Commentary: Oh, the outrage!

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Two recent events produced the opposite reactions from industry, versus what ought to have occurred. From this perspective, it appears that people’s anger was directed at the wrong event.

Two recent developments made headlines last week, and the reaction to both was telling.

First, the drama.

According to multiple news sources, a Nevada cattle rancher got into an ugly confrontation with Bureau of Land Management agents who tried to conduct a controversial roundup of his cattle. The rancher, Cliven Bundy, along with family members and what eventually became as many as 100 protestors, clashed with BLM officials over the removal of hundreds of head of his cattle from federal rangeland, where they were grazing illegally, according to a statement from BLM.

Bundy claimed his herd of roughly 900 cattle have grazed on the land along the riverbed near Bunkerville, Nev., about 80 miles northeast of Las Vegas, since the 1870s. When federal officials attempted to remove the animals for non-payment of grazing fees, Bundy threatened “a range war” on his website after one of his sons was arrested.

“I have no contract with the United States government,” Bundy told news media members. “I was paying grazing fees for management, and that’s what BLM was supposed to be, land managers, and they were managing my ranch out of business, so I refused to pay.”

Government officials countered that Bundy “owes the American people in excess of $1 million” in unpaid grazing fees — actually, they’re fines, since BLM bought out the area permit holders, including Bundy, more than 20 years ago to protect the habitat of the endangered desert tortoise.

Following lengthy court proceedings dating back to 1993, BLM obtained a court order to remove the cattle, but when officers tried to enforce the order, a clash between Bundy family members and some 100 supporters soon turned violent. Cell phone video showed people being tasered, including Bundy’s son, Ammon. Two of protesters were arrested but later released, according to BLM officials.

The agency then backed off and BLM Director Neil Kornze issued a statement that read, “Based on information about conditions on the ground, and in consultation with law enforcement, we have made a decision to conclude the cattle gathering because of our serious concern about the safety of employees and members of the public.”

As tone-deaf as BLM’s statement might sound, the comments from Bundy’s family and supporters were even further afield.

“It’s not about cows, it’s about freedom,” Utah resident Yonna Winget told ABC News affiliate KTNV in Las Vegas. Bundy’s wife, Carol, added that, “People are getting tired of the federal government having unlimited power.”

Unlimited power? You mean the power to provide “unlimited” grazing privileges for a century and a half to certain ranchers? Or the “freedom” to run cattle on public lands without having to pay grazing fees?

Look, it’s understandable that a heavy-handed response by federal officials would provoke anger and resentment among the family and their fellow ranchers. But if the facts of the case are anywhere near what’s been reported, Mr. Bundy hasn’t paid grazing fees (or fines) for more than 20 years. Shouldn’t that that provoke, if not outrage, at least some mild annoyance from ranchers who do pay the fees?

Do the folks who showed up to harass BLM agents really believe that public lands ought to be available — free of charge — to any and all ranchers, as long as they claim seniority? Is that really their definition of freedom? Freedom from payment?

We’d all like that deal, but the Bundys and their supporters are willfully ignoring history. It was the government that secured the rangeland where the cattle in question are grazing — first by using the U.S. Army to subdue and remove the Native tribes from the land, then by handing over vast acreage to the railroads to sell off to homesteaders, then by providing private individuals and big corporations alike sweetheart deals to promote mining, logging and ranching in Nevada.

And let’s not forget the massive reclamation and irrigation projects — funded by all of us freedom-loving taxpayers — that provide the essential infrastructure to support agriculture across the West.

Without the “unlimited” power of the big, bad federal government, very few on the folks who were waving signs — and weapons — at BLM officials would be engaged in their chosen profession.

A bonus too big

Now, here’s the second story that ought to provoke genuine outrage but seems to have barely caused a ripple.

According to Reuters, two of the senior executives with the WH Group Ltd., the parent company that now owns Smithfield Foods Inc., were given a combined $600 million-dollar bonus as a “reward” for their role in acquiring the company.

That bonus represents more than 12 percent of the total price WH Group paid to acquire Smithfield.

And the figure isn’t based on speculation, because a securities filing obtained by Reuters showed that Wan Long, the chairman and CEO of WH Group, received 573.1 million new shares of stock in October 2103, while Yang Jhijun, the firm’s executive director of investments, received 245.6 million shares.

Meanwhile, Smithfield Foods reported a nearly 35 percent drop in its latest earnings report. Why? The company reported that “costs associated with its takeover by Hong Kong-based WH Group” contributed to the decline in earnings.

This news is disturbing on several levels. First of all, the amount of the bonus is obscene. Nobody’s worth $600 million — not any two guys, for that matter. Sure, they engineered the purchase. But they didn’t do all the legal and financial trench work necessary to structure the deal and comply with a slew of international regulations.

