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THE AGRIBUSINESS EXAMINER #435

OVERVIEW:

COMMENTARY: "THE FAULT, DEAR BRUTUS, IS NOT IN OUR STARS BUT IN OURSELVES" FAT DAYS MAY BE OVER FOR FARM SUBSIDIES By Richard Wolf THE TRUE LIMITS OF MANUFACTURERS AND COMMERCE By Thomas Jefferson CONGRESS FAILS TO SUPPORT FAMILY FARMERS AND RANCHERS By National Farmers Union SMITHFIELD'S PROFIT PLUNGES AS MEAT GLUT HURTS PRICES By Associated Press A "RAW MATERIALS PROCUREMENT AND DISTRIBUTION SYSTEM" By Fred Stover WAL-MART SAYS STORE UPGRADES ARE PAYING OFF By Emily Kaiser

COMMENTARY: "THE FAULT, DEAR BRUTUS, IS NOT IN OUR STARS BUT IN OURSELVES"

What does the former fear-mongering, raid-bating Republican U.S. Senator from Wisconsin Joseph R. McCarthy and the "enemy within" U.S. agriculture --- the American Farm Bureau Federation --- have in common ???

Aside from the fact that the former sought to use anti-communism as a political platform to further his own career and the later exploited it in an effort preserve corporate agribusiness's chokehold on the American farmer they both sought to discredit and gag one of our nation's truly great journalists --- Edward R. Murrow.

The McCarthy-Murrow story has drawn nationwide attention recently with the release of the prize-winning, critically acclaimed film "Good Night, and Good Luck."

What most American don't realize, however, is that it was only a few short years after McCarthy had attacked Murrow on national television, questioning his loyalty and integrity, that the Farm Bureau launched a similar barrage of invective against the CBS reporter for his legendary documentary "Harvest of Shame."   

It was the early 1960's that the public's awareness of the plight of farm laborers not only in California, but throughout the United States, was fueled by the increasing attention the media was devoting to the subject. Newspaper reports and incisive radio reports such as those by Edward P. Morgan on the continuing struggles of migrant workers were becoming more frequently heard throughout the nation.

But, it was on the night after Thanksgiving, 1960 that Morrow, standing in a Florida field, tieless and in shirt sleeves, introduced to a national TV audience the shocking story of America's "Harvest of Shame."

"These are the forgotten people, the underprotected; the undereducated; the underclothed; the underfed . . . . This is Belle Glade, Florida. This is a shape-up for migrant workers. One farmer looked at this and said, `We used to own our slaves, now we just rent them.'"

Conceived by Fred W. Friendly, produced by David Lowe and filmed by Marty Barnett, this land-mark documentary evoked immediate nation-wide attention and outrage. In her brilliant biography, Murrow: His Life and Times, A.M. Sperber recalls:

"It was clear cut advocacy journalism and Murrow's skillful narration, ranging from understated irony to flaming anger, carried along Lowe and Barnett's portrait gallery of pickers, farmers, lobbyists, missionaries, and politicians, from the introductory voice-over juxtaposed against the early-morning `shape-up' for the hired help (`This . . . has nothing to do with Johannesburg or Capetown . . . This is Florida . . . These are citizens of the United States') to the closing appeal for action in the muckraking tradition of Ida Tarbell and Lincoln Steffens."

Some of the program's critics wondered why Murrow, for his part, was so invariably pro-union? "Because I hoed corn in a blazing sun," he once answered such an accusation. Yet, despite the praiseworthy attention the program received, it was as Ms. Sperber tells us, effectively Murrow's last hurrah,

"the final round of Times editorials, the praises and damnation in the press and Congress, the anger of the interest groups, the squirming by the sponsors (two executives dispatched to Florida had virtually apologized), as well as the public calls to action that would probably fizzle."

Even before the program aired Murrow and "Harvest of Shame" was being denounced.

As Sandy Berger, in his expose of the AFBF in the book "Dollar Harvest:" recounts:

"The attack on the program was led by the American Farm Bureau Federation. The AFBF board of directors passed a widely circulated resolution blasting the  broadcast as "highly colored propaganda."

The AFBF issued a critique  of the program, the commentator, the producer and the network and supplied it to several Congressmen and Senators for use on Capitol Hill. The essence of the critique was that the show had been a total distortion of the "real" migrant who, the Bureau claimed, was actually doing quite well."

The latter point emphasized by the then current AFBF president Charles Shuman, who was interviewed on the program. "I think that most social workers will agree that's its better for a man to be employed, even if his capacity is such as to limit his income. And we take the position that it's far batter to have thousands of these folks who are practically unemployable earning some money, doing some productive work, for at least a few days in the year."

After the broadcast of "Harvest of Shame" the attacks continued by agribusiness upon Murrow as was evidenced when he left CBS-TV and was nominated by President John F. Kennedy to serve as the new director of U.S. Information Agency (USIA).

