In what appears to be the final chapter of a public relations disaster for the U.S. cattle industry the 5th U.S. Circuit Court of Appeals has upheld a 1998 verdict by a federal jury that rejected cattlemen's claims against talk show host Oprah Winfrey, her production companies Harpo Productions Inc. and King World Productions and family farm activist Howard Lyman.
The court made it clear that Winfrey's April 16, 1996, television program on the subject of mad cow disease did not give false information about it or defame cattle producers. On that program Lyman observed that processed cattle in cattle feed -- a practice later banned in the U.S. -- could spread mad cow disease to people. The brain-destroying disease is suspected of killing 23 people in Great Britain.
Texas cattle producer Paul F. Engler and Cactus Feeders, Inc. sought to prove that U.S. cattle prices and cattle futures dropped drastically after the show aired.
Engler, president of Cactus Feeders and six other Texas cattle businesses, filed the $6.7 million lawsuit against Winfrey, the amount of money being what Engler claims he lost in the cattle market due to remarks made by Winfrey and Lyman on the show in question. Plaintiff's in the case in addition to Engler and Cactus Feeders included Texas Beef Group; Perryton Feeders Inc.; Maltese Cross Cattle Co.; Bravo Cattle Co.; Alpha 3 Cattle Co.; and Dripping Springs Inc.
In a 3-0 decision with Judge Edith Jones concurring the court said the food safety claims expressed by Lyman were based on facts and could not be challenged under business disparagement law. "There is little doubt that Howard Lyman and the Winfrey show melodramatized the 'Mad Cow Disease' scare," the court said. But, the court added, the cattlemen who sued Winfrey did not prove that they were harmed.
In Engler & Co.'s suit against Winfrey and Lyman and in the news reports of the trial readers were constantly being told that Engler claimed to have lost millions (the "Oprah crash") in the cattle market owing to Winfrey and Lyman's discussion of the possibility of mad cow disease in the U.S.
When one examines the nation's cattle market, however, for a period of time both after and before the April 16, 1996 show a rather different picture emerges.
The week of the program (April 15-April 22) the then-current futures contract on feeder cattle dropped 2.5 percent; the week following the program (April 22-April 29) the same contract dropped 3 percent, and the week following that (April 29-May 6) it rebounded and showed a 7.4 percent gain. However, the week before the program (April 8-April 15) the same contract dropped 3.8 percent, the largest drop of the entire month's period in question.
Likewise, the week of the program (April 15-April 22) the then-current futures contract on live cattle dropped 3.9 percent; the week following the program (April 22-April 29) the same contract dropped 2.1 percent, and the week following that (April 29-May 6) it also rebounded and showed a 5.6 percent gain. However, the week before the program (April 8-April 15) the same contract dropped 4.8 percent, again the largest drop of the entire month's period in question.
It was expected that the 1998 trial would be a landmark constitutional test of so-called veggie libel laws, which are in effect in 13 states, including Texas.
U.S. District Judge Mary Lou Robinson ruled that Winfrey and her co-defendants could not be sued under the state's food disparagement law, meaning the cattlemen had to prove that Winfrey deliberately or recklessly made false statements with the intent to hurt the cattle business.
[For more on this issue, see Charles Levendosky's column on page 21.]
In a blistering attack on IBP, the U.S.'s largest meat packer, which has been called the nation's number one "corporate outlaw," Nebraska state Senator Jon Bruning told a company representative "I think your company has behaved shamefully and despicably in the way you've run from the law for years."
Bruning's charges came during a recent Nebraska Legislature's Natural Resources Committee hearing considering a measure to require covers on wastewater lagoons at state meatpacking plants to control toxic emissions.
Bruning of Sarpy County led the criticism, saying IBP had spent millions of dollars in mounting legal battles rather than addressing health and odor concerns caused by its Dakota City, Nebraska, slaughterhouse and wastewater treatment plant. He also castigated IBP for moving its headquarters and executives to Dakota Dunes, South Dakota, away from the company's own sulfur emission odors, comparing an IBP lawyer's unwillingness to say such emissions caused health problems to the cigarette industry's denials that cigarette smoking is linked to cancer.
"I am appalled at IBP's behavior," Bruning said. "If I get re-elected and you do not follow up on addressing this problem, I promise you I will reintroduce this legislation year after year after year."
People living near the Dakota City plant, the Omaha World Herald's Paul Hammel reports, have complained for years about a rotten-egg smell and suspected health problems likened to emissions from the IBP facility.
"I'm working on three minutes of sleep since 2 a.m. because of the hydrogen sulfide that invaded my home last night," David Krogh of Dakota City told committee members. Krogh said he and his pregnant wife are being forced to sell their custom-built home along the Missouri River, just south of the IBP plant, because of the emissions. He said the emissions cause severe headaches.
"I hate to move but I have to think about the health and welfare of my family," said Krogh, a member of a citizens group that has called on IBP to reduce emissions.
A federal health organization, the Agency for Toxic Substances and Disease Registry, has said monitoring showed "the highest levels of hydrogen sulfide we have seen anywhere in the country" near the plant. In January, the U.S. Department of Justice filed a 48-page lawsuit against IBP, alleging that the company has violated both state and federal air- and water-pollution laws.
