First the Chicken: The Origins ofFlexible Accumulation in Agrifood Douglas H. Constance*, Jason Konefal*, William D. Heffernan** and Anthony Rainey* *Sam Houston State University **University of Missouri - Columbia Presentation for the annual meeting of the Rural Sociological Association: SAFRIG Mini-Conference July 28, 2012
The Premise Ifyou want to understand agrifood globalization, you should study the poultry industry. The poultry industry is the original model of neoliberal structuring and flexible accumulation in agriculture.
The Framework Commodity Systems Analysis (Friedland 1984) Agrifood Regimes (Friedmann and McMichael 1989)
Agrifood Regimes Corporate Food Regime (McMichael 2005) Based on neoliberal restructuring (Harvey 2005) Consolidation/concentration of agrifood sectors Accumulation by dispossession Consumer food crises
Agrifood Regimes Globalization Project (McMichael 1996) Contested Project – (Bonanno and Constance 2008) Corporateresponse to success of social- democratic movements of Fordism CapitalFlight – avoid regulations in North Decentralization of Production – multi-site sourcing Informalization of Labor - anti-union, minorities, casualization Global Sourcing – global commodity chains
The Literature Living on Contract (Little and Watts 1994) Flexibleform of organizing commodity chains Provides control without liability and responsibility Poultry Agro-Industrial Districts in US South (Boyd and Watts 1997) Early model of flexible accumulation
History of Poultry Industry 1930s - Northeast US: Independent system servicing urban markets. 1940s – Northeast production for the war 1940s-50s – Southeast US dominates production
Industry Moves South: 1940s Abundance of small marginal farmers Farmers suffering from cotton crop failures History of sharecropping Planters,merchants and feed dealers extending informal credit Availability of surplus labor for processing Women and minorities (non-union)
Vertical Integration: 1950s/1960s Rationalization of the commodity chain Genetics,hatcheries, feedmills, contract production, processing and transportation Ralston Purina, Cargill, and Tyson emerge as dominant companies Independent production “non-existent”
Agro-Industrial DistrictsNW ArkansasNorth GeorgiaNorth AlabamaNE Texas/NW LouisianaSouth Central North Carolina
Southern Model: Contracts 1940s – 1960s: informal contracts changed to formal contracts Change from “a simple credit arrangement to a tightly interlnked credit, input, and labor contract” (Boyd and Watts 1997)
Poultry Contracts Company provides chicks, feed, mgmt. Grower provides land, labor, power, and capital for growout barns. (asset specificity) Long term debt and short term contracts Quality of contract for grower erodes with horizontal integration (Heffernan 2000).
Poultry Contracts Contract system allows the integrator to take advantage of the chief assets of the family farm – cheap, ‘docile’, and flexible labor – without the burdens of equity or the costs of wage labor. (Boyd and Watts 1997)
Poultry Contracts Social relations of production: independent commodity producers are subordinated to “management” through a distinctive labor process. (Boyd and Watts 1997)
Poultry Contracts Grower Dependent and Vulnerable “contracts are batch to batch” … “fear of being cut off” (Heffernan 1984) “propertied laborer” (Davis 1980) “serfs on the land” (Breimyer 1965) “only slaves left in the country” ( Wellford 1990)
Poultry Contracts: Conclusions Production contracts are “detours” around “obstacles” to capitalist penetration of agriculture – (Mooney 1982) Provides control without ownership/liability Form of labor discipline. System being adopted around the world Development agencies (IMF/WB/FAO) Expanding into other agrifood sectors
Southern Model The vertical integration system developed in the US South around agro-industrial districts is THE MODEL for the low cost production systems that are the social basis of competitiveness in a now global industry. (Boyd and Watts 1997)
Analysis of grower testimony Companies are Regional Monopsonies Suppress grower organization Hold Up - Technology Upgrades Long term debt, short term contracts Maintain debt (asset specificity) Tournament Ranking System Lack of transparency Chicks/feed/weight
Grower Testimony Contract “renewals” From long to short term Sign contract or lose the farm Asset specificity leads to extortion Fear of Retaliation Blacklist/poor chicks/bad feed/delays Debt Bondage Asset rich but cash poor
Debt “Oncethe grower bites the hook and goes deep into debt they start a cycle of debt burden from which it is very difficult to escape.”
Contracts “Beforethe end of the initial 10-year term the company changed that contract to a 1- year term. I realized that the company could change contracts easily by threatening to stop placing birds if I refused to sign.”
