1. First the Chicken: The Origins of
Flexible 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. 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. The Framework
 Commodity Systems Analysis
 (Friedland 1984)
 Agrifood Regimes
 (Friedmann and McMichael 1989)

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. 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. 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. 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. 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. 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. 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. Agro-Industrial Districts
NW Arkansas
North Georgia
North Alabama
NE Texas/NW Louisiana
South Central North Carolina

12. US Broiler Production Map

13. The Southern Model (Constance 2008)
 The modern broiler system “possessed a
distinctive southern accent from its
inception” (Boyd and Watts 1997:184)

14. Southern Model
 Distinct labor process
 Processing – informal labor relations
 Production – sharecropping/contracts

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. 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. 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. Poultry Contracts
 Social relations of production:
independent commodity producers are
subordinated to “management” through a
distinctive labor process. (Boyd and Watts
1997)

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. 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. 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. Horizontal Integration: 1960s/2000s
 Commodity cycles
 Mergers and acquisitions
 Sector consolidation/concentration
 CR4 – 1963: 14%
 CR4 – 2009: 57%

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. 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. 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. Legitimation Crisis:
Social Movement Resistance
 Poultrygrowers want USDA/USDOJ to
protect them from market power of the
poultry companies.
 NationalContract Poultry Growers
Association

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. The Problem: VI + HI = MO
 Regional Monopsonies
 Asset Specificity – debt dependency
 Hold Up – debt bondage
 The Tournament
 Predatory Opportunism
 Form of labor discipline

41. Araghi (2003)
 “Slavishconditions of employment…
without visible enslavement.”

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. 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. 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

47. 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.

48. 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)

49. 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)

50. 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)

51. Tyson - Conclusions
 Corporate
Philosophy:
Segment, Concentrate, and Dominate
 “We anticipate consumer demand, segment
a market, concentrate production and
marketing, and, subsequently, dominate
that segment.”

52. 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)

53. 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.

54. 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.