In 1997, Hammel recounts, IBP proposed spending $13 million to build new, covered waste lagoons and take other steps to curb pollution and expand its tannery operation. The plan, however, has been held up in a battle with the Nebraska Department of Environmental Quality. IBP claims that excessive red tape has held up state approval of its plan, while the Department of Environmental Quality has said IBP needs to correct its wastewater problems before embarking on a plant expansion.
Krogh's brother, Rod, charges that IBP had held the communities of South Sioux City and Dakota City as hostage, refusing to move ahead with the new pollution controls until it gets permission for its tannery expansion -- despite the environmental department's encouragement to install the pollution controls. Krogh said local residents want to see pollution curbs in place before supporting an expansion that would pump more toxins in the air.
Sheila Hagen of Dakota Dunes, South Dakota, vice president and general counsel for IBP, in disputing Bruning's allegations, said the new lagoons and the tannery expansion are part of a joint project and cannot be separated and built at different times.
Any lingering questions as to how U.S. trade policy is formulated and executed has once again been answered with President Bill Clinton's recent appointment of Cargill Chairman Ernest S. Micek to serve on the Asia-Pacific Economic Cooperation (APEC) Business Advisory Council (ABAC), an influential group of world business leaders that advises APEC on important issues.
The 21-member economies that make up APEC -- including China, Japan, Russia and the United States -- account for nearly half of global trade and population.
Micek is one of three U.S. members to sit on the council. He and Sy Sternberg, chairman, president and CEO of New York Life Insurance Co., were named on February 11 to join Paul Song, president and CEO of ARIS Corp. Micek and Sternberg succeed John F. Smith Jr., chairman and CEO of General Motors Corp., and J. Gary Burkhead, vice chairman of FMR Corporation, the parent company of Fidelity Investments.
"This is a tremendous opportunity to represent America's business interests in these important markets," said Micek, who joined Cargill in 1959. "I relish the chance to help lower overseas barriers on American goods and services and to work with APEC leaders in building a more environmentally sustainable and prosperous trading system."
Since its inception in November 1995, ABAC has issued several reports to APEC on a wide range of issues of importance to business. Several of these recommendations have been adopted -- including a proposal to create a regional open food system "where agricultural and food products could be traded more freely among APEC countries."
Micek is also chairman of the Emergency Committee for American Trade, a Washington, D.C.-based group comprised of the leaders of more than 50 of America's largest companies that together represent more than four million employees. He also serves on the President's Export Council and is a member of the U.S. board of the Pacific Basin Economic Council.
His appointment is only the latest in a long list of Cargill executives who have held key trade posts in recent past administrations, i.e., Cargill Corp. executives -- William R. Pearce and Daniel Amstutz -- who played such a key and profound role in fashioning U.S. and world trade policies in the past 30 years.
When the U.S. entered the 1970s it was faced with an economic crisis as the nation's balance of payments was worsening and the value of the dollar was plummeting the Nixon Administration, realizing the need to respond to this crisis, appointed a Presidential Commission on International Trade and Investment Policy, headed by Albert L. Williams, head of IBM's finance committee.
Corporate agribusiness was well represented by Edmund W. Littlefield, head of the Business Council and a board member of the Del Monte Corp., and Pearce, then a vice-president of Cargill Inc., who would come to play a prominent role on the Commission and would be responsible for writing much of its final report.
The Nixon's Administration's New Economic Policy (NEP) soon came to incorporated the Williams Commission's analysis and policy recommendations. Recognizing that there were costs to maintaining the U.S.'s philosophy of "economic imperialism," the report pointed out "many of the economic problems we face today grow out of the overseas responsibilities the U.S. has assumed as the major power of the non-communist world."
A major section of the Williams report was devoted to outlining a strategy for expanding U.S. food exports. The basis for this strategy was the principal of "comparative advantage." "Comparative advantage" was simply a means of describing an international division of labor structured around U.S. interests.
In 1972 as Peter Flanigan, the head of Nixon's Council on International Economic Policy, was imploring the USDA to develop a strategy for the upcoming General Agreement on Tariffs and Trade (GATT) negotiations, Cargill's Pearce was appointed the White House's special deputy trade representative. Flanigan's principal target (which would remain the basis of the U.S. negotiating position throughout the GATT negotiations) was the Common Agricultural Policy (CAP) of the European Common Market countries.
In the intervening years, the U.S., for its part, has sought to have all agricultural programs put "on the table," meaning that all government farm programs that impact price, production, consumption, or trade in any way be eliminated.
What the Reagan, Bush and Republican administrations sought and finally achieved in the 1996 "Freedom to Farm" bill was a plan to "decouple" so-called welfare-type payments to farmers for a seven year period while they "adjusted" themselves to a "free market" or more accurately what could be described as a "transition" out of agriculture.
One need look no further than the drafter of that original U.S. proposal -- Daniel Amstutz, another former Cargill vice-president and one-time chief agricultural trade negotiator for the United States -- to learn who its major beneficiaries were intended to be. The measure was also promoted around the globe by Cargill, the Fertilizer Institute and other corporate agribusiness groups who now stand to substantially benefit from a return to full-scale agricultural production and a cheap raw materials policy.
It should also be noted that when Pearce and Amstutz left the government they both returned to the Cargill corporate structure.
A.V. Krebs is director of the Corporate Agribusiness Research Project, P.O. Box 2201, Everett, Washington 98203-0201 avkrebs@earthlink.net http://www.ea1.com/CARP/