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

1. 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?

2. 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

3. 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! (It’s been ongoing for many decades) • Selected Researchers’ Observations • 1960s & 70s - Poultry (broiler) Industry • 1980s & 90s - Swine Industry

4. 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

5. Feed mill Crops Animals Soil Separation of Crops & Livestock Had Implications for Location of Enterprises Global Manure ? ? ?

6. 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

7. 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

8. 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

9. 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

10. A Model of Structural ChangeFour – 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

11. Observations in 1980s & 1990sFocus: 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

12. 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?

13. 2. Viewing Industrialization in a Broader Context for Conflict/Policy Analysis • Externalities and Public Policy • Existence of “third party” effects (externalities) • People’s 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)

14. 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.

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

16. 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?

17. 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.

18. 3. Consequences of Industrialization that Cause Conflict Over CAFOs • Content Examples • National and Regional Scale • Nutrient Overabundance

19. Feed mill Crops Animals Soil Nutrient Cycle Doesn’t Cycle! Global Manure ? ? ?

20. 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

21. Inorganic P Sources Crops Phosphorus Cycle Has Become Fragmented Soil Manure ? ? ? Regional Boundary State Boundary Feed Mill Farm Animals Global People

23. 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 State’s Development and residents quality of life • Future viability of an animal sector and associated income or jobs • Viability of other industries supported by agriculture

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

25. 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 burdensdepending 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

26. 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

27. 4.Concluding Thoughts about Public Policy Responses • Explore Role of Boundary Issues • Firm level – What costs do firms consider? • Federal –State – Local Gov’ts - Who decides? • Between Agencies – Who Decides & Who Implements Policy?

28. 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

29. 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 • Neighbor’s frustration that no state agency has jurisdiction over their concern (odors, insects, water quantity)

30. 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 • Neighbor’s frustration that no state agency has jurisdiction over their concern (odors, insects, water quantity)

31. 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

32. Key Stakeholder Concerns Intensive Livestock Operations Study • Environmental Use • Health and Safety • The Role of Gov’t Officials • Economic Impact • Community Conflicts about Farming/Food • Decision Making Processes • The Possibility of Successful Resolution

33. Selected Stakeholder Concerns • Governments officials’ role (i.e. trust) • Lack of clarity of laws and gov’t 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 gov’t preemption)

34. Need for Improved Conflict Management Methods • Avoid • High legal fees • Economic costs, delays • Losing control of decisions • Tearing of social fabric • Wasting community resources

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

37. 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