ago, greatly expands the data cache that is Cover Concepts' most persuasive selling point with corporate advertisers. Gatorade, for example, uses information on a school's ethnicity to distribute book covers showing Hispanic, African-American and what it calls "mainstream" themes. Nike Inc. targets urban schools. McDonald's Corp. goes for grades four through six, and distributes only within a close radius of its restaurants."

Cover Concepts, the Journal reports, is currently testing a new Pringles can for Procter & Gamble Co. at 24 schools in South Carolina. It distributes the cans and then interviews the children about them at lunchtime. If the test goes well, it will be expanded to other schools.

Gatorade, manufactured by Quaker Oats Co., is now testing a promotional T-shirt it has advertised on some Cover Concepts book covers with an 800 number to place an order. "Yes, it's a mix of education and commerce," says Patti Jo Sinopoli, a Gatorade spokeswoman. "But a lot of what we do is pure commerce."





MILK PRICE GOUGING CHARGE LEVELED
AGAINST SUPERMARKETS

Excessively high retail milk prices are being charged to Southern California consumers by big supermarket chains who are gouging the customer, according to Consumers Union, the publisher of Consumer Reports magazine.

The study, which appeared in the October 16 Los Angeles Times, was based on a 79-store survey in the Southland earlier in the month. It showed a wide gap between prices charged by large chains and those at mom-and-pop stores--with stores such as Vons, Ralphs and Lucky charging $1.50 to $1.70 more per gallon.

The markets in question immediately disputed the suggestion that they are gouging, pointing out that rising prices instead reflect a variety of factors, including higher costs paid to dairy farmers.

"The supermarket retailers know that there is no reasonably priced, nutritional alternative to milk and that consumers will continue to buy it at almost any cost," said Elisa Odabashian, a policy analyst for Consumers Union and the report's author. By charging as much as 74% more than many of the small stores, consumer food bills have soared, particularly poor families with children." After years of relative stability, prices nationwide have moved up by 6% since December.

Driving the increase, according to the supermarket chains, is a steady climb in the prices paid to farmers for fluid milk. This so-called farm-gate price is determined by the federal government or, in California, by the State Department of Food and Agriculture.

Neither the federal nor state government, however, has any control over the wholesale or retail pricing of milk.

Critics have questioned the U.S. Department of Agriculture's assumption that milk prices are routinely higher in the West than in the nation as a whole, in large part because of higher processing, transportation and other costs, when California is in fact the nation's leading dairy producer.

Consumers Union said in its report that it was troubled by a seeming lack of competition in milk pricing among the major grocery chains.

It suggests that the lack of competition is likely due to the considerable amount of "consolidation" that has taken place in the Southland grocery industry in recent years, with the most recent merger occurring between Ralphs and the company that owns the Food 4 Less warehouse stores.

There has been continuing controversy in California between state officials and the grocery companies in recent years over the issue of whether fewer big chains means less competition on pricing even as merger activity continues.

In a September Consumers Union survey it was shown that there was even greater uniformity of milk prices among San Francisco Bay Area supermarket chains. As in Southern California, smaller independent stores sold milk at much lower prices.

This "apparently odd" pricing pattern has gotten the attention of Thomas Greene, chief of the antitrust section of the California attorney general's office, who told Consumers Union in a letter that a staff member would follow up on the issue.

A look at the price for a gallon of whole milk at a sampling of Los Angeles County grocery stores:

   Store City Price

   Vons West L.A.: $3.99

   Ralphs Torrance: $3.99

   Lucky Northridge: $3.87

  Woodley Market Encino: $2.99

  Trader Joe's Granada Hills: $2.79

  Ranch Market Los Angeles: $2.29

    



A NATION'S CONTINUING "HARVEST OF SHAME"

The United Farm Workers (UFW), whose obituary has been written quite often in past years in the news and editorial pages of the New York Times received a well-deserved resurrection in an October 4, 1996 editorial.

While noting the union's "new vigor" the Times editorial went on to point out that "a union made up of hard-to-organize transients -- many of them illegal immigrants -- grew at the fastest rate of any union last year. But the U.F.W. still claims only 26,000 members out of roughly 1.6 million farm workers."

Not surprisingly the editorial further noted that "for those not in the union, conditions are as appalling as ever." In what Edward R. Murrow, in his now legendary television documentary, called America's continuing "Harvest of Shame" the paper noted the following facts:

With the recent minimum-wage increase, wages for harvest workers in some crops were at their lowest point in terms of purchasing power in decades. Despite Federal and state laws, many workers do not have access to water or toilets in the field and are not paid benefits such as unemployment.

Likewise, farm worker lawyers have numerous documented cases, where workers who are supposed to be making the minimum wage, are in effect only being paid $2 or $3 an hour.

Dating back to the 1930's, farm workers, then largely black, unorganized and powerless were left out of the New Deal not only because President Franklin D. Roosevelt needed support from Southern senators, but also because the American Farm Bureau Federation opposed any type of labor law legislation that might include farm workers. It was not until 1963 that such workers got a minimum wage or Social Security, or coverage by health and safety laws.

Today, as the Times editorial notes, "farm work differs from most other labor in two important ways. Competition for jobs is fiercer. . .and with Mexico's economic crisis, the flow of illegal immigrants rose, creating more competition for agricultural jobs."

Likewise, the rights most other workers enjoy, including the right to collectively bargain with their employers, is largely denied farm laborers and the few legal protections they have managed to get into law are often not enforced. It is only in California alone that the law permits farm workers to organize and form unions.

Today, many growers circumvent the law by using an increasing number of labor contractors where a grower will pay a crew leader a lump sum to hire workers at harvest time making them "responsible" for providing field water, toilets and all the payroll details. Often, as the Times points out, "the grower does not pay the crew leader enough to give the workers a minimum wage."

Urging better law enforcement the Times notes that the U.S. Labor Department's Wage and Hour Division has only three farm labor inspectors in Florida, and they also are responsible for having to enforce dozens of other laws. In California, for example, it would take the state's wage and health inspectors 150 years at current rates to visit every farm just once.

As the Times editorial concludes: "Farm workers should be able to unionize, consult effective lawyers and enjoy regular visits from a larger staff of inspectors. The only reason they were denied the legal protections other workers got in the 1930's is that they lacked clout. Today their powerlessness keeps the laws from being enforced."

 


11/12/96

ADM ADMITS GUILT: "No who did what wrong,
who was doing this, who shouldn't have been doing this."

Archer Daniels Midland Co., "Supermarket to the World" has agreed to plead guilty to conspiring with competitors to fix domestic and world prices of lysine, a feed additive, and citric acid, an organic acid used in various foods, and pay $100 million in fines.

The plea and the fine, touted as exceeding the U.S. Justice Department's next highest criminal price-fixing fine by almost seven times, brings to a close the latest chapter of four years of investigation which began when Mark E. Whitacre, a one-time ADM senior executive, acting as an FBI undercover spy, secretly taped hundreds of intracorporate conversations.

ADM, headquartered in Decatur, Ill., buys, stores, is the nation's largest agricultural commodity processor and sells agricultural products with sales in the 1996 fiscal year of $13.3 billion. It operates 165 plants, 300 grain elevators, 10,000 railroad cars, 15,000 trucks and 2,000 barges.

Its products include various oils and oil seed products, ethanol, additives for animal feed and syrup for soft drinks. Products that use one or more ingredients from ADM include Doritos corn snacks, SnackWells' cookies, Coca-Cola, Kellogg's Pop-Tarts, Ragu spaghetti sauce, Hamburger Helper and Premium Saltines.

ADM will pay $70 million in fines for fixing lysine prices and $30 million for the citric acid case. The latest Justice Dept. action also resolves all of the criminal investigations of the Company, including the accusation that ADM used cash payments and other illicit means to steal technology from competitors. To date, including civil suits related to the price-fixing matter, ADM has agreed to pay a total of $190 million in fines and civil settlements.

In addition, the Justice Department will not pursue charges that ADM fixed prices in a third product, high-fructose corn syrup, a sweetener used in soft drinks such as Coke and Pepsi. Known as HFCS, it is by far the product with the largest dollar market of the three products.

With their guilty plea ADM will also cooperate with U.S. prosecutors on an already-extensive federal antitrust investigation into price fixing in the $1.2 billion-a-year citric-acid industry.

ADM's agreement to cooperate ''takes us into a whole other international conspiracy,'' Gary Spratling, deputy assistant attorney general for antitrust enforcement, told the Wall Street Journal's Thomas M. Burton and Scott Kilman. Talks have already begun between the Justice Department and some citric acid makers toward possible settlements in that inquiry.

Attorney General Janet Reno also said at a Washington news conference: "Let me underscore that the department's investigation is continuing."

ADM "did cooperate" in the citric-acid inquiry, adds Phillip H. Warren, an attorney with the Justice Department's antitrust office in San Francisco, which is conducting that inquiry. Mr. Warren said he couldn't detail the cooperation, but added "it is substantial." Federal prosecutors said during a plea hearing in Chicago federal court that they could have insisted on a higher fine for ADM, but didn't because of the grain-processing company's assistance in the citric-acid case.

The Journal has also reported that the head of ADM's citric acid business, Barrie R. Cox, will get immunity from prosecution and become a government witness under the ADM plea agreement.

The business of making citric acid, used as a beverage flavor-enhancer, is dominated by a handful of manufacturers, including the U.S.-based Haarmann & Reimer unit of Bayer AG and the U.S.-based Hoffmann-LaRoche Inc. unit of Switzerland's Roche Holding Ltd. These companies also claim to be cooperating with the inquiry.

Stock analysts figure ADM has deep enough pockets to pay its fine without disrupting business. On June 30, according to the New York Times, the company had about $2.5 billion in cash and marketable securities. Analysts were relieved, the paper added, that, as a part of the plea agreement, the government closed its price-fixing investigation of ADM's high-fructose corn-syrup business, the biggest of the ADM products under government scrutiny.

ADM's guilty plea and promise of government cooperation, however, does not bode well for the Company's executive vice president, Michael D. Andreas, 47-year-old son of ADM's longtime chief executive officer and chairman, Dwayne Andreas, 78, and the Company's heir apparent.

Michael Andreas attorney declined to comment on the case.

It is reported that the younger Andreas was videotaped by federal agents meeting in a Southern California hotel room with a senior executive of Ajinomoto Co., a rival Tokyo-based maker of synthetic lysine, discussing the "fixing" of prices and production quotas of the popular livestock-feed additive. Justice Dept. prosecutors have told Michael Andreas and ADM corn-processing chief Terrance S. Wilson that they will be indicted.

"I believe that when the dust settles, it will be clear that ADM and my client tried to bust open these international cartels, not fix them, and, in the process, saved American consumers millions," said Reid Weingarten, an attorney for Wilson, the head of ADM's corn processing division who also is a government target.

The fact that ADM supplies ingredients which are only one part of a final consumer product makes it difficult to determine what effect, if any, its settlement will have on consumer prices, Tom Pirko, president of BevMark Inc., a New York beverage consulting firm told the Washington Post. But consumers ultimately will benefit from the message that the government will not tolerate companies that conspire to fix prices, he said.

In a September, 1995 study the Cato Institute reported that since 1980 every $1 of profits earned by ADM's corn sweetener operation has cost consumers $10, and every $1 of profits earned by its ethanol operation cost taxpayers $30. Kenneth L. Adams of Dickstein Shapiro & Morin, a Washington firm representing lysine users earlier this year presented an analysis by a Purdue University agricultural economics professor contending that customers were cheated out of between $171.4 million and $180.2 million from 1992 through last year.

Shortly after ADM's guilty plea was entered before Chicago Federal District Court Judge Ruben Castillo on October 15, the two Company executives stepped down from their jobs. Former Canadian Prime Minister Brian Mulroney, who serves on the ADM board, said Andreas had been granted a leave of absence while Wilson had retired." They no longer work here," Mulroney told reporters after the company's annual meeting.

In a statement released later, ADM said that Andreas, who as an executive vice president ran the company's day-to-day operations, "requested and received company approval to take a temporary administrative leave . . .Terrance S. Wilson announced his recent retirement from the company for medical reasons related to his progressive heart disease." The statement added, however, that the two men remain available to perform services for the company. "In accordance with the company's personnel policies it will have no further comment on these matters," the statement concluded.

According to an Associated Press account that quoted Mulroney, at a closed-door meeting of a panel of ADM's board of directors, ADM Chairman Dwayne O. Andreas, who has headed the company for 26 years, offered to resign, but his offer was rejected. It was Mulroney who headed the five-member panel that negotiated the guilty plea with the government.

At the Company's annual stockholder's meeting in Decatur on October 17 a contrite Andreas apologized to the stockholder's. "I am the one in charge, and as Harry Truman said, the buck stops with me," he told more than 700 people gathered at the meeting. "You have my apology and my commitment that things have been arranged so this will never happen again."

Andreas and other ADM officials gave few specifics about the price-fixing case and did not mention the fate of Wilson or Andreas's son.

Several shareholders told the Associated Press that they felt ADM officials, who had repeatedly denied the criminal charges until its guilty plea earlier in the week, were trying to avoid the issue."There was just the apology and that was that," said Carson Mitchell of Dallas, who said he owns 54 shares. "There was no who did what wrong, who was doing this, who shouldn't have been doing this."

ADM officials did, however, take a softer tone with dissident share- holders, the AP also reported, compared with last year's stormy annual meeting, where Andreas cut off Ed Durkin of the International Brotherhood of Carpenters pension fund with a curt, "this meeting, sir, runs according to my rules." This time Andreas ordered employees to give a microphone to Durkin, who again fired several aggressive questions at ADM officials.

Several large institutional investors, however, have called for the resignation of Chairman Andreas. "Dwayne, obviously, should go," Patricia Macht, spokesperson for the California Public Employees Retirement System, known as Calpers, which holds 3.6 million shares of ADM stock told the Washington Post's Sharon Walsh. "It's a lot like an apple -- if it's blemished on the outside, it's rotten at the core."