While the majority of the Senate Foreign Relations Committee concurred in the nomination, Florida Democrat Spessard Holland of Florida, who had close ties to the state's citrus industry which was particularly enraged by the program, threatened to oppose the nomination unless Murrow blocked the showing of the program on the BBC.

Although the BBC eventually would air the program, Murrow himself opposed its showing, but for entirely different reasons. As Sperber notes Murrow himself had been  "jolted by the sale to England of the program --- a muckraking effort, as he conceived it, to move Americans to action, not for merchandising abroad to turn a buck, a view he would retain long after the incident was past."

In the immediate years following the CBS-TV report additional efforts to document the continuing saga of farm workers continued. One such effort was Truman Moore's The Slaves We Rent, an explosive report not only devoted to the living, working and health conditions of the over two million men, women and children who annually harvested the nation's crops, but also a book which contained a damning overview of the system that created and continues to this day to tolerate such sub-human conditions.

But, as Murrow himself often reminded others, television could only hold the mirror, the idea was to hold it up until something happened: a seven-day-a-week job, defending the Republic and pointing up the warts.

It is worth recalling that when Murrow leveled his attack on Joseph McCarthy in 1954 he ended his program by noting that the Junior Senator of Wisconsin had "caused alarm and dismay amongst our allies abroad and given considerable comfort to our enemies" and then in words that could well be applied several years later to his "Harvest of Shame" detractors, he added: "And whose fault is that? Not really his. He didn't create this situation of fear, he merely exploited it and rather successfully.

"Cassius was right.`The fault, dear Brutus, is not in our stars, but in ourselves.'

"Good night, and good luck."

 FAT DAYS MAY BE OVER FOR FARM SUBSIDIES By Richard Wolf               USA TODAY June 7, 2006

CORDOVA, Maryland --- Richard Hutchison says farmers like him and his brothers help make Americans "bigger and taller and wider," so he has no beef accepting government payments to grow corn, soybeans and barley. But an effort in Congress to expand those payments unified opponents and ended in a rare setback, marking what could be a turning point in U.S. farm policy.

The Bush administration, the House of Representatives and a loose alliance of liberals and conservatives helped quash a Senate plan to add nearly $4 billion in farm aid for droughts, floods and fuel costs to a $94.5 billion spending bill for war funding and hurricane recovery. The White House said it would have complicated world trade talks and driven up the federal deficit. Instead, in a deal announced Wednesday, farmers will receive only $409 million, about one-tenth of what farm-state senators sought.

Even some farmers said one provision, to boost government payments 30% to offset higher fuel prices, went too far. "Agriculture is the backbone of this country, but when you start giving out fuel adjustments, where does that really stop?" said Buddy Hance, who heads the Maryland Farm Bureau.

Experts on farm policy say the decision to slash farmers' money signals a dramatic change. "I think it's an indication of their waning political support in Congress," says Cal Dooley, a former Democratic congressman who now heads the Food Products Association.

Farm lobbyists say the year is young. "If we don't get disaster assistance now, we'll get it before the election," says Mary Kay Thatcher of the American Farm Bureau. Still, National Farmers Union president Tom Buis is concerned by the opposition. "Rural America needs to wake up," he says.

Farm subsidies were established during the Great Depression and have been a favored form of federal spending ever since. In the Senate, every lawmaker has farmers back home, albeit in dwindling numbers --- two percent of the population is tied to farming today, compared with 25% in the 1930s.

The last farm bill, passed in 2002, was among the most generous. Subsidies hit a record $23 billion in 2005. And disaster payments were added in 16 of the past 17 years.

"The politics of it is pretty simple," says Douglas Holtz-Eakin, an economist at the Council on Foreign Relations and former director of the Congressional Budget Office. "There are farmers everywhere. They're the ultimate coalition."

In recent years, that coalition has cracked. Traditional commodities such as wheat and corn are subsidized, while farms that grow fruit and vegetables or raise livestock are left out. "Small farmers and ethnic minority farmers get virtually nothing," says Antonio Gonzalez, president of the William C. Velasquez Institute, which conducts research on Latino issues.

"The farm bloc isn't what it used to be," says Sen. Byron Dorgan, Dem.-North Dakota, who proposed the $4 billion farm package to cover weather-related disasters and rising fuel costs.

Out on Maryland's Eastern Shore, between the Washington and Baltimore exurbs and Atlantic Ocean beaches, farmers such as Hutchison say government payments are crucial. "The farm program is a 'cheap-and-abundant-food program,' " Hutchison said during a break after giving shots to hundreds of hogs at his 3,900-acre farm.

