Crisis and Opportunity: Sustainability in American Agriculture

3. Corporate Agriculture and Family Farms

33 Corporate Agriculture and Family Farms At the turn of the twentieth century, America was still an agrarian nation. In 1900 over 40 percent of the people in the United States were still farmers and well over half still lived in rural areas.1 A hundred years later, at the turn of the twenty-first century , less than 2 percent of Americans called themselves farmers and only around 25 percent lived outside major metropolitan areas. The number of farms in the United States peaked at more than six million in the 1930s and has since dropped to less than two million. By the 1990s even those families who lived on farms relied on nonfarm income for about 90 percent of their household incomes.2 During the twentieth century, America was transformed from an agricultural to an industrial nation. Some scholars associate the word “industrialization” with the transformation of an economy from agriculture to manufacturing as the primary source of productivity. However, such a transformation is the natural consequence of applying an industrial model or paradigm in the development of a nation’s natural resources. A fundamental characteristic of the industrial paradigm is specialization. Thus, industrialization naturally leads to some people specializing in food and fiber production, freeing others to manufacture the other things associated with an industrial economy. In earlier times, specialization was referred to as “division of labor.” Early industrialists observed that if a group of laborers who were each producing an item (i.e., transforming raw materials into finished products) would instead specialize in performing only one or two functions in the production process, they could perform each task more efficiently. By specializing 3 34 Industrialization and working together, so that different functions were performed by different people, the group of laborers could greatly increase their collective productivity. To facilitate such specialization, each function in the production process had to be standardized so that each specialized step in the process would fit together with the others. Specialization and standardization then allowed production processes to be routinized, and possibly mechanized, which greatly simplified the production management process. This allowed control of production to be centralized or consolidated, with fewer people making decisions but with each manager controlling the use of more land, labor, and capital. Today, we commonly refer to the economic gains from industrialization as economies of scale. Industrial development is characterized by specialization, standardization , and consolidation of control. The transformation of American agriculture has followed the classic process of industrialization. Diversified farming operations gradually become more specialized—first specializing in livestock or crops, then in particular crops or species of livestock, and finally into specific phases of production for a specific crop or species of livestock. For example, today we have separated beef production into cow-calf, stocker cattle, and cattle feeder operations, which are separate from producing feed grains, soybeans, and hay, and from grain handlers, livestock truckers, and so on. We have separated the functions that once were performed on a single diversified farm into a number of specialized, standardized processes that are performed by separate enterprises all across the country. And in the process, we have made it not only possible but also more economically ef- ficient to consolidate the decision making, bringing all of these specialized functions together under the control of far fewer farmers, ranchers, and other decision makers who manage far larger business enterprises. Industrialization also results in separation and specialization with respect to the basic economic resources—land, labor, cap- Corporate Ag and Family Farms 35 ital, and management. Some people own land, others perform labor, others provide capital, and others manage. As agricultural operations have grown larger, they have required larger amounts of capital. First, family farms were incorporated so that families could keep their capital intact as their farms were transferred from one generation to the next. But eventually, the most economical size of an operation exceeded the financial capabilities of most family corporations. Publicly held corporations are able to assemble capital from many sources, providing an almost unlimited ability to finance any economically competitive business operation. Thus, it seems inevitable that an industrial agriculture ultimately will come under the control of large publicly owned corporations. So today, American agriculture is in the final stage of industrialization—the corporatization of command and control. In agriculture today, some people are landowners, some are agricultural workers, some own stock in agricultural corporations...