Bags of money

DURING THE 1970s THE cordial relationship between Monfort executives and workers at the Greeley slaughterhouse came to an end. The underlying source of conflict was straightforward. Monfort wanted to reduce labor costs, but its workers thought that wages should not be cut at a time when the company was earning profits and the nation’s annual inflation rate had reached double digits. In the midst of contract talks with Greeley workers in 1979, who were now represented by the UFCW, Ken Monfort purchased a slaughterhouse in Grand Island, Nebraska, from Swift & Company. Before handing over the plant, Swift shut it down and fired all of the workers, who also belonged to the UFCW. When Monfort took control of the slaughterhouse a few weeks later, he signed a sweetheart deal with the National Maritime Union – a group that had never before represented meatpacking workers and that quickly agreed to a large pay cut.

In November of 1979 the workers in Greeley went on strike. Monfort refused to meet their demands, and the dispute became ugly. The company began to hire scabs. Ken Monfort received death threats. Eight weeks after going on strike, the workers decided to return to their jobs without a contract, but riot police prevented them from entering the slaughterhouse. When the company allowed workers back into the plant, many of them disobeyed supervisors and committed acts of sabotage. After a few months of industrial anarchy, Monfort closed the Greeley slaughterhouse and fired all its workers. The days of paternalism were over in Greeley. Ken Monfort was no longer a liberal Democrat. He had become a pro‑business Republican.

In 1982 the slaughterhouse in Greeley reopened without a union, paying wages that had been cut by 40 percent. Former workers were not offered jobs. Instead Monfort transferred some employees from its Grand Island plant and hired new ones. Although Ken Monfort decided to follow IBP’s tough policy on labor unions, he strongly resisted the increasing consolidation of the meatpacking industry. During the early 1980s one independent meatpacker after another either went out of business or was purchased by a large corporate rival. In 1983, Monfort sued Excel – the nation’s second‑largest beef processor – to prevent it from acquiring Spencer Beef, the nation’s third‑largest beef processor. Monfort argued that the proposed acquisition would allow Excel to engage in predatory pricing and to reduce competition. A panel of federal judges ruled in favor of Monfort, but Excel appealed their decision to the U.S. Supreme Court. President Reagan’s Justice Department submitted a brief in the case – and argued on behalf of Excel, claiming it had every right to buy a rival company.

The Reagan administration did not oppose the disappearance of hundreds of small meatpacking firms. On the contrary, it opposed using antitrust laws to stop the giant meatpackers. In 1986 the U.S. Supreme Court overturned the earlier ruling and approved the merger of America’s second‑ and third‑largest meatpacking companies. The following year, Monfort agreed to a friendly takeover by ConAgra. “It seemed to me that if the industry was going to be concentrated,” Ken Monfort explained, “there should be at least three large players instead of just two.” As part of the deal, he became a top executive at the company, head of the ConAgra Red Meat division, and his family received about $270 million in ConAgra stock.

By purchasing Monfort, ConAgra became the biggest meatpacker in the world. Today it is the largest foodservice supplier in North America. In addition to being the number‑one producer of french fries (through its Lamb Weston subsidiary), ConAgra is also the nation’s largest sheep and turkey processor, the largest distributor of agricultural chemicals, the second‑largest manufacturer of frozen food, the second‑largest flour miller, the third‑largest chicken and pork processor, as well as a leading seed producer, feed producer, and commodity futures trader. The company sells its food under about one hundred consumer brand names, including Hunt’s, Armour, La Choy, Country Pride, Swiss Miss, Orville Redenbacher’s, Reddi‑Wip, Taste O’Sea, Knott’s Berry Farm, Hebrew National, and Healthy Choice. Although few Americans have heard of ConAgra, they are likely to eat at least one of its products every day.

Twenty years ago, ConAgra – a combination of two Latin words whose intended meaning is “partnership with the land” – was an obscure Nebraska company with annual revenues of about $500 million. Last year ConAgra’s revenues exceeded $25 billion. The company’s phenomenal growth over the past two decades was driven by the entrepreneurial spirit of its longtime chief executive, Charles “Mike” Harper. When Harper took over ConAgra in 1974, it was losing money, the market value of its stock was $10 million, and the value of its debt was $156 million. According to the company’s official history, ConAgra Who? (1989), Harper promptly instituted a new corporate philosophy. “Harper told each general manager that he’d been given a bag of money,” the company history explains, “and that at the end of the year he’d be expected to return it – plus a little extra.” He gave each of his top executives a personalized, inspirational plaque. On it was a cartoon of two vultures sitting in a tree. “Patience, my ass,” one vulture says to the other. “I’m gonna go kill somebody.”

The intense pressure to return a bigger bag of money every year has prompted a number of ConAgra employees to break the law. In 1989, ConAgra was found guilty in federal court of having systematically cheated chicken growers in Alabama. During an eight‑year period, 45,256 truckloads of full‑grown birds were deliberately misweighed at a ConAgra processing plant in the state. ConAgra employees tampered with trucks and scales to make the birds seem lighter. The company was forced to pay $17.2 million in damages for the fraud.

In 1995, ConAgra agreed to pay $13.6 million to settle a class‑action lawsuit that accused the company of having conspired with seven other firms to fix prices in the catfish industry. For more than a decade, ConAgra executives allegedly spoke on the phone to, or met at motels with, their ostensible rivals to set catfish prices nationwide. According to the plaintiffs in the case, ConAgra’s price‑fixing scheme gouged independent wholesalers, small retailers, and consumers.

In 1997, ConAgra paid $8.3 million in fines and pleaded guilty in federal court to charges involving wire fraud, the misgrading of crops, and the addition of water to grain. According to the Justice Department, ConAgra cheated farmers in Indiana for at least three years by doctoring samples of their crops, making the grain seem of lower quality in order to pay less for it. After buying the grain at an unfair price, ConAgra employees sprayed water on it and thereby fraudulently increased its weight, then sold it and cheated customers.