Alan Schmidt and his brother Hans till 1,500 acres in Sudlersville, Maryland. "I can understand both sides of the issue," Schmidt says. He doesn't like relying on subsidies, but he doesn't know how to get by without them. "I have to take what the market will give me," he says. "I can't add a surcharge to a bushel of corn."

Today, U.S. farm policy faces a turning point brought on by changes in trade and energy. Ongoing World Trade Organization talks threaten U.S. and European farm subsidies, on the grounds that they penalize farmers in poorer countries. Oil prices are fueling interest in alternative energy sources such as ethanol, which could help farmers if they lose government payments.

"At the end of the day, federal support for agriculture is moving away from these direct subsidies," says Bill Hoagland, an expert on agriculture and budget policy for Senate Majority Leader Bill Frist, Rep.-Tennessee "It's a confluence of events, global as well as domestic."

The inequities of government subsidies have led Agriculture Secretary Mike Johanns to favor changes. In more than 20 "listening sessions" with farmers across the country, he heard demands from producers of unsubsidized crops and found deep differences within the farm community.

Opponents cite several reasons why existing farm subsidies need to change:

* Some call them unaffordable. Pat Toomey, a former Republican congressman who heads the fiscally conservative Club for Growth, calls them "Moscow on the Mississippi."

* Some call them protectionist. Groups such as Oxfam and Bread for the World, as well as Irish rock star Bono, say American and European subsidies help flood the world market with inexpensive crops, holding back farmers in Third World countries.

* Some call them discriminatory. Hoagland says 93% of the payments go to farmers who account for just 21% of farm income.

Perhaps the most influential member of the alliance is the Environmental Working Group, which maintains a computerized database of farm subsidies by size of farm, type of crop, even congressional district. The data help foment discord among farmers by detailing who gets subsidies and who doesn't. By the group's analysis, 54 mostly commercial farms would have collected more than $100,000 each under the Senate bill; more than 300,000 small farmers would have received less than $100 apiece.

"One by one, we can't threaten the current regime," says Rick Swartz, of the Alliance for Sensible Agriculture Policies. By joining together, he says, "then the politics begin to look a little bit different."

 THE TRUE LIMITS OF MANUFACTURERS AND COMMERCE By Thomas Jefferson      Letter to John Jay 1809

"Manufacturers, sufficient for our own consumption, of what we raise the raw material (and no more). Commerce sufficient to carry the surplus produce of agriculture, beyond our own consumption, to a market for exchanging it for articles we cannot raise (and no more). These are the true limits of manufactures and commerce. To go beyond them is to increase our dependence on foreign nations, and our liability to war. These three important branches of human industry will then grow together, and be really handmaidens to each other."

 CONGRESS FAILS TO SUPPORT FAMILY FARMERS AND RANCHERS By National Farmers Union June 8, 2006

The House-Senate conference committee on the 2006 Emergency Supplemental bill failed to include meaningful disaster assistance for farmers and ranchers in its committee report. Senate conferees pushed for a version of the bill consisting of $3.9 billion in relief funding, but House negotiators stripped it down to $409 million.

"We're very disappointed that the conference committee did not include weather-related disaster assistance for producers who have suffered severe economic blows due to circumstances beyond their control," NFU President Tom Buis said.

Sen. Byron Dorgan, Dem.-North Dakota, offered an amendment during the conference committee meeting to maintain the senate-passed $3.9 billion for agriculture losses. That amendment was rejected by the House conferees working in consort with President Bush, who promised to veto the proposed assistance for producers.

"Despite the recent setback, NFU will continue to pursue disaster assistance legislation to help farmers who have suffered tremendous economic losses through no fault of their own," Buis said.

 SMITHFIELD'S PROFIT PLUNGES AS MEAT GLUT HURTS PRICES By Associated Press June 8, 2006

RICHMOND, Virginia --- Smithfield Foods Inc., the world's largest pork processor, on Thursday reported its profit plunged 99% in its fourth quarter as bloated meat inventories in the U.S. hurt prices. Its shares were off nearly five percent in midday trading.

Industry observers have blamed the oversupply on bird-flu fears that have softened international demand for chicken and have hurt domestic prices of other meats. Evolving diet trends --- a move away from high-protein, low-carb meals --- may also be playing a role, though a smaller one.

"This past quarter was difficult for many in the protein industry, including ourselves," said Joseph W. Luter III, Smithfield's chief executive officer.

Smithfield, based in Smithfield, Virginia, said it earned $1.1 million, or one cent a share, in the quarter ended April 30. That is down from $85.4 million, or 76 cents a share, in the year-earlier period. Revenue decreased 8% to $2.68 billion from $2.90 billion.

The current quarter includes a pretax charge of $10 million, or five cents a share, tied to the restructuring of the company's East Coast pork-processing operations. Income from continuing operations --- excluding its to-be-sold Gorges/Quik-to-Fix Foods unit --- was $4.7 million, or four cents a share.