No doubt the lawyers and bankers involved got rewarded handsomely, but they didn’t pull down any nine-figure bonuses. C’mon, let’s get serious. Those are reserved for really important people, like baseball players and movie actors.

The problem with this deal — not that anyone else seems to care — is that if there’s that much “cushion” in the deal that a couple executives can rake in 12 percent of the purchase price on top of their current compensation, then Smithfield shareholders got screwed. That $600 million in equity should have gone to them, not a couple fat cats at the top who did little more than set some wheels in motion and scratch their names on a bunch of legal documents.

That one company scooping up another one is seen as justification for a $600 million-dollar bonus is, in a word, outrageous. Only one problem: All the outrage seems to have been expended on a fight over a lousy one million in past due grazing fees.

The opinions expressed in this commentary are solely those of Dan Murphy, a veteran food-industry journalist and commentator.

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SD  |  April, 19, 2014 at 11:53 AM

Could the difference that one incident involves federal government against a family business, while the other involves corporate business? We do 'love to hate' both corporations and overreaching government agencies, after all!

Dan Murphy    
Everett, Washington  |  April, 29, 2014 at 11:50 AM

Yes, it's easy to hate the government. Nobody "loves" paying taxes and following regulations. But in the end, government is nothing more than "We the People." And guess what? when there's trouble, such as the recent disastrous mudslide in Washington state that killed 41 people, we demand that "government" in the form of first responders, law enforcement, FEMA and the National Guard spring into action and do everything possible to mitigate the consequences. When we need help, we "love" government. When it's tax time -- or time to pay your grazing fees -- then not so much.

Wyo  |  April, 19, 2014 at 09:05 PM

NO…….the difference is that one episode is based on folks using "investor/stockholder" money while the other is based on using "taxpayer" money. IF you can't understand the difference……..then…….invest MORE in your government.

lost  |  April, 21, 2014 at 07:41 PM

The media is ignoring a very important twist to this case. in 1993, Bundy stopped paying his grazing permit fees. in 1994, the BLM canceled his permit. The permit was then purchased by Clark County. The County subsequently retired the permit, closing the allotment to grazing. Why? they did that to offset the impacts to desert habitat caused by development elsewhere (i.e. Las Vegas). So Bundy is really the victim of Urban Sprawl. The County is much more interested in the development around Las Vegas then they are with the fortunes of a hardscrabble rancher.

Old Cow Puncher    
April, 22, 2014 at 09:24 AM

These two stories are related and you have missed the point Dan. If we could get beef production integrated by efficient reliable managers like Smithfield, soon all producers would be organized and properly contracted. Plus, production volumes would be managed so no more catastrophic beef production failures like this past several years and no marketing disasters like this overpriced beef in supermarkets. Seriously Dan, only a crank could argue against financially successful large organized business in the face of inept armies of one railing against the BLM. It is proven to be long past time for the hit-or-miss cowboy to be consigned to the dustbin of history.

Dan Murphy    
Everett, Washington  |  April, 29, 2014 at 11:54 AM

The point I was trying to make isn't that Smithfield (or there new owners) shouldn't focus on production efficiency, or that such efficiencies don't benefit the larger industry. My point was that a deal that rewards a couple guys who happened to be the ones to sign the papers with hundreds of millions in bonuses is a bad deal. If there's that much profit built into an acquisition, then the shareholders got screwed. As for being a crank, in the light of this past week's events, I would respectfully cede any claim to that title to Mr. Cliven Bundy.

Dan Murphy    
Everett, Washington  |  April, 29, 2014 at 12:02 PM

Chilidawg, even if Bundy's situation were due to urban sprawl, that doesn't excuse his contention that he doesn't recognize the U.S. government. The fact is that when Bill Clinton was elected president in 1993, that's when (why) Bundy stopped paying his grazing fees. And as I understand it, the reason that the permits were later retired was compliance with the ESA, not an offset to urban sprawl.

Dan Murphy    
Everett, Washington  |  April, 29, 2014 at 12:12 PM

The outrage in either case is inappropriate. In Bundy's case, he professes outrage over an oppressive government that's taking away his liberty, so he's decided he doesn't have to obey the laws nor pay the grazing fees other ranchers do. But I'm guessing he doesn't have a problem with using the U.S. military to maintain oil imports from the Mideast, so we have the energy we need. Nor does he seem to have a problem driving his cattle to market on Interstate highways built by the government (and paid for by citizens who do recognize the government and do pay their taxes). No, he only wants to avoid paying for use of the land he's using; other than that, it spears he's happy to make use of the rest of what the government does to ensure that his ranching business is profitable. That's where the outrage from the rest of us comes from.

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