Food Production gamed by investor piracy
Corporate activism in the hands of the greedy is nothing short of piracy and pillage. Every dollar that they steal is paid by the consumer as part of the price of our basics. Add to this the cost of subsidies, advertising, packing and delivery, then it is plain to see that local food production could result in significantly lower food prices. But when corporate giants like ConAgra control the government, then corporate welfare creates unfair advantage.
Former chairman of Rothschild North America, James Lawrence, under the corporate facade of investment firm Jana, said Thursday it now has a significant stake in ConAgra Foods. Lawrence intends to profit his employer, Barry Rosenstein, by making use of leverage to force the break-up of this huge Omaha-based food manufacturer. Lawrence is also chairman of Great North Star LLC, an investment advisory service, and former chief financial officer of Unilever Plc and General Mills Inc.
Management says that cuts could include outsourcing and eliminating layers of management. The company employed around 2,500 in Omaha at the end of last year.
99% of U.S. households use ConAgra brand foods, mainly because ConAgra brands have a virtual monopoly of valuable space on supermarket shelves, something that newer competitors have difficulty obtaining. This insurmountable obstacle to free enterprise has manifested itself in a proliferation of outdoor local farmer’s markets throughout the United States. Whether or not this is the reason for ConAgra’s continual decrease in sales has not been proven.
The following has just been issued:
July 01 (Fitch) Fitch Ratings has affirmed the Long-term Issuer Default Ratings (IDRs) for ConAgra Foods, Inc. (ConAgra) and its subsidiary, Ralcorp Holdings, Inc. (Ralcorp) at ‘BBB-‘ and has affirmed ConAgra’s Short-term IDR at ‘F3’.
The Rating Outlook is Negative. Fitch views ConAgra’s announcement that it will exit the Private Brands operation and essentially unwind the Ralcorp acquisition (completed just two years ago) as a credit positive, and the company could use potential proceeds to pay down debt to bring leverage down to the low 3.0x range in the near term. However, ConAgra continues to face headwinds in its remaining branded business.
It is very important to note Jana’s list of three possible candidates to the ConAgra board in its filing with the Securities and Exchange Commission. Besides James Lawrence, listed is Brad Alford (retired chief executive of Nestle USA). and Diane Dietz who runs a consulting company and is former chief marketing officer of Safeway.
The Chicago Tribune reported that after Jana invested $300 million in Safeway, it demanded the grocery chain close 70 locations and lay off 6,000 workers. This should give a good idea of what’s in store for ConAgra workers and how the shutting down of business can result in hundreds of millions in profits for investors who produce absolutely nothing of value.
Jana’s principal owner is Barry Rosenstein, who made $140 million in a recent year without having produced anything. He started Jana Partners in 2001.
So how do they do it? The new CEO, Connolly said he would pursue aggressive cuts to operating expenses at ConAgra. “Our approach will be relentless,” Connolly said. “Everything is on the table. We just don’t tolerate waste.”
The media is portraying Jana as an ‘Activist investment group’. This is a new name for ‘Corporate Raider’, or what is basically another way to make money through crass destruction, even if what they are destroying is a much hated and resented monopoly on our access to food. However, it doesn’t have to work out that way.
An activist investor places members on the board to maximize growth and value. If the result of this activism is further job creation, improved product, additional companies being formed, and fair compensation packages, then good will result.
Corporate activism in the hands of greedy villains is nothing short of piracy and pillage. Every dollar that they make will be paid by the consumer as part of the price of our basic food.
What will be the result of the $17 billion ConAgra being broken into different pieces?The New York-based Jana Partners wouldn’t say exactly what it’s looking for, other than a general improvement in ConAgra’s stock performance. If this is obtained by selling the company in pieces, rather than increasing sales, that will mean a much smaller ConAgra. ConAgra’s branded foods business made up $7.3 billion of its $17.7 billion in fiscal 2014 sales.
A fourth quarter loss of $324 million, or 77 cents per diluted share, was posted a year ago . Due to an extra week in the fourth quarter of this year, fourth-quarter sales of $4.1 billion appeared to be up 3.7 percent from $3.96 billion a year ago. The extra week in this year’s fourth quarter created the appearance of about a 7 percent increase of sales across the company’s units, but this has not fooled the credit rating agencies.
In the corporate version of Austerity, even after the break off of ConAgra from its private-branding units, well over 2 billion dollars of debt will remain to be paid off.
Post the sale of the private brand business, ConAgra would have to pay down approximately $2.3 to $2.6 billion in debt to return gross leverage to the 3.0-3.2x range.July 01 (Fitch) Fitch Ratings
“The 2008 Farm Bill was estimated to spend $604.1 billion over 10 years, as calculated by the Congressional Budget Office,” Sen. Jim DeMint (R-S.C.) notes. “The 2012 Farm Bill is estimated to spend $969.2 billion over the next 10 years. That’s a whopping 60 percent increase!” In 2008, $173.5 million was spent on lobbying that year’s farm bill, most of it by international corporations eager to ensure that their subsidy gravy train wouldn’t get derailed.
