ConAgra: Corporate Rap Sheet

ConAgra

by Philip Mattera

Packaged food giant ConAgra seeks to cover all the bases from supposedly good-for-you Healthy Choice frozen entrees to indulgences such as Slim Jim beef jerky and Reddi-wip dessert topping. It is also a major supplier to the foodservice industry. Behind the brands is a corporate track record tainted with numerous food and workplace safety controversies as well as other scandals.

Founded in 1919 as the Nebraska Consolidated Mills Company, ConAgra rose to the top tier of U.S. food processors during the 1980s with a series of acquisitions including Peavey (flour milling and grain trading), Armour Food (meat processing), Monfort of Colorado (beef) and Swift (another meat processor). In 1990  it jumped to the number two position (behind General Foods) with the purchase of food giant Beatrice.

ConAgra continued the buying spree, taking on companies such as chicken processor Seaboard Farms and International Home Foods, but it also embarked on a restructuring that involved thousands of layoffs. In 2001 ConAgra had to restate its financial results for three years because its United Agri Products subsidiary had recorded fictitious and deferred revenue. ConAgra also had to pay $45 million to resolve a Securities and Exchange Commission civil fraud case and $14 million to settle shareholder litigation related to the accounting irregularities.

In the 2000s ConAgra sold off many of its meat and poultry processing operations, its cheese business and the Bumble Bee tuna brand. It combined its flour milling operations with those of Cargill and CHS in a joint venture called Ardent Mills. In 2012 ConAgra paid nearly $7 billion to purchase Ralcorp Holdings, a major producer of private-label products, only to put it up for sale three years later. In 2015 ConAgra announced plans to split into two companies through the spinoff of its frozen potato business, Lamb Weston.

 

Price Fixing and Other Market Violations

In 1995 ConAgra and Hormel Foods announced that they would pay $21.1 million to settle a class action lawsuit alleging that they conspired with other companies to fix the price of processed catfish. ConAgra's share of the payout was $13.6 million.

In 1998 ConAgra pleaded guilty to federal criminal charges that its Peavey Grain unit illegally sprayed water on grain stored in elevators in three states to increase its weight (and value) and also bribed federal inspectors. The $8.3 million settlement included a $4.4 million criminal fine, $3.45 million in restitution of illegal profits and $450,000 to reimburse the Agriculture Department for investigative expenses.

In 2002 DuCao L.P., a joint venture of ConAgra and DuPont, agreed to pay a $500,000 criminal fine to settle charges that it participated in a conspiracy to fix the price of vitamin B4.

In 2013 ConAgra agreed to pay $3.2 million to settle a class action suit alleging that its Alexia Foods subsidiary improperly labeled its frozen potato products as "all natural."

 

Food Safety

In 2002 the U.S. Department of Agriculture announced a recall of 19 million pounds of ground beef produced by ConAgra after an outbreak of E.coli in half a dozen states was traced back to the company's plant in Greeley, Colorado. Nineteen people had become ill, and several were hospitalized. This was the second largest beef recall in U.S. history up to that point. After obtaining evidence that ConAgra had evidence of E.coli contamination weeks before the recall was announced, several members of Congress called for an investigation of the company. The number of victims later grew to about 50, with at least one death. ConAgra was reported to have paid out millions of dollars to settle civil lawsuits.

That same year, the Denver Post reported that ConAgra had declined to destroy 80 tons of meat quarantined by South Korean customs agents because of possible listeria contamination and instead resold the meat in other countries with lower standards, including the United States.

In 2007, ConAgra recalled Banquet and private label frozen chicken and turkey pot pies after health officials warned of a possible link to more than 160 salmonella cases in 30 states.

Also in 2007 ConAgra issued a recall of its Peter Pan and Great Value peanut butter brands after nearly 300 people became ill with salmonella poisoning in 39 states. The company later said that moisture from a leaky roof and a faulty sprinkler at a plant in Georgia created the conditions in which the salmonella bacteria grew. The federal government took the rare step of bringing criminal charges against a company in a food safety case, and in 2015 a ConAgra subsidiary pled guilty and paid $11.2 million, including an $8 million criminal fine (the largest such penalty ever paid in a food case) and a $3.2 million forfeiture of assets.

