Interpreting the Consequences of Midwestern Agricultural Industrialization
King, Martin Bruce, Journal of Economic Issues
The nature and consequences of the industrialization of agriculture are well documented in academic research and in the popular press. Interpretations of the process vary in reflection of the diverse perceptions of the nature and overall significance of industrialization. Suggested policies range from a "hands-off" to a "prohibit and prevent wherever possible" approach. Both approaches are unrealistic because they fail to recognize the historical context in which agricultural industrialization is taking place [Castle 1998].
In this paper, I present a historical context for the process, using nineteenth-century Illinois and the industrialization of swine production as examples of commercialization and industrialization of Midwestern agriculture, respectively.  I integrate the work of Karl Polanyi and K. William Kapp into the discussion to provide a foundation for realistic policy and to demonstrate the relevance of an institutionalist perspective to the formation of contemporary agricultural policy.
The Industrialization of Swine Production
Historically, independent producers have raised swine from birth to market. Despite gradual specialization and coordination in production and improvements in production techniques and management, overall production patterns were not drastically altered from the late-nineteenth to the mid-twentieth centuries. In the 1970s, sweeping changes in technology began to take place. Production that had traditionally occurred outside, with shelter provided from inclement weather, began to shift toward total confinement.
Confinement facilities provided producers with near complete control over climate, feeding regimes and reproduction. Genetic selection, which over the course of the twentieth century had improved feed efficiency and carcass quality, was accelerated to produce even leaner hogs that were ready for market sooner. Production stages became separated and specialized in the same production facility. The regular use of antibiotics, combined with segregated production, permitted better disease control [Thu and Durrenberger 1998].
A consequence of the application of industrial techniques and technology was an increased supply of pork without a significant change in the number of breeding animals [Fabiosa and Kaus 1999]. Subsequent low prices for swine, combined with high corn prices in the 1990s, resulted in declining numbers of farms raising hogs. In Iowa, the number of farms with swine inventories declined by 14,000, or 40 percent, between the years 1992 and 1997 [Lawrence 1998]. Although swine operations can be competitive regardless of the size of operation [Kliebenstein, Lawrence, and Duffy 1998], most farms discontinuing swine production were small-to medium-sized operations with little invested in facilities [Lawrence 1998].
Price declines became especially dramatic in the late 1990s. Prices that were in the $50 per hundredweight range in 1997 fell to less than $15 per hundredweight in December 1998. Prices bottomed out at 50-year lows and were responsible for the greatest losses from swine production in history [Lawrence 1999]. This event reinforced the trend described by Gary Benjamin  in Economic Perspectives. Benjamin argued that, given standards in place in 1997, 50 producers could produce all of the hogs needed in the United States, and fewer than 12 state-of-the-art packing plants could process all of the country's production.
Declining numbers of farms raising hogs were not the only consequence of the application of industrial techniques to swine production. Larger facilities with advanced management and production techniques gained higher reproductive efficiency that allowed non-Midwestern states to overcome feed and price disadvantages [Kliebenstein, Lawrence, and Duffy 1998]. Specialized production, improvements in feed processing, and large-scale purchases of grain gave states outside the Midwest an average feed cost per pound that was competitive with Midwestern states [Lawrence 1998], and, as a result, production increased in nontraditional regions. …