Edited by FRED MAGDOFF, JOHN BELLAMY FOSTER

HUNGRY FOR PROFIT

HUNGRY FOR PROFIT

THE AGRIBUSINESS THREAT TO FARMERS,

FOOD, AND THE ENVIRONMENT

edited by FRED MAGDOFF, JOHN BELLAMY FOSTER,

and FREDERICK H. BUTTEL

MONTHLY REVIEW PRESS

New York

CONTENTS

An Overview

the Agrarian Origins Of Capitalism

Liebig, Marx, And The Depletion Of Soil Fertility: Relevance For Today's Agriculture

Concentration Of Ownership And Control In Agriculture

Ecological Impacts Of Industrial Agriculture And Possibilities For Truly Sustainable Farming

The Maturing Of Capitalist Agriculture: Farmer As Proletarian

New Agricultural Biotechnologies: The Struggle For Democratic Choice

Global Food Politics

The Great Global Enclosure Of Our Times: Peasants And The Agrarian Question At The End Of The Twentieth Century

Organizing U.S. Farm Workers: A Continuous Struggle

Rebuilding Local Food Systems From The Grassroots Up

Want Amid Plenty: From Hunger To Inequality

Cuba: A Successful Case Study Of Sustainable Agriculture

The Importance Of Land Reform In The Reconstruction Of China

AN OVERVIEW

FRED MAGDOFF. JOHN BELLAMY FOSTER

AND FREDERICK H. BUTTEL

The conventional view that agriculture was displaced by industry in two stages-by the industrial revolution in the late nineteenth century and. as aresult of the rise of the agribusiness system in the mid-twentieth century-hasleft many observers of the contemporary issues with the impression that to dealwith agriculture is essentially to focus on political-economic history, rather thancontemporary political economy. Nothingcould be further from the truth. Thepurpose of this book is to help compensate for the neglect that agriculture hasoften suffered in political-economic literature of the late twentieth century, andto assist what is fast becoming a powerful resistance movement in theagricultural realm.

Historically, the significance of agriculture to the origin and developmentof capitalism cannot be overemphasized. The development of capitalism inEngland depended on the increasing surpluses resulting from an agriculturein the throes of major technical and social transformations. And England's distinctive patterns ofland holding created a new kind of market dependencyin agricultural production that was critical to the initiation of dynamiccapitalist relations geared to constant productivity growth (see Wood, chapter1). In subsequent development, the rise of industry in no way leftagriculture behind but was mirrored (indeed in some cases prefigured) at eachstage by changes in the latter.

Agriculrure which has been dominated for decades in the United States and, more recently in the rest of the world, by large agribusiness corporations, is now once again undergoing rapid even unprecedented change. To be sure,much of this story - concentration and centralization of capital and exodusof peasants and farmers from the land - is not new. But the trends witnessedin agriculture in the late twentieth century are distinctive in several importantrespects. Concentration and centralization and rural dispossession within thissector are being reinforced by new technological innovations, particularly inthe area of biotechnology, leading to such developments as the proletarianization of the farmer, and to the appropriation of ownership and control ofindigenous plants and animals in third world countries. The global commodificationof agriculture has its counterpart in the destruction of peasantand small-scale agriculture throughout the world. Subsistence farming is indecline in the third world while the production of luxury crops for export tothe rich countries is being expanded as never before. The result is a rise inworld food supplies, together with an increase in world hunger. So sharp arethese contradictions that hunger is expanding in the United States itself, at the very heart of the system, where it is no longer surprising to see food linesand soup kitchens even during economic expansions. The growth of agribusinesshas also generated more and more ecological problems through thesubdivision of traditional diversified farming into specialized production, thebreak in the soil nutrient cycle, the pollution of land and water (and food itself) with chemicals, soil erosion and other forms of destruction of agriculrural ecosystems, and so on. These developments in world agriculture, however, have not gone unanswered. Movements dedicaced to promotingsustainable agriculture, fighting hunger, supporting family- and small-scale farming, and staving off ecological destruction have sprouted from the ruraland urban grassroots everywhere: locally, nationally, and globally. Ourpurpose in compiling the essays for this book is to provide the basis for acoherent analysis of these developments.

The essays in Hungry for Profit are focused on the political economy ofagriculture, food, and ecology. Each article adopts a historical approach whileat the same time focusing on issues of current concern and of importance forthe future. Further, each of the essays is a critique in the classical sense ofstriving to penetrate a contradictory reality in order to develop the means fortranscending it. Capitalism presents us with the paradoxical reality of a rapidgrowth of food production and perpetuation of overproduction (relative tomarkets and income distribution) on one hand, accompanied by the reinforcementof social exclusion and thus the growth of hunger on the other.The latter is not, as is sometimes thought, mainly a result of population growth(which has generally beensurpassed by the growth of productivity in agriculture), but instead a consequence of the fact that the immediate object offoodproduction is not human sustenance and well-being but the growth of profits.The coincidence of hungry mouths with overflowing grain silos may seem to be a paradox, but it is a paradox not of our analysis, but of capitalistagribusiness itself.

