“Perspectives on Local Food Systems” virtual issue in Agriculture and Human Values

AHV_10460Agriculture and Human Values has a virtual issue on the topic of “perspectives on local food systems.” This is a collection of 12 articles previously published in the journal on a common theme and made available with free access on the journal’s website (here). I don’t know how long the collection of articles will stay up, but it is a nice set.

Here is my online introduction to the essay collection:

Local food systems are all the rage. Consumers are flocking to farmers markets, which are sprouting up in urban and rural areas. Agriculturally-minded persons are organizing community gardens and urban agricultural projects between, within and even on top of city structures. Social entrepreneurs, scholars, policymakers and farmers are working together and are using alternative food networks as a response to a host of opportunities and challenges in contemporary agricultural systems. Given this context, academic research on alternative food networks focuses on many issues, as evidenced by the breadth and diversity of topics published in Agriculture and Human Values. However, one theme has generated considerable attention among scholars: what do we mean by “local” food systems and is an emphasis on “local” important, necessary or sufficient for a food system?

Over the years, Agriculture and Human Values has published many papers dealing with issues relating to “local” food systems. The collection of papers in this virtual issue of the journal provides a sampling of perspectives and commentary on this topic. In particular, DeLind (2011) and Scharber and Dancs (2016) introduce various critiques and challenges to local food systems. Schnell (2013), Trivette (2015) and Schupp (2016) explore different definitions and geographies of what local means. Trivette (2017), Albrecht and Smithers (2017) and Papaoikonomou and Ginieis (2017) consider how and why local food systems have value over other food systems structures. Cleveland, et al. (2015) and Laforge, et al. (2017) write about governance issues relating to local food provisioning. Finally, Mount (2012) and Clark and Inwood (2016) examine the possibility and challenges of scaling up various aspects of local food systems.

Here is the collection of papers:



The next issue of Agriculture and Human Values is now in print

AHV_10460The next issue of Agriculture and Human Values, volume 35, issue 1, has now been published and is also available online (here). This issue contains 16 regular articles as well as six book reviews and a list of new books received.

Here is a summary of the research articles: Chiles and Fitzgerald conduct an historical assessment of the social norms relating to meat consumption in Western society. McClintock and Simpson identify typologies of motivations for participating in urban agricultural activities. Houssou et at describe the evolution of farming systems in Ghana. Albrecht and Smithers explore ways of fostering improved “reconnections” of producers and consumers of food. Klimek et al contrast the organizational structures and values of farmers markets in Minneapolis and Vienna. Huth et al study the perceptions of Australian farmers about the prospects of co-existing with coal seam extraction firms. Sseguya et al examine the role of social capital in improving food security in a sample of households from rural Uganda. Lehrer and Sneegas examine the perspectives of stakeholders on pesticide use in the tree fruit industry in the western United States. Hodgins and Fraser consider options for increasing the participation of low-income consumers in alternative food networks. Coq-Huelva et al examine how quality control and production norms differ in developed (Western) and developing countries, using cocoa production in Ecuadorian Amazonia as a case study. Gupta describes and explains the evolution of the anti-GMO activism in Hawai’i. Powell and Wittman study ways that farm to school programs can promote food sovereignty in a North American context. Dillon et al evaluate factors affecting improved dairy herd management practices. Hidayat et al propose a means of evaluating the governance sustainable palm oil production. Zepeda examines reasons why people experiencing food insecurity do not utilize food local and available food pantries in the U.S. Westengen, et al examine the role of framing narratives about conservation agriculture on agrarian change in Zambia.

When is it fair to say a small business is not one?

A recent program review by the US government’s Office of Inspector General focused on loans by the Small Business Administration made to poultry farmers. The report concluded that poultry farmers do not meet the regularly requirements of a small business and therefore are no longer eligible for small business loans. A nice article in Modern Farmer entitled “Should a poultry farm be considered a small business?” discusses this report.

In the US, most poultry growers have contracts with chicken companies, like Tyson and Pilgrim’s Pride, to raise chicks until they have grown large enough for slaughtering. These companies are known as “integrators” because so much of the poultry growing and processing operation is owned and controlled by the company (i.e., integrated into one business enterprise). The integrators own the chicks that poultry farmers raise; they determine the quality and quantity of chicks poultry farmers receive; they provide the chicken feed and dictate the operating procedures that poultry farmers must use in feeding and raising the chicks; they mandate the size and shape of the buildings poultry farmers grow the chicks in and can require growers to make changes in buildings at the grower’s expense; they can conduct surprise inspections of poultry farmer operations. Poultry farmers provide the labor in raising the chickens.

One reason why the Office of Inspector General concluded that poultry farmers were not small businesses is that they are “affiliated” with chicken companies and thus are not truly independent businesses. An entity is “affiliated” with a business operation when the business “controls or has the power to control the other” entity. According to the report, “integrators exercised comprehensive control over the growers through a series of contractual mandates and restrictions, management agreements, operating procedures, oversight, inspections, and market controls that overcame practically all of the grower’s ability to operate their businesses independent of integrator mandates.”

