Agriculture Reference
In-Depth Information
sets of repackaged, reformulated, and reengineered products in hopes that a few of them will
turn out to boost corporate profits.
Whither the Poor Consumer?
What does all this mean for the consumer? The consolidation of the food industry clearly
means less competition and lower costs for the producer. But recent research suggests that the
consumer may not benefit. A study by a group of agricultural economists at the University
of Nebraska-Lincoln and the University of Connecticut shows that concentration in the food-
processing industry has resulted in higher consumer prices in most sectors due in part to the
ability of oligopolies to set prices. 20
A consolidated, corporately controlled food and agriculture system is able to provide vast
quantities of standardized fare. The foundation of this system rests on a set of very large
farms articulating with a small number of global food processors, who in turn link with an-
other small number of very large and increasingly global food retailers. For the system to run
efficiently it must standardize and rationalize both production and transaction costs all along
the food chain. The smaller the number of players in the system, the easier it is to standardize
and rationalize.
Production costs are lowered by adopting mass-production techniques to grow crops, raise
livestock, and process and package these commodities. For the industrial type of agriculture
to continue to expand, it must convert family farms into factory farms. The transformation of
family farms into factory farms requires not only a change in the size of the farm operation
but a change in management strategies as well. It means locking the farmer into the orbit of
the large agribusiness corporation.
Stewart Smith, an agricultural economist from Maine, examined the distribution of eco-
nomic activity within the agricultural sector of the economy. He found that in 1910 farming
accounted for 41 percent of the industry's economic activity. By 1990, this had fallen to 9
percent. On the other hand, the input sector saw its share of activity grow from 15 percent in
1910 to 24 percent in 1990, while the marketing sector went from 44 percent to 67 percent
during this period. 21 The data in table 4.3 indicate that this represents a shift of billions of
dollars from farmers to agribusiness. Indeed, farmers receive less in real dollars today than
they did in 1910, while the dollar amount taken by marketers has increased over sixfold. As
Eric Schlosser notes in Fast Food Nation, “Farmers and cattle ranchers are losing their inde-
pendence, essentially becoming hired hands for the agribusiness giants… . Family farms are
now being replaced by gigantic corporate farms with absentee owners.” 22
Factory farming is making inroads among many commodities. Large dry-lot dairies ac-
count for the bulk of milk production in many states. Confinement hog operations are
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