HISTORICAL TURNING POINT

There can no longer be any doubttoday, at the turn of the twenty-first century, that we are in the midst of an unusually rapid change in all aspectsof the world's agriculture-food system. This system consists of the farmerswho produce the food, but also the huge industry that supplies farmers withinputs, from seeds to fertilizers to tractors to fuel, and the even larger industrythat processes, packages, and distributes the food. And, although internationaltrade in agricultural products has occured for centuries, the pace atwhich the world is being bound together by trade and the penetration of third world agricultre by the largest of corporations is also quickening (seeMcMichael. chapter 7).

Traditionally, the various activities of different parts of the agriculcurefoodsystem have involved many players-numerous suppliers of inputs, mill1ions of farmers, many purchasers of agricultural commodities, andprocessors and distributors of food-and have often been portrayed as thetextbook example of free-market competition. In Monopoly Capital(1966), Paul Baran and Paul Sweezy discussed the process of the increasing concentrationand centralization of production under a mature capitalism,whichresults in a few "corespective" firms dominating most industrial sectors.Under these conditions, a handful of giant corporations control the bulk of a particular market, and the struggle over market share is more by advertising, product differentiation, and brand identification than price competition.

The process of concentration and centralization of the agriculture and foodsectors of the economy is occurring later than in the nonfarm industrial sectors. But recent decades have witnessed a starling pace of concentrationof suppliers of agricultural inputs that farmers must purchase (such as seeds, fertilizers. pesticides. and machinery) as well as concentration in the foodprocessing, distribution, and retail sectors, where a relatively small numberof food conglomerates now play a dominant role (see Heffernan. chapter 3).

How food is produced and how it gets from farm fields to people's tables(the entire food system) is something that obviously concerns everyone.Today there is growing popular fear over possible pesticide contaminationof food as well as with the microbiological safety of the food supply. Recentoutbreaks of illness have been associated with a variety of contaminated products-meat, juice, fruits, and vegetables. Concern also is growing in theUnited States and abroad over the safety of food made from geneticallymodified crops. But the food safety question so much on people's minds isonly one small part of the picture. Other important issues include concentrationof ownership and control in the production, processing, and marketingof food; safety of farmers and farmworkers when using pesticides; theheavy dependence on nonrenewable resources; environmental consequencesof widespread use of genetically modified plants, animals, and microorganisms;contamination of surface- and groundwaters with pesticides and nutrients;low returns for most farmers; low wages and poor working and livingconditions for farmworkers; cruel treatment of livestock; and inadequateaccess to food by poor people. The negative influences of current agriculturalpractices on ecological systems at the local, regional, and globallevels affectthe lives of all of us as well as many other species (see Foster and Magdoff, chapter 2, and Altieri, chapter 4). The environmental, social, and economicproblems are intertwined, and all are related to the structure of agricultureas it has developed in the late twentieth century.

There are now few buyers for most raw agricultural products. This has leftfarmers without truly free markets to sell their commodities. Although supplyand demand forces, when at their extremes, certainly influence the prices ofagricultural commodities, prices for most agricultural commodities havegenerally remained low and the farmer's share of the food dollar (after payingfor input costs) has steadily declined from about 40 percent in 1910 to lessthan 10 percent in 1990. The enormous power exerted by the largestagribusiness/food corporations allows them essentially to control the cost oftheir raw materials purchased from farmers while at the same time keepingprices of food to the general public at high enough levels to ensure large profits. It is no accident that the food industry is the second most profitableone in the United States, following pharmaceuticals!

While Baran and Sweezywrote persuasively and perceptively about howconcentration and centralization of capital was occurring and would decisively affect national economies and societies, several of the essays in thiscollection point to how these concentration and centralization processes arebeing shaped by the globalization of capital in agriculture and agro-foodsystems. Heffernan's essay portrays the breakneck pace of concentration andcentralization of agribusiness capital at a global scale. McMichael notes thatthe emergence of new global trade rules over the past twenty-five years-culminatingin the World Trade Organization, the North American Free TradeAgreement, other regional trade agreements, and the proposed MultilateralAgreement on Investment (MAl)-has contributed to the expansion ofglobal sourcing of foodstuffs and to the growth of export-oriented productionin the third world.

Just as remarkable as the globalization of the agro-industrial chain ofproduction and distribution are the trends in the United States and mostother nations toward the industrialization of agriculture and contractualintegration. Recognizing that farming tends not to be very profitable and that cheapening the cost of obtaining raw food products is a key to corporate profitability, agribusiness firms have begun to develop "industrial"-orfactory-style-production systems and contractual integration arrangementsin which the decisions about how to produce crops and animals are increas·ingly being taken over by the large agribusinesses (see Lewontin, chapter 5).In the extreme situation, such as poultry growers under contract to Tyson orPerdue, or hog producers under contract to Murphy Family Farms, independentfarmers are reduced to the position oflaborers, but without the rightsof workers to collectively bargain.

Contractual integration in the white and red meat sectors (especiallybroilets and hogs) is closely associated with industrialized or "facrory" farming. Meat packets and processors prefer factory farming because it provides them with large, predictable quanities of uniform commodities. Though factory farming and contractual integration are often justified interms of the need to respond to "consumer preferences," consumers moreoften than not oppose factory farming, and there appear to be few benefitsfor consumers from these types of production systems. The development offactory farms,which produce animals under the most cruel conditions as partof a vertically integrated production system, has also resulted in the separationof the animals from the land that produces their feed (see Foster and Magdoff, chapter 2). This phenomenon is in addition to the separation of the mass ofthe population from the land that occurred when industrialization causedthe migrations to urban centers (a process that continues to this day in ThirdWorld countries, with or without commensurate industrialization). Theecological consequences of that earlier process were outlined by Marx inCapital.

TECHNOLOGY AND EVER-INCREASING SCALE

As is generally the case for relatively small-scale producers of commoditiesunder capitalism, farmers are on a tradmill in which the downward pressureon prices they receive-and/or the upward pressure on inputs needed forproduction-force them to adopt new technologies and to increase the scaleof production in an attempt to stay in business. (It has been said that farmingis one of the few businesses that pays retail prices for inputs and sells itsproducts at wholesale prices.) As the financial returns of farmers decline perunit of output, in order to reap the same returns as before the farmers aretold that they must get larger or get out. The treadmill that this creates isindicated by an old New England saying:”we grow more corn, to feed morecows, to make more milk, to buy more land, to grow more corn," However, a recent study of dairy farmers in New York State showed that their profitper cow decreased as production per cow and herd size increased. Moreproduction is needed just to stand still!

The physical advantages that accrue to increasing production scale (mainlymore efficient use oflabor and machinery) reach their limits fairly quickly inagriculture. For most commodities medium-sized family farms are as or moreefficient than larger, more industrial ones, But that doesn't mean that therearen't real pecuniary advantages to very large farms in a capitalist economy – theyrypically receive a premium for the commodities they sell because oftheir large volumes, pay less for purchased inputs and for interest on borrowed money, and have more opportunity for making profits throughthe use of hired labor.

In the most industrialized and "integrated" sectors such as broilers, "openmarkets" disappear, and only those producers who have production contractswith processors and other agribusiness "integrators" are able to find a marketfor their products. A number of publicly funded agricultural experimentstations have also tended to give more attention to factory producers-whoaccount for a very small share of their clientele-than to the far morenumerous, but less influential family-scale farmers.

Those who can't keep up with the treadmill of producing on an ever-increasingscale tend to be forced out of farming, and their children arediscouraged from entering farming. This is what has been responsible for thedrastic decline in the numbers of farms in many countries; in the UnitedStates from close to 7 million in the 1930s to about 1.8 million by themid-1990s. And as farmers left the land, the effects on minorities weredevastating. From a high of 14 percent of all U.S. farms being owned byblacks in the 1930s, today less than 1 percent are black-owned. The bulk of decline in farms occurred from the end of the Second World War throughthe early 1970s, when farm numbers stabilized at approximately 2.0 millionand declined by only 0.2 percent a year through the early 1980s. (Althoughthere has recently been an increase in the number of minority-owned farms,mainly among Mexicans and Asians, they still represent a very small percentof total farms.) During the severe "farm crisis" of the 1980s, U.S. farmnumbers again declined at a rapid pace (of approximately 17 percent perdecade), but are now declining at a slower rate. The rates of decline in farmshave been particularly startling in the livestock sectors that are undergoingthe most rapid industrialization and movement toward factory farming.Since the early 1980s the numbers of broiler, hog, and dairy farmers havedeclined at about 4.0 to 4.5 percent per year.

Philip McMichael (chapter 7) stresses that one of the key provisions of theUruguay General Agreement on Tariffs and Trade (GATT) Round whichculminated in the establishment of the World Trade Organization (WTO)was the dismantling of agricultural commodity programs, which since theSecond World War have served, albeit vay imperfectly, to put a floor underdomestic commodity prices. The U.S. government wasted little time incomplying with the Uruguay RoundAgreement, having done so, in the formof the Federal Agriculrural Improvement and Reform Act (FAIR) of 1996.As this book goes to press we are in the midst of another era of hardship andbankruptcies caused by the phasing out of the farm commodity programsafety ner, and by continuing low prices received by farmers for the basicagricultural commodities such as wheat, corn, and soybeans. This year, as last, an "emergency" farm-aid bill was passed by the U.S.Congress inresponse to the low prices of farm products.

As farm numbers declined during the last half century, the average farmsize increased and the largest of farms have come to account for a sizableproportion of production. At present, the 122,000 largest farms in the UnitedStates, representing only 6 percent of the total number, receive close to 60 percent of total farm receipts. These large farms have also been able to reapa disproportionate amount of government support payments, receiving over30 percent of the payments for the commodity programs.