Stockholder sentiment concerning the Company's guilty plea and fine was reflect in a statement that James E. Burton, chief executive officer of Calpers, one of the nation's largest pension funds, issued following the guilty plea: "The $100 million fine is shareholder assets that are being squandered to pay for criminal activity that should have never occurred.

"Again we ask the question, where was the board of directors? That's why this admission of guilt is a compelling reason to reform the board and its practices. It speaks volumes to supporting our proposal to change the bylaws to require a truly independent board of directors. This $100 million is real money, which could have been used in many ways to improve the company's profitability," he added.

At its October 17 stockholder's meeting repeated questions were also asked of the Company as to why they were kept in the dark about company plans to plead guilty and pay a record fine. One shareholder asked Company officials if they had considered postponing the annual meeting or telling shareholders in advance about the company's plea arrangements with federal prosecutors since there were numerous reports circulating that ADM would enter guilty pleas and yet the company had refused to comment during months of investigations. "I would say we considered it but there was so much publicity it was known," Andreas told the meeting.

It was at the annual meeting, however, that investors sent a clear message of dissatisfaction to ADM management in a vote on a proposal that the Company's board of directors be for the most part independent of corporate management. The proposal only failed 58%-42% of the shares voted.

"It sent a signal from a very large block of shareholders in view of the extremely un-independent board," said Alyssa Machold, deputy director of the Council of Institutional Investors. Before the vote, Andreas said that ADM needed directors who were personally successful and who knew something about agriculture and food processing.

In the past year ADM reduced the size of its board from 17 members to 12. Three were added at the recent annual meeting: John R. Block, former secretary of agriculture in the Reagan administration; Richard Burt, former ambassador to Germany; and Mollie Hale Carter, an investment officer for John Hancock Mutual Life Insurance Co. and the daughter of H.D. Hale, chairman of ADM Milling Co. They join other directors, who include Lowell Andreas, brother of Dwayne Andreas and ADM's retired president; and Shreve M. Archer, father of ADM's treasurer.

ADM's board of directors is virtually a who's who of corporate agribusiness. In addition to the members named above, Andreas and Mulroney other members include: Robert S. Strauss, former U.S. Ambassador to the Soviet Union; O. Glenn Webb, Board Chair and CEO of Growmark, Inc.; John K. Vanier, CEO of Western Star Ag Resources, Inc., and Gaylord O. Coan, President and CEO of Gold Kist Inc., one of the nation's largest agricultural cooperatives, and presently in a joint peanut venture with ADM.

Also on the board is F. Ross Johnson, the former RJR Nabisco CEO and principal character in the book and film Barbarians At the Gate, who was the author of the infamous "three rules of Wall Street --- never play by the rules, never pay in cash, and never tell the truth."

Curiously, with the Company's policies already being severely criticized after its guilty plea on charges of price-fixing, and the fact that it needed desperately to persuade institutional shareholders that it was willing to cede more power to independent directors, it had already defied such action.

In the October 17 New York Times reporter Kurt Eichenwald revealed that the ADM nominating committee, headed by ADM board member and stockholder Robert Strauss, last August approved the selection of a new director who, by almost any definition, would be considered someone with "close" financial ties to the company

The Company, however, never officially told its shareholders anything about the nomination, which would tip the much-criticized slate even further toward insiders and associates, nor was there any public announcement made -- although a press release was written by ADM at the time, but never released.

In addition, the nomination was not presented at the annual meeting for a vote by the shareholders. Rather, the Times reported, executives said that if the nomination was ever taken up by the board, it would not be until sometime after the rebelling institutional investors went home. Then, the nomination would be approved based on a vote of the directors, rather than the shareholders.

The nominee, David Swanson, is the chief executive of Countrymark, an Indianapolis farmers' cooperative that formed a joint venture with Archer Daniels two months ago. Swanson has been in corporate agribusiness for more than 20 years, working with companies like Continental Grain and Central Soya. Currently, he sits on the board of Conrail, who recently announced that it was merging with CSX, thus becoming the nation's second largest railway company.

"It's not very savvy politics on their part," Rosemary Lally, editor of Corporate Governance Highlights, a publication of the Investor Responsibility Research Center in Washington, told the Times. "They are right in the middle of negotiating with their shareholders about having more independent directors on the board. On the other hand, they are negotiating with this fellow."

Institutional investors, many of who sponsored a resolution to impose stricter requirements for independence by board members, called the undisclosed nomination disturbing.

"It's outrageous," said Charles Valdes, chairman of the investment committee of Calpers. "It's a reckless disregard of shareholders. It is almost fraudulent to announce this after the voting."

"I have been proposed to be a member of the ADM board to be elected sometime after the annual meeting, because my selection wasn't in time to get into the proxy material," Swanson said in an interview prior to the stockholder's meeting.

As for the joint venture, Swanson said, "It's been operational as of Sept. 1," adding that its board of directors -- including three executives from ADM and three from Countrymark -- had already held its first meeting.

Meanwhile, in two related stories to the ADM saga, federal judge Castillo has refused to accept a plea of no contest from Ajinomoto Ltd., the large Japanese agricultural company that has been linked to the current lysine price-fixing scandal..

Under the terms of an August plea deal with the government, the directors of Ajinomoto now have four weeks to change the company's plea to guilty. If they fail to do so, the company will be indicted, and will be the sole corporation to be tried on charges that it engaged in an international conspiracy with ADM and others to fix the price of lysine.

Federal prosecutors disclosed to the court that after a government search in 1995 at Ajinomoto's American operations, senior company executives issued a directive to destroy documents in Japan relating to the price-fixing scheme. Even though the directive was later reversed, the destruction of documents appeared to have played an important role in the decision of Judge Castillo's rejection of the no-contest plea.

"I am deeply troubled by the reaction of the company when it learned of the investigation," Castillo said in his ruling. "I am concerned that the Ajinomoto company has not received the message of the importance of this country's antitrust laws."

The ruling came at a hearing at which Ajinomoto and two competitors -- Kyowa Hakko Kogyo Co. of Tokyo and Sewon America, a unit of Sewon Co. of South Korea -- formally offered pleas to charges that they had engaged in an international conspiracy to fix lysine prices. Ajinomoto pleaded no contest and the other two pleaded guilty. The guilty pleas of Kyowa Hakkoand Sewon were accepted by Castillo.

Also, former ADM executive Mark Whitacre, who spied for nearly three years for the FBI on his former employer which led to current international corn derivatives price-fixing investigations has now accused ADM of selling contaminated cattle feed and other corporate wrongdoings.

On October 3 a Whitacre associate faxed a copy of the accusing affidavit to The Associated Press, exactly two weeks after ADM sued Whitacre for more than $30 million. Whitacre, reached by telephone at his Chapel Hill, N.C., office, confirmed the document was authentic but said it hadn't been filed in any court.

ADM's lawsuit claims Whitacre stole more than $9 million from the company before and during his undercover work for the FBI price-fixing probe. Whitacre, who was fired after the probe became public knowledge, says the millions were Company under-the-table payments common for top executives at ADM. Whitacre says he now plans to sue ADM for wrongfully firing him.

Whitacre, in his latest action, joined a group of Missouri cattle farmers in accusing ADM of selling contaminated cattle feed. The cattle producers are suing ADM in federal court in Kansas City, Missouri, claiming the feed killed and sickened hundreds of animals. Whitacre said a change in cottonseed processing at ADM increased the amount of oil from the seeds, but also increased the amount of a toxin called gossypol in the cottonseed meal used for feed.



tion, joined a group of Missouri cattle farmers in accusing ADM of selling contaminated cattle feed. The cattle producers are suing ADM in federal court in Kansas City, Missouri, claiming the feed killed and sickened hundreds of animals. Whitacre said a change in cottonseed processing at ADM increased the amount of oil from the seeds, but also increased the amount of a toxin called gossypol in the cottonseed meal used for feed.



 

Bananas, Beans, Milk & Protest

11/12/96

RICHARD DOUGLAS, a former lobbyist for Sun-Diamond Growers of California, the nation's largest fruit cooperative, has been indicted by a Northern California-based federal grand jury for both giving illegal gifts to then USDA Secretary of Agriculture Mike Espy in 1993 and 1994 and for channeling illegal political donations to Espy's brother.


CHIQUITA BRANDS INTERNATIONAL INC. headquartered in Cincinnati, Ohio, was the scene September 26 of a protest by the Tacamiche Solidarity Committee, accusing the company of being unfair to employees at its Honduran banana farms.


FREDERICK L. CAMERON, the friend of Tyson Foods Senior Chairman Don Tyson, who along with Tyson settled Securities and Exchange Commission insider trading charges in September "without admitting or denying" guilt, has been told by the government agency that when he stated as much he had better not later attempt to hedge on such a statement.

 

EXCESSIVELY HIGH RETAIL MILK PRICES are being charged to Southern California consumers by big supermarket chains who are gouging the customer, according to Consumers Union, the publisher of Consumer Reports magazine.

THE UNITED FARM WORKERS (UFW), whose obituary has been written quite often in past years in the news and editorial pages of the New York Times received a well deserved resurrection in an October 4, 1996 editorial.

 

THE MONSANTO CO., undaunted by the announcement of a world-wide boycott aimed at its Roundup Ready Soybeans (RRS) and the continuing controversy over rBGH, the bovine growth hormone, announced on October 14 that it plans to sell or spinoff its chemical operations, concentrating instead on its drug and agricultural biotechnology lines, including such products as Nutrasweet and Roundup.

 

ORGANIZED PROTESTS and calls for an international boycott of Monsanto's RRS variety of soybeans have been echoing across both the U.S. and Europe in recent weeks.

 

IN BRIEF . . .

 



SUN-DIAMOND CO-OP LOBBYIST INDICTED 11/12/96


Richard Douglas, a former lobbyist for Sun-Diamond Growers of California, the nation's largest fruit cooperative, has been indicted by a Northern California-based federal grand jury for both giving illegal gifts to then USDA Secretary of Agriculture Mike Espy in 1993 and 1994 and for channeling illegal political donations to Espy's brother.

A 19-count indictment, announced by Donald Smaltz, the independent counsel investigating the case, accused Douglas of making "material false statements" to federal investigators and wire fraud in obtaining a mortgage. From 1983 to 1996, Douglas was a senior vice president for public affairs at Sun-Diamond.

Espy resigned in 1994 amid accusations of accepting illegal gifts and favors from companies he was supposed to regulate, although he has repeatedly denied doing anything wrong.

"This is yet another attempt to coerce someone into saying negative things about Mike Espy," said Reid Weingarten, Espy's lawyer. "One wonders how many decent, honorable people like Richard Douglas will have to get hurt before the special prosecutor realizes Mike Espy committed no crimes."

Although Espy was not named as a defendant, the indictment noted that the former Mississippi congressman "falsely" told the FBI agents that the tickets had been provided by Mr. Douglas.

Douglas's attorney John Dowd called the charges against his client, "frivolous and without merit," and accused Smaltz of arrogantly creating "a new standard of conduct" for government officials. "If the exchange of things of value and entertainment between two successful black men, who have been close friends for 26 years, is a violation of federal law, then woe be unto the many official guests in the [Washington Redskins] owner's box at RFK Stadium [or] at dinner parties in the salons of Georgetown," Mr. Dowd pointed out.

Dowd likewise has indicated that in fighting the charges he will also accuse the prosecutor of racial bias in bringing the case in California.

"Mr. Douglas' former employer, Sun-Diamond, was already tried in the District of Columbia for Douglas' alleged gratuities to Michael Espy," Dowd said. "The case against Douglas should be brought in Washington, D.C. Instead, for reasons that appear to be racially motivated the independent counsel has chosen to avoid this forum and bring the gratuity case in California."

Douglas and his attorney said he believed that the special prosecutor had avoided the District of Columbia as the venue for the case because of the likelihood that the jury pool would reflect the city's majority black population. Smaltz denied the accusation.

In September Sun-Diamond was convicted of violating federal law on charges dealing with the same gifts and donations cited against Douglas. James Lake, a partner in a Washington public relations firm, pleaded guilty also this year to wire fraud and election law violation in the donations.

Sun-Diamond has claimed that the gifts in question, which included lavish meals, luggage and tickets to the 1993 U.S. Open tennis tournament, were prompted by friendship and were not an attempt to sway Espy's judgment or win favorable policies. Smaltz said the gifts were worth $10,780, and the contributions to Henry Espy's unsuccessful Mississippi Congressional campaign totaled $2,000.

In this respect, Douglas is also being charged with urging a communications and lobbying concern that did $250,000 worth of annual business with Sun-Diamond to make an illegal $5,000 campaign contribution to Espy's brother in an attempt to pay off his campaign debts.

Because of its conviction, Sun-Diamond has been barred from participating in all federal food purchase programs for three years. The cooperative has said that it will attempt to get the Agriculture Department to rescind its decision.

Headquartered in Pleasanton, California, Sun-Diamond, is a mammoth conglomerate of five agricultural cooperatives owned by 4,500 producers of raisins, prunes, walnuts, hazelnuts and figs. Faced with possibly $3 million in court fines the co-op is appealing USDA's debarment, claiming it could cost Sun-Diamond millions of dollars in government subsidies to promote their Sun-Maid, Sunsweet and Diamond Walnut brands in foreign markets as well as large sales to government nutrition programs.

 







CHIQUITA BANANA: "DEALING FAIRLY" WITH
ITS HONDURAN WORKERS
11/12/96

Chiquita Brands International Inc., headquartered in Cincinnati, Ohio, was the scene September 26 of a protest by the Tacamiche Solidarity Committee, accusing the company of being unfair to employees at its Honduran banana farms.

Chiquita, formerly known as the infamous United Fruit Co. and then United Brands, evicted residents of the banana-producing lands who went on strike in 1994 for higher wages, according to Patrick Harmon, a spokesperson for the protesters. The company, he charged, has forced about 120 families to live as refugees in another Honduran town since their eviction in February.