This lobbying of the Farm Bill was the second-most lobbying money ever spent on any U.S. legislation, falling short only of the $250 million spent on Dodd-Frank.
Back in 2008, Coca-Cola spent $513,000 lobbying the Farm Bill; Pepsi spent $437,000 to keep snacks and sodas on the list of SNAP (food stamp) eligibility. This is a running battle, and big corporations are definitely winning.
[this excerpt is about how students are being exposed to propaganda that places the blame for budget deficits on the truly needy recipients of food stamps. It also explains why ConAgra chose to focus on the areas that receive the most tax subsidies, leaving the rest to small business.]
The farm bill encourages factory farming by making sure feed can be purchased for less than the price of growing it, giving factory farms billions of dollars in cost discounts every year.
A portion of this savings gets passed along to the American grocery-shopping public in the form of artificially cheap food that real farmers (those of us who have to pay for the true costs of production) simply cannot compete with. Anyone who shops at a conventional grocery store for factory farmed meat or processed foods is taking a government handout, not just the “welfare mothers.”
Any way you slice the pie, the Farm Bill affects these students, either because:
it sponsors (or fails to sponsor) programs that might help them get started on the land or in a food-related enterprise;
or because the policies of the bill greatly benefit agribusiness, thus making it tougher and tougher for family-scale farms to compete;
or because it results in a proliferation of processed, crappy foods that pollute our bodies as well as our soil and water;
or because it provides a food benefit that a number of them will likely need in the near future.
These kids need to understand the Farm Bill. It can help them and it can hurt them. But the only reaction they could muster was venom toward any human being who might have need of food assistance, thus the only action many of them might take would be to cheer if the food and nutrition assistance programs were cut. They’re hurting themselves with their apathy and venom.By fixating on the notion that a fellow human in need is threatening to their well-being, these students are playing an active role in promoting the very social inequality that impairs their own futures. As social epidemiologists Kate Pickett and Richard Wilkinson have shown, no matter whether we are rich or poor, the more inequality there is in our culture, the greater our rates of anxiety, depression, and countless other social problems from crime to illness—for everyone.
1919: Four Nebraska flour mills – Henry Glade Milling Co. in Grand Island, Ravenna Mills in Ravenna, Hastings Mills in Hastings and Blackburn-Furry Mill in St. Edward – consolidate and incorporate as Nebraska Consolidated Mills with headquarters in Grand Island.
ConAgra was founded in 1919 by Frank Little and Alva Kinney, who brought together four grain mills as Nebraska Consolidated Mills(NCM). Initially headquartered in Grand Island, Nebraska, it moved to Omaha in 1922. The company ran at a profit until 1936, when Kinney retired. In 1940, the company began producing flour at its own mill, and in 1942 ventured into the livestock feed business. That year president R.S. Dickinson opened the company’s first out-of-state facility in Alabama with a flour mill and animal feed plant.
After researching new uses for their flour, NCM funded the establishment of the Duncan Hines brand of cake mixes in 1951 as a way to market more flour. This venture was very successful, leading the company to its current place as the third largest flour miller in the U.S.
1971: NCM changes its name to ConAgra Inc. with fiscal 1971 sales of about $270 million and 4,105 employees in 13 states, Puerto Rico and Spain.
1973: ConAgra common stock is listed on the New York Stock Exchange.
1974: Pillsbury executive Mike Harper is hired as ConAgra’s first chief operating officer.
1980: ConAgra enters the frozen food business with the purchase of Banquet Foods Co. from RCA.
1981: Sales reach $1 billion.
1988: ConAgra announces plans to build a state-of-the-art product development laboratory and a new headquarters campus in Omaha, and the first Healthy Choice frozen dinners are introduced.
2002: ConAgra Foods sells its fresh beef and pork processing business and begins the process of focusing the business on branded packaged foods.
“The farm bill encourages factory farming by making sure feed can be purchased for less than the price of growing it, giving factory farms billions of dollars in cost discounts every year.”
2004: ConAgra Foods’ sales mix, 51 percent of which came from fresh meat and other commodities in 1998, continues to change, with more than 80 percent coming from branded packaged foods.
2005: Gary Rodkin is named president and CEO, succeeding Bruce Rohde.
2009: Marie Callender’s Home-Style Creations is launched and ConAgra Foods revamps it look.
2015: Gary Rodkin retires. Sean M. Connolly takes leadership of ConAgra Foods as chief executive officer. Fitch Ratings affirms the Long-term Issuer Default Ratings (IDRs) for ConAgra Foods, Inc. and its subsidiary, Ralcorp Holdings, Inc. at ‘BBB-‘ and affirms ConAgra’s Short-term IDR at ‘F3’. The Rating Outlook is Negative.