According to the report, 76 percent of all agricultural loans by the Small Business Administration in 2016 went to poultry farmers. The average size of loans in 2016 was $1.4 million.

If a poultry grower defaults on a small business loan, it is very difficult for the lender to recover losses through, for instance, the sale of business assets. The reason is that the value of grower facilities is strongly tied to the production contracts that growers make with integrators. If the integrator cancels a particular grower’s contract, the grower usually has no option but to exit the business. In most rural areas where poultry farming occurs, there is only one integrator with whom a grower can contract. The program review report notes “substantial loss in the value of a grower’s facility without the integrator contract.” Economists would say the salvage value of poultry barns is very low. I guess an interesting question to consider is why a lender would make a loan to a poultry grower if the risk of default is closely tied to integrator behavior and the salvage value of assets backing the loan is low. Loans guaranteed by the US government is a reasonable answer.

My colleague, Mary Hendrickson, and I have written about the unfairness of the poultry contracting and growing system. In a paper published in 2016 (here), we show how the relative dependency of poultry growers combined with a lack of contractual and other safeguards create an unfair system for them.

Is it fair to poultry growers that the Small Business Administration will not recognize them as small businesses? As stated in the Modern Farmer article, “There is an argument to be made that by not helping poultry farmers get loans, the SBA would be hurting poultry farmers.” Thus, I can see how poultry growers might assert that the change in designation–if upheld after further government review–is unfair to them. If growers can no longer expect to obtain small business loans, then a claim of unfairness might make sense. Dr. Hendrickson and I, along with two doctoral students, have a new paper, where we not only assess the validity of unfairness claims by poultry growers, but also provide a framework explaining why a violation of expectations is important when assessing claims of unfairness.

In the long-run, however, the change in designation of poultry growers might be a good thing. One could argue, as noted in Modern Farmer, that the ability of growers to obtain small business loans “is currently propping up a wildly damaging system.” If it becomes more difficult or even impossible for growers to obtain such loans, then maybe that will push the system to change more in favor of poultry growers.

Chicken prices, consolidation and a couple of pending lawsuits

The Wall Street Journal reports that “Food distributors sue Tyson, Pilgrim’s Pride and others alleging collusion on chicken prices.” Sysco and US Foods, the two largest food distribution companies in the US, separately filed lawsuits against the top poultry processing firms, accusing them “of conspiring to limit stocks and manipulate wholesale prices, fueling a legal battle that has pitted buyers and consumers against chicken processors.”

Any student of basic economics knows that market prices are affected by both demand and supply conditions. Thus, when prices are rising, there must be an increase in demand or a decrease in supply (or both), but only if market conditions are competitive. According to the Wall Street Journal, “poultry companies were struggling in 2008 due to rising grain prices, and it was logical for the poultry industry to cut back on production to reduce risk.” This suggests rising prices following 2008 was due to supply factors.

The following chart shows monthly wholesale chicken prices between 2007 and 2017, according to USDA data (collected from here). In 2009, poultry prices were rising, consistent with the cost-squeeze argument. The period between 2011 and mid 2013 saw rising prices. There are also periods of significant decline, such as in 2014 and 2015. But the inserted trendline does show an overall increase in wholesale prices over time.

Poultry prices

However, when market are not competitive, firms with monopoly power have the ability to affect market prices by manipulating the amount of output they produce.

The poultry industry is not an example of textbook market competition. The top four poultry processing firms, Tyson Foods, Pilgrim’s Pride (owned by JBS), Sanderson and Perdue, currently control more than 50 percent of the market. Thus, they can affect poultry prices, if they choose to do so.

The lawsuits allege that the top poultry processing firms coordinated their production plans through information gleaned from industry data. This allowed them to manipulate a pricing index they used to set prices to wholesale food distributors and other customers. This pricing index, the Georgia Dock index, listed prices “about 32% higher than similar benchmarks such as one maintained by the USDA,” according to the Wall Street Journal article. Another Wall Street Journal article (here) also examined allegations about problems with the Georgia Dock index.

Industry executives and some economists argue that consolidation provides efficiency benefits to firms, which in turn can pass cost savings on to consumers through lower prices. The challenge here is incentives. Why pass cost savings on to consumers when there is no competitive reason to do so? This is why industry consolidation is an ethical as well as economic issue. Ideally we want an economic system where firms have an incentive to innovate, seek cost-saving efficiencies, and pass those benefits on to consumers, and where consumers have incentives to seek out best products and services from firms. Healthy competition does this. Consolidation, however, warps these incentives.

I have no prediction on the outcome of the lawsuits. But if I were an executive at Sysco or US Foods, I would tread carefully here. These “food-distribution giants represent roughly 25% of the domestic food-distribution business,” quoting the Wall Street Journal. Thus, the same arguments these companies make in court against the top poultry processing firms might be used by their own customers against them. Ethically, it is best to treat one’s customers like you want to be treated by your suppliers.

