The Industrialization of Agriculture: Implications for Public Concern and Environmental Consequences

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The Industrialization of Agriculture
Implications for Public Concern and Environmental
Consequences of CAFOs

• When/where did industrialized agriculture and
  CAFOs come into being?
• What are the driving forces behind agricultural
  industrialization?
• What consequences of industrialization and CAFO
  have caused controversy?
• How are these consequences being dealt with by
  public policies and institutions?

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Outline

• 1.Review of Industrialization in the Poultry and
  Swine Sector
• 2.Viewing Industrialization in a Broader Context
  for Conflict (or Policy) Analysis
• 3.Consequences of Industrialization that Cause
  Conflict Over CAFOs
• 4. Concluding Thoughts about Public Policy and
  Institutional Responses

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1. Review of Industrialization in the Poultry and
Swine Sectors

• Marriage of Scientific Knowledge and Industrial
  Economy Forces 
• Ag industrialization is not a new thing! (Its
  been ongoing for many decades)
• Selected Researchers Observations
• 1960s 70s - Poultry (broiler) Industry
• 1980s 90s - Swine Industry

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Ag Industrialization - Observations of
Researchers in the 1960s 1970s

• Scientific/Technological Knowledge Industrial
  Economy Forces
• Specialization in services products
• Substitution of off-farm activities for farm work
• Decreased importance of land vs. capital
• Separation of crop and animal production
• Shift from land-based to capital-based activity
• Could be located almost anywhere

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Separation of Crops Livestock Had Implications
for Location of Enterprises
Global
Manure ? ? ?
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Ag Industrialization - Observations of
Researchers in the 1960s 1970s

• Scientific Knowledge and Industrial Forces
• Specialization in services products
• Substitution of off-farm activities for farm work
• Decreased importance of land vs. capital
• Separation of crop and animal production
• Shift from land-based to capital-based activity
• Could be located almost anywhere
• Integration of Production-Marketing
  Geographical Concentration - Broilers

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Integration of Production and Marketing
Geographical Concentration

• First Application in Broiler Industry in 1960s
• Industry Reorganization
• Growth from Economies of Scale in Processing
• Vertical Integration
• Agglomeration Economies Clustering of
  production
• Contracting
• Processors/Integrators own birds
• Contract fee reduced grower price risk
• Growers clustered near large processors

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Integration of Production and Marketing
Geographical Concentration

• Geographic Shifts in Broilers (toward South)
• Pre WW II
• Delmarva, South (AK,TX), New England, Midwest
  (IN,IL)
• Post WW II
• Arkansas, Southeast (GA, AL, NC) and South (TX,
  MS), Delmarva
• Consolidation has led to a highly industrialized
  and vertically integrated sector
• Production 90 contracted, Dominant four firms

Source Martin and Zering, 1997
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How Industrialization Happens

• Comparative analysis of broiler, fed cattle and
  processing vegetable sectors
• Identified three catalytic forces that trigger
  structural change
• New mechanical, biological or organizational
  technology
• Shifting market forces and demand
• New government policies and programs

Source Reimund, Martin and Moore, USDA Economic
Research Service, 1981
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 A Model of Structural Change Four Stage Process

• Technological change - innovators adopt new
  technology
• Locational shifts - production of the commodity
  moves to areas more amenable to changed methods
  than traditional ones
• Growth and development - output rises as a
  result of newly gained efficiencies
• Adjustment to risks - new institutions for
  coordination emerge and relationships within the
  sector evolve in order to manage new risks.  

Source Reimund, Martin and Moore, 1981
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Observations in 1980s 1990s Focus Swine
Industry

• Industrialization Trend Existed for Decades
• Accelerated in late 1980s early 1990s
• Significant Farm Exits, Consolidation, etc.
• Major Geographic Shifts in the 1990s
• Traditional Large Production Area was in Midwest
  states (IA, IL, IN, MN, NE, OH, SD)
• Rapid expansion in the N. Carolina in early 1990s
• Shifts to Great Plains (KS, OK) in late 1990s
• Some Factors Driving Evolution of Sector

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Factors Driving Rapid Evolution of the Swine
Sector

• New technology
• Biological Genetics and feeding
• Mechanical - Improved housing, disease control
• Organizational - Contracting, Vertical
  Integration
• Shifting market forces and demand
• Consumer meat preferences, Diet/Health
• New government policies and programs?
• State/Local Econ Dev Environmental Policies
• Business Climate?
• Market Control?

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2. Viewing Industrialization in a Broader Context
for Conflict/Policy Analysis

• Externalities and Public Policy
• Existence of third party effects
  (externalities)
• Peoples actions and welfare are linked
• Existing Public Policy Determines Rules for who
  can do what to whom?
• Industrialization as a Dynamic Process
• New Linkages Between People
• New Patterns of External Effects
• Positive Opportunities (profits, jobs, income)
• Negative Burdens or Costs (water
  degradation,odors)

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Viewing Industrialization in a Broader Context
for Conflict/Policy Analysis

• Existence of new opportunities (benefits) and
  burdens creates incentives for individuals and
  groups to change the policy rules
• Those helped protect benefits and gains through
  industrialization
• Those harmed protect themselves from the
  negative effects (damages or costs) of
  industrialization
• People selectively view the consequences of
  industrialization depending on how they relate (
  or -) to the process.

