"As I've written so many times before, a very few companies essentially control U.S. meat production.

Their business model is crude, but for years has been effective: You place lots of animals in a tight space (or "contract" with farmers to do so), stuff them with corn and soy (made cheap chronic overproduction mandated by U.S. farm policy), boost their growth with all manner of hormones and antibiotics, and move these unhappy creatures to vast factory-like slaughterhouses, to be done in by some of the lowest-paid, least-protected workers in the U.S.

All down the line, the model relies on the genius of deregulation: lax oversight of the titanic waste generated at factory animal farms, feeble enforcement of labor code, bungling responses to the food-safety crises generated by Big Meat.

I've learned recently that the industry relies on another jewel of deregulation: the cheap and easy credit that has been sloshing through our financial system for years now. Turns out that running massive meat empires -- and gobbling up competitors in an endless race to get bigger -- requires lots of loans.

Guess what? Wall Street has imploded, and its battered survivors aren't keen on loaning. As a result, at least two gigantic meat companies look in danger of collapse.

Actually, Big Meat has been staggering since 2006, when U.S. farm policy underwent a sudden shift.

For more than 30 years before then, policy had focused on encouraging dirt-cheap corn and soy. The meat industry fattened in those years. According to a report from Tufts researchers Elanor Starmer and Tim Wise, federal crop subsidies saved the meat industry $35 billion between 1997 and 2005 alone

But then, in 2006, President Bush and the Congress dramatically ramped up ethanol mandates while holding already-generous subsidies and protective measures in place. The policy caused a surge in feed prices -- and dealt a major blow to the profits of Big Meat.

Now, with their profits razor-thin, the industry finds itself squeezed by the credit crunch. On Friday, Smithfield Foods -- the world's largest hog producer and pork processor -- had to "reassure investors ... that it was in compliance with its debt covenants and had adequate liquidity," Reuters reports.

Observers of the financial meltdown will remember that Lehman Brothers, Fannie Mae, Freddie Mac, and Bear Stearns all made similar reassurances -- before plunging into an abyss.

Investors seem less than sanguine about Smithfield's prospects. As of late Monday morning, Smithfield shares were down 15 percent.

Chicken giant Pilgrim's Pride finds itself in even worse shape. That company has fallen behind on loan payments, avoiding bankruptcy only by negotiating temporary relief from creditors. More ominously, it has "retained advisers to review its operations and refinancing strategy." That's code for "somebody please buy us at a fire-sale price soon, or we're going belly up."

Investors are betting on the worst-case scenario. In late Monday-morning trading, Pilgrim's Pride shares had surrendered 20 percent of their value. The company's shares closed at $18.50 as recently as last Tuesday. Today, they're fetching about $2.80."

source: http://www.grist.org/article/like-lambs-to-slaughter

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Whom is the profit leader? GMO corn and soy, for better or for worse? Discuss.

"While debate rages on Gristmill and elsewhere about whether biofuels are worth a damn ecologically, investors in agribusiness firms are quietly counting their cash.

As corn and soy prices approach all-time highs, driven up by government biofuel mandates, farmers are scrambling to plant as much as they can -- and lashing the earth with chemicals to maximize yields.

At a Wall Street meeting on Tuesday, genetically modified seed/herbicide giant Monsanto promised investors even-higher-than-expected profits in fiscal year 2008. The company expects to rake in $1.3-$1.4 billion in gross profit from its Roundup herbicide alone (Monsanto had been previously expecting to make $1 billion from Roundup); and it's looking for a cool $3.5 billion from its genetically modified seeds and traits.

The company said it's seeing "strong early-season order patterns in its U.S. corn seed and traits business" -- meaning farmers are scrambling to lay in supplies of GM corn and soy seed ahead of the spring planting season.

Below the fold, I'll drill down a little into Monsanto's announcement.

Use of "triple-stacked trait" seeds in the United States is surging. Monsanto has been pushing corn seeds with three different GM traits -- Roundup tolerance plus two kinds of pesticides. Envision vast cornfields where nearly everything is dead except the corn plants. Writes the company: "Monsanto's triple-stack trait product could be planted on 25-27 million acres in the United States, an increase of approximately 50 percent over the prior year."
Monsanto is making boatloads of cash on industrial-ag booms in Brazil and Argentina. The company seems to be openly establishing corn and soy seed monopolies down there. " Monsanto now estimates that Brazilian soybean farmers used its Roundup Ready technology on 55 percent of acres this season, an increase of 10 percent compared with planted acres in 2007," the report states.
As for Brazilian corn, "Monsanto confirmed that its corn brands, DEKALB, Agroceres and Agroeste, are expected to collectively hold share at 40 percent of the Brazilian corn seed market."
As for Argentina and its massive demand for corn seeds, Monsanto didn't reveal its market share. However, it did boast that its insecticide-laced corn seed has increased its market share by 5 percentage points two years running; and also that it's about to launch a "double-stacked" corn seed, featuring an insecticide and Roundup tolerance."

http://www.grist.org/article/biofuels-good-for-agrochemical-gmo-biz