Discussion Questions on the Impact of Industrialization

Discussion Question One -

Comment on the essential elements of the industrialization of agriculture, namely, consolidation and increasing vertical coordination in the food supply chain.

Industrialization has touched all aspects of our economic inputs including agribusiness and the associated supply chains within the industry. Supply chain refers to the complex network associated with transitioning raw materials into usable end products for consumers. It is comprised of interrelated parts encompassing all areas from manufacture to distribution in an effort to consolidate and reduce costs and maximize profits (Smock, 2003). The agricultural realm has experienced a unique evolution over the past two decades; consolidation and vertical coordination within the supply chain (Welsh, 2009). Consolidation of United States' agriculture speaks to the movement in the industry of one owner or major player representing numerous brands.

A good example of consolidation at work is the ConAgra Foods conglomerate which produces Banquet, Orville Redenbacher, Healthy Choice, and Hunts. Each of those brands has its own brand-identity and is usually not mentioned in conjunction with ConAgra (York, 2010). Consolidation makes it so that one owner, successful with a specific process, is able to replicate that process across many types of outputs, thereby increasing their market share. In this way, you can have one owner, or organization, supplying a large percentage of food products while commanding a large percentage of the revenue for the industry (Welsh, 2009). Consolidation, however, is just one piece of how industrialization has affected agriculture. Another integral development in agricultural industrialization is the increase in vertical coordination.

Through vertical coordination, the agribusiness industry monitors and ensures appropriate management of all segments of production, marketing and processing surrounding feedback from consumers as to which products they want to be produced. Agricultural products require a certain level of vertical coordination primarily because of the perishability of the products, the large number of firms involved in each step of the process, and the overall complexity of the food industry. From the producers’ standpoint, it is unnecessary to produce goods that no one will consume. Once there is consensus on what will be produced, farmers are employed on a contractual basis to produce a certain quantity of a certain product (Welsh, 2009). Simply stated, vertical coordination is the use of communication from the end-user, sent up the supply chain, and used to determine outputs.

References

Smock, D. (2003). Supply chain management: What is it? Purchasing, 132(13), 45-49. Retrieved

from http://search.proquest.com/docview/214443294?accountid=458

Welsh, R. (2009). Farm and market structure, industrial regulation and rural community welfare: Conceptual and methodological issues. Agriculture and Human Values, 26(1-2), 21-28. doi:http://dx.doi.org/10.1007/s10460-008-9184-3

York, E. B. (2010). Healthy choices aid Conagra resurgence. Advertising Age, 81(9), 16.Retrieved from http://search.proquest.com/docview/208358516?accountid=458

Discussion Question Two -

Describe the role that genetically modified organisms play in the industrialization of agriculture.

Agribusiness continues to grow and change and has proven not to be immune from technological advancements – including those that change the genetic quality of the crop being produced. Genetically modified organisms are engineered to ensure certain parameters are met during output. For instance, the agricultural industry has employed the use of genetically modified organisms to ensure resistance to herbicides and pesticides allowing the crop yield to remain unaffected by the use of these chemicals. This is done by taking a gene promoting herb or pesticide resistance from one organism and transplanting it into the seed of the crop to be produced. In this way, science is creating a trait within a crop that does not occur naturally (Llaguno, 2001). For farmers, this means there is no autonomy in the decisions regarding what to produce. The evolution of the industry has made it so farmers must enter into production contracts, committing to the use of only genetically modified seeds to sow their crops (Hendrickson & James, 2005). One of the most controversial (and expensive) contract terms is the use of terminator seeds. These seeds yield only one crop forcing the farmer to purchase a new batch of seeds each season if he intends to continue production (Llaguno, 2001).

References

Hendrickson, M. K., & James, H. S. (2005). The ethics of constrained choice: How the industrialization of agriculture impacts farming and farmer behavior. Journal of Agricultural and Environmental Ethics, 18(3), 269-291. doi:http://dx.doi.org/10.1007/s10806-005-0631-5

Llaguno, C. (2001). Genetically Modified Organisms. Science Diliman, 73-76.

Discussion Question Three -

What are life science companies, and how does their emergence relate to the industrialization of agriculture?

Industrialization, in general, causes evolution in industry. The industrialization of agriculture has lent to the creation and evolution of an entirely new industry; life science. Life science companies are large, multi-divisional organizations that blend agriculture with biotechnology to yield larger crops with specific traits, tolerances, and resistance (Kneen, 1999). One such life science company is Monsanto which, according to Kneen (1999), seeks to “…shape the character of agriculture, seed by seed and farm by farm, so as to create global dependency on its genetic technologies (Kneen, 1999). Monsanto is most known for Roundup herbicide and Nutrasweet, the proceeds of which are said to finance its other endeavors in developing genetic technology (Hendrickson & James, 2005). The intention of the life sciences industry in general and Monsanto specifically is to blur the lines between crops, food, and pharmacology.

Monsanto is highlighted here, but there are numerous other life science companies operating under a similar philosophy; DuPont, Dow Agrosciences, and Wyatt Technologies just to name a few. According to former Monsanto CEO Hendrik Verrfaillie “Once we add quality traits into crops…the line between crops and food will be erased. Take one step beyond that and build health-enhancement compounds into crops…the line between pharma and crops and food will be erased (Kneen, 1999). Crops are no longer in the hands of the farmers. The decisions surrounding what will be produced is now made at life science companies who genetically modify the seeds, sell those seeds to farmers, then distribute the finished product through a vertically coordinated network (Welsh, 2009). The industrialization of agriculture has introduced and accelerated the evolution of the life science industry.

References

Hendrickson, M. K., & James, H. S. (2005). The ethics of constrained choice: How the industrialization of agriculture impacts farming and farmer behavior. Journal of Agricultural and Environmental Ethics, 18(3), 269-291. doi:http://dx.doi.org/10.1007/s10806-005-0631-5

Kneen, B. (1999). Restructuring food for corporate profit: The corporate genetics of Cargill and

Monsanto. Agriculture and Human Values, 16(2), 161-167. Retrieved from http://search.proquest.com/docview/214186649?accountid=458

Welsh, R. (2009). Farm and market structure, industrial regulation and rural community welfare:

Conceptual and methodological issues. Agriculture and Human Values, 26(1-2), 21-28. doi:http://dx.doi.org/10.1007/s10460-008-9184-3

Discussion Question Four -

Select one counter trend to the industrialization of agriculture and discuss its positive aspects, drawbacks, and potential for future expansion.

Agricultural industrialization has forged ahead and created or enhanced various sub-industries. Though the use of genetically modified organisms and the involvement of life science companies within agribusiness continue to grow, there is a counter-culture that is also growing as consumers become more concerned about the products they are eating. Counter trends include purchasing organic products and purchasing only locally produced food. An even larger trend is the emergence of farmers’ markets. The USDA funded a survey that showed that in 1994 there were 1,755 farmers’ markets operating in the United States. By 2004 that number grew to 3,706. Today, the USDA registry shows 8,144 markets listed on the National Farmer’s Market Directory (USDA Reports Growth in US Farmers' Markets, 2013). There are both positive aspects and drawbacks to the counter trend of farmers’ markets.

The growth in the number of farmers’ markets continues to increase. According to the USDA Farm Services report, the benefits of farmers’ markets are tri-fold. For small and medium-sized producers this venue is typically their introduction into the marketplace. These markets allow consumers to access healthy, locally-grown products while building relationships with the growers. Finally, the community benefits because of access to these healthy food items as well as the injection of funds into the local economy. Sales at farmers’ markets are over $1 billion annually with approximately 25 percent of vendors naming farmers’ market sales their sole source of income (Ragland, 2009). Though the positive attributes of this counter-trend are tremendous, there are certain drawbacks to farmers’ markets.

For the farmer, the costs associated with transporting their yields to the farmers’ market may prove to be a barrier depending upon the distance of the closest market. Additionally, farmers may not be as free to market their products in the way they see fit as they may have to work within the confines of those overseeing the market and can sell their produce only when the market is in operation (James, 1995). Disadvantages for consumers include not finding the variety of items they seek because products are seasonal and finding it necessary to travel to multiple markets to complete their purchases (Murphy, 2011). Even with the drawbacks, the potential for future expansion is immense.

As industrialization, globalization, and urbanization continue to drive agribusiness, the farmers’ market counter-trend continues to gain ground. The industry, overall, has realized greater than 300% growth from 1994 to 2013 (USDA Reports Growth in US Farmers’ Markets, 2013). Over the past 10 years, the growth in the number of farmers’ markets around the country continued to rise with a 3.6% increase in the number of farmers’ markets from 2012 to 2013 (Ragland, 2009). The increase in public awareness and the desire to consume local, healthy foods, will continue to drive growth in this counter-trend.

References

James, L. (1995). Farmers face disadvantage in marketplace. Arkansas Business, 12(21), 27. Retrieved from http://search.proquest.com/docview/220388912?accountid=458

Murphy, A. (2011). Farmers Markets as Retail Spaces. International Journal of Retail and Distribution Management, 39(8), 582-597.

Ragland, E. &. (2009). USDA National Farmers Market Manager Survey. Washington D.C.: US Department of Agriculture, Agricultural Marketing Service.

USDA Reports Growth in US Farmers' Markets. (2013, August 6). Retrieved from Farm Futures:http://farmfutures.com/story-usda-reports-growth-farmers-markets-0-101077