Contracts “It’sonly a contract until they bring you the next one, you know. It might say 15 years, but two months from now they might decide to change that contract. So they bring you a new one and you sign it, or you don’t grow chicks, you know.”
Contracts “Contracts can be changed or terminated at any time for any reason and as growers we have no recourse. And we’re forced to sign a contract whether we like it or not on a take it or leave it basis because, you know, we can either sign it or face bankruptcy.”
Upgrading – Holdup “And one of the things that always came up was upgrades and how the companies, the integrators would keep growers in debt with upgrades.”
The Tournament “Ithink it’s unfair because of the lack of transparency gives the company the ability to terminate or penalize growers based on false claims of poor performance that, in fact, is out of the grower’s control?”
Tournament “Anybody in this room knows that there is no such thing as a level playing field, the inputs. There’s just too many variables: quality of chicks; quality of feed; the feed deliveries. The stuff that’s outside of our control is almost endless.”
Information Asymmetry “Feed is formulated and mixed, loaded and weighed by the company and then delivered to the farm. Feed must be accepted by the grower on the company’s say so. And there’s no guarantee that the feed is of the highest quality or quantity.”
Monopsony “In 1963 the top four firms controlled 14% of the chickens slaughtered. Today it’s roughly 57%. And now it’s not uncommon for a grower to have to do business with only one company in their area.”
Economic Concentration “So you’ve got consolidation on the retail side and you’ve got vertical integration on the production side. And that can lead to a lot of imbalance in the system.”
The Problem: VI + HI = MO Regional Monopsonies Asset Specificity – debt dependency Hold Up – debt bondage The Tournament Predatory Opportunism Form of labor discipline
Araghi (2003) “Slavishconditions of employment… without visible enslavement.”
Tyson International: Diffuse the Innovation 2003– beef operations in China, Ireland and Russia 2003 – broiler operations in Argentina, Brazil, China, Denmark, Indonesia, Japan, Korea, Malaysia, Mexico, Panama, Philippines, Spain, UK, Venezuela
Tyson International: Mexico 1987joint venture with Trasgo de Mexico and C. Itoh of Japan - CITRA 1994 Trasgo de Mexico - Tyson de Mexico 2003 buys Nochistongo 2003 largest “value added” producer
Tyson International: Mexico Prototype: Mexico - after 20 years 3 rd. largest overall and 1st. in value-added sales Return on Investment (ROI) in Mexico 30% higher than US Followedits American customers South – WalMart, McDonald’s, KFC, Burger King
Regional Integration: The Mexican Poultry Industry #1 – Industrias Bachoco ($2B) #2 – JBS/Pilgrim’s Pride ($32B) #3 – Tyson/Tyson de Mexico ($28B) CR3 – 52% Increasing adoption of contract system.
JBS - Brazil 2005 – Buys Swift/Armour Argentina (beef) 2007 – Buys Swift US and Australia (beef) 2008 – Buys Smithfield Beef and Tasman Beef 2009 – Buys Pilgrim’s Pride, Inc. (poultry)
Mexico: Neoliberal Restructuring 1984: Peso Crisis IMF – Structural Adjustment Loans 1995: NAFTA FDI; corn dumping Shifts from ejidos to private contractors 2007: Tortilla Crisis (Sin Maiz, No Hay Paiz)
Tyson: Diffuse the Innovation 2008 – buys Macedo, Avita, and Frangobras of Brazil (poultry) 2008 – joint venture with Godrej Foods of India (poultry) 2008 – joint venture with Hinchang Foods and Jinghai Poultry in China (poultry) 2007 – joint venture with Cactus Feeders and Cresud in Argentina (beef)
Tyson - Conclusions Corporate Philosophy: Segment, Concentrate, and Dominate “We anticipate consumer demand, segment a market, concentrate production and marketing, and, subsequently, dominate that segment.”
Neoliberalism and the Southern Model Poultryindustry is the preferred model of agrifood globalization Model of flexible accumulation Control without liability/responsibility Casualization of labor in production and processing – labor discipline Model of the “World Farm” (see Burch 2005 on CP in Thailand)
Conclusions VI + HI = MO MO = monopsony opportunism in production Based on “debt bondage” Growing monopsony power in retailing. WalMart , food service, fast food driving the commodity chains within the commodity system.
Conclusions Ifyou want to see the preferred MODEL of global agrifood relations of production, study the poultry industry. The MODEL is based on flexible labor and capital relations. The MODEL is form of sharecropping and a remnant of colonialism and slavery.
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