At that time Chiquita, which says it has dealt fairly with Central America banana workers, was paying the workers about $2.70 per day, not enough to live on in Honduras, said Harmon, who spent this past summer in Honduras, but resides in Cincinnati. Many of those evicted from the community of Tacamiche had been living on that land for generations, he added.

The Tacamiche Solidarity Committee has staged two similar protests during the past year at the Chiquita offices, said Sister Alice Gerdeman, a Roman Catholic nun who distributed leaflets to passers-by. Prior to the demonstration the pickets had met with a Chiquita official. "Nothing much ever came of it,"Gerdeman observed.

Chiquita claims it evicted squatters who had illegally tried to take control of its banana plantations. Subsequently, the Honduran government and courts upheld the company's position, Chiquita public relations spokesman Joe Hagin points out.

"We stand by our decisions that were made in this case,"Hagin declared. "While we think it's unfortunate that the debate has played out the way that it has, the company bent over backwards to ensure a peaceful and equitable solution to the squatter problem."






TYSON FRIEND ADMONISHED BY SEC 11/12/96

Frederick L. Cameron, the friend of Tyson Foods Senior Chairman Don Tyson, who along with Tyson settled Securities and Exchange Commission insider trading charges in September "without admitting or denying" guilt, has been told by the government agency that when he stated as much he had better not later attempt to hedge on such a statement.

Subsequently, the SEC in an usual action ordered Cameron to recant statements made on his behalf about the settlement of insider-trading charges brought against the two men. Mr. Cameron was alleged to have traded on information provided by Mr. Tyson regarding a pending acquisition.

Tyson, former chairman and now "senior chairman" of Tyson Foods Inc., the nation's largest chicken processor, was accused of providing inside information to Cameron prior to Tyson 's acquiring Arctic Alaska Fishing Corp. in 1992.

The civil suit, however, was immediately settled by Tyson and Cameron, a Southern California rancher, as they agreed to pay more than $150,000 in fines while neither admitted or denied the charge.

Because later assertions made on his behalf "were construed by the commission as denials of the allegations," the SEC not only directed Cameron to clarify himself, but also basically forced a gag order on him regarding the proceedings relating to the trading case.

In question were assertions made to the Washington Post by Mr. Cameron's attorney, Jordan Green of Phoenix, SEC officials said. In a Sept. 24 Post article, Mr. Green was quoted as saying Mr. Cameron "asserts he overheard a conversation between other people in which he learned of the transaction." The story also quoted the attorney as saying Mr. Cameron denied the charges. Mr. Green has subsequently declined to comment on the matter.

SEC standard procedure, which the agency takes quite seriously, is that in such settlement cases the accused can say they neither admit nor deny the allegations.

"It really denigrates the whole purpose of the law-enforcement program" for a defendant to publicly deny what's outlined in the settlement, said William McLucas, the SEC's enforcement director. After reading that Mr. Cameron denied the charges, the agency threatened to withdraw its approval from the settlement, which would have meant reinstating the lawsuit







MILK PRICE GOUGING CHARGE LEVELED
AGAINST SUPERMARKETS
11/12/96

Excessively high retail milk prices are being charged to Southern California consumers by big supermarket chains who are gouging the customer, according to Consumers Union, the publisher of Consumer Reports magazine.

The study, which appeared in the October 16 Los Angeles Times, was based on a 79-store survey in the Southland earlier in the month. It showed a wide gap between prices charged by large chains and those at mom-and-pop stores--with stores such as Vons, Ralphs and Lucky charging $1.50 to $1.70 more per gallon.

The markets in question immediately disputed the suggestion that they are gouging, pointing out that rising prices instead reflect a variety of factors, including higher costs paid to dairy farmers.

"The supermarket retailers know that there is no reasonably priced, nutritional alternative to milk and that consumers will continue to buy it at almost any cost," said Elisa Odabashian, a policy analyst for Consumers Union and the report's author. By charging as much as 74% more than many of the small stores, consumer food bills have soared, particularly poor families with children." After years of relative stability, prices nationwide have moved up by 6% since December.

Driving the increase, according to the supermarket chains, is a steady climb in the prices paid to farmers for fluid milk. This so-called farm-gate price is determined by the federal government or, in California, by the State Department of Food and Agriculture.

Neither the federal nor state government, however, has any control over the wholesale or retail pricing of milk.

Critics have questioned the U.S. Department of Agriculture's assumption that milk prices are routinely higher in the West than in the nation as a whole, in large part because of higher processing, transportation and other costs, when California is in fact the nation's leading dairy producer.

Consumers Union said in its report that it was troubled by a seeming lack of competition in milk pricing among the major grocery chains.

It suggests that the lack of competition is likely due to the considerable amount of "consolidation" that has taken place in the Southland grocery industry in recent years, with the most recent merger occurring between Ralphs and the company that owns the Food 4 Less warehouse stores.

There has been continuing controversy in California between state officials and the grocery companies in recent years over the issue of whether fewer big chains means less competition on pricing even as merger activity continues.

In a September Consumers Union survey it was shown that there was even greater uniformity of milk prices among San Francisco Bay Area supermarket chains. As in Southern California, smaller independent stores sold milk at much lower prices.

This "apparently odd" pricing pattern has gotten the attention of Thomas Greene, chief of the antitrust section of the California attorney general's office, who told Consumers Union in a letter that a staff member would follow up on the issue.

A look at the price for a gallon of whole milk at a sampling of Los Angeles County grocery stores:

   Store City Price

   Vons West L.A.: $3.99

   Ralphs Torrance: $3.99

   Lucky Northridge: $3.87

  Woodley Market Encino: $2.99

  Trader Joe's Granada Hills: $2.79

  Ranch Market Los Angeles: $2.29

    



11/12/96

A NATION'S CONTINUING "HARVEST OF SHAME"

The United Farm Workers (UFW), whose obituary has been written quite often in past years in the news and editorial pages of the New York Times received a well-deserved resurrection in an October 4, 1996 editorial.

While noting the union's "new vigor" the Times editorial went on to point out that "a union made up of hard-to-organize transients -- many of them illegal immigrants -- grew at the fastest rate of any union last year. But the U.F.W. still claims only 26,000 members out of roughly 1.6 million farm workers."

Not surprisingly the editorial further noted that "for those not in the union, conditions are as appalling as ever." In what Edward R. Murrow, in his now legendary television documentary, called America's continuing "Harvest of Shame" the paper noted the following facts:

With the recent minimum-wage increase, wages for harvest workers in some crops were at their lowest point in terms of purchasing power in decades. Despite Federal and state laws, many workers do not have access to water or toilets in the field and are not paid benefits such as unemployment.

Likewise, farm worker lawyers have numerous documented cases, where workers who are supposed to be making the minimum wage, are in effect only being paid $2 or $3 an hour.

Dating back to the 1930's, farm workers, then largely black, unorganized and powerless were left out of the New Deal not only because President Franklin D. Roosevelt needed support from Southern senators, but also because the American Farm Bureau Federation opposed any type of labor law legislation that might include farm workers. It was not until 1963 that such workers got a minimum wage or Social Security, or coverage by health and safety laws.

Today, as the Times editorial notes, "farm work differs from most other labor in two important ways. Competition for jobs is fiercer. . .and with Mexico's economic crisis, the flow of illegal immigrants rose, creating more competition for agricultural jobs."

Likewise, the rights most other workers enjoy, including the right to collectively bargain with their employers, is largely denied farm laborers and the few legal protections they have managed to get into law are often not enforced. It is only in California alone that the law permits farm workers to organize and form unions.

Today, many growers circumvent the law by using an increasing number of labor contractors where a grower will pay a crew leader a lump sum to hire workers at harvest time making them "responsible" for providing field water, toilets and all the payroll details. Often, as the Times points out, "the grower does not pay the crew leader enough to give the workers a minimum wage."

Urging better law enforcement the Times notes that the U.S. Labor Department's Wage and Hour Division has only three farm labor inspectors in Florida, and they also are responsible for having to enforce dozens of other laws. In California, for example, it would take the state's wage and health inspectors 150 years at current rates to visit every farm just once.

As the Times editorial concludes: "Farm workers should be able to unionize, consult effective lawyers and enjoy regular visits from a larger staff of inspectors. The only reason they were denied the legal protections other workers got in the 1930's is that they lacked clout. Today their powerlessness keeps the laws from being enforced."

 

 


11/12/96

MONSANTO TO CONCENTRATE ON AGRICULTURAL BIOTECHNOLOGY

 

The Monsanto Co., undaunted by the announcement of a world-wide boycott aimed at its Roundup Ready Soybeans (RRS) and the continuing controversy over rBGH, the bovine growth hormone, announced on October 14 that it plans to sell or spinoff its chemical operations, concentrating instead on its drug and agricultural biotechnology lines, including such products as Nutrasweet and Roundup.

It is estimated by analysts that the Company's chemical division is worth between $2.5 to $3.5 billion.

"In recent years, the strategies and needs of the chemical and life sciences businesses have become quite different," Robert Shapiro, Monsanto's recently appointed CEO said in a brief prepared statement. "It's in the best interests of our people, our customers and our share owners that we take appropriate steps to allow all of our businesses to reach their maximum potential."

In 1995 Monsanto agreed to sell some of its chemical operations -- a division that makes plastics for use in cars, computers, telephones and the like -- for $580 million. Recently, Monsanto spent $750 million buying control of the Calgene and Agrecetus genetic engineering companies and Asgrow Agronomics, a soybean seed business.

Through Calgene, Monsanto is marketing the Flavr Savr tomato, which has been genetically engineered for a longer shelf life.

No deadlines for disposing of the chemical unit have been set, but the company stressed its determination to rid itself of the division. "This is not something that we think is going to stretch on for months and months," said A. Nicholas Filippello, the company's chief economist. Counting Monsanto's total revenues, Filippello said, it ranks third among American chemical companies, behind DuPont and Dow.

The largest unit in Monsanto's corporate structure, the chemical division registered 1995 sales of $3.7 billion, which represented 41% of the company's nearly $9 billion in sales. Profits, however, the company points out this year were only 33% of Monsanto's nearly $1 billion profit figure.

 


11/12/96

MONSANTO'S ROUNDUP READY SOYBEANS OBJECT OF BOYCOTT

Organized protests and calls for an international boycott of Monsanto's RRS variety of soybeans have been echoing across both the U.S. and Europe in recent weeks.

In Washington, D.C. and Chicago, Illinois plans were announced for a boycott of ten targeted products that will, according to campaign spokespersons, use such beans in their processing operations. The products include: Coca-Cola, Green Giant Harvest Burgers, Nestle Crunch, Similac infant formula, McDonald's french fries, Kraft salad dressings, Fleischmann's margarine, Fritos, Karo corn syrup and Quaker Oats corn meal.

"We're going to put pressure on from the bottom up," spokesperson Jeremy Rifkin declared at a press conference announcing the boycott. The object of the effort, he added, is to get grocers and school boards, and eventually their suppliers, to deny a market to foods that have been bi-technologically altered.

Already approved by the U.S. Food and Drug Administration, which claimed that in its review of the genetically engineered corn and soybeans it found no reason to doubt the safety of the beans and corn. One food industry group Rifkin noted was "continuing to spread his weed-like misinformation."

"In short, they are telling us to shut up and eat our Frankenfoods," Pure Foods Campaign director Ronnie Cummins told demonstrators at the Chicago Board of Trade. The CBOT has already announced that it will accept genetically altered corn and soybeans to satisfy its grain contracts.

During the Chicago demonstration protesters dumped 100 lbs. of suspect grain onto the sidewalk in front of the CBOT.

At the Washington press conference EuroCommerce's Heinrich Kroener stressed that after this year's "mad cow" crisis "we don't want another" food scandal. The 15-nation European Union, has already approved RRS for marketing, but has not issued a ruling on gene-altered corn.

"I can't ask for a boycott, a total boycott (of U.S. soybeans)," Kroener said, but emphasized that several major members of EuroCommerce would not buy U.S. soybeans without assurance they would not receive genetically altered ones.

In Europe marketers and processors were expressing second thoughts about the use of the RRS variety after a multi-country protest demonstration organized by Greenpeace as activists attached banners on buildings of the leading soya product's processor, food manufacturer Unilever, demanding consumers be given a choice.

The grass-roots environmental organization is attempting to force food companies like Nestle's and Unilever to either boycott foods containing the bio-tech soybeans or provide clear labels for consumers indicating that such beans are being used in the product.

``General indifference seems to have given way to a belief that labeling of soya products or of entire United States soybean cargoes would be the best response to quell public concerns and to avoid a harmful boycott,'' a European food broker told Reuter's News Service's Vera Eckert.

``It's still unclear whether this will die down or if it will blow up into a major food industry war with consumers.''

Europe is heavily dependent on soybeans, which make up more than half of all oil seeds processed here. The United States supplies 60% of that total as process oil seeds make vegetable oil for some 30,000 food products such as margarine as well as meals for animal feed.

A European Parliament committee is currently discussing how precise the labels should be. Some members believe that only substantial changes to a product should be printed on a label, which would not include oil and meal from genetically-altered beans after they have been processed.

Consumer groups, however, want to know where such products come from and whether or not they are derived from gene-altered organisms.

As this year's crop of U.S. soybeans are harvested and sent abroad they will contain a mixture of regular soybeans and new "Roundup Ready Soybeans" variety, resistant to the world's largest selling toxic herbicide Roundup. These new beans, gene-spliced and genetically engineered by Monsanto are slated to be used in soya products, which comprise some two-thirds of all the items on super market shelves.

Food processors plan to use this new soybean variety in such foods despite the fact that numerous surveys indicate that the vast majority of consumers are concerned about the safety of genetically engineered food and want the government to impose mandatory labeling on such products, Monsanto and other chemical-biotech companies are adamantly opposed to such
labeling.


 

11/12/96

IN BRIEF....

