The Last Farm Crisis
Among the consequences, the capital-intensive treadmill for farmers sped up, and they became even more eager to embrace whatever innovation promised to boost returns. Just as farm prices were cratering, Monsanto and others began promoting genetically altered seeds for corn and soybeans with cost-cutting promises, and this new technology swept the landscape. "These farmers are so desperate for profitability," Fred Stokes said, "they grab whatever is offered to them. Offering GM seeds is like selling them a bag of cocaine." His grain-growing colleagues in the Organization for Competitive Markets affirm that they have seen no bottom-line benefits from GM seeds. As agricultural experience has long demonstrated, the first farmers to adopt new production technologies will enjoy higher returns, but the effect soon wears off when everyone is using the same stuff. The result is still higher yields and greater productive capacity--more surpluses than the market can absorb.
Exports, as many farmers have figured out, are not going to save them. The logic promoted by agribusiness and the Agriculture Department--not to mention global-trade boosters in and out of government--was that greater efficiency would allow lower prices on US crop exports and thus give US farmers the edge to grab market share from other grain-growing nations. Roughly the opposite has occurred during the past thirty years, despite the inflated promises that accompany each new trade agreement (most recently with China). Agricultural economist Daryll Ray of the University of Tennessee has documented a stair-step decline in the US share of global trade in corn, soybeans and wheat, starting in the 1970s. "What the past fifteen years have taught us is that lower crop prices do not cause competing exporters, including Canada, the European Union, Brazil, Argentina and Australia, to fold up shop and give the United States their market share," Ray explained. "When US prices drop, our competitors quickly lower their export prices as well." Importing countries, he added, do not increase their food purchases significantly when supplies are plentiful and prices lower. Nations, like people, buy what they need, but they do not eat twice as much just because the food is cheap.
The more momentous consequence of the price collapse is that in the past few years it drove many more farmers into accepting the status of contract producers--growing crops or livestock under fixed-price contracts with the corporations. Richard Levins, an agricultural economist at the University of Minnesota, said these production contracts covered about $60 billion by 1997, almost one-third of farm-level crop and livestock sales, and have expanded greatly since. Mainstream authorities regard supply contracting as the future. "Old MacDonald's farm is being absorbed into what might be called New McDonald's Farms," Levins observed. In other words, farming begins to resemble a fast-food franchise to run a burger joint or an auto dealership. The operator buys the supplies and equipment from the brand-name company and produces to its uniform specifications. "They are going to put cattle in buildings, too," Levins predicted. "It's not there yet, but cattle will be raised indoors eventually."
While contract status will effectively end the entrepreneurial culture in farming, it also ostensibly frees small producers from the harrowing instabilities of market prices. Or does it? Farmers foresee that the supposed stability of contract farming will actually leave them utterly dependent on the handful of agribusiness firms and without alternatives. Neil Harl, a veteran agricultural economist from Iowa State University, explained: "Let's say we're down to two huge hog-slaughtering firms, and each is 90 percent vertically integrated. The new contract [offered to a hog-factory operator] is considerably less attractive than the expiring contract. The producer is told, Take or leave it. If the closest competitive option for hogs is 900 miles away--and is also heavily integrated--clearly a producer in that situation is likely to be squeezed."
Agriculture's emerging pattern of organization begins to resemble what is under way in other major sectors, including globalized manufacturing. The model is no longer the huge industrial behemoth but the "virtual corporation" that owns very little in hard capital assets itself--that is, factories--but organizes a complex, floating network of affiliated producers and subcontractors who adhere to its brand standards--think of Nike. One can predict that the consolidated food industry will likely respond to periods of slack demand in the same way the auto industry or shoe manufacturers do--dropping subcontractors, closing factories, discarding workers.
The deeper implications are about power, as Jeremy Rifkin explains in The Age of Access. If there is no other place for smaller producers to sell, then access to the network becomes the crucial privilege. And who exactly controls the access? Or has the power to expel and punish weaker partners? This is among the veils that a strong new antitrust doctrine must look behind.
Farmers at long last will find themselves in the very same predicament that confronted industrial workers in other sectors 100 years ago. Harl believes that, unthinkable as it sounds, farmers must sooner or later pursue labor's remedy--collective action--by organizing unions that restore their bargaining power and by creating producer cooperatives large enough to compete with the big guys. "There was stability in Russia," Harl mused. "Russian agriculture was stable because the center told everyone what to do. And we will get stability if Cargill tells us what to do. But is that what Americans want?"
Maybe they do. Most consumers have seemed at least indifferent. Why cry for small farmers, a New York Times feature asked, when modern consolidations are wiping out so many other local enterprises, from independent bookstores to neighborhood groceries? But aside from the questions of food quality and safety or social equity, there is another threat that consumers might ponder: If this nexus of collaborating corporations acquires the market power to control total farm output and stabilize prices, then it will also have the power to inflate food prices on behalf of greater profit. In the last act, cheap food disappears right along with the free market.