USDA secretary resigns; industrial-corn man takes charge
Big doings at the USDA yesterday: Mike Johanns, the reliably pro-agribiz former governor of Nebraska, resigned from his post as USDA chair — right in the middle of Farm Bill negotiations, now in the Senate. He says he’s going to run for the Senate seat that Chuck Hagel is vacating.
Chuck Conner, currently the USDA’s no. 2 man, will be the agency’s acting secretary. Conner joined the Bush administration in 2001 as the president’s "special assistant" on ag issues, and joined the USDA in 2005.
Before working for Bush, Conner spent four years as executive director of the Corn Refiners Association, a trade group dominated by Archer Daniels Midland that exists to promote corn-based ethanol and high-fructose corn syrup.
Below the fold, I’m pasting a backgrounder on Conner I wrote a couple of years ago.
Archer-Daniels Midland’s man at USDA
"Charles Conner served as President of the Corn Refiners Association from 1997 through 2001. During his tenure, he expertly guided the industry through several challenging trade and biotech issues. His term coincided with significant growth in the industry and the development of several new uses of corn." –From a Corn Refiners Association press release, dated April 28, 2005, praising Chuck Conner’s confirmation as Deputy Secretary of Agriculture
In his blistering polemic against industrial agriculture, Against the Grain, Richard Manning quotes The New York Times on Archer Daniels Midland’s political influence: "Archer-Daniels does not have a lobbyist in Washington; it does not need one."
The Paper of Record meant that ADM has skillfully and quietly created a niche for itself within the U.S. political economy, without need of a noisy team of lobbyists. ADM buys 12 percent of the nation’s corn at a heavily subsidized price from farmers, and converts it into two main products: high-fructose corn syrup and ethanol. As I’ll show below, both of those products owe their markets completely to government intervention. And in both cases, government action benefits ADM without resulting in direct payments that the company’s opponents can easily attack on the Hill.
Thus, no need for a lobbyist. However, despite ADM’s lack of a lobbyist in Washington, it does boast a man in Washington, specifically in the Department of Agriculture.
Chuck Conner, recently confirmed as deputy secretary of the U.S. Department of Agriculture, made his Bitter Greens Journal debut in this post, stroking his chin and declaring "intriguing" a mind-bendingly dumb idea involving ethanol, the fuel made from corn.
From 1997 to 2001, Conner served as president of the Corn Refiners Association. ADM is the dominant corn refiner: As stated above, it buys 12 percent of all field corn grown in the US, the country’s largest crop. And it controls a third of the high-fructose corn syrup market, and about a third of the market for ethanol. The corn-refining industry is so highly concentrated that the association has only seven member companies, among them ADM and another shadowy agri-giant, privately held Cargill.
A “perfect vehicle”
In 1996, the Corn Refiners Association became embroiled in a scandal involving ADM’s scheme to fix the price of high-fructose corn syrup and other processed corn products. The Chicago Sun-Times reported on Nov. 3, 1997, that an FBI agent testified to a grand jury that ADM had used the association between 1992 and 1995 as cover to hold secret meetings with competitors for price-fixing purposes. (Article unavailable online; I pulled it from Nexis.)
The Sun-Times article states: "The trade group provided what the alleged conspirators called ‘an easy cover-up’ and ‘perfect’ vehicle for carrying out their plans, the agent said in an affidavit."
ADM eventually copped a plea, pleading guilty to fixing the price for lysine and citric acid (corn-processing byproducts) in exchange for immunity from charges involving high-fructose corn syrup. The company paid a then-record fine of $100 million, and executive Michael Andreas, son of legendary CEO Dwayne Andreas, did time in jail.
The Corn Refiners Association, however, walked away clean, although it might not be a coincidence that it needed a new president in 1997, the year Conner signed on.
And, indeed, ADM walked away clean, too. In 2004 alone, the company turned a profit of $318 million from its sweetener business.
Conner’s only notable activity that I can dig up as leader of that august group has been his attempt to bully Mexico into letting heavily subsidized high-fructose corn syrup from the U.S. overwhelm its domestic sugar industry.
Sweetness and power
Now an aside. Why does high-fructose corn syrup (HFCS) exist? Richard Manning shows in Against the Grain that ADM financed the lobbying effort that led to the blatantly protectionist sugar-quota system that went into effect in 1982 and has held sway ever since. (Signed into law by one zealously pro-free trade president, Reagan, it now has the full support of another, G.W. Bush. Clinton, too, paraded his free-trade credentials while accepting the sugar quotas).
What does this have to do with HFCS? The world price of processed sugar has long been below that of HFCS, meaning industrial users such soft-drink bottlers have no real reason to buy it. That’s where the sugar quota comes in. It props up the price of sugar in the U.S. to twice the world level. With the sugar price artificially inflated, ADM has a ready market for its HFCS. Here is Manning: "The cost of corn syrup hovers about halfway between world sugar and protected domestic sugar, a price designed to ‘overcome [soft-drink] bottler resistence, a reluctance, it turns out, solely based on price.’" (He is quoting a Barron’s article.)
Today, HFCS is the dominant sweetener in the U.S. If it weren’t for ADM’s efforts, no market for it would exist.
This information puts an interesting spin on the sugar industry’s opposition to CAFTA, and Conner’s involvement in trying to rig up a sugar exception to that trade pact, discussed here.
A well-fed senator
Before taking the helm of the tainted trade group, Conner served as an aide to Sen. Richard Lugar, R-Ind., starting in 1980. During that long tenure, Conner attained the position of minority and majority staff director of the Senate Agriculture, Nutrition, and Forestry Committee.
Luger is a long-time proponent of government subsidies for ethanol. Even ethanol’s staunchest supporters acknowledge it would collapse if the government pulled the plug.
In the January/February 1999 issue of Foreign Affairs, Luger published a long essay hailing ethanol as just the thing to save the U.S. from dependence on foreign oil. His co-author: James Woolsey, director of the CIA from 1993 to 1995. At the time, Woolsey served on the board of directors of BCI International, an ethanol start-up company.
Throughout his long career and tenure on the Agriculture, Nutrition, and Forestry Committee, Lugar has been a magnet for agribusiness cash. This link shows the goodies he received in 1996, Conner’s last full year as his assistant; click around that site for more info.
Before becoming ADM’s man in the USDA, Conner served from 2001 until just a few weeks ago as ADM’s man in the White House, bearing the title of "special assistant to the president for agriculture, trade and food assistance."
It’s not far-fetched to say that ADM does have a lobbyist in Washington, only the company doesn’t pay his wages. You do. Salary: $134,000.
When future historians gasp in horror at how Pax Americana ran the world’s food system, obscure figures like Conner may become objects of derision. On the other hand, the way these guys are running the world, we may be lucky to have future historians at all.
[editor’s note, by Tom Philpott]Edited to omit an erroneous line; for more info, see comment below from Meander.