Monkey business

An argument made against the theory of evolution is that it is improbable, if not impossible, for there to be random mutations in genes sufficient enough to result in the development of humans from, say, apes. As an analogy, some refer to what is known as the Infinite Monkey Theorem. If there were an infinite number of monkeys typing randomly on a keyboard over a sufficient amount of time, could one eventually produce the Bible or the works of Shakespeare? Attempts to demonstrate the plausibility of monkeys typing out works of literature using computer technology have shown that it can happen. Since it is plausible, then the theory of evolution as currently understood is plausible, too, so the argument goes.

Michael Shermer, in his book, The Mind of the Market, explains how this works within the theory of evolution. The requisite principle is called “variation plus cumulative selection.” The idea is that when evolutionary processes get a gene mutation right, it saves the “correct” mutation and then moves on until the next “correct” mutation occurs, at which time evolutionary processes save that one, on and on until you get the complete works of Shakespeare (so to speak). For instance, random typing can produce the phrase “To be or not to be” if, once a random “T” is typed, it is flagged or saved until a random “O” is typed, and so on. Shermer gives this illustration of random typing:

wieTskewkOsdfeB92uE2OseRdl7jeNkseOdseTe3r22TsweOsxBwxseE …

which, if you look for the bolded capital letters, contains “T O B E O R N O T T O B E …”

Interesting idea. But, as I was reading Shermer’s book, it occurred to me that his explanation actually demonstrates the requirement for a God. Think about it. How does a computer program mimicking the random typing of monkeys know when the typers gets the right letters or words unless that was programmed into the software initially? How does the non-random selection process know when to say to the typing monkeys “STOP! There is the letter T we need. Now proceed again. … Wait! STOP! There is the O we need …”? We know to look for the T, O, B, E, etc, to complete the phrase “To be or not to be” because we have the advantage of already knowing how the story ends. Someone has to know what is correct and how and when to save things, if we are to accept the idea of a non-random cumulative saving mechanism. There is nothing in the evolutionary theory, especially once “variation plus cumulative selection” is added, that can explain to me how random mutations can correctly accumulate sufficiently over time for human consciousness to evolve, unless something along the way knew what to save and when.

Scientists love to invoke Occam’s Razor, which says that when faced with two or more explanations for an effect, the simpler one is preferable. So, which is a simpler explanation for humans? Random typing by monkeys with an unexplained non-random cumulative saving mechanism, or a God directing the affairs of things? The answer seems obvious to me.

Another issue of Agriculture and Human Values is now published

AHV_10460The latest issue of the academic journal I edit, volume 34, issue 4, of Agriculture and Human Values, has been published online (here). This issue contains nine regular articles, a special symposium, Leland Glenna’s presidential address delivered at the 2017 meetings of the Agriculture, Food and Human Values Society presidential address, and eight book reviews.

Here is a summary of the research articles and the symposium: McInnes et al present results of a survey exploring the potential convergence of different elements of alternative food networks in Canadian food systems. Bain and Selfa assess the relative merits and contrasting approaches of organic and non-GMO labeling organizations. Ellison et al assess the relative rankings of consumers of seven common claims about food products. Miaralles et al study the nature and role of sharing in alternative food networks. Rossi et al link food-, health- and lifestyle-related behaviors to CSA participation. Nichols examines the development and distribution of diets in India that are high in calories, fats and protein. Spilkova compares community gardens in Prague, Czechia, to those found in other developed countries. Bacon and Baker evaluate private food assistance programs in the US, UK and other countries. Porter et al assess the willingness-to-pay of students for food with ‘real’ qualities. Finally, a collection of papers edited by Daniela Gottschlich, Tanja Molders and Martina Padmanbhan focus on feminist perspectives on human–nature relations.

What does it mean when corporations are as economically powerful as governments?

In 2016, a non-governmental organization by the name of Global Justice Now, based out of the UK, produced a report listing the largest governments and corporations by revenue. Their report stated that the “10 biggest corporations make more money than most countries in the world combined and that 69 of top 100 economic entities are corporations not countries.” The complete listing of governments and corporations is here.

An article in the Journal of Economic Perspectives by Luigi Zingales of the University of Chicago provides the following commentary about corporations that rival the size of governments:

In some cases, these large corporations had private security forces that rivaled the best secret services, public relations offices that dwarfed a US presidential campaign headquarters, more lawyers than the US Justice Department, and enough money to capture (through campaign donations, lobbying, and even explicit bribes) a majority of the elected representatives. The only powers these large corporations missed were the power to wage war and the legal power of detaining people, although their political influence was sufficiently large that many would argue that, at least in certain settings, large corporations can exercise those powers by proxy.

The 2015 list produced by Global Justice Now consisted of 26 governments and 24 corporations in the top 50. Walmