Published: April 24, 2008 11:16 am            

Farm and Food File: Just stick your head in the sand and don’t worry about it

Originally published in the April 25, 2008, print edition.

Spring finally found the legs to arrive in central Illinois nearly a month after the calendar alerted us to be on the lookout for it. Certain signs — corn planters and daffodils blooming in every barnyard, Queen Mary-sized fertilizer trucks cruising down every county blacktop — suggest the season’s here to stay.

Also here to stay is the baggage brought by winter. Facts, figures and ideas, like snowflakes, slowly accumulate over winter until their drift threatens to bury sanity and the dog. I don’t sort it as much as shovel it. Some I even keep.

For example, on Dec. 27 I printed a two-page analysis by Wall Street blogger David Phillips on the annual proxy statement filed by Tyson Foods the day before. Phillips’ sharp eye uncovered the staggering pay both patriarch Don Tyson and son John will receive in 2008 for doing nothing more than carrying the family name.

According to Phillips’ figures, son John, who retired (at the ripe old age of 52) in 2006, will pocket “$300,000 per annum to perform certain advisory and limited public relations service not to exceed 20 hours per month.” At $1,250 per hour, I’m guessing that’s one of the better gigs in Arkansas. I know it’s one of the better paying jobs in poultry growing. But that’s not all. Little John’s 10-year company contract picks up country club dues, personal use of the company jet, insurance, blah, blah, blah … worth, Phillips estimates, another $6.54 million a year.

Hey, fair is fair: Daddy Don “entered into a similarly lucrative consulting contract in July 2004,” explains Phillips.

Additionally, Chicken King Don and kin cut an even fatter hog in fiscal 2007 by leasing Tyson Foods the family-owned farms for $832,230, the family-owned aircraft for $2,043,552 and two, family-owned wastewater treatment plants for $1.25 million that “service the company’s chicken processing facilities in Nashville and Springdale, Ark.”

Service, indeed. Between June and the proxy filing Dec. 26, 2007, Tyson Foods stock price tumbled 36.5 percent. The combined, 2007 earnings of the Tysons, however, was mere chicken feed compared to the pay knocked down by the roosters on Wall Street. According to the New York Times, the chiefs at the top 10 financial services (there’s that word again) firms pocketed $320 million in 2007 “even as their banks reported mortgage-related losses of $55 billion.”

And, according to the April 16 Wall Street Journal, there’s more losses — billions more — on the horizon. Merrill Lynch is expected to swallow another $6 billion to $8 billion of red ink when it reports its current, ahem, earnings. That raises its losses over the last nine months to more than $30 billion.

Wall Street seems shocked that one of its fattest calves is now bleeding so badly. What should shock all us, however, is that government oversight of these titans is so focused on its navel that even as Merrill’s leveraged ratio last Christmas approached 39:1 — it carried 39 times more debt than equity on its books — no one raised one alarm of possible calamity.

Similarly, few in government or agriculture appear alarmed that a government-supported Brazilian meatpacker, JBS, now has its hooks in America’s fourth and fifth largest beef packers, National and Smithfield Beef, just months after closing a deal to buy America’s third largest cattle killer, Swift.

The buyout, if approved by the Department of Justice, would make JBS the biggest beef packer and feedlot owner, with a one-time capacity of more than 800,000 head, in America. Given the DOJ’s unblemished record of rubber-stamping similar deals, America’s cowboys will end up taking orders from a Brazilian packer by winter.

Ah, but it’s spring now so why worry, right?

        

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