 

Workplace Safety and Health

In 1989 the Occupational Safety and Health Administration accused ConAgra Turkey of numerous violations at a plant in Missouri and proposed penalties of more than $1 million in connection with repetitive motion injuries and other hazards. The company later settled the case for $425,000.

In 2004 OSHA proposed $171,500 in penalties for violations linked to the death of a worker at a ConAgra chicken processing plant in Athens, Georgia. The company negotiated a reduction in the penalty to $85,750.

In 2007 ConAgra announced that it would change the recipe for its Orville Redenbacher and Act II brands of frozen popcorn after a flavoring ingredient called diacetyl was linked to lung disease in workers at plants making the products. ConAgra acted after warnings that the chemical might be dangerous to consumers as well as workers.

In 2009 an explosion during the installation of a gas-fired industrial water heater at ConAgra's Slim Jim plant in Garner, North Carolina killed four workers and injured dozens. OSHA proposed $134,773 in fines, and the company negotiated a reduction to $106,430.

In 2012 a federal jury awarded $180 million in damages to three men serious injured in an explosion at a ConAgra grain elevator in southern Illinois, but most of the award was later vacated by an appeals court.  

In 2013 ConAgra signed a corporate-wide settlement with OSHA to address ammonia problems at five frozen food plants.

In 2014 OSHA proposed $117,000 in fines against ConAgra for multiple alleged safety violations -- mostly in connection with machines lacking safety guards -- at its flour mill in Columbus, Ohio. The company negotiated a reduction in the penalties to $76,050.

 

Labor Practices

Upon taking over Armour in 1983, ConAgra replaced workers at 13 of its meatpacking plants when they would not go along with a 25 percent pay cut. The company then refused to rehire any of the union members. The move was challenged by the United Food and Commercial Workers union as well as the National Labor Relations Board. In 1987 ConAgra had to pay $6.6 million to settle the dispute. Along with back wages, the workers were guaranteed job offers with retroactive seniority.  

ConAgra clashed with the UFCW in 2000 during an organizing drive at the company's 600-employee beef plant in Omaha. The union accused the company of intimidating workers, and after losing the representation election it petitioned for a new vote. The NLRB intervened and arranged a new election in 2002 which the union won by a wide margin.

After workers at ConAgra's turkey processing plant in Longmont, Colorado, rejected a decertification effort in 2005, the company tried to have the vote overturned but was rebuffed by the NLRB (BNA Labor Relations Week, 10/5/2005).

After selling off most of its meat operations, ConAgra has fewer dealings with the UFCW but still has a larger union presence than many other large companies these days. According to the company's most recent 10-K filing, 32 percent of its roughly 33,000 employees are covered by collective bargaining agreements.

 

Subsidies

In 1987 ConAgra negotiated a multiyear state tax break worth an estimated $160 million as part of a deal to keep its corporate headquarters in Omaha after threatening to move to another state. In 2015 ConAgra announced plans to move its headquarters to Chicago. According to the Good Jobs First Subsidy Tracker, ConAgra has received more than $292 million in state and local subsidies around the country.

 

Other Information Sources

Violation Tracker summary page


Campaigns and Watchdog Groups

Cornucopia Institute

Corporate Accountability International

Food and Water Watch

International Union of Food Workers

National Farmers Union

Organization for Competitive Markets

United Food and Commercial Workers

 

Key Books and Reports

Grocery Goliaths: How Food Monopolies Impact Consumers (Food and Water Watch, 2013).

Merchants of Grain by Dan Morgan (Viking Press, 1979).

The Corporate Reapers: The Book of Agribusiness by A.V. Krebs (Essential Books, 1992).

 

Last updated January 26, 2016