NFU ANNOUNCES FINDINGS OF NEW STUDY ON AG CONCENTRATION

For Immediate Release: February 10, 1999

For more information:
Marilyn Wentz (Denver)
303-338-2535
Erika Hovland (Washington)
202-314-3104

NFU Announces Findings of New Study on Agricultural Concentration
Shows Network of Firms Dominating Food System, Threatening U.S. Food Security

WASHINGTON- A small number of dominant "clusters" of firms control the
decision-making throughout all levels of the U.S. food chain, threatening
America's system of independent family farms and ranches, according to a new
report unveiled today by the National Farmers Union (NFU).

The study, prepared by Dr. William Heffernan, a rural sociologist at the
University of Missouri, documents how linkages in the food system, through
alliances, joint ventures, partnerships, mergers and other relationships, have
formed a complex network of "clusters" of firms. Each cluster is a vertically
integrated "food chain," controlling the system from the gene to the
supermarket shelf.

"The study reveals the complex web of relationships among a handful of firms
in the food chain," said NFU President Leland Swenson. "The trend toward a
privately centralized food system puts our food security in great jeopardy.
Food is different than other goods and services, and it would be dangerous to
permit a few major firms to control decision making throughout the entire food
chain. This study should compel Congress to take action to ensure the
industry remains competitive."

The study details the relationships forming the three major clusters-
Cargill/Monsanto, ConAgra, and Novartis/ADM-which now dominate the food
system. Some of the studies findings include:

---The complexity of the linkages in the system undermines market competition
and makes it difficult to measure. The network of relationships is creating a
seamless system with little market transparency along the various stages of
the food system. Because of the complexity, a firm that does not hold a
majority share of a specific market may still have great decision-making power
within the food chain.

---Technological advances are accelerating the process of vertical
integration. Biotechnology and the terminator gene have put the farmer at the
mercy of the food cluster for seed to plant the crop. Also, precision
farming's global positioning system separates management from the production
of agriculture. With this technology, it is possible for "managers" in
distant offices to make decisions about farm production, while producers
simply become laborers.

---The new structure threatens independent producers. The clusters influence
opportunities all along the food chain-from production inputs to global trade-
which severely hampers producers' ability to earn a fair return on their
product. It also erodes the independence of producers by shifting major
decision-making to a handful of firms.

---The new structure is harming rural communities because corporate returns
are reinvested in the firm, rather than in local economies where the goods are
produced.

The study was unveiled at a Capitol Hill news conference. The full text of the
study can be found on NFU's website at www.nfu.org.