 A "RAW MATERIALS PROCUREMENT AND DISTRIBUTION SYSTEM" By Fred Stover        U.S. Farm News October, 1985

"The biggest problem farmers have is that they have to sell their products through a market place that is really a `raw materials procurement and distribution system;' a system that is designed to buy raw materials as cheaply as possible and resell the products on the basis of all the traffic will bear --- regardless of cost, efficiency, supply, demand or fair market value."

Fred Stover, was President of the U.S. Farmers Association

 WAL-MART SAYS STORE UPGRADES ARE PAYING OFF By Emily Kaiser       Reuters New Service

June 2, 2006

FAYETTEVILLE, Arkansas --- Wal-Mart Stores Inc. on Friday tried to convince skeptical Wall Street analysts that its efforts to remodel stores, add more upscale merchandise and reduce excess inventory were paying off.

The world's biggest retailer, whose share price has been stuck in a rut for some seven years, said it was committed to U.S. expansion and was on pace to meet its goal of 270 to 280 new supercenters this year, including seven more in California, where many communities have tried to block Wal-Mart stores.

Some analysts have called on Wal-Mart to slow down its U.S. growth because of falling returns on investment, and advised clients to buy shares of rival Target Corp. because its sales and profit are growing faster.

"All of our new stores overall are doing very well," John Menzer, vice chairman and head of the U.S. operations, said during an analyst meeting following the retailer's annual shareholder meeting here. "We have now approved 1,400 stores in our pipeline for future expansion."

Wal-Mart, which currently has more than 3,800 U.S. stores, has been adding fashionable clothing, high-end electronics and organic food to its stores in the hope of appealing to a broader range of customers and revive the double-digit profit growth that once made the stock a Wall Street darling.

The retailer also asked suppliers to cut back on inventory as it tries to clean up what it calls "clutter" in its stores. The moves prompted several suppliers to warn of weaker than expected sales or profits in recent months.

Wal-Mart said the changes under way were helping to improve return on investment at its key U.S. discount stores division, which had reported slumping returns for the past three years.

Wal-Mart has said it expects return on invested capital to flatten during the current fiscal year, which ends in January, and then improve the following year.

Chief financial officer Tom Schoewe said the company was "on the path to meet or exceed that objective," after a strong performance in the recently ended first quarter, when operating profit grew faster than sales and inventory levels fell.

Wal-Mart acknowledged that its customers were cutting back on shopping in the face of rising gasoline prices. Its May sales at stores open at least a year grew at less than half the rate of Target's, whose customers are typically wealthier and better equipped to absorb rising gasoline prices.

"Obviously we're not happy with our (comparable-store sales) performance," said Eduardo Castro-Wright, president of Wal-Mart's U.S. discount stores. "Our customer, with these gas prices, has reduced the number of shopping trips."

But he added that when customers do go to stores, they are stocking up. That should play right into Wal-Mart's strength because it carries everything from toothpaste to tennis balls, making it easier for customers to make one-stop stock-up trips, Castro-Wright said.

The challenge is to clean up the stores and improve the merchandise to keep those shoppers coming back. The company already draws some 130 million U.S. shoppers to its stores each week, but sees opportunity among fast-growing population segments including affluent suburbanites, baby boomers and Hispanics.

Wal-Mart recently opened what it calls a "laboratory" store in Plano, Texas, a wealthy suburb where the retailer is testing high-end features such as a sushi bar, gourmet food, and a wider selection of wine as it tries to figure out how to please wealthier shoppers.

Reaching those customers could prove tricky, however. Wal-Mart faces fierce opposition to its expansion efforts in many major cities including New York and Los Angeles. A suburb near San Francisco recently voted to invoke eminent domain to block Wal-Mart from building a store near its waterfront.

EDITOR'S NOTE:

* Unfortunately, due to the recent absence of THE AGRIBUSINESS EXAMINER and THE CALAMITY HOWLER contributions to the work of these two newsletters fell off dramatically. It is for that reason that this SPECIAL APPEAL is being made to readers for their continued support. Checks should be made out to A.V. Krebs and mailed to P.O. Box 2201, Everett, Washington 98213-0201.

* A limited number of inscribed copies of THE CORPORATE REAPERS: The Book of Agribusiness (Essential Books: 1992) are now available from the author. Checks for $25.00 (which includes postage and handling) should be made out to A.V. Krebs and mailed to P.O. Box 2201, Everett, Washington 98213-0201.

* Those readers interested in the founding of what has evolved into the United Farm Worker's (UFW) and the role of the churches and individual clergy in supporting Cesar Chavez and the union's early years may wish to know that editor recently authored the online book LA CASUSA: And the Word Was Made Flesh at http://farmworkermovement.org/ click "Essays," click "Manuscripts."