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Parent Issue
Day
19
Month
April
Year
1974
OCR Text

(Editor 's note: The following article focuses on the giant food industry monopolies-and their effect on your life. It was made possible with much help from the following sources: The Agribusiness Accountability Project, the Union for Radical Political Economics (URPE), National Food Research Collective, "The American Food Scandal" by William Robbins (William Morrow & Co. 1974) and Liberation News Service. This article originally appeared in "Sunrise. ")

There's a new breed of American farmer fast replacing the hardworking, up-at-dawn figure of the past. To be sure, the day to day work is still done by people close to the land. But today more often than not, the big decisions-what to grow and how, who to sell to and for how much-are being made in corporate boardrooms by "farmers" in pinstripe suits whc carry briefcases instead of pitcfrforks.

In 1935 there were 6.8 million farms in the United States, but according to the Census of Agriculture, that number had dropped by 1969 to 2.7 million. Farms continue to fold at the rate of 2,000 a week, many swept up into bigger farms ten times their size. "Fortune," a magazine serving the business world, estimated in its July, 1973 issue that in a few decades, there will only be about 100,000 to 200,000 large farms left in this country.

Who are these new farmers? Large agribusiness corporations such as Ralston Purina, Del Monte, General Foods, and Safeway control vast amounts of land and the crops produced on it.

There is also fast-growing conglomerate involvement in agri-culture companies, who by their names you'd never guess were involved in agriculture. For instance, ITT serves up Smithfield Ham and Wonder Bread; turkey is available from Greyhound's Armour division; Dow Chemical grows lettuce and Boeing Aircraft dishes out its own potatoes while Purex provides strawberries.

To give just one example of the land these companies control, take Tenneco. Already involved in oil production, pipelines, chemicals, packaging and shipbuilding, this conglomerate moved into agribusiness in the late 1960's when it acquired the Kern County Land Company with its millions of acres in California, Arizona, New Mexico and Oregon.

"It is sometimes difficult to grasp the dimensions of such vast land holdings under the control of one financial interest," writes William Robbins in his book, "The American Food Scandal." To try to get the point across, one witness at U.S. Senator Adlai Stevenson's hearings in 1972 presented graphically the scope of (Tenneco's) Kern County Holdings: "That is roughly equal to a one-mile strip of land extending from San Francisco to Los Angeles." The distance between these two cities is more than 400 miles. "If you have trouble getting all of that," he added, "it is also equal to a six-mile wide strip from San Francisco to Sacramento- a distance of 85 miles.

Many of the giant agribusiness concerns have also become more powerful through a process called "vertical integration." Briefly, vertical integration is when one company engaged in a particular phase of an industry, enters another phase of that same industry. Thus a supermarket begins not only to sell bread but to manufacture it, or a processor of peas decides to grow its own peas.

"No longer is farming a way of life, it is a business," writes the Agribusiness Accountability Project, a public interest research organization based in Washington. "The goal is to make rural America an agricultural factory, with a vertically integrated corporate-controlled assembly line running from the field through the supermarket check-out counter."

Today nearly a fourth of total U.S. agricultural production is now vertically integrated. Take for instance Del Mont the world's largest canner of fruits and vegetables. According to the Agribusiness Accountability Project, Del Monte also "manufactures its own cans, and prints its own labels; it conducts its own agricultural research; it grows produce on its own land, as well as putting 10,000 farmers under production contracts; it distributes its produce through its own banana transports, air-freight forwarding stations, ocean terminals and trucking operations; it operates its own warehouses; it maintains 58 sales offices throughout the world; and it caters 28 restaurants and provides food services for United Airlines."

Ralston Purina, the firm that vertically integrated poultry production in the 1960's leaving thousands of independent chicken producers devastated, is now engaged in hog integration. Along with Swift & Co., Ralston intends to build a massive integrated hog factory in Missouri.

Corporate control of the food industry affects consumers in a very real way for the corporations have the power to decide what will be produced, what methods of production will be used, whether or not new firms will be able to enter the field, the quality of the finished food product, and how much it will cost.

This conspiracy against the consumer is also aided by the vast network of interlocking directorates which brings a member of the board of directors of one company in close contact with directors from other companies in related industries. The following are some of the interlocks discovered by the Agribusiness Accountability Project. Remember, one link with one other company is all that's necessary to tie a corporation into the network.

