Agribusiness Market Hypocrisy
When it comes to agricultural policy, the global agribusiness giants have twisted beyond recognition Ralph Waldo Emerson's comment that "A foolish consistency is the hobgobblin of small minds."
When it comes to the debating the proper reliance on markets in agriculture, the position of the Archer Daniels Midlands, Cargills, Continental Grains, IBPs, Tysons and other agribusiness conglomerates is, simply, hypocritical and contradictory.
On the one hand, these companies profess support for a deregulated marketplace. They support the Freedom to Farm Act governing agricultural regulation and subsidies in the United States, and they are pushing hard for a new World Trade Organization agricultural agreement that would force countries in the developing world to expose their farmers to the global market, removing supports and regulations to protect local farmers.
On the other hand, the agbiz goliaths fiercely protect the enormous assistance they receive for exports, and the de facto subsidy they receive by externalizing the dramatic environmental costs of their factory farms. And they rail against any efforts to block, let alone undo, the mergers and restrictive contracts that are consolidating their oligopolistic control of agricultural product markets -- a concentrated control making a mockery of the notion that agriculture is governed by free markets.
What the U.S. experience of the last several years has shown is that agriculture cannot be left to the whims of the market -- especially a closed market that is dominated by a handful of giant corporations.
The 1996 U.S. Freedom to Farm Act aimed to eliminate a multi-pronged system of supports for farmers that sought to match supply and demand, and ensure grain prices did not fall below the cost of production. In place of this system inherited from the New Deal, Freedom to Farm promised an unfettered market that would reward efficient producers and provide limited, direct subsidies that would be phased out over time.
As Ben Lilliston and Niel Ritchie write in this issue, since enactment of Freedom to Farm, grain prices have plunged -- to about half the levels of five years ago. Without any means to act collectively to control supply, farmers are faced only with the choice of generating more revenue by increasing production -- and thereby exacerbating the problem of excess supply -- or going out of business. Many family farmers are finding there is no choice at all, as they are forced out of business.
Meanwhile, a parallel crisis has wracked the livestock markets. Prices are plummeting there too, and small farmers are being run out of business by factory farm feedlots owned by large corporations. Even worse, as Michael Stumo's article shows, vertical integration -- with meat packers (the buyers of cattle and hogs) either merged with giant feedlots or increasingly procuring their livestock through fixed contracts rather than on the open market -- has sharply limited the market opportunities for small, independent farmers and ranchers.
With commodity prices plummeting and the big companies tightening their grip on key markets, the very future of family farming is at risk in the United States. (And, as Vicki Monks shows, family farmers are getting no help from their purported representatives at the Farm Bureau.)
Finally, as Mark Floegel writes, the demise of family farming and expansion of corporate agriculture is posing serious environmental and consumer hazards. Factory farms are creating enormous pools of excrement that too often leak and poison groundwater and nearby rivers. The factory farms are delivering meat and poultry of dubious quality, and speeded-up packing lines -- subjected to ever-diminishing regulatory oversight -- are permitting too many bacteria-infested and diseased products to make it to supermarket shelves. (And, incidentally, none of the commodity price reductions are being passed on to consumers in the form of lower prices for end products.)
The leading agribusiness companies now propose to export this model of unregulated, concentrated and closed markets to developing countries through a WTO agricultural agreement that would further inhibit Third World governments from protecting local farmers. In an interview, Dr. Peter Rosset of Food First declares this prospect to be "perhaps the gravest threat in history" to rural communities, small farmers and rural ecologies around the world.
Claims that certain forms of economic integration are inevitable always invite a high degree of skepticism, but never more than in the agricultural sector. There are numerous, if imperfect, examples of sensible farming policies that support family farmers and ecologically sustainable farming methods, seek to maintain commodity prices at levels above the cost of production, and avoid the problems of conglomerate stranglehold over markets. Many of these examples come from the Populist and New Deal reforms in the United States. Many others are found around the world.
A nascent global movement joining together small farmers, rural workers, environmentalists and, crucially, consumers, is beginning to challenge agribusiness's market hypocrisy. But this is a desperate race against time. In country after country, once the family farm sector has been wiped out, it will be extremely difficult to regenerate.