Industrial Agriculture in the Era of Free Trade

By Warnock, John W. | Canadian Dimension, January-February 1998 | Go to article overview
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Industrial Agriculture in the Era of Free Trade


Warnock, John W., Canadian Dimension


In 1958 Ray Goldberg of Harvard University coined the word "agribusiness" to describe the food system from farm inputs to the end product on the table. He focused on the shrinking share of the consumer's food dollar that was going to the farmer.

In the 1970s, it became common to talk about "food product chains" that existed on an international level, how large food corporations were buying farm commodities from all over the world and processing them primarily to serve the affluent markets of the industrialized world.

People working in the agri-food sector today refer to the "industrialization" of agriculture and food. Many call this the final stage of food production, the shift from producing farm commodities for direct consumption to production for manufacturing. The cutting edge of food production today involves increased capital and technology and vertical integration of farms into the food-processing industry.

No one believes that corporations will want to own and operate farms. Farmers will still own the land, provide and recruit labour, and manage the operation. Corporations do not want to sink money in land, pay wages for farmworkers and pay management as well. Furthermore, they prefer to have the option of changing their sources of agricultural commodities if they can make a better arrangement somewhere else in the world.

The preferred system of operation is vertical integration by contract. This, of course, is nothing new. It has been fully developed in the poultry industry for around 30 years. This model extends today to vegetables, fluid milk, potatoes, seed crops, citrus fruit and pork.

The other general characteristic is the continued and accelerated trend to concentration of ownership in food processing. For example, in the United States in 1973, the four largest milling firms had 33 per cent of the market; by 1990 this had risen to 58 per cent. In Canada today, Archer Daniels Midland, a giant US agribusiness corporation, controls over 70 per cent of the market.

In the United States, four firms account for 80 per cent of all cattle slaughtered, and three firms account for 75 per cent of all lambs slaughtered. A recent study for the US Department of Agriculture on concentration in the red meat industry concluded that with the extent of vertical contracts, and so few processors, it is impossible for farmers to determine a market price.

The highly concentrated food processing industry is putting even greater emphasis on developing new manufactured end products, accompanied by mass advertising campaigns to convince consumers that this is what they want to eat. They are focusing on the high end of the market, families where adults are working and there is increased reliance on prepared foods. For example, the baking industry in North America introduces around 1,000 new products every year.

Added to this is the recent introduction of plants, animals and foods that have been developed by biotechnology. In 1997 there were around 4,000 transgenic plants in field trials in Canada. The Canadian Food Inspection Agency has already approved 28 varieties of plants for commercial use.

So even basic cereals are now being produced for specialized use for further processing, on a vertical contract basis. Traditional farm commodities are bypassing the normal commodity markets.

On the farm level, agriculturalists speak of the "super-farmers," the large producers with capital, technology and management skills that enable them to fit into the new industrial food system. Traditional family farmers are called "sun-downers," those who struggle to stay in business, primarily by earning most of their income off the farm.

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