Del Monte has directors who meet others from a wide range of agribusiness on the boards of Broadway Hale Stores, Western Bancorporation, Southern California Edison, Pacific Gas and Electric and others. Dow Chemical has, among others, an interlock with Bud Antle, Inc. a giant farming enterprise from which Dow bought 17,000 acres of land in California and Arizona.

Getty Oil is interlocked with A&P. The J.G. Boswell Company was linked with Safeway Stores and Safeway was in turn interlocked with Southern Pacific as well as Amgac, Inc. and Castle & Cooke, the two Hawaiian agricultural giants.

The bank boards are, at the very least, exceedingly convenient meeting places. And it should not seem strange that at banks where such big interests congregate, smaller farmers pay highly discriminatory rates in comparison with those charged the corporations.

The concentration of power these corporations hold is staggering. But don't get the idea that that power will ever be diminished by breaking up the monopolies into smaller, "more competitive" companies. "Big companies represent a natural outgrowth of the old system in which many firms competed with each other," explains the Union for Radical Political Economics National Food Research Collective.

"The rationales of the Mom and Pop stores and the supermarkets are the same. Each tries to make as many profits as possible, regardless of their effects on people, nature or their competitors. Neither can afford to be different."

Anti-trust action the early 1900's actually split up some of the huge industrial empires built up by the Rockefellers, Mellons, Carnegies, and others. But in the ensuing seventy years, the wealth and power of the Rockefellers, for example, has only increased, concentrated now in dozens of "different" corporations rather than under one company name.

"We cannot break apart big companies and at the same time preserve the integrity of the profit system," continues URPE. "As long as the profit system exists some companies will grow and swallow others. We could chop up the big companies a hundred times, but they would still keep coming back."

GOVERNMENT COLLUSION WITH THE FOOD MONOPOLIES

The American food industry is the largest in the world -- a $150 billion a year industry surpassing automobiles, steel, oil and even the defense establishment. In the corporate drive for domination of the industry and its profits, government help is crucial. Among government's magnanimous gestures to agribusiness are the following:

Surplus Food Purchases-ln addition to the farm subsidy program, the government, for more than 40 years, has bought up food in an attempt to stabilize farm income by removing surplus production. A glut of peas, for example, would drive pea farmers bankrupt, so the government buys up the surplus to stabilize the price. The peas are then distributed to low-income people and school children. That's the theory.

However, in the 1960's it became obvious that the distribution aspects of these programs were hardly satisfactory, and the Department of Agriculture admitted, after all, that the programs were really intended to raise the income of farmers, not to feed people.

Another legal loophole that allows corporate farmers to rake in the money. Federal tax laws, for instance, allow most of the capital investment that is put into developing an orchard, a poultry flock or a livestock herd, for instance, to be written off as ordinary expenses.

Water Frauds help the corporate farmers as well. In 1902 a law was passed which authorized the Bureau of Reclamation to build reservoirs and related canal systems to provide water in areas of scarcity. By limiting the amount of privately-owned land eligible for water to 160 acres, the law was plainly intending to aid family-size farms and NOT to produce windfalls  for speculators and big landed interests.

However, from the beginning the law was virtually disregarded. All the large land owners needed to do was promise to dispose of excess land to buyers who could meet the legal requirements. Few were required to keep those promises. The most blatant excuse ever used for ignoring the acreage limitation was a letter, written by Secretary of the Interior Ray Lyman Wilbur in the early 1930's. The letter simply asserted that the law did not apply to California's Imperial Valley.

Today hundreds of thousand of acres continue to be served by water from federal projects in violation of the law. Ex-senators Fred Harris (D.-Okla) testified before Congress in 1972 that in the Imperial Valley, where a network of canals and dams has been built at a public cost of $200 million, water service was being provided illegally for vast blocks of land owned by such agribusiness giants as Purex, United Brands (formerly United Fruit Co.) and the Irvine Land Co. Other corporations receiving water illegally, charged Harris, included Tenneco, Getty Oil, Standard Oil of California and the Southern Pacific Co.

These handouts are even more disturbing, points out Robbins, when on the one hand the government pays $10 billion to open land through various federally-funded water projects which only increase surpluses of acreage and crops. And on the other hand, it pays out tens of billions to try to solve farmer's problems created by the surpluses. The corporate farmers are making it coming and going -- and at the taxpayers' expense.