ConAgra Shrimp Cos., a subsidiary of CONAGRA INC., has signed a definitive agreement to buy certain assets of Florida Sea Inc., currently owned by Schwan's Sales Enterprises Inc. for an undisclosed sum. The nation's third largest food manufacturer will operate Florida Sea, whose 1995 sales were approximately $45 million, as a separate sales entity. . . . California's WELLS FARGO BANK was the most profitable bank in the world in 1995 after adjusting for different inflation rates and ratios of capital to assets, according a new study. The survey by IBCA, the European bank rating agency, found that Wells Fargo in 1995 forged ahead of Hang Seng Bank, the Hong Kong bank part-owned by HSBC Group, that has been the leader in IBCA's annual survey over the past two years. . . . . USDA SECRETARY DAN GLICKMAN, prior to the ninth Farm Aid benefit concert in Columbia, South Carolina, told a town meeting that U.S. agricultural exports will top the $60 billion mark this year. One of every three acres of production in the United States went to crops headed for export, he added, and that it was essential for small and medium-size farmers to share in the growing export market. "While I don't like the structure problems of agriculture, when you've got more and more larger producers, the fact is this year we will see net farming income of $51.5 million," he said. "It's never been higher." Dating back to 1985, when singer and songwriter Willie Nelson first conceived the Farm Aid concerts they have generated nearly $13 million in assistance to more than 100 farm organizations, churches and service agencies in 44 states. WHEAT FUTURES PRICES have plunged from $6.18 on April 25 to $3.92 a bushel on October 21, a new season low, depressed by persistently poor export wheat demand, indications of plentiful supplies worldwide and weakness in corn futures. World wheat prices have been falling steadily in recent months, leaving U.S. wheat prices uncompetitive worldwide, even after recent price setbacks.

 


 

11/12/96

"Plea deal: Super markup to the world"

Thanks to the unknown person on the Seattle Post-Intelligencer copy desk who came up with this wonderfully pithy headline following the news that Archer Daniels Midland had pled to federal charges of conspiring with international "competitors" to fix domestic and world prices of lysine and citric acid and had agreed to pay $100 million in fines. (See "Top Story")

U.S. Attorney General Janet Reno also got it right when she told a Washington, D.C. press conference after the news of the guilty plea was made public: "Greed, simple greed, replaced any sense of corporate decency or integrity. This is shameful behavior that goes to the every essence of a competitive, open, free market. And we will not tolerate it."

While her scathing criticism of ADM's price fixing and "markups" is appropriate, unfortunately neither the severity of the crime nor the penalty imposed speaks well to the resolve of the U.S. government to vigorously enforce the nation's anti-trust laws and how that lack of resolve makes the U.S. in the international trade market look like out and out hypocrites

To begin with the fine of $100 million is minuscule, despite being the largest such fine in history levied against an American corporation for anti-trust violations, compared to the enormous profits that ADM most likely reaped from conspiring to fix world prices for a number of its corn derivative products.

"ADM was involved in such huge conspiracies, this is a dramatic exhibition of the potential for fines in antitrust cases. But we will see others," observed Gary Spratling, the Justice Department's lead investigator on the ADM case. "This is not the last one that's going to come in over 10 million bucks."

Although Spratling, a deputy assistant attorney general for antitrust, declined to discuss which companies or industries may be hit with big fines in the immediate future, he and other Justice Department officials said in interviews with the Wall Street Journal's Bryan Gruley that the ADM case marks a turning point in the way federal antitrust officials treat price-fixers. "In our view, it creates a whole new frame of reference for determining penalties," he said.

The largest previous fine for price-fixing had been $15 million, levied against a maker of commercial explosives last year. It has been generally assumed by corporate America that federal price-fixing penalties wouldn't exceed $10 million, an amount specified in the Sherman Act, which made price-fixing a crime. However, the act also offers another way to calculate the penalty: twice the profit gained by a price-fixing perpetrator or the losses suffered by a victim. That's the method the Justice Department reportedly used in the ADM case.

The actual fine, $70 million for fixing prices in lysine markets and $30 million for fixing prices of citric acid, was set under 1991 sentencing guidelines, which takes into account the volume of business involved and other factors, such as how cooperative the company has been.

The Justice Department in its plea agreement with ADM agreed to request a lesser fine than what would normally be required in the citric acid matter because of the "substantial assistance" of the company. Such a penalty reduction was not applied to the ADM's guilty plea involving price-fixing of lysine, the feed additive.

While the imposed fine may be a "turning point" it will probably only sap most of ADM's profits in the third quarter, the company reported after its plea, but that in all likelihood will be the end of its impact. Even after accounting for the payment, attorneys fees and related civil settlements of $90 million, ADM still earned $3.56 million, or 1 cent per share in the quarter.

Even one of the Justice Department's own anti-trust attorneys, James M. Griffin, observed to the Associated Press that the government will never know just how much the average consumer has been affected by the conspiracy since the Company sells its products world-wide as ingredients, to be put into the products of others.

In that regard, the New York Times was correct in an October 16 editorial, pointing out that the Justice Department "can only put a stop to A.D.M.'s illegal price-gouging" while "only Congress can stop the more insidious, legal gouging that keeps food and energy prices high for hundreds of millions of Americans, some of whom are poor. Senior A.D.M. officials have behaved egregiously. So has Congress."

Leonard Teitelbaum at Merrill Lynch told AP that the settlement lays to rest, thankfully for ADM, one of the few thorny issues facing the Company and that its belated admission is unlikely to affect its future sales or profits.

"They're all big boys," Teitelbaum said, referring to ADM's customers. "They know ADM is a major player in these markets and don't really have anyone else to turn to even if they wanted," he added.

Following the news of the plea and fine most stock analysts shrugged off the size of the penalty pointing out that the company has about $2.5 billion in cash and as a result of the settlement, would be relatively free to focus on growth.

"If they threw $100 million into one quarter and simply reported a loss, it would be explained and the stock wouldn't go off too much,'' Carey Tharp, an H.G. Wellington analyst, told Dow Jones News Service. Merrill Lynch & Co.'s analyst Teitelbaum said, ''By next quarter all of the charges will be known and will be taken as a charge to the earnings.'' He added, therefore, he is still bullish on ADM and believed that the stock could hit 28 within 18 months.

Probably the most succinct analysis, however came from analyst Louis Ehrenkrantz of Ehrenkrantz, King, Nussbaum who said he thought ADM would be restored as one of the great growth stocks. ''If there is one thing whose demand will be growing in the coming years, certainly in the coming five years, it will be food."

There is another troubling aspect to the whole ADM affair and one that was conveniently ignored by the media in its exulting over the "largest fine in history," the sinister effects of this nation's largest agricultural commodity processing company being caught price fixing, etc., etc.

No mention was made in any of the news stories as to what happens to the dozens of hours of video and audio tapes compiled by Mark Whitacre, the now ex-ADM executive who acted for nearly three years as a spy for the FBI, and which reportedly documented many of ADM's nefarious dealings with its competitors. Prior to ADM's guilty plea and during its negotiations with the Justice Department it was rumored that the Company was seeking as part of its willingness to enter a guilty plea a permanent sealing of all such tapes and documents relating to the price-fixing cases.

My colleague Steve Suppan at the Institute for Agriculture and Trade Policy in Minneapolis, Minnesota summed up these "oversights" quite candidly.

"The Justice Department deal with ADM deprives the public of access to evidence of highly secretive agribusiness practices. At the same time that the U.S. is demanding greater `transparency' in the practices of what it calls State Trading Enterprises (STEs) (e.g. the Canadian Wheat Board, the Australian Wheat Board, and the New Zealand Dairy Board), the U.S.will not make `transparent' the evidence of ADM price fixing and other violations of U.S. anti-trust law.

"Since the deal allows ADM to continue to operate non-transparently, U.S. trading partners may regard U.S. proposals to discipline STEs through the World Trade Organization as a hypocritical strategy to weaken competition for corporations such as ADM," he added.

As recently as September 12, USDA Deputy Secretary of Agriculture Richard Rominger testified before a House Agriculture Committee that the U.S. is pressing on all fronts to insure that the WTO's first ministerial meeting in Singapore results in a commitment to seek stronger rules on STE's in the next round of international agricultural negotiations.

"We regard the lack of adequate requirements for transparency and the need for improved discipline on STEs as areas requiring the further attention in the WTO," he said. "We are working to lay the groundwork and build a consensus for putting the issue of stronger STE discipline high on the agenda for the next round of WTO negotiations in agriculture.

"We believe that," he added, "under current rules, countries may be tempted to use STEs to circumvent their Uruguay Round commitments. The prospect of other nations using state trading to circumvent their WTO commitments or to engage in unfair trade practices that disadvantage U.S. producers is simply not acceptable to this Administration."

Rominger noted that the detailed activities of both import and export STE's are kept confidential in "nearly all cases" and therefore the U.S. cannot determine whether STEs are keeping their WTO commitments.

"The information necessary to distinguish between practices consistent and inconsistent with WTO rules and commitments can, in many cases, be hidden from public view. As long as the operations of STEs can be largely concealed, countries may be tempted to employ practices that violate WTO rules and commitments," Rominger emphasized.

Does the phrase "what is good for the [WTO] goose is good for the [ADM] gander" immediately spring to one's mind in reading Rominger's testimony?

 

 

 

It's Back, And It's Online! (10/4/96)


"I've probably never told you this before, but I think THE AG BIZ TILLER is wonderful. You know when stuff comes in the mail every month without fail I can't keep up with it all anyway. So when your ship comes in, consider the joys of intermittency and don't let them convince you that the only alternative to regularity is constipation. Best wishes."

-Paula S.

No, the "ship has not come in," but ever since I received that wonderful postcard of support from a good friend and long-time colleague back in 1979, after I had to suspend publishing THE AGBIZ TILLER for lack of funding, I vowed if I ever had the opportunity to revive it my friend's wise counsel would keynote the premiere issue.

Yes, THE AGBIZ TILLER is back! And it is online! It is the hope of the editor/publisher and the Corporate Agribusiness Research Project that in the weeks and months to come it will become a regular feature on the Internet with topical, relevant news, commentary and in-depth perspective as it seeks to monitor corporate agribusiness from a public interest perspective.

While many of the names and numbers have changed since the TILLER last appeared the issues and the trend toward the increasing concentration of corporate power, land and natural resources continues almost unabated.

As this globalized industrialization of agriculture and our food supply gains ever-increasing momentum the men, women and children who harvest the world's cornucopia of food and fiber are in that process being systematically de-humanized. In addition, they are also losing their autonomy in a 20th century society which has rapidly reduced the individual to a dependent state, dependent on someone else's decisions, some one else's laws, some one else's machinery, some one else's food, and some one else's land.

Consequently, each day we see an out-of-control government becoming more and more a handmaiden to the interests of Corporate America.

Corporate money is increasingly wrecking popular government in these United States. The big corporations and its billionaries have taken daily control of our work, our pay, our housing, our food, our health, our pension funds, our banks and savings deposits, our public lands, our airwaves, our newspapers and magazines, our elections, and the very government so many of our citizens depend on to protect the general welfare.

It was Thomas Jefferson who told us that we cannot have political democracy without economic democracy. Sadly, however, the law of life among us now is also what Jefferson called "the general prey of the rich on the poor." The moment has grown dangerous. The challenge of 1776 was one thing; the challenge of 1996 is quite another.

It was former Oklahoma U.S. Senator Fred Harris who once so correctly observed that we can't today make corporations responsible for they have no soul to save, nor butt to kick, but we can work to make them
accountable.

That is the mission of THE AG BIZ TILLER ONLINE, to make as best we can corporate America, specifically corporate agribusiness, accountable! Hopefully in that process we can inspire people to realize, to seek out, to create, to develop and to organize a system of economic and political alternatives that will allow not only family farmers, but farm workers, labor and consumers to control their own lives and withdraw their support from the national and international corporate oligarchy.

In that pursuit we welcome your interest and your generous support.



MONSANTO TO CONCENTRATE ON AGRICULTURAL BIOTECHNOLOGY (10/4/96)


The Monsanto Co., undaunted by the announcement of a world-wide boycott aimed at its Roundup Ready Soybeans (RRS) and the continuing controversy over rBGH, the bovine growth hormone, announced on October 14 that it plans plans to sell or spinoff its chemical operations, concentrating instead on its drug and agricultural biotechnology lines, including such products as Nutrasweet and Roundup.

It is estimated by analysts that the Company's chemical division is worth between $2.5 to $3.5 billion.

"In recent years, the strategies and needs of the chemical and life sciences businesses have become quite different," Robert Shapiro, Monsanto's recently appointed CEO said in a brief prepared statement. "It's in the best interests of our people, our customers and our share owners that we take appropriate steps to allow all of our businesses to reach their maximum potential."

In 1995 Monsanto agreed to sell some of its chemical operations -- a division that makes plastics for use in cars, computers, telephones and the like -- for $580 million. Recently, Monsanto spent $750 million buying control of the Calgene and Agrecetus genetic engineering companies and Asgrow Agronomics, a soybean seed business.

Through Calgene, Monsanto is marketing the Flavr Savr tomato, which has been genetically engineered for a longer shelf life.

No deadlines for disposing of the chemical unit have been set, but the company stressed its determination to rid itself of the division. "This is not something that we think is going to stretch on for months and months," said A. Nicholas Filippello, the company's chief economist. Counting Monsanto's total revenues, Filippello said, it ranks third among American chemical companies, behind DuPont and Dow.

The largest unit in Monsanto's corporate structure, the chemical division registered 1995 sales of $3.7 billion, which represented 41% of the company's nearly $9 billion in sales. Profits, however, the company points out this year were only 33% of Monsanto's nearly $1 billion profit figure.

Playing Health Roulette With Monsanto's Soybeans (10/4/96)

Soybeans, long one of the United State's premier food commodity exports, may soon be in for a rough welcome from many of its overseas customers. Such treatment will most likely stem, however, not from increased foreign competition nor adverse weather, but rather from the fact that the Monsanto Corp., a major multinational agribusiness, wants to realize greater profits from the marketing of its already widely-used chemical poison Roundup.

