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CommStock Report

Friday, September 21, 2012

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David Kruse, president of CommStock Investments Inc.
The major media is probably the most uniformed on agriculture and food issues as on any other topic. At least we hope so, as if they are as poorly informed on other things that we don't have the scope of judgment to be able to determine, as they are on something that we know about, we are being poorly informed in general.

The major media is so superficially engaged on the issue of ethanol as to be a worthless contributor to public opinion. The major media can do a lot of damage relative to spreading misinformation. Therefore, I am looking ahead with great anticipation to the results of the law-suit filed by Beef Products Inc. against ABC News over their depiction of a meat product, lean finely textured beef (LFTB) - the product ABC News helped affix the label "pink slime" to. The company is seeking $1.2 billion in damages for defamation. The firm lost 80% of its business in 28 days.

LFTB is beef. It is safe and wholesome. It is meat scraps heated and treated with a small amount of ammonia to kill bacteria, a process that is used throughout food processing in general. It is primarily included in ground beef. This beef would otherwise be lost, which is a terrible waste. The media, however, is about ratings and they need catchy headlines and embellished facts to break through to get the public's attention.

Beef Products, Inc (BPI) said, "The reports created the false impression that it's some type of chemical product, that it's not beef. It led people to believe that it's some kind of repulsive, horrible, vile substance that got put into ground beef and hidden from consumers. The result of that has been catastrophic for this company. Celebrity chef Jamie Oliver began railing against it. McDonald's and other fast food companies stopped using it, and major supermarket chains including Kroger and Stop and Shop vowed to stop selling beef with the low-cost product. The U.S. Department of Agriculture has said the vast majority of states participating in its National School Lunch Program have opted to order ground beef that doesn't contain the product. Only three - Iowa, Nebraska, and South Dakota - chose to order beef that may contain it."

The smear was effective. They should not put me on that jury, although I would be fairer and more balanced than FOX News and the WSJ on ethanol in this case. "BPI alleges that ABC and the individuals named in the suit knowingly made false, defamatory and disparaging statements regarding BPI and LFTB. According to BPI, these statements were made even after BPI and others sent ABC factual information about LFTB, including conclusions from USDA, FDA, food safety organizations and numerous beef industry experts, that LFTB is a safe, nutritious lean beef. As a result of the disinformation campaign, the BPI folks say their sales declined from approximately 5 million lbs. of LFTB per week to less than 2 million lbs."

"The suit also says ABC put pressure on supermarkets to stop carrying the product. A BPI lawyer said ABC created a "black list" of supermarkets that sold pink slime and took them off the list only after they stopped selling it."

The media seems to carelessly forget that what they report impacts real people. BPI closed plants and laid off 600 workers as a result of the media fallout. The negative financial impact flowed back through the entire beef industry. . .and for what? To eliminate a safe, wholesome, valuable food from the food chain to feed the media hype to promote a story.

Let me make this clear: There was absolutely no benefit to anyone, anyhow, in any way, from the ABC reports done on LFTB. They didn't provide the public with any useful information that made their lives better. They were not protected from any risk because there was none; the government had already determined that.

All it did was create a long, costly path of destruction. I think that they ought to be held accountable for that, so the BPI lawsuit was welcomed. If they can do it to LFTB and the beef industry, they can do it to your food product too. That is what the Ag sector has to fear from the lack of judgment and restraint from the news media, which puts ratings first.

David Kruse is president of CommStock Investments,Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet. CommStock Investments is a registered CTA, as well as an introducing brokerage.



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