http://www.multinationalmonitor.org:80/mm2008/112008/weissman.html

Multinational Monitor
NOV/DEC 2008
VOL 29 No. 3
The System Implodes: The 10 Worst Corporations of 2008
by Robert Weissman

AIG
Cargill
Chevron
CNPC
Constellation Energy
Dole
General Electric
Imperial Sugar
Philip Morris Int’l.
Roche
 
2008 marks the 20th anniversary of Multinational Monitor’s annual list of the 10 Worst Corporations of the year.

In the 20 years that we’ve published our annual list, we’ve covered corporate villains, scoundrels, criminals and miscreants.
We’ve reported on some really bad stuff — from Exxon’s Valdez spill to Union Carbide and Dow’s effort to avoid responsibility
for the Bhopal disaster; from oil companies coddling dictators (including Chevron and CNPC, both profiled this year) to a bank
(Riggs) providing financial services for Chilean dictator Augusto Pinochet; from oil and auto companies threatening the future
of the planet by blocking efforts to address climate change to duplicitous tobacco companies marketing cigarettes around the
world by associating their product with images of freedom, sports, youthful energy and good health.

But we’ve never had a year like 2008. 

The financial crisis first gripping Wall Street and now spreading rapidly throughout the world is, in many ways, emblematic of the
worst of the corporate-dominated political and economic system that we aim to expose with our annual 10 Worst list. Here is how.
... [snip]

Cargill: Food Profiteers

The world’s food system is broken.                                   
Or, more accurately, the giant food companies and their allies in the U.S. and other rich country governments, and at the International
Monetary Fund and World Bank, broke it.

Thirty years ago, most developing countries produced enough food to feed themselves [CHECK]. Now, 70 percent are net food importers.

Thirty years ago, most developing countries had in place mechanisms aimed at maintaining a relatively constant price for food commodities.
Tariffs on imports protected local farmers from fluctuations in global food prices. Government-run grain purchasing boards paid above-market
prices for farm goods when prices were low, and required farmers to sell below-market when prices were high. The idea was to give farmers
some certainty over price, and to keep food affordable for consumers. Governments also provided a wide set of support services for
farmers, giving them advice on new crop and growing technologies and, in some countries, helping set up cooperative structures.

This was not a perfect system by any means, but it looks pretty good in retrospect.

Over the last three decades, the system was completely abandoned, in country after country. It was replaced by a multinational-dominated,
globally integrated food system, in which the World Bank and other institutions coerced countries into opening their markets to cheap
food imports from rich countries and re-orienting their agricultural systems to grow food for rich consumers abroad. Proponents said the
new system was a “free market” approach, but in reality it traded one set of government interventions for another — a new set of rules
that gave enhanced power to a handful of global grain trading companies like Cargill and Archer Daniels Midland, as well as to seed
and fertilizer corporations.

“For this food regime to work,” Raj Patel, author of Stuffed and Starved, told the U.S. House Financial Services Committee at a May hearing,
“existing marketing boards and support structures needed to be dismantled. In a range of countries, this meant that the state bodies that
had been supported and built by the World Bank were dismantled by the World Bank. The rationale behind the dismantling of these institutions
was to clear the path for private sector involvement in these sectors, on the understanding that the private sector would be more efficient
and less wasteful than the public sector.”

“The result of these interventions and conditions,” explained Patel, “was to accelerate the decline of developing country agriculture. One of
the most striking consequences of liberalization has been the phenomenon of ‘import surges.’ These happen when tariffs on cheaper, and
often subsidized, agricultural products are lowered, and a host country is then flooded with those goods. There is often a corresponding
decline in domestic production. In Senegal, for example, tariff reduction led to an import surge in tomato paste, with a 15-fold increase
in imports, and a halving of domestic production. Similar stories might be told of Chile, which saw a three-fold surge in imports of vegetable
oil, and a halving of domestic production. In Ghana in 1998, local rice production accounted for over 80 percent of domestic consumption.
By 2003, that figure was less than 20 percent.”

The decline of developing country agriculture means that developing countries are dependent on the vagaries of the global market. When
prices spike — as they did in late 2007 and through the beginning of 2008 — countries and poor consumers are at the mercy of the global
market and the giant trading companies that dominate it. In the first quarter of 2008, the price of rice in Asia doubled, and commodity
prices overall rose 40 percent. People in rich countries felt this pinch, but the problem was much more severe in the developing world.
Not only do consumers in poor countries have less money, they spend a much higher proportion of their household budget on food — often
half or more — and they buy much less processed food, so commodity increases affect them much more directly. In poor countries, higher
prices don’t just pinch, they mean people go hungry. Food riots broke out around the world in early 2008.

But not everyone was feeling pain. For Cargill, spiking prices was an opportunity to get rich. In the second quarter of 2008, the company
reported profits of more than $1 billion, with profits from continuing operations soaring 18 percent from the previous year. Cargill’s 2007
profits totaled more than $2.3 billion, up more than a third from 2006.

In a competitive market, would a grain-trading middleman make super-profits? Or would rising prices crimp the middleman’s profit margin?

Well, the global grain trade is not competitive.

In an August speech, Cargill CEO Greg Page posed the question, “So, isn’t Cargill exploiting the food situation to make money?” Here is
how he responded:

“I would give you four pieces of information about why our earnings have gone up dramatically.

The demand for food has gone up. The demand for our facilities has gone up, and we are running virtually all of our facilities worldwide
at total capacity. As we utilize our capacity more effectively, clearly we do better.
Fertilizer prices rose, and we are owners of a large fertilizer company. That has been the single largest factor in Cargill’s earnings.
The volatility in the grain industry — much of it created by governments — was an opportunity for a trading company like Cargill to make money.
Finally, in this era of high prices, Cargill over the last two years has invested $15.5 billion additional dollars into the world food system. Some
was to carry all these high-priced inventories. We also wanted to be sure that we were there for farmers who needed the working capital to
operate in this much more expensive environment.
Clearly, our owners expected some return on that $15.5 billion. Cargill had an opportunity to make more money in this environment, and I think
that is something that we need to be very forthright about.”
OK, Mr. Page, that’s all very interesting. The question was, “So, isn’t Cargill exploiting the food situation to make money?” It sounds like your
answer is, “yes.”

Chevron: “We can’t let little countries screw around with big companies”

There are lots of thoughtful comments on corporate citizens in this article. Hope you read it all. Global trade might work without
amoral corporate pirates running it ...

     As a Maryland resident, I just want to comment that the story of what happened with Constellation Energy is much more complex than this article would lead one to believe.  Much of the blame for whatever problems ensued belong to our Legislature, both back in 1999 and in the last couple of years.  And, although no one likes to face up to increases in the cost of electricity, the truth is that Maryland residents got a hugh break by having rates frozen at 1993 levels from 1999 until 2007.  It should have been no surprise that when it came time to purchase that power at market prices at the end of the period it was capped, there would be a very large increase.  The truth is, at least for us, the so-called 70 some percent increase has never really materialized in our actual bills.  They have been higher, but not that high.  Yes, Warren Buffet most probably is getting a bargain by buying out Constellation Energy, but he is also saving a company that the Public Service Commission and politicians of Maryland have done their utmost to try to ruin.  This company has been a good corporate citizen in this state for years and years and has always contributed generously to many charitable causes.  There is always - the rest of the story.....   BTW, I have no personal interest in Constellation Energy other than as a consumer in the State of Maryland.