An Unhealthy Choice For Farmers, Workers, Consumers and Environment?


Special to the Progressive Populist

Everett, Wash.

ConAgra Inc., is the nation's second largest food manufacturer. It is the only major food company that operates across the food chain -- providing feed, fertilizers and chemicals to farmers and ranchers, trading meat and grain, and producing packaged foods for consumers.

Corporate agribusiness today, from seedling to supermarket, is dominated by such transnational corporate giants as Unilever, Nestle, Philip Morris, RJR Nabisco, Cargill and Archer Daniels Midland.

In attempting to demonstrate the nearly complete control that corporations have now acquired over our everyday lives, the Alliance for Democracy, a fledgling two-year old national populist movement, believes that food and the process by which we obtain our food is the appropriate place to begin an effort to achieve both corporate responsibility and corporate accountability.

The Alliance for Democracy (AfD), in its effort in seeking to end large corporation's domination of our economy, our government, and our culture, seeing the corporation's role as illegitimate in a self-governing democracy, believes that the time is now to publicly dramatize the need for corporate responsibility and accountability.

In ConAgra the Alliance sees a corporation that clearly reflects not only the prototype of a modern transnational corporation, but also one which graphically illustrates the unhealthy prices that family farmers, workers, consumers, the environment and our communities are being required to pay to support such corporate behemoths. It believes the record shows that by many of its recent actions ConAgra can be considered antithetical to the common good.

The AfD points to some recent examples:

(ogonek) ConAgra Inc. earlier this year agreed to pay $8.3 million in penalties, including a criminal fine of approximately $4.4 million, to settle federal fraud charges pleading guilty to a felony charge of wire fraud. In addition, ConAgra agreed to plead guilty to misdemeanor charges of misgrading crops and adding water to grain.

ConAgra officials have maintained that the company's sophisticated watering systems were used to suppress the grain dust that can fuel elevator explosions. But the water also increases the weight of the grain, and thus its market value, because grain is sold by weight. The government investigation focused on whether Peavey Grain elevators around Terre Haute, Ind., and elsewhere padded profits by excessively dousing crops -- which the government considers "economic adulteration."

The Justice department said ConAgra reaped $3.5 million in criminal profits. U.S. attorney Judith A. Stewart also announced that the company agreed to plead guilty to charges that it systematically cheated farmers who sold crops to a dozen of ConAgra's Peavey grain elevators in Indiana from 1989 to 1992.

Among other things, ConAgra employees doctored samples of grain being offered by farmers to make the crops appear to be of lower quality, and thus less valuable, according to documents in federal court in Indianapolis.

(ogonek) In September, 1992 some 100 undocumented workers were arrested in a raid on a Monfort meatpacking plant in Grand Island, Nebraska and were deported. In all, 307 illegal immigrants, most from Mexico, were arrested. Subsequently, the company, which is a wholly owned subsidiary of ConAgra, was fined $103,000 by a federal judge after pleading guilty to 25 counts of knowingly hiring undocumented workers and one count of engaging in a pattern and practice of employing aliens at its Monfort facility.

(ogonek) In the summer of 1995, ConAgra abruptly canceled poultry producing contracts with over 178 independent contract growers in the southern United States. In offering new and what one producer described as "abusive" contracts, ConAgra demanded binding arbitration be included.

A typical poultry contract is a unilateral contract, often referred to as a contract of adhesion. An adhesion contract is simply a "take it or leave it" contract. Frequently a farmer who has borrowed one-third to a half million dollars in order to secure a business contract with a processor like ConAgra has no option other than to sign, even if it means giving up his or her constitutional right to access their state and federal courts should anything go amiss in terms of fraud or dispute.

Some 53 families, at the risk of losing their farms and their homes, refused to accept such terms, saying it was clearly a violation of their freedom of speech. ConAgra's cancellation 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.

(ogonek) 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 percent of the $5 billion. The seafood processors, however, had previously and privately agreed to "kick back" the $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., at the time 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."

(ogonek) A federal court ruled that Golden Valley Microwave Food, a ConAgra subsidiary, obtained patents through "deception," concealing information from the government, filing fake affidavits, misrepresenting test results and unlawfully claiming another company's invention as its own. Golden Valley Microwave Foods was also one of several companies that agreed to pay $6.8 million to settle a price fixing lawsuit after a federal court ruled in 1991 that "sufficient evidence exists that Golden Valley engaged directly or acquiesced in a pricing conspiracy."

(ogonek) In April 1996 Monfort abruptly closed its Des Moines, Iowa, plant giving some 1322 workers just one day's notice of termination. In announcing that ConAgra was cutting 6500 jobs planning to alter or shutting down 29 plants Philip Fletcher, ConAgra CEO and chairman declared: "For our shareholders and employees, this is the right step to make ConAgra more competitive, more secure, more profitable."

(ogonek) After ConAgra agreed in 1983 to buy Armour Foods Co. from Greyhound, it said it would retain Armour's 2,250 union workers only if they agreed to concessions. The workers refused an hourly pay cut to $8 from $10.69, so Greyhound dismissed them and shut down the plants shortly before ConAgra assumed possession. When ConAgra reopened the plants, including one in Mason City, Iowa, a few days later, they announced they had hired new workers at "competitive compensation" -- an average base wage of $6 an hour.

Later, ConAgra officials, after being accused of discriminatory hiring practices, but without admitting any wrongdoing, agreed to a $6.6 million settlement. In addition to back pay plus interest, the settlement called for job offers, retroactive seniority and preferential hiring rights for the union workers.

ConAgra, Latin for "in partnership with the land," is the second largest food manufacturing company (behind Philip Morris) in the U.S. with 1996 sales of $24.82 billion and with earnings of $545.2 million, as compared with the previous year's earnings of $495.6 million. It is estimated that six cents of every dollar Americans spend for food goes to ConAgra.

