Fall, 1996 (v8n4)

Technical Reviews

The industrial reorganization of U.S. agriculture: An overview and background report.

Rick Welsh

Policy Studies Report No. 6, Henry A. Wallace Institute for Alternative

Agriculture, Greenbelt, Md. 1996

This concise, 48-page report examines the nature and consequences of the industrialization of U.S. agriculture. The author provides definitions and primary statistics, and reviews competing interpretations of recent trends. This careful and objective work is the first part of a larger study of structural change in the agricultural sector being conducted by the Henry A. Wallace Institute for Alternative Agriculture.

For the author, industrialization

refers to the interactive processes of coordination, concentration and globalization. Coordination is the degree of control an actor has over the various links in a commodity system-from production inputs to marketing to end users. Concentration includes the scale of an agricultural operation, as well as the ability to wield market power. And globalization refers not only to international trade linkages but coordination and concentration on a global scale (page 6).

Welsh gives equal attention to two competing explanations for why agriculture is industrializing, one of which emphasizes accommodation to consumer demands for convenience, safety, and good nutrition; the other the increased profit potential for businesses who must manage risk given high debt loads, unpredictable markets and stringent financing requirements. He then contrasts how observers from these perspectives view the implications of industrialization for consumers, farm households, rural communities, agricultural labor, and the environment.

In addition to this overview of the literature, Welsh interviewed agricultural stakeholders to understand the meanings they ascribe to structural changes in agriculture. The interviews were conducted in four focus groups, one each in New York, Iowa, California and Georgia. Participants included representatives from processing firms, farmers, local government officials, environmentalists, farm labor advocates, farm input suppliers, persons involved with direct marketing, and family farm advocates. The report quotes extensively from these group interviews, enabling the reader to sample a wide range of opinion on what concentration means and what, if anything, should be done about it.

While deep disagreements persist, Welsh finds a broad consensus that two discrete agricultural production systems are emerging in the U.S.:

One system will consist of large-scale corporate enterprises and contract production dominated by a few buyers, often MNC's [multinational corporations]. This system will be characterized by capital intensive technology development and adoption, proprietary control of some information enableing production, as well as worldwide marketing and distribution. . . . The other system will consist of smaller scale farms which employ strategies of onfarm diversification of enterprises, as well as limited off-farm input use to control costs and minimize environmental impacts. This system will be characterized by the development of markets backed on locality of production, production practices, consumer health concers, farm structure, and the production of diverse varieties of crops and/or livestock.

Readers will find this report a useful compendium of statistics and concise guide to the debates surrounding industrialization. As the author intended, the work succeeds in illustrating key questions for future inquiry, and the need to draw on a variety of disciplines in developing information-based policy reforms.

Copies of the report can be obtained by sending $5.50 per copy to: Henry A. Wallace Institute for Alternative Agriculture, 9200 Edmonston Road, Suite 117, Greenbelt, MD 20770.

For more information contact: Rick Welsh, Henry A. Wallace Institute for Alternative Agriculture, 9200 Edmonston Road, Suite 117, Greenbelt, MD 20770.

DEC. 542

Contributed by David Campbell