First the Chicken: The Origins ofFlexible Accumulation in Agrifood     Douglas H. Constance*, Jason Konefal*,    William D...
The Premise Ifyou want to understand agrifood  globalization, you should study the poultry  industry. The  poultry indus...
The Framework Commodity      Systems Analysis   (Friedland   1984) Agrifood   Regimes   (Friedmann    and McMichael 19...
Agrifood Regimes   Agrifood Regimes: Friedmann and McMichael (1989)      1880s to 1920s – Settler/Colonial (Empire - Bri...
Agrifood Regimes Corporate   Food Regime (McMichael 2005)    Based on neoliberal restructuring (Harvey 2005)    Consoli...
Agrifood Regimes Globalization         Project (McMichael 1996)     Contested Project – (Bonanno and Constance 2008) Co...
The Literature Living   on Contract (Little and Watts 1994)   Flexibleform of organizing commodity chains   Provides co...
History of Poultry Industry 1930s - Northeast US: Independent system servicing urban markets. 1940s   – Northeast produc...
Industry Moves South: 1940s Abundance       of small marginal farmers   Farmers     suffering from cotton crop failures...
Vertical Integration: 1950s/1960s Rationalization   of the commodity chain Genetics,hatcheries, feedmills, contract prod...
Agro-Industrial DistrictsNW  ArkansasNorth GeorgiaNorth AlabamaNE Texas/NW LouisianaSouth Central North Carolina
US Broiler Production Map
The Southern Model (Constance 2008) The modern broiler system “possessed a distinctive southern accent from its inception...
Southern Model Distinct   labor process Processing – informal labor relations Production – sharecropping/contracts
Southern Model: Contracts 1940s – 1960s: informal contracts changed to formal contracts Change   from “a simple credit a...
Poultry Contracts Company    provides chicks, feed, mgmt. Grower  provides land, labor, power, and capital for growout b...
Poultry Contracts Contract system allows the integrator to take advantage of the chief assets of the family farm – cheap,...
Poultry Contracts Social relations of production: independent commodity producers are subordinated to “management” throug...
Poultry Contracts Grower   Dependent and Vulnerable “contracts are batch to batch” … “fear of  being cut off” (Heffernan...
Poultry Contracts: Conclusions Production contracts are “detours” around “obstacles” to capitalist penetration of agricul...
Southern Model The  vertical integration system developed in the US South around agro-industrial districts is THE MODEL f...
Horizontal Integration: 1960s/2000s Commodity    cycles Mergers   and acquisitions Sector   consolidation/concentration...
Tyson Foods, Inc.: An Example 1930s  – John Tyson 1947–Tyson Feed & Hatchery, Inc. 1958 – buys first processing plant....
Tyson Foods 1998 – buys Hudson Farms, now largest broiler firm in US and world 2001- buys IBP, largest beef and pork pro...
The Problem: VI + HI = MO VI   + HI = MO   (Constance      et al. 2012) Monopsony        Opportunism   Predatory Behav...
Legitimation Crisis:  Social Movement Resistance Poultrygrowers want USDA/USDOJ to protect them from market power of the ...
GIPSA Hearings (Grain Inspection    Packers Stockyard Adm. USDOJ/USDA    Public Workshops Exploring Competition in Agricu...
Analysis of grower testimony Companies     are Regional Monopsonies   Suppress   grower organization Hold   Up - Techno...
Grower Testimony Contract   “renewals”   From  long to short term   Sign contract or lose the farm   Asset specificity...
Debt “Oncethe grower bites the hook and goes deep into debt they start a cycle of debt burden from which it is very diffi...
Contracts “Beforethe end of the initial 10-year term the company changed that contract to a 1- year term. I realized that...
Contracts “It’sonly a contract until they bring you the  next one, you know. It might say 15 years,  but two months from ...
Contracts “Contracts  can be changed or terminated at any time for any reason and as growers we have no recourse. And we’...
Upgrading – Holdup “And one of the things that always came up was upgrades and how the companies, the integrators would k...
The Tournament “Ithink it’s unfair because of the lack of  transparency gives the company the ability  to terminate or pe...
Tournament “Anybody  in this room knows that there is no such thing as a level playing field, the inputs. There’s just to...
Information Asymmetry “Feed is formulated and mixed, loaded and weighed by the company and then delivered to the farm. Fe...
Monopsony “In 1963 the top four firms controlled 14%  of the chickens slaughtered. Today it’s  roughly 57%. And now it’s ...
Economic Concentration “So you’ve got consolidation on the retail side and you’ve got vertical integration on the product...
The Problem: VI + HI = MO Regional   Monopsonies Asset Specificity – debt dependency Hold Up – debt bondage The Tourna...
Araghi (2003) “Slavishconditions of employment… without visible enslavement.”
Tyson International:     Diffuse the Innovation 2003– beef operations in China, Ireland and Russia 2003 – broiler operat...
Tyson International: Mexico 1987joint venture with Trasgo de Mexico and C. Itoh of Japan - CITRA 1994   Trasgo de Mexico...
Tyson International: Mexico Prototype: Mexico - after 20 years 3 rd. largest overall and 1st. in value-added sales Retur...
Regional Integration:    The Mexican Poultry Industry #1 – Industrias Bachoco ($2B) #2 – JBS/Pilgrim’s Pride ($32B) #3 ...