Agribusiness Men in Washington are also important to make sure that the group's interests are never ignored. Take two of the highest ranking food officials in government today (not to mention scores of their underlings)- Agriculture secretary Earl Butz and Food and Drug Administration (FDA) Food Bureau Director Virgil Wodicka.

Butz served as a paid board member of four agribusiness concerns, Ralston Purina, J.I. Case (subsidiary of Tenneco), Stokely VanCamp, and International Minerals and Chemicals, prior to his government appointment under the Nixon administration.

Wodicka was employed with Ralston Purina, Libby, McNeill & Libby, and Hunt-Wesson Foods, prior to taking his place in government.

Multinational Food Companies -- Increasingly, the large food companies are moving their operations abroad where cheaper labor and tax breaks add to their profits. Del Monte for instance, has invested some $60 million in farming, processing and marketing facilities in over 20 foreign countries, including Kenya, Venezuela, Taiwan, South Africa, Brazil and Guatemala.

One of the company's latest ventures was a pineapple production move to the Philippines, virtually abandoning its previous pinapple production in Hawaii. The move had clear advantages for Del Monte. Hawaiian plantation workers earn $2.64 an hour. Del Monte pays its Philippine workers 15 cents an hour. Similarly, Hawaiian cannery workers are paid $2.69 an hour compared to the 20 cents an hour it pays Philippine cannery workers to do the same job.

"Even if all other costs of production remain the same in the Philippines," concludes the Agribusiness Accountability Project, "Del Monte saves 47 percent of canning pineapple there rather than in the U.S. Del Monte makes big savings. The American consumer does not, for regardless of where it is produced, consumers pay the same price for a can of Del Monte pineapple."

When a multinational like Del Monte abandons a community, it never bears the costs. The company will simply deduct the costs relating to the closing of its Molokai, Hawaii plantation operations from its federal taxes as a business expense. The Hawaiian workers are not so lucky, though. Estimates are that on the island of Molokai alone the unemployment rate could rise to 60 percent which would in turn have a tremendous "ripple" effect on thousands more Hawaiians.

Another major subsidy is the foreign tax credit. This credit allows American-based multinationals to subtract taxes paid to foreign governments dollar for dollar from their tax liability. That means, in effect, that American taxpayers are footing the bill for the foreign taxes of multinational corporations.

Advertising--The food industry currently spends $4 billion a year on advertising, says the Agribusiness Accountability Project. And not only do the corporations pass the cost of pushing "Heartland" versus "Kaptain Krunch" versus "Count Chocula" directly to the consumer in the form of higher prices, they also write advertising off their income as a business expense.

That's what they mean when they say "It pays to advertise." Even the money that the corporations spend in Washington to persuade Congress and the IRS to allow such write-offs, can be written off.

Clearly the end result of this government-corporate colluion to monopolize the food industry means nothing but bad news for most Americans. In the rush for profits, food quality has been sacrificed. Inexpensive chemical additives take the place of the good flavor that only nature can produce, and often make our food even dangerous to eat. Take for instance, the carcenogenic qualities of Red Dye no.2, found in countless food products.

Fresh produce is developed with an eye to withstanding the steel fingers of mechanical harvesters, not for taste. Hard, grainy and tasteless tomatoes are reddened with a gas spray while being shipped over vast distances. The food monopolies have also caused the loss of jobs both through their moves to foreign countries where labor is cheaper, and their emphasis on mechanization-on the land, in the processing plants and the supermarkets.

On top of all this, food prices rise when corporations are powerful enough to manipulate costs on all levels of food production. According to a confidential study by the Federal Trade Commission staff in 1972, 13 food lines are overpriced by $2.1 billion because of monopoly power.

The study, revealed in "F.T.C, and Phase II: The McGovern Papers," by Paul D. Scanion, (published in the "Antitrust Law and Economics Review), also revealed that monopoly power in the farm machinery industry added an extra $251 million to the price at the retail level.

Commented the Agribusiness Accountability Project, "The virtually unhampered capacity of huge corporations to vertically integrate, to attract capital, to advertise and to draw government subsidy is enough to overwhelm farmers, workers and consumers."

(For more information from the Agribusiness Accountability Project, write to 1000 Wisconsin Ave., NW, Washington D.C. 20007, (202)-338-5365. For the URPE Food Fact Sheets send $2 to Batya Weinbaum, 301 W. 108th St., No. 10E, New York, N.Y. 10025; (212)-866-6398.)