In 1996 ConAgra's return on common equity (profitability) was 24.3 percent. It's 1992-96 yearly average was 23.4 percent. Had a person invested $30,000 in ConAgra stock in 1974 and sold it in May 1992 it would have been worth $5 million.

ConAgra is currently:

No. 3 in marketing fed beef.

No. 2 in beef packing (CR4 = 87%)

No. 3 in pork packing (CR4 = 60%)

No. 4 in broilers (CR4 = 45%)

No. 1 in turkeys (CR4 = 35%)

No. 1 in sheep slaughter (CR4 = 73%)

No. 2 in flour milling (CR4 = 62%)

No. 4 in dry corn milling (CR4 = 57%)

CR4 = Refers to the market concentration percentage of the top four firms.

ConAgra's principal business in terms of growth has been its prepared foods segment (including its over $1 billion flagship brand) "Healthy Choice", which has accounted for more than three-quarters of its total sales. The corporation typically has 80-100 "acquisition candidates" in screening at all times. ConAgra has described itself as "a mutual fund of the food chain" with "about 70" operating units "across the food chain." It has seen increases in sales and profits every year for the past 15 years.

Currently ConAgra's board of directors, which reads like a who's who of American business, is comprised of members who also serve as board members of the following corporations:

RJR Nabisco, Valmont Industries, Norwest Corp., Peter Kiewit Sons, E.I. Dupont de Neimours & Co., Wells Fargo Bank (ConAgra's second largest stockholder), Columbia\HCA Healthcare Corp., Ford Motor Co., Pacific Gas & Electric Co., Newhall Management Corp., SunAmerica Inc., The Economist Newspaper Group, W.H. Smith PLC, Public Radio International, The Atlantic Council, KRA Inc., Opus Corp., North Star Ventures, MFS Communications, Berkshire Hathaway Inc., Burlington Resources Inc., California Energy Corp. FirstTier Financial Inc., Sears Roebuck & Co., Wales Group Int., American Software Inc., Apple South Inc., Bell South Inc., Georgia Power Co., National Life Insurance Co., Global Connections, Inc., Asian Fine Arts, Fidelity Group Mutual Funds, McKesson Corp., Cornerstone Properties and C-Tec Corp.

Clayton C. Yeutter, past president and CEO of the Chicago Mercantile Exchange, former U.S. Secretary of Agriculture, domestic affairs advisor to President George Bush and U.S. trade representative, was named to ConAgra's board of directors in December 1992. He also serves on the boards of Texas Instruments, FMC Corp., Oppenheimer Funds, B.A.T. Industries, and Farmers Insurance Co.

As the University of Missouri rural sociologist Bill Heffernan points out, "We no longer have a competitive agriculture sector in the U.S. The food system resembles an hourglass with many producers and millions of consumers, but the few firms that control the processing are in a position to control the food industry.

"There is a general assumption," Heffernan said, "that when four firms control 40 percent or more of the market, the market no longer behaves as a competitive market. The conclusion to be drawn is that for poultry meat, cattle, pork, sheep, wheat, soybeans and corn processing, United States farmers no longer sell in a competitive market."

Also, says Heffernan, "a few firms -- names like ConAgra, Cargill, Archer Daniels Midland, Bunge and IBP -- now appear on the list of several commodities." And "a few of these firms control the food system from 'seed to shelf.' "

He cited ConAgra which operates elevators and owns railroad cars and barges. It's one of the four top firms in processing of poultry, beef, pork, sheep and wheat.

"With this type of an integrated food system, one can ask: Where do farmers fit into the overall production process, and how do the farm family and the rural community benefit?" Heffernan asks. He believes control by a relative few companies allows them to "receive a disproportionate share of the economic benefits from the food system."

Since early August, the Alliance for Democracy has been engaged in its fall harvest Food Action Campaign throughout the nation, making ConAgra Inc. the campaign's focal point. The campaign consists of two stages, while also seeking the ideas and participation of local and national farm, worker, environmental and consumer groups.

The AfD prepared "The People's Report" on ConAgra, which includes an 18-page "Corporate Profile" and an eight-page "Bill of Particulars." These reports are being circulated to the AfD's approximately 50 local alliances across the US. They can be obtained by sending a 10 x 13 stamped ($1.47) self-addressed envelope to AfD's Food Action Campaign, P.O. Box 2201, Everett, Wash. 98203-0201

These local alliances, along with other farm, labor, environmental and consumer organizations and groups, are being urged to join with the Alliance for Democracy throughout the nation in planning a local non-violent action on Thursday, September 25 at one of the Company's facilities in their area. The date September 25 coincides with ConAgra's annual stockholders meeting in Omaha, Nebraska.

At that meeting the Food Action Campaign representatives will present to the stockholders and the ConAgra management a list of its corporate accountability expectations. These demands, in keeping with the AfD's historic populist roots, will be presented as the Omaha Platform of 1997.

Just as the populists of the late 19th century framed their grievances, criteria and alternative solutions to the concentration of capital in the historic Omaha Platform of 1892, the AfD, after inviting its membership and allies to submit their corporate accountability demands, will present those demands in a modern-day version of that famous document both inside and outside of the September 25 meeting.

The Omaha and local actions on September 25 will be but the kickoff of the AfD's harvest season Food Action Campaign, with other events and actions scheduled for such locations as its National Convention outside of Kansas City, Missouri on October 30-31 and November 1-2.

A. V. Krebs is director the Corporate Agribusiness Research Project. Contact him at P.O. Box 2201, Everett, Washington 98203-0201; phone 206-258-5345; or e-mail: avkrebs@earthlink.

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