As this year's crop of U.S. soybeans are harvested and sent abroad they will contain a mixture of regular soybeans and new RRS (Roundup Ready Soybeans) variety, resistant to the world's largest selling toxic herbicide Roundup, and therein lies the problem. These new beans, gene-spliced and genetically engineered by Monsanto, are already the center of a growing protest and likely consumer boycott campaign in Europe in spite of heavy-handed pressure by the company and the U.S. government to get European food manufacturers to accept the new beans for use in their food products.`Soybeans and its deratives are used in a wide variety of manufactured food including salad dressing, margarine, chocolate, soy burgers, tofu, vegetable oils, baked goods, cereals, dairy substitutes and infant formula. Geraldine Schofield of the British Food and Drink Federation points out that two thirds of all the items on supermarket shelves contain soya products as the total world production is more than 120 million tons a year.

Not only is this new soybean variety to be used in such foods, but despite the fact that numerous surveys indicate that the vast majority of consumers are concerned about the safety of genetically engineered food and want the government to impose mandatory labeling on such products, Monsanto and other chemical-biotech companies are adamantly opposed to such labeling.

Already Eurocommerce, the European Union's retail and wholesale representation group, and the European Green Party have launched campaigns to urge clear labeling of such soybean products. It is also the first time a genetically engineered food product has failed to win the backing from a majority of EU member states and their objections have taken U.S. officials by surprise.

The anti-RRS campaign in Europe, having largely gone unreported in the U.S. press, is being launched prior to the delivery of the 1996 U.S. soybean crop, 40% of which is slated for export. It is estimated that approximately two percent of that crop will be made up of the RRS variety.`"We have to leave the consumers the choice between genetically-modified and non-genetically modified food," declared Henrik Kroner, Secretary-General of Eurocommerce. "In order to allow the consumer to make this choice, the soybean harvest has to be segregated in the U.S. so that the food products can be labeled correctly."`European Green Party spokesperson and a member of the European Parliament Hildrut Breyer indicates that a boycott of such products, as long as there is no labeling attached, is a very real possibility.

Breyer and Kroner will join Bill Christianson, a Missouri soybean farmer and vice president of the National Family Farm Coalition and Jeremy Rifkin, of the Foundation on Economic Trends, at a National Press Club press conference in Washington, D.C. on October 7 at 9:30 a.m.`It is anticipated that at that press conference the Pure Food Campaign and the Foundation on Economic Trends will announce an international boycott of genetically engineered soybeans and corn.

Ms. Breyer points out that consumer-labeling of such genetically-engineered products is possible because a patented test kit ("Genetic ID," developed by a small Fairfield, Iowa laboratory services company), has been introduced as the first testing service that identifies genetically-engineered foods. `"Genetic ID's proprietary technology positively detects genetically-altered foods," explains Jeffrey Wells, Ph.D., general manager of Genetic ID. "Our laboratory protocol scans the DNA structure of the crop samples sent to us to precisely identify any altered gene sequences. This is an extremely sensitive and accurate test. Even the tiniest fragment of foreign DNA can be detected."`Despite such technology, however, Monsanto is adamantly resisting the idea of labeling. In addition, it is putting behind-the-scenes pressure on Nestle's and Unilever, two of the world's and Europe's largest food manufacturing companies, to incorporate such soybeans into their food processing operations.

Faced with a lack of ready suppliers since organic supplies are insufficient, Argentinean supplies have already been bought up and Brazilian supplies are unsuitable for food use, food distributors can do little about the forthcoming American supply, except insist on labeling.

Sainsbury, the United Kingdom's biggest food retailer, has indicated that "our preference is to label genetically-modified products. We believe customers should have the right to choose."`Yet a company spokesperson relates that when company representatives met with the American Soybean Association in Brussels in early September the Association was asked if U.S. soybean growers realized that there was a growing resistance by European consumers to the new soybeans they answered "no."`Prior to the Brussels meeting, however, Eurocommerce's Kroner sent a July 1 letter to J. Zak, Regional Director of the American Soybean Association in Brussels urging that the genetically-engineered beans be segregated.`"As you know, European Commerce represents one third of all European enterprises, which employ more than 20 million people and generate 14% of Europe's value added. Also, EuroCommerce members are in daily contact with Europe's 370 million consumers, ceaselessly working towards responding to consumer wishes.

"We are writing to you on behalf of our members to urge your members to secure segregation of genetically modified raw materials in order to ensure complete and truthful labeling of foodstuffs for the food chain."

Scientists have warned that RRS and other unlabeled, genetically engineered foods may cause allergies. Splicing foreign genes into genetic codes of traditional foods such as soybeans is playing "health roulette." As the New England Journal of Medicine has noted, the "allergenic potential of these newly introduced microbial proteins is uncertain, unpredictable and untestable."

Or, as Margaret Mellon, director of agriculture and biotechnology programs at the Union of Concerned Scientists, a Washington D.C.-based research and lobbying group, points out: "It's all work this out as you go and hope to God it works! We've still got a lot to learn."`RRS, as an "alien plant," could also lead to "genetic pollution" of the environment as RRS herbicide resistance might spread to weeds, such as ryegrass, turning them into "super weeds."RRS will assuredly cause an increase in the use of Roundup. There is evidence, however, that the herbicide can cause harm to the environment even at current levels of use. Roundup can pollute the water, kill fish, and decrease wild plant diversity. It also harms beneficial soil microorganisms, earthworms, and fungi. Its residues have been found on strawberries, lettuce, carrots and barley. It's active ingredient --- glyphosate --- was the third most commonly reported cause of pesticide illness in farm workers.

Aside from the health questions the growing resistance from abroad to RRS would have an unwanted negative impact on the already fragile U.S. farm economy and rural America, affecting $1.6 billion in annual soybean sales to Europe.

For Monsanto genetically-engineered products such as RRS are a potential gold mine. `"Until now, biotechnology has been exciting, but it has been expensive excitement," Hendrik A. Verfaille, vice-president in charge of agribusiness for Monsanto, told the New York Times. In explaining the need for licensing fees and seed-use restrictions, Monsanto representatives have told farmers it has spent $500 million over the last ten years just to develop Roundup-resistant plants.

According to Monsanto, "Roundup(R) and other glyphosate-based herbicides face competition from generic producers in certain markets outside the United States. Patents protecting Roundup(R) in various countries expired in 1991, while compound per se patent protection for the active ingredient in Roundup(R) herbicide continuesin the United States until the year 2000.

"Management expects that manufacturing process and formulation patents that are important to Monsanto's cost position will help maintain our competitive position after the expiration of this other patent. Monsanto has introduced new formulations of Roundup(R), called Roundup(R) Ultra and Roundup(R) Pro herbicides, in the United States.Significant growth potential for Roundup(R) remains in conservation tillageapplications worldwide."

The company's Agricultural Products division 11% yearly increase in sales ($2.5 billion in 1995), was based mainly, according to Monsanto, on increased world-wide sales of Roundup.`Many U.S. soybean farmers acknowledge that they are nervous over accepting the new RRS product. Farmers must procure a technology license required by Monsanto complete with a $5-a-bag "fee" that the company charges separately from the seed price. Under the agreement, farmers must promise not to sell or give away any seed or to save any for planting the following year. They must also use Roundup, and allow inspection by Monsanto officials.

"When I read through the contract, I almost scared myself out of doing it,"admitted one Illinois soybean farmer.Obviously responding to the concern for genetically engineered products abroad the Central Soya Co. has written to Ohio farmers that it is requesting non-RRS beans at its Cincinnati soybean crushing plant, one of its six such facilities in the Midwest.

According to the Bridge News Service when word of Central Soya's letter to Ohio farmers requesting a guarantee that delivered soybeans would not be of the RRS variety, some "cash sources"believed it could be a positioning by the company for European business. Norway is already reported to be inquiring about RRS-free soybeans from U.S. exporters.

Striving to take the leadership in the corporate dominated age of biotechnologically engineered agriculture and food is the Monsanto Company, headquartered in St. Louis, Missouri. By setting out to forever change how food and fiber are produced, the near 95-year old chemical firm has asserted that as a corporation "Monsanto is developing a way to use Mother Nature to modify organisms to serve us better." `"Research and development isn't part of the strategy. Research and development is the strategy," Richard J. Mahoney the recently retired company chairman and chief executive officer has emphasized.

Congress's Office of Technology Assessment (OTA) estimates that some 400 companies may now be spending over $2 billion a year on biotechnology research and development. Clearly, Monsanto, with 1995 sales of $8.96 billion and net income of $739 million, wants to be the leader in this growth industry.

"Two years from now every crop in the world will be easily manipulated. Ten years from now, in some plant we'll know every gene, every protein, every function. The door is wide open. There are no longer any technical restraints," Robert T. Farley, of the company's plant molecular biology group, declared in 1990.

Already the company has developed a variety of crops --- soybeans, tomatoes, potatoes, alfalfa, tobacco and cucumbers --- that are resistant to viral infections. In addition they have also altered cotton, tomatoes and potatoes with bacterial genes that produce proteins fatal to bud worms, boil worms and other pests. They are also the developers of the highly controversial rBGH, the bovine growth hormone, Nutrasweet, the artificial sweetener, and have a majority interest in Calgene, the company that introduced the gene-spliced mutant tomato called 'Flav Savr.'

"The kind of biotechnology that Monsanto has embarked upon is silver-bullet technology that will prolong the system of agriculture we have now," warns Jack Doyle, author of Altered Harvests. "We have the potential to understand biological systems in agriculture as never before, such as understanding the entire cycle of how pests attack crops and how crops respond. But the way the very technology is being capitalized and developed, we're intervening for the convenience of a product." "Monsanto sees all living creatures as resources to be subject to whatever manipulations are required for the market," adds the Foundation on Economic Trends' Jeremy Rifkin.

Monsanto's principal industry segments are in crop chemicals, animal sciences, chemicals, capital equipment, NutraSweet and pharmaceuticals. With main offices and research laboratories in the St. Louis area, it also has research and production facilities in Alabama, California, Connecticut, Florida, Georgia, Idaho, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Missouri, New Jersey, North Carolina, Ohio, South Carolina, Texas, and West Virginia.

Abroad it has facilities in Argentina, Australia, Brazil, Belgium, Canada, France, Japan, Mexico, Norway, Puerto Rico and the United Kingdom. It employs 28,500 people worldwide.

 


 

ADM SETTLES CITRIC ACID PRICE CIVIL LAWSUITS (10/4/96)


ARCHER DANIELS MIDLAND, already under a federal anti-trust criminal investigation for fixing prices in three of its major product lines, has agreed to settle two civil lawsuit totaling $65 million brought by both shareholders and customers for allegedly fixing citric acid prices.

ADM, in settling the two suits, did not admit to any wrongdoing. It is widely believed that the company sought to settle the class action lawsuits pending against it as quickly as possible. Any admission of wrongdoing in a criminal case would most likely result in the company having to pay a much higher amount to settle its numerous civil cases.

"These settlements will enable them to plead to a lot of things without a risk of civil exposure," Clint Krislov, a Chicago lawyer who is not involved in the Archer Daniels litigation told the New York Times."But it may also turn out, if Archer Daniels does plead and the full extent of what happened comes out, a lot of these plaintiffs may wish that they had asked for more."

Speculation is that if the government has agreed to let the company follow such a course of action it could indicate that any action in the criminal case would be delayed until after the final approval of civil settlements by the judges involved. In resolving the lysine and citric acid lawsuits, lawyers said ADM could be signaling a willingness to make a plea involving those products, but not on high-fructose corn syrup.

ADM will pay $35 million to settle a California lawsuit, filed in the U.S. District Court for Northern California, by customers who bought citric acid from the company. The customers contended that they had been harmed by ADM's agreeing with competitors to charge an artificially high price for citric acid, a preservative used in prepared foods, beverages and soft drinks.

The company will also pay $30 million to resolve claims by Illinois shareholders who, in action filed in U.S. District Court for the Central District of Illinois, charged that the firm's price-fixing artificially inflated ADM's company's sales and profits. Purchasers of ADM stock between Sept. 16, 1992 and July 10, 1995 who lost money on their investment are eligible to participate in the shareholder settlement.

Another smaller case, one involving claims from some Missouri cattle ranchers that an ADM feed product caused their livestock to die, was also settled for $105,000. Bearing out ADM's strategy of attempting to settle its civil cases as quickly as possible is the fact that the company agreed to settle this case for more than three times what the plaintiffs' lawyers had originally proposed just a few months ago.

Previously ADM had settled a highly controversial class action lawsuit involving the prices of lysine, a corn feed grain additive, for $25 million. A fourth suit, involving high-fructose corn syrup customers still is pending.

In a September, 1995 study the Cato Institute reported that ADM since 1980 has cost the American economy billions of dollars and indirectly cost American consumers and taxpayers tens of billions of dollars in higher prices and higher taxes in that same period of time At least 43 percent of ADM's annual profits, it is estimated, are from products heavily subsidized or protected by the American government.

The study claimed that every $1 of profits earned by ADM's corn sweetener operation costs consumers $10, and every $1 of profits earned by its ethanol operation costs taxpayers $30.

Kenneth L. Adams of Dickstein Shapiro & Morin, a Washington firm representing lysine users earlier this year presented an analysis by a Purdue University agricultural economics professor contending that customers were cheated out of between $171.4 million and $180.2 million from 1992 through last year.

Since 1979 Dwayne Andreas, family members, and ADM have contributed more than $4 million to congressional and presidential candidates, as well as to the national Democratic and Republican parties.In the two years before the 1992 election, ADM gave $772,000 to Republicans but only $136,500 to Democrats.

But, with the advent of the Clinton administration, according to the Wall Street Journal, "Andreas, whose personal contributions heavily favored Republican candidates in 1992, weighed in a mere six days before the presidential election with a $50,000 contribution to the Democrats' congressional campaign committee."

In 1992, according to the Center for Responsive Politics, Andreas, among Democratic party givers, ranked third and among Republican party givers, ranked first. Andreas-related contributions to individual candidates were also split in the November, 1994 mid-term elections: $461,500 to Democrats, $325,268 to Republicans. In the first 18 months of the Clinton administration, as Peter Stone of the National Journal reported, Andreas and ADM donated over $300,000 "in soft money to Democratic groups -- roughly six times what they contributed to Republicans."

In their current investigation the Justice Department is examining the alleged price-fixing of three different products made by ADM, and the investigation of each of those products -- high-fructose corn syrup and citric acid, used in soft drinks, and the livestock feed additive lysine -- involves a separate grand jury.

Throughout the entire ADM investigation, since the FBI made its initial raid of company headquarters in Decator, Illinois on June 27, 1995, Dwayne Andreas has publicly kept his silence. He is after all the man, who after telling the Washington Post's Peter Carlson the story of how he engineered a Canadian-Russian wheat sale a few years ago over President George Bush's objections, smiled slyly and added "it's always better to apologize than it is to ask permission."





ADM'S ANDREAS, WILSON FACE
FEDERAL INDICTMENTS
(10/4/96)

MICHAEL ANDREAS and TERRENCE WILSON, one the son of Archer Daniel Midland's Chairman and chief executive officer Dwayne O. Andreas, the other the head of ADM's corn processing division, face federal indictments on price-fixing charges, according to a company proxy statement mailed to shareholders on September 25.

Terrance S. Wilson, the 58-year old ADM executive, has already asserted his Fifth Amendment right against self-incrimination rather than testify about his knowledge of possible price-fixing within his division.

Both he and once ADM heir apparent, 47-year old Michael Andreas, the vice chairman of the company, have been previously informed by federal prosecutors that they stood to be indicted in September on federal criminal charges stemming from their role in what the prosecutors believe was a corporate conspiracy to fix prices for lysine, a corn derivative feed supplement.

In early 1992, both Wilson and Whitacre, according to reports in the Wall Street Journal, met in Tokyo with officials from Ajinomoto and Kyowa, corporations who along with ADM control the majority of the world's market shares in lysine, describing the idea of a "lysine trade association" that could solve the industry's problems, people familiar with the events allege. By that summer and fall, representatives of various lysine manufacturers, including ADM, were also meeting in hotels in Mexico City and Paris to discuss price increases, sources claim.

By May 1993, at ADM headquarters, the first of two industry summit meetings took place, people familiar with the case report. Kazutoshi Yamada, a managing director of Ajinomoto, and Hirokazu Ikeda, then general manager of Ajinomoto's feed additive department, met with Michael Andreas and Messrs. Wilson and Mark Whitacre to discuss sales volumes, the people say.

Federal authorities have been investigating whether an agreement over world-wide sales volumes was forged in a Los Angeles-area meeting in October, 1993. Sources also report that two of the principal figures who discussed sales volumes at this session were Michael Andreas of ADM and Mr. Yamada of Ajinomoto.

First news of a federal price-fixing probe at ADM came in the summer of 1995, when FBI agents raided ADM headquarters and seized documents. Mark E. Whitacre, the head of ADM's BioProducts division, had been working for more than two years as an undercover informant for the FBI in the antitrust investigation. Whitacre had also secretly made hundreds of audio and video tapes reportedly showing ADM executive fixing prices.

Three of ADM's competitors in the lysine market and a top executive from each of the three companies have already agreed to plead guilty or no contest to price-fixing. They are scheduled to appear in court Oct. 18, the day after ADM's annual meeting.

Guilty pleas or convictions in the ADM case could mean hundreds of millions of dollars in fines for the company and possible jail time for both Andreas and Wilson. ADM, in addition, most likely will also be having to pay hundreds of millions more as a result of civil lawsuits stemming from the same price-fixing allegations.





WHITACRE SUED FOR $30 MILLION BY ADM(10/4/96)

MARK WHITACRE, the former head of Archer Daniels Midlands BioProducts division and who for nearly three years assisted federal anti-trust investigators in building an alleged lysine price-fixing case case against ADM, has now been sued for $30 million by his former employer. Filing suit in Illinois state court ADM will seek to recover the $9.5 million it claims its former executive embezzled between 1991 and 1995. Whitacre was fired in August 1995 after it was revealed that for nearly three years he had been helping federal antitrust investigators secretly tape, both audio and video, meetings between ADM officials and other corporate manufacturers of lysine, a corn-derative feed additive.

The ADM lawsuit follows court action instigated last year in Switzerland by the company to recover funds that ADM says Whitacre stashed there. In the Illinois lawsuit, ADM is asking, in addition to the $9.5 million, and additional $20 million in punitive damages.While Whitacre acknowledges diverting millions of dollars in company funds to his personal accounts, he claims that the money was under-the-table compensation and was a common practice among ADM executives.

Following ADMs allegations in the Swiss lawsuit the government was faced with nearly a year rebuilding key parts of its price-fixing probe that had relied on Whitacre's credibility, and to also investigate the company's accusations against the 39-year old executive. In August, however, the Justice Department's price-fixing case was given new life when three Asian manufacturers of lysine admitted conspiring to rig prices world-wide. Whitacre recently told the Wall Street Journal that he has already pledged to the Justice Department that he will return to ADM the $6.5 million he claims he diverted to his personal accounts. He said he also expects the government to charge him shortly with tax fraud, among other things, in connection with the diversion.

Meanwhile, Justice Department and ADM lawyers continue to negotiate the terms of a possible plea by the company in the lysine anti-trust case. It was Whitacre who originally told of how within the ADM family it was common to hear the advice that "the competitor is our friend and the customer is our enemy."Based on inside reliable sources known to syndicated columnist Alan Guebert, once the lysine market was in place, he writes in the August 20 edition of the Delmarva Farmer, ADM executives dickered on what prices should be charged to big lysine users and key ADM customers -- Tyson Foods and Frank Perdue Farms.

Should ADM raise prices for the feed additive in nickel increments or should it hit buyers for one, big 20-cent-per-pound raise? Guebert relates that in response to the internal pricing debate one senior ADM official resolved the question by reportedly stating -- on tape: "F--- Tyson! They have more money than us. F--- Perdue! Raise it 20 cents." Lysine prices, reported two sources, soon leapt 20 cents.





ADM SHAREHOLDERS URGED TO
HOLD PROXY VOTES
(10/4/96)

CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM (CalPERS) and the FLORIDA RETIREMENT SYSTEM TRUST FUND have faxed a "STOP, LOOK, and LISTEN" warning to Archer Daniels Midland shareholders to refrain from signing or returning proxy voting cards until they receive the Systems' letter in the next several days justifying a proposal to amend ADM's bylaws for board member independence.

The two Systems took the unusual step because ADM was so late in mailing out the proxy materials package before its October 17th annual meeting that shareholders might act too quickly to vote their shares without the benefit of full information the pension funds have to offer them. The supplementary information is key to the pension funds' case for more independent directors. The alert to shareholders stated:

"STOP, LOOK, LISTEN: ...Please look for the shareholder information
letter from the State Board of Administration of Florida and the
California Public Employees' Retirement System...Please give careful
consideration to our message concerning the past actions of Archer
Daniels Midland Co.'s management and to our independent director
proposal before signing, dating and returning your proxy voting card."


The joint shareholder proposal urges ADM's Board of Directors to amend the Company's by-laws to ensure that the nation's largest farm commodity processor Board consists of a majority of independent directors. The proposal is the most recent attempt by CalPERS and Florida in a series of actions to seek to better ADM's corporate governance, which will in turn improve their investment in the company. Together, the two funds hold 6.4 million shares, or 1.2% of Archer Daniels's stock,

The "STOP, LOOK, and LISTEN" letter issued by the Systems was faxed to approximately 50 percent of ADM shareholders. "Customary practice is an 8-week solicitation process where shareholders have at least six weeks to consider materials and return votes," said Dr. William D. Crist, President of the CalPERS Board of Administration.

"We are three weeks out from ADM's October 17 annual meeting and there is little time for all shareholders to receive the materials, to read through them and to make an intelligent vote."

"The important point we want to make with this alert is to ensure that shareholders have sufficient time to review our materials. Our proposal, if passed, will become the major tool for accountability and for change at ADM," said Barbara Jarriel, Acting Executive Director of the Florida Retirement System Trust Fund.

CalPERS and the Florida Retirement System Trust Fund define an independent director as one who:

* has not been employed by the Company or an affiliate in an executive
capacity within the last five years;
* was not, and is not a member of a corporation or firm that is one of
the Company's paid advisers or consultants;
* is not employed by a customer, supplier or provider of professional
services to the Company;
* has no personal services contract with the Company;
* is not employed by a foundation or university that receives grants or
endowments from the Company;
* is not a relative of the management of the Company; and
* is not an officer of a company on which the Company's Chairman or CEO
is also a board member.


As one examines ADM's board of directors it becomes a look at a virtual who's who of corporate agribusiness.

In addition to Dwayne O. Andreas, chairman and chief executive officer of ADM, other prominent board members include: Brian Mulroney, former Canadian Prime Minister; Margararetta "Happy" Rockefeller; Robert S. Strauss, former U.S. Ambassador to the Soviet Union; O. Glenn Webb, Board Chair and CEO of Growmark, Inc.; John K. Vanier, CEO of Western Star Ag Resources, Inc., Ray A. Goldberg, the Harvard University business professor who first coined the term "agribusiness" and Gaylord O. Coan, President and CEO of Gold Kist Inc., one of the nation's largest agricultural cooperatives, and presently in a joint peanut venture with ADM

Also on the board is F. Ross Johnson, the former RJR Nabisco CEO and principal character in the book and film Barbarians At the Gate, who was the author of the infamous "three rules of Wall Street --- never play by the rules, never pay in cash, and never tell the truth."

A representative from the Florida Retirement System Trust Fund will present the joint shareholder proposal at ADM's annual shareholder meeting scheduled for October 17 in Decatur, Illinois.

In August, Securities and Exchange Commission (SEC) staff lawyers sided with the two big pension funds in their effort to ensure that the ADM board is dominated by truly independent directors. Attorneys for ADM had argued against putting the matter up for a proxy vote, partly on technical grounds. But, the chief counsel in the SEC's corporate finance division replied that his staff was "unable to concur" with most of the company's arguments.

The staff letter said it disagreed that the matter was moot. ADM had argued that the proposal was invalid because its backers hadn't indicated when they had purchased their ADM shares. The SEC staff noted, however, that the company apparently hadn't asked for that information when it received the proxy proposal. In addition, the letter said, that if the company chose to disregard the staff's views, it would be for the courts to decide whether the proposal should be included in the proxy.

CalPERS is the nation's largest public pension fund. The System provides retirement and health benefits to one million current and retired public employees and their families.



CPC INTERNATIONAL SETTLES FOR $47 MILLION (10/4/96)

CPC INTERNATIONAL INC. has offered and a federal judge accepted on September 22 a $7 million settlement in a Peoria, Illinois court case where some half-dozen customer lawsuits were brought together against CPC and four other companies for fixing the price on high-fructose corn syrup, a key soft-drink sweetner.

Not included in the settlement were the other companies: Archer Daniels Midland Co. (ADM), Cargill Inc., A.E. Staley Manufacturing Co. and American Maize Products Co., a unit of France's Eridania Beghin-Say S.A.

While CPC provided documents and interviews to federal officials investigating the price-fixing allegations it is not a target of a criminal investigation, CPC attorneys stressed. Earlier, ADM, the main target of such an investigation, settled a similar price-fixing lawsuit involving lysine, a corn-based livestock feed supplement, for $25 million earlier this year.

CPC International Inc., based in Englewood Cliffs, N.J., is a food conglomerate whose products include Hellmann's mayonnaise and Skippy peanut butter.




TYSON, FRIEND ACCUSED OF INSIDER TRADING (10/4/96)

DONALD J. TYSON, former chairman and now "senior chairman" of Tyson Foods Inc., the nation's largest chicken processor, has been accused of providing inside information to a friend prior to Tyson's acquiring Arctic Alaska Fishing Corp. in 1992.

The civil suit, however, was immediately settled by Tyson and his friend, Frederick Lee Cameron, a Southern California rancher, as they agreed to pay more than $150,000 in fines while neither admitted or denied the charge.

The settlement also implies that others who might have been involved in the transaction have been cleared of any wrong doing. Tyson Foods had been represented by the Rose Law Firm in Little Rock, Ark., whose partners then included Hillary Rodham Clinton. In 1994 the Wall Street Journal reported that the Phoenix Group, an investment concern headed at the time of the acquisition by Patsy Thomasson, currently a White House aide, might be named in an SEC action.

In their accusation the SEC claimed that Cameron, 62, of National City, Calif., a 20-year long friend of Tyson had frequently traveled with him, including a fishing trip and a trip to Great Britain during the time the Tyson acquisition of Arctic Alaska Fisheries was being negotiated.

The SEC complaint charged that on June 2, 1992, Cameron purchased 9,000 shares of Arctic Alaska Fisheries for $6.625 a share, for a total price of $59,625 plus brokerage commissions. The SEC said Cameron had been tipped off by Tyson regarding the pending acquisition.

On June 16 the acquisition was announced with each Arctic Alaska share to be acquired for cash and Tyson stock worth at the time about $12.75. That day, Cameron sold his Arctic shares for $11.75 each, making a profit of $46,125, the SEC said.
With the present settlement Cameron will repay that profit, plus interest of $18,153.43. In addition, he and Tyson will each pay a civil penalty of $46,125, the amount of the profit.




TYSON FOODS IN FEDERAL GRAND JURY PROBE (10/4/96)

TYSON FOODS INC., the nation's largest chicken processor, is currently the focal point of a Federal grand jury investigation.
In remarks after Tyson's lobbyist Jack L. Williams pleaded innocent to lying about gifts made to former U.S. Department of Agriculture secretary Mike Espy, Federal Prosecutor Robert W. Ray, while refusing to confirm that there was a widening investigation of Tysons, did admit that a federal grand jury was conducting an investigation that involved "Tyson Foods, its officers, and directors."

At Williams arraingment his defense attorney, Henry F. Schuelke III, said that he expects a grand jury will also return a new indictment against his client adding new charges and new defendants.

Williams, who has a Washington lobbying firm, has plead innocence to charges that he lied to federal investigators about his and Tyson's role in giving favors directly to Espy and to Espy's girlfriend, Patricia Dempsey.The favors included a $1,200 scholarship from a Tyson-run charity to Dempsey, as well as tickets for Espy and Dempsey to a National Football League playoff game, and limousine rides during the playoff weekend.




JURY FINDS SUN-DIAMOND GROWERS GUILTY (10/4/96)

SUN-DIAMOND GROWERS OF CALIFORNIA was found guilty by a nine-man, three-women jury on September 24 of nine counts of illegal gifts, campaign contributions and wire fraud. The gifts in the amount of $14, 287 were made to former Secretary of Agriculture Mike Espy between January, 1993 and early March, 1994, and the illegal campaign contributions to his brother Henry, who subsequently ran unsuccessfully for his brother's vacant Mississippi congressional seat.

The guilty verdict is the first in a series of cases scheduled to come to trial in a two-year-old investigation by independent counsel Donald C. Smaltz. No individuals were charged, but Sun-Diamond faces fines of up to $500,000 on some counts and other penalties.

Sun-Diamond, headquartered in Pleasanton, California, is an umbrella company for 4,500 growers of figs, hazelnuts, prunes, raisins and walnuts in California and Oregon, whose annual sales in 1995 was a combined $670 million.

A central issue for Sun-Diamond and its members, which includes Sun-Maid Growers of California, is the USDA's Market Promotion Program, through which growers can get millions of dollars in grants to promote their products overseas. It is the Secretary of Agriculture who has the authority to make such grants. In 1994, for example, USDA awarded $2.2 million to the California Prune Board, which in turn funneled $1.2 million of the money to Sunsweet Growers, another of the five cooperatives that make up Sun-Diamond.

And in that same period, Sun-Diamond was lobbying USDA for assistance in delaying a plan by the Environmental Protection Agency to ban the use of Methyl Bromide, a pesticide used widely by Sun-Diamond's members.

In his recently published book FIELDS WITHOUT DREAMS (Free Press) California raisin grower Victor Davis Hanson talks about his membership in a "Valley Girl Cooperative." It is widely believed that the name is simply a pseudonym for Sun-Maid.

"
No longer was it a parochial Great Depression relic, founded on boring principles of fair dealing and self-help to maximize sales returns for its beleaguered, unimaginative, and profitless growers. Indeed, Valley Girl herself gave way and quite improperly, without a vote of its membership, became a subsidiary to a new `Valley Maiden', the enormous umbrella organization that had swallowed private companies and cooperatives together."

Prosecutors identified Sun-Diamond's Senior Vice President Richard Douglas, a longtime friend of Espy's, as the man who spent $14,287 of the companies money in little more than a year on himself, his girlfriend and Espy and Espy's girlfriend at Sun-Diamond expense. Prosecutors also said that Douglas arranged the illegal campaign gifts."This kind of conduct should send a strong signal to other companies,"Smaltz said afterward. It also shows, he added, that the investigation
did not go far afield when it began focusing on companies and their behavior.

Prosecutors also argued that Douglas urged a communications and lobbying firm that did $250,000 worth of annual business with Sun-Diamond to make an illegal $5,000 campaign contribution to Espy's brother.

In addition to the Sun-Diamond verdict, the investigation successfully produced a guilty plea from James H. Lake, a top Republican lobbyist, who testified against Sun-Diamond, his former client.

Because he testified for the government the president of Sun-Diamond Larry Busboom was given immunity from prosecution. Other companies and individuals await trial on charges similar to those against Sun-Diamond.





ONE BILLION LIVING IN RURAL
POVERTY: WORLD BANK
(10/4/96)

LIVING IN RURAL POVERTY, despite the huge growth of urban slums, characterizes the living conditions of approximately one billion of the world's 5.7 billion people, according to a recent World Bank study. Of those, 500 million are children. About 40,000 people a day die from hunger-related causes, most in rural areas.

Among developing countries whose economies grew dramatically in the 1980s, the study notes, most showed rapid agricultural growth in the preceding years, including China, Indonesia and Thailand. Agricultural growth stimulates economic growth in other sectors, which results in increased employment and reduced poverty.

.......................................................................................................Urban poor /Rural poor

Middle East and North Africa..............20.0 MILLION POOR ............39%....... 61%
Europe and Central Asia ......................52.2 MILLION POOR ............65% ......35%
Africa .................................................108.8 MILLION POOR.............20% ......80%
Latin America and Caribbean .............146.5 MILLION POOR.............59% ......41%
East Asia and Pacific...........................199.8 MILLION POOR.............13% ......87%
South Asia ..........................................433.3 MILLION POOR............ 21% ......79%

A September 26, 1996 Washington Post editorial also points out that "some poor countries are so heavily in debt that, even if they do everything right, they will never climb outof their hole. The World Bank and the International Monetary Fund are on the verge of taking an important step toward remedying that situation. But they need support from the world's creditor countries, which so far have been reluctant to go along.

"The senselessness of the current situation isn't hard to fathom. Multilateral lending institutions and rich countries now make new loans to poor countries just so those countries can make payments on past loans. In one recent year, for example, a branch of the World Bank loaned $2.9 billion to the most indebted countries -- of which $1.9 billion came right back in repayments."


 

 

"Plea deal: Super markup to the world" 11/12/96

Thanks to the unknown person on the Seattle Post-Intelligencer copy desk who came up with this wonderfully pithy headline following the news that Archer Daniels Midland had pled to federal charges of conspiring with international "competitors" to fix domestic and world prices of lysine and citric acid and had agreed to pay $100 million in fines. (See "Top Story")

U.S. Attorney General Janet Reno also got it right when she told a Washington, D.C. press conference after the news of the guilty plea was made public: "Greed, simple greed, replaced any sense of corporate decency or integrity. This is shameful behavior that goes to the every essence of a competitive, open, free market. And we will not tolerate it."

While her scathing criticism of ADM's price fixing and "markups" is appropriate, unfortunately neither the severity of the crime nor the penalty imposed speaks well to the resolve of the U.S. government to vigorously enforce the nation's anti-trust laws and how that lack of resolve makes the U.S. in the international trade market look like out and out hypocrites

To begin with the fine of $100 million is minuscule, despite being the largest such fine in history levied against an American corporation for anti-trust violations, compared to the enormous profits that ADM most likely reaped from conspiring to fix world prices for a number of its corn derivative products.

"ADM was involved in such huge conspiracies, this is a dramatic exhibition of the potential for fines in antitrust cases. But we will see others," observed Gary Spratling, the Justice Department's lead investigator on the ADM case. "This is not the last one that's going to come in over 10 million bucks."

Although Spratling, a deputy assistant attorney general for antitrust, declined to discuss which companies or industries may be hit with big fines in the immediate future, he and other Justice Department officials said in interviews with the Wall Street Journal's Bryan Gruley that the ADM case marks a turning point in the way federal antitrust officials treat price-fixers. "In our view, it creates a whole new frame of reference for determining penalties," he said.

The largest previous fine for price-fixing had been $15 million, levied against a maker of commercial explosives last year. It has been generally assumed by corporate America that federal price-fixing penalties wouldn't exceed $10 million, an amount specified in the Sherman Act, which made price-fixing a crime. However, the act also offers another way to calculate the penalty: twice the profit gained by a price-fixing perpetrator or the losses suffered by a victim. That's the method the Justice Department reportedly used in the ADM case.

The actual fine, $70 million for fixing prices in lysine markets and $30 million for fixing prices of citric acid, was set under 1991 sentencing guidelines, which takes into account the volume of business involved and other factors, such as how cooperative the company has been.

The Justice Department in its plea agreement with ADM agreed to request a lesser fine than what would normally be required in the citric acid matter because of the "substantial assistance" of the company. Such a penalty reduction was not applied to the ADM's guilty plea involving price-fixing of lysine, the feed additive.

While the imposed fine may be a "turning point" it will probably only sap most of ADM's profits in the third quarter, the company reported after its plea, but that in all likelihood will be the end of its impact. Even after accounting for the payment, attorneys fees and related civil settlements of $90 million, ADM still earned $3.56 million, or 1 cent per share in the quarter.

Even one of the Justice Department's own anti-trust attorneys, James M. Griffin, observed to the Associated Press that the government will never know just how much the average consumer has been affected by the conspiracy since the Company sells its products world-wide as ingredients, to be put into the products of others.

In that regard, the New York Times was correct in an October 16 editorial, pointing out that the Justice Department "can only put a stop to A.D.M.'s illegal price-gouging" while "only Congress can stop the more insidious, legal gouging that keeps food and energy prices high for hundreds of millions of Americans, some of whom are poor. Senior A.D.M. officials have behaved egregiously. So has Congress."

Leonard Teitelbaum at Merrill Lynch told AP that the settlement lays to rest, thankfully for ADM, one of the few thorny issues facing the Company and that its belated admission is unlikely to affect its future sales or profits.

"They're all big boys," Teitelbaum said, referring to ADM's customers. "They know ADM is a major player in these markets and don't really have anyone else to turn to even if they wanted," he added.

Following the news of the plea and fine most stock analysts shrugged off the size of the penalty pointing out that the company has about $2.5 billion in cash and as a result of the settlement, would be relatively free to focus on growth.

"If they threw $100 million into one quarter and simply reported a loss, it would be explained and the stock wouldn't go off too much,'' Carey Tharp, an H.G. Wellington analyst, told Dow Jones News Service. Merrill Lynch & Co.'s analyst Teitelbaum said, ''By next quarter all of the charges will be known and will be taken as a charge to the earnings.'' He added, therefore, he is still bullish on ADM and believed that the stock could hit 28 within 18 months.

Probably the most succinct analysis, however came from analyst Louis Ehrenkrantz of Ehrenkrantz, King, Nussbaum who said he thought ADM would be restored as one of the great growth stocks. ''If there is one thing whose demand will be growing in the coming years, certainly in the coming five years, it will be food."

There is another troubling aspect to the whole ADM affair and one that was conveniently ignored by the media in its exulting over the "largest fine in history," the sinister effects of this nation's largest agricultural commodity processing company being caught price fixing, etc., etc.

No mention was made in any of the news stories as to what happens to the dozens of hours of video and audio tapes compiled by Mark Whitacre, the now ex-ADM executive who acted for nearly three years as a spy for the FBI, and which reportedly documented many of ADM's nefarious dealings with its competitors. Prior to ADM's guilty plea and during its negotiations with the Justice Department it was rumored that the Company was seeking as part of its willingness to enter a guilty plea a permanent sealing of all such tapes and documents relating to the price-fixing cases.

My colleague Steve Suppan at the Institute for Agriculture and Trade Policy in Minneapolis, Minnesota summed up these "oversights" quite candidly.

"The Justice Department deal with ADM deprives the public of access to evidence of highly secretive agribusiness practices. At the same time that the U.S. is demanding greater `transparency' in the practices of what it calls State Trading Enterprises (STEs) (e.g. the Canadian Wheat Board, the Australian Wheat Board, and the New Zealand Dairy Board), the U.S.will not make `transparent' the evidence of ADM price fixing and other violations of U.S. anti-trust law.

"Since the deal allows ADM to continue to operate non-transparently, U.S. trading partners may regard U.S. proposals to discipline STEs through the World Trade Organization as a hypocritical strategy to weaken competition for corporations such as ADM," he added.

As recently as September 12, USDA Deputy Secretary of Agriculture Richard Rominger testified before a House Agriculture Committee that the U.S. is pressing on all fronts to insure that the WTO's first ministerial meeting in Singapore results in a commitment to seek stronger rules on STE's in the next round of international agricultural negotiations.

"We regard the lack of adequate requirements for transparency and the need for improved discipline on STEs as areas requiring the further attention in the WTO," he said. "We are working to lay the groundwork and build a consensus for putting the issue of stronger STE discipline high on the agenda for the next round of WTO negotiations in agriculture.

"We believe that," he added, "under current rules, countries may be tempted to use STEs to circumvent their Uruguay Round commitments. The prospect of other nations using state trading to circumvent their WTO commitments or to engage in unfair trade practices that disadvantage U.S. producers is simply not acceptable to this Administration."

Rominger noted that the detailed activities of both import and export STE's are kept confidential in "nearly all cases" and therefore the U.S. cannot determine whether STEs are keeping their WTO commitments.

"The information necessary to distinguish between practices consistent and inconsistent with WTO rules and commitments can, in many cases, be hidden from public view. As long as the operations of STEs can be largely concealed, countries may be tempted to employ practices that violate WTO rules and commitments," Rominger emphasized.

Does the phrase "what is good for the [WTO] goose is good for the [ADM] gander" immediately spring to one's mind in reading Rominger's testimony?

 


 

ADM ADMITS GUILT: "No who did what wrong,
who was doing this, who shouldn't have been doing this."
11/12/96

Archer Daniels Midland Co., "Supermarket to the World" has agreed to plead guilty to conspiring with competitors to fix domestic and world prices of lysine, a feed additive, and citric acid, an organic acid used in various foods, and pay $100 million in fines.

The plea and the fine, touted as exceeding the U.S. Justice Department's next highest criminal price-fixing fine by almost seven times, brings to a close the latest chapter of four years of investigation which began when Mark E. Whitacre, a one-time ADM senior executive, acting as an FBI undercover spy, secretly taped hundreds of intracorporate conversations.

ADM, headquartered in Decatur, Ill., buys, stores, is the nation's largest agricultural commodity processor and sells agricultural products with sales in the 1996 fiscal year of $13.3 billion. It operates 165 plants, 300 grain elevators, 10,000 railroad cars, 15,000 trucks and 2,000 barges.

Its products include various oils and oil seed products, ethanol, additives for animal feed and syrup for soft drinks. Products that use one or more ingredients from ADM include Doritos corn snacks, SnackWells' cookies, Coca-Cola, Kellogg's Pop-Tarts, Ragu spaghetti sauce, Hamburger Helper and Premium Saltines.

ADM will pay $70 million in fines for fixing lysine prices and $30 million for the citric acid case. The latest Justice Dept. action also resolves all of the criminal investigations of the Company, including the accusation that ADM used cash payments and other illicit means to steal technology from competitors. To date, including civil suits related to the price-fixing matter, ADM has agreed to pay a total of $190 million in fines and civil settlements.

In addition, the Justice Department will not pursue charges that ADM fixed prices in a third product, high-fructose corn syrup, a sweetener used in soft drinks such as Coke and Pepsi. Known as HFCS, it is by far the product with the largest dollar market of the three products.

With their guilty plea ADM will also cooperate with U.S. prosecutors on an already-extensive federal antitrust investigation into price fixing in the $1.2 billion-a-year citric-acid industry.

ADM's agreement to cooperate ''takes us into a whole other international conspiracy,'' Gary Spratling, deputy assistant attorney general for antitrust enforcement, told the Wall Street Journal's Thomas M. Burton and Scott Kilman. Talks have already begun between the Justice Department and some citric acid makers toward possible settlements in that inquiry.

Attorney General Janet Reno also said at a Washington news conference: "Let me underscore that the department's investigation is continuing."

ADM "did cooperate" in the citric-acid inquiry, adds Phillip H. Warren, an attorney with the Justice Department's antitrust office in San Francisco, which is conducting that inquiry. Mr. Warren said he couldn't detail the cooperation, but added "it is substantial." Federal prosecutors said during a plea hearing in Chicago federal court that they could have insisted on a higher fine for ADM, but didn't because of the grain-processing company's assistance in the citric-acid case.

The Journal has also reported that the head of ADM's citric acid business, Barrie R. Cox, will get immunity from prosecution and become a government witness under the ADM plea agreement.

The business of making citric acid, used as a beverage flavor-enhancer, is dominated by a handful of manufacturers, including the U.S.-based Haarmann & Reimer unit of Bayer AG and the U.S.-based Hoffmann-LaRoche Inc. unit of Switzerland's Roche Holding Ltd. These companies also claim to be cooperating with the inquiry.

Stock analysts figure ADM has deep enough pockets to pay its fine without disrupting business. On June 30, according to the New York Times, the company had about $2.5 billion in cash and marketable securities. Analysts were relieved, the paper added, that, as a part of the plea agreement, the government closed its price-fixing investigation of ADM's high-fructose corn-syrup business, the biggest of the ADM products under government scrutiny.

ADM's guilty plea and promise of government cooperation, however, does not bode well for the Company's executive vice president, Michael D. Andreas, 47-year-old son of ADM's longtime chief executive officer and chairman, Dwayne Andreas, 78, and the Company's heir apparent.

Michael Andreas attorney declined to comment on the case.

It is reported that the younger Andreas was videotaped by federal agents meeting in a Southern California hotel room with a senior executive of Ajinomoto Co., a rival Tokyo-based maker of synthetic lysine, discussing the "fixing" of prices and production quotas of the popular livestock-feed additive. Justice Dept. prosecutors have told Michael Andreas and ADM corn-processing chief Terrance S. Wilson that they will be indicted.

"I believe that when the dust settles, it will be clear that ADM and my client tried to bust open these international cartels, not fix them, and, in the process, saved American consumers millions," said Reid Weingarten, an attorney for Wilson, the head of ADM's corn processing division who also is a government target.

The fact that ADM supplies ingredients which are only one part of a final consumer product makes it difficult to determine what effect, if any, its settlement will have on consumer prices, Tom Pirko, president of BevMark Inc., a New York beverage consulting firm told the Washington Post. But consumers ultimately will benefit from the message that the government will not tolerate companies that conspire to fix prices, he said.

In a September, 1995 study the Cato Institute reported that since 1980 every $1 of profits earned by ADM's corn sweetener operation has cost consumers $10, and every $1 of profits earned by its ethanol operation cost taxpayers $30. Kenneth L. Adams of Dickstein Shapiro & Morin, a Washington firm representing lysine users earlier this year presented an analysis by a Purdue University agricultural economics professor contending that customers were cheated out of between $171.4 million and $180.2 million from 1992 through last year.

Shortly after ADM's guilty plea was entered before Chicago Federal District Court Judge Ruben Castillo on October 15, the two Company executives stepped down from their jobs. Former Canadian Prime Minister Brian Mulroney, who serves on the ADM board, said Andreas had been granted a leave of absence while Wilson had retired." They no longer work here," Mulroney told reporters after the company's annual meeting.

In a statement released later, ADM said that Andreas, who as an executive vice president ran the company's day-to-day operations, "requested and received company approval to take a temporary administrative leave . . .Terrance S. Wilson announced his recent retirement from the company for medical reasons related to his progressive heart disease." The statement added, however, that the two men remain available to perform services for the company. "In accordance with the company's personnel policies it will have no further comment on these matters," the statement concluded.

According to an Associated Press account that quoted Mulroney, at a closed-door meeting of a panel of ADM's board of directors, ADM Chairman Dwayne O. Andreas, who has headed the company for 26 years, offered to resign, but his offer was rejected. It was Mulroney who headed the five-member panel that negotiated the guilty plea with the government.

At the Company's annual stockholder's meeting in Decatur on October 17 a contrite Andreas apologized to the stockholder's. "I am the one in charge, and as Harry Truman said, the buck stops with me," he told more than 700 people gathered at the meeting. "You have my apology and my commitment that things have been arranged so this will never happen again."

Andreas and other ADM officials gave few specifics about the price-fixing case and did not mention the fate of Wilson or Andreas's son.

Several shareholders told the Associated Press that they felt ADM officials, who had repeatedly denied the criminal charges until its guilty plea earlier in the week, were trying to avoid the issue."There was just the apology and that was that," said Carson Mitchell of Dallas, who said he owns 54 shares. "There was no who did what wrong, who was doing this, who shouldn't have been doing this."

ADM officials did, however, take a softer tone with dissident share- holders, the AP also reported, compared with last year's stormy annual meeting, where Andreas cut off Ed Durkin of the International Brotherhood of Carpenters pension fund with a curt, "this meeting, sir, runs according to my rules." This time Andreas ordered employees to give a microphone to Durkin, who again fired several aggressive questions at ADM officials.

Several large institutional investors, however, have called for the resignation of Chairman Andreas. "Dwayne, obviously, should go," Patricia Macht, spokesperson for the California Public Employees Retirement System, known as Calpers, which holds 3.6 million shares of ADM stock told the Washington Post's Sharon Walsh. "It's a lot like an apple -- if it's blemished on the outside, it's rotten at the core."

Stockholder sentiment concerning the Company's guilty plea and fine was reflect in a statement that James E. Burton, chief executive officer of Calpers, one of the nation's largest pension funds, issued following the guilty plea: "The $100 million fine is shareholder assets that are being squandered to pay for criminal activity that should have never occurred.

"Again we ask the question, where was the board of directors? That's why this admission of guilt is a compelling reason to reform the board and its practices. It speaks volumes to supporting our proposal to change the bylaws to require a truly independent board of directors. This $100 million is real money, which could have been used in many ways to improve the company's profitability," he added.

At its October 17 stockholder's meeting repeated questions were also asked of the Company as to why they were kept in the dark about company plans to plead guilty and pay a record fine. One shareholder asked Company officials if they had considered postponing the annual meeting or telling shareholders in advance about the company's plea arrangements with federal prosecutors since there were numerous reports circulating that ADM would enter guilty pleas and yet the company had refused to comment during months of investigations. "I would say we considered it but there was so much publicity it was known," Andreas told the meeting.

It was at the annual meeting, however, that investors sent a clear message of dissatisfaction to ADM management in a vote on a proposal that the Company's board of directors be for the most part independent of corporate management. The proposal only failed 58%-42% of the shares voted.

"It sent a signal from a very large block of shareholders in view of the extremely un-independent board," said Alyssa Machold, deputy director of the Council of Institutional Investors. Before the vote, Andreas said that ADM needed directors who were personally successful and who knew something about agriculture and food processing.

In the past year ADM reduced the size of its board from 17 members to 12. Three were added at the recent annual meeting: John R. Block, former secretary of agriculture in the Reagan administration; Richard Burt, former ambassador to Germany; and Mollie Hale Carter, an investment officer for John Hancock Mutual Life Insurance Co. and the daughter of H.D. Hale, chairman of ADM Milling Co. They join other directors, who include Lowell Andreas, brother of Dwayne Andreas and ADM's retired president; and Shreve M. Archer, father of ADM's treasurer.

ADM's board of directors is virtually a who's who of corporate agribusiness. In addition to the members named above, Andreas and Mulroney other members include: Robert S. Strauss, former U.S. Ambassador to the Soviet Union; O. Glenn Webb, Board Chair and CEO of Growmark, Inc.; John K. Vanier, CEO of Western Star Ag Resources, Inc., and Gaylord O. Coan, President and CEO of Gold Kist Inc., one of the nation's largest agricultural cooperatives, and presently in a joint peanut venture with ADM.

Also on the board is F. Ross Johnson, the former RJR Nabisco CEO and principal character in the book and film Barbarians At the Gate, who was the author of the infamous "three rules of Wall Street --- never play by the rules, never pay in cash, and never tell the truth."

Curiously, with the Company's policies already being severely criticized after its guilty plea on charges of price-fixing, and the fact that it needed desperately to persuade institutional shareholders that it was willing to cede more power to independent directors, it had already defied such action.

In the October 17 New York Times reporter Kurt Eichenwald revealed that the ADM nominating committee, headed by ADM board member and stockholder Robert Strauss, last August approved the selection of a new director who, by almost any definition, would be considered someone with "close" financial ties to the company

The Company, however, never officially told its shareholders anything about the nomination, which would tip the much-criticized slate even further toward insiders and associates, nor was there any public announcement made -- although a press release was written by ADM at the time, but never released.

In addition, the nomination was not presented at the annual meeting for a vote by the shareholders. Rather, the Times reported, executives said that if the nomination was ever taken up by the board, it would not be until sometime after the rebelling institutional investors went home. Then, the nomination would be approved based on a vote of the directors, rather than the shareholders.

The nominee, David Swanson, is the chief executive of Countrymark, an Indianapolis farmers' cooperative that formed a joint venture with Archer Daniels two months ago. Swanson has been in corporate agribusiness for more than 20 years, working with companies like Continental Grain and Central Soya. Currently, he sits on the board of Conrail, who recently announced that it was merging with CSX, thus becoming the nation's second largest railway company.

"It's not very savvy politics on their part," Rosemary Lally, editor of Corporate Governance Highlights, a publication of the Investor Responsibility Research Center in Washington, told the Times. "They are right in the middle of negotiating with their shareholders about having more independent directors on the board. On the other hand, they are negotiating with this fellow."

Institutional investors, many of who sponsored a resolution to impose stricter requirements for independence by board members, called the undisclosed nomination disturbing.

"It's outrageous," said Charles Valdes, chairman of the investment committee of Calpers. "It's a reckless disregard of shareholders. It is almost fraudulent to announce this after the voting."

"I have been proposed to be a member of the ADM board to be elected sometime after the annual meeting, because my selection wasn't in time to get into the proxy material," Swanson said in an interview prior to the stockholder's meeting.

As for the joint venture, Swanson said, "It's been operational as of Sept. 1," adding that its board of directors -- including three executives from ADM and three from Countrymark -- had already held its first meeting.

Meanwhile, in two related stories to the ADM saga, federal judge Castillo has refused to accept a plea of no contest from Ajinomoto Ltd., the large Japanese agricultural company that has been linked to the current lysine price-fixing scandal..

Under the terms of an August plea deal with the government, the directors of Ajinomoto now have four weeks to change the company's plea to guilty. If they fail to do so, the company will be indicted, and will be the sole corporation to be tried on charges that it engaged in an international conspiracy with ADM and others to fix the price of lysine.

Federal prosecutors disclosed to the court that after a government search in 1995 at Ajinomoto's American operations, senior company executives issued a directive to destroy documents in Japan relating to the price-fixing scheme. Even though the directive was later reversed, the destruction of documents appeared to have played an important role in the decision of Judge Castillo's rejection of the no-contest plea.

"I am deeply troubled by the reaction of the company when it learned of the investigation," Castillo said in his ruling. "I am concerned that the Ajinomoto company has not received the message of the importance of this country's antitrust laws."

The ruling came at a hearing at which Ajinomoto and two competitors -- Kyowa Hakko Kogyo Co. of Tokyo and Sewon America, a unit of Sewon Co. of South Korea -- formally offered pleas to charges that they had engaged in an international conspiracy to fix lysine prices. Ajinomoto pleaded no contest and the other two pleaded guilty. The guilty pleas of Kyowa Hakkoand Sewon were accepted by Castillo.

Also, former ADM executive Mark Whitacre, who spied for nearly three years for the FBI on his former employer which led to current international corn derivatives price-fixing investigations has now accused ADM of selling contaminated cattle feed and other corporate wrongdoings.

On October 3 a Whitacre associate faxed a copy of the accusing affidavit to The Associated Press, exactly two weeks after ADM sued Whitacre for more than $30 million. Whitacre, reached by telephone at his Chapel Hill, N.C., office, confirmed the document was authentic but said it hadn't been filed in any court.

ADM's lawsuit claims Whitacre stole more than $9 million from the company before and during his undercover work for the FBI price-fixing probe. Whitacre, who was fired after the probe became public knowledge, says the millions were Company under-the-table payments common for top executives at ADM. Whitacre says he now plans to sue ADM for wrongfully firing him.