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Different Stakeholders will Selectively Perceive
or - Impacts of a Proposed CAFO

• - CAFO owner
• - Other producers
• - Integrator
• - Local Ag Suppliers
• - Farmer Interest Groups
• - Consumers
• - Local Officials

• Neighbors
• Residents of rural area or watershed
• Environmentalists
• Water suppliers
• State officials 
• Federal officials

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Viewing Industrialization in a Broader Context
for Conflict/Policy Analysis

• Some Implications Questions
• Are the current public policies obsolete?
• How well do markets work to deal with the new
  pattern of externalities?
• Do institutions exist for people to discuss and
  deal with negative and positive consequences of
  industrialization?
• How can these processes and policies be improved?

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3.Consequences of Industrialization that Cause
Conflict Over CAFOs

• Three Dimensions of Conflict
• People - History of relationships and
  personalities
• Process - Patterns of interaction and possibly
  conflict escalation
• Problem - (or content ) the issues and interests
  that are the reason for the dispute

Source Beer and Steif, 1997.
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3. Consequences of Industrialization that Cause
Conflict Over CAFOs

• Content Examples
• National and Regional Scale
• Nutrient Overabundance

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Nutrient Cycle Doesnt Cycle!
Global
Manure ? ? ?
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3. Consequences of Industrialization that Cause
Conflict Over CAFOs

• Selected Problem (or Content) Examples
• National and Regional Level
• Generally - Nutrient Overabundance
• Surface Water Quality
• Spills from manure lagoons
• Nitrogen and Phosphorus in the valued water
  resources Ecosystem and economic effects
• Public Health Concerns in late 1990s Pfiesteria
  in water bodies in MD and NC and possible links
  to high levels of phosphorus from farms and other
  sources

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Phosphorus Cycle Has Become Fragmented
Regional Boundary
State Boundary
Feed Mill Farm
Animals
Global
People
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3. Consequences of Industrialization that Cause
Conflict Over CAFOs

• Selected Problem (or Content) Examples
• State level
• Existing Water Quality and/or Quantity
• Future Quality of Water (or Air) Resources and
  their role in the States Development and
  residents quality of life
• Future viability of an animal sector and
  associated income or jobs
• Viability of other industries supported by
  agriculture

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3. Consequences of Industrialization that Cause
Conflict Over CAFOs
Selected Problem (or Content) Examples Local
Community Level

• Drinking water quality
• Surface and groundwater quality
• Water availability
• Dead animal disposal
• Insects and public health or nuisance issues

• Odors
• Air quality
• Property Values
• Farm or farmer viability
• Ag-related businesses
• Open space preservation

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4.Concluding Thoughts about Public Policy
Responses

• Industrialization as a Dynamic Process
• New Patterns of Positive and Negative External
  Effects
• Different stakeholders perceive different
  benefits or burdens depending on how they relate
  ( or -) to the process.
• Question about policies and institutions that
  allow people to effectively express their
  concerns over the effects of industrialization

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4.Concluding Thoughts about Public Policy
Responses

• How Are the Consequences of Industrialization Are
  Being Dealt With By Public Policies and
  Institutions?
• Current Level of Conflict over CAFOs-- suggests
  not very well.
• Addition Efforts Looking at Boundary Issues at
  Several Levels

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4.Concluding Thoughts about Public Policy
Responses

• Explore Role of Boundary Issues
• Firm level What costs do firms consider?
• Federal State Local Govts - Who decides?
• Between Agencies Who Decides Who Implements
  Policy?

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3.Consequences of Industrialization that Cause
Conflict Over CAFOs

• Three Dimensions of Conflict
• People - History of relationships and
  personalities
• Process - Patterns of interaction and possibly
  conflict escalation
• Problem - (or content ) the issues and interests
  that are the reason for the dispute

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3.Consequences of Industrialization That Cause
Conflict Over CAFOs

• Acknowledge the People dimension
• Process Issues -Previous interactions in
  policy-making
• Environmentalists concerns about follow-through
  of a business or agency
• Neighbors frustration that no state agency has
  jurisdiction over their concern (odors, insects,
  water quantity)

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3.Consequences of Industrialization That Cause
Conflict Over CAFOs

• Acknowledge the People dimension
• Process Issues Some Examples
• Previous interactions in policy-making
• Environmentalists concerns about follow-through
  of a business or agency
• Neighbors frustration that no state agency has
  jurisdiction over their concern (odors, insects,
  water quantity)

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Conflict can be over Process

• Results of Conflicts over Intensive Livestock
  Operations Potential for Public Participation
  Conflict Management project
• Funded by PA Dept. of Ag. 1998 -2000
• Universities
• Penn State University
• Ag Law Center Dickinson Law School/PSU
• Juniata College

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Key Stakeholder Concerns Intensive Livestock
Operations Study

• Environmental Use
• Health and Safety
• The Role of Govt Officials
• Economic Impact

• Community Conflicts about Farming/Food
• Decision Making Processes
• The Possibility of Successful Resolution

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Selected Stakeholder Concerns

• Governments officials role (i.e. trust)
• Lack of clarity of laws and govt
  responsibilities
• Capabilities
• Bias and/or Conflicts of interest
• Decision making processes
• Respect and civility Desire to have their input
  heard and considered
• Frustration with current opportunities for
  education and dialogue
• Lack of control (e.g., local govt preemption)

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Need for Improved Conflict Management Methods

• Avoid
• High legal fees
• Economic costs, delays
• Losing control of decisions
• Tearing of social fabric
• Wasting community resources

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Recommended Processes

• Mediation
• Consensus Seeking Processes
• Formal Public Hearings
• Formal Review and Comment
• Public Information Meetings

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Focusing on Different Goals

• Education of citizens
• Public information meetings
• Enhanced dialogue with citizens
• Formal review and comment Formal hearings
• Search for common ground to advise public
  decision making
• Consensus seeking processes
• Search for consensus and commitment by all
  stakeholders
• Mediation