JBS - Brazil 2005  – Buys Swift/Armour  Argentina (beef) 2007 – Buys Swift US  and Australia (beef) 2008 – Buys Smithfi...
Mexico: Neoliberal Restructuring 1984:    Peso Crisis   IMF    – Structural Adjustment Loans 1995:    NAFTA   FDI;   c...
Tyson: Diffuse the Innovation 2008  – buys Macedo, Avita, and  Frangobras of Brazil (poultry) 2008 – joint venture with ...
Tyson - Conclusions Corporate          Philosophy: Segment, Concentrate, and Dominate “We anticipate consumer demand, se...
Neoliberalism and the         Southern Model Poultryindustry is the preferred model of agrifood globalization   Model of...
Conclusions VI   + HI = MO MO = monopsony opportunism in production   Based   on “debt bondage” Growing    monopsony p...
Conclusions Ifyou want to see the preferred MODEL of  global agrifood relations of production,  study the poultry industr...
Rss poultry2012
Rss poultry2012
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Rss poultry2012

  1. 1. 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
  2. 2. 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.
  3. 3. The Framework Commodity Systems Analysis  (Friedland 1984) Agrifood Regimes  (Friedmann and McMichael 1989)
  4. 4. Agrifood Regimes Agrifood Regimes: Friedmann and McMichael (1989)  1880s to 1920s – Settler/Colonial (Empire - Britain)  1940s to 1970s – Agricultural Surplus (State - US) The 3rd. Agrifood Regime (Market as hegemon)  Corporate (McMichael 2005)  Corporate-Environmental (Friedmann 2005)  Financialized (Burch/Lawrence 2009)  Neoliberal Food (Pechlaner /Otero 2010)  Nutritionalization (Dixon 2009)  Food from Somewhere (Campbell 2009) 
  5. 5. Agrifood Regimes Corporate Food Regime (McMichael 2005) Based on neoliberal restructuring (Harvey 2005) Consolidation/concentration of agrifood sectors Accumulation by dispossession Consumer food crises
  6. 6. 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
  7. 7. 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
  8. 8. History of Poultry Industry 1930s - Northeast US: Independent system servicing urban markets. 1940s – Northeast production for the war 1940s-50s – Southeast US dominates production
  9. 9. 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)
  10. 10. 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”
  11. 11. Agro-Industrial DistrictsNW ArkansasNorth GeorgiaNorth AlabamaNE Texas/NW LouisianaSouth Central North Carolina
  12. 12. US Broiler Production Map
  13. 13. The Southern Model (Constance 2008) The modern broiler system “possessed a distinctive southern accent from its inception” (Boyd and Watts 1997:184)
  14. 14. Southern Model Distinct labor process Processing – informal labor relations Production – sharecropping/contracts
  15. 15. 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)
  16. 16. 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).
  17. 17. 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)
  18. 18. Poultry Contracts Social relations of production: independent commodity producers are subordinated to “management” through a distinctive labor process. (Boyd and Watts 1997)
  19. 19. 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)
  20. 20. 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
  21. 21. 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)
  22. 22. Horizontal Integration: 1960s/2000s Commodity cycles Mergers and acquisitions Sector consolidation/concentration CR4 – 1963: 14% CR4 – 2009: 57%
  23. 23. Tyson Foods, Inc.: An Example 1930s – John Tyson 1947–Tyson Feed & Hatchery, Inc. 1958 – buys first processing plant. 1963 – Tyson Foods, Inc. 1978 - buys Wilson Foods 1984 - buys Valmac Industries 1986 – buys Lane Processing 1989 – buys Holly Farms
  24. 24. Tyson Foods 1998 – buys Hudson Farms, now largest broiler firm in US and world 2001- buys IBP, largest beef and pork processor in the US and world
  25. 25. The Problem: VI + HI = MO VI + HI = MO  (Constance et al. 2012) Monopsony Opportunism  Predatory Behavior  Form of labor discipline (Vukina and Leegmonchai 2006)
  26. 26. Legitimation Crisis: Social Movement Resistance Poultrygrowers want USDA/USDOJ to protect them from market power of the poultry companies. NationalContract Poultry Growers Association
  27. 27. GIPSA Hearings (Grain Inspection Packers Stockyard Adm. USDOJ/USDA Public Workshops Exploring Competition in Agriculture (2010) Fiveworkshops: general/seeds; poultry; dairy; livestock; margins.
  28. 28. 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
  29. 29. 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
  30. 30. 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.”
  31. 31. 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.”
  32. 32. 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.”
  33. 33. 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.”
  34. 34. 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.”
  35. 35. 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?”
  36. 36. 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.”
  37. 37. 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.”
  38. 38. 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.”
  39. 39. 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.”
  40. 40. The Problem: VI + HI = MO Regional Monopsonies Asset Specificity – debt dependency Hold Up – debt bondage The Tournament Predatory Opportunism  Form of labor discipline
  41. 41. Araghi (2003) “Slavishconditions of employment… without visible enslavement.”
  42. 42. 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
  43. 43. 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
  44. 44. 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
  45. 45. 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.
  46. 46. 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)
  47. 47. 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)
  48. 48. 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)
  49. 49. Tyson - Conclusions Corporate Philosophy: Segment, Concentrate, and Dominate “We anticipate consumer demand, segment a market, concentrate production and marketing, and, subsequently, dominate that segment.”
  50. 50. 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)
  51. 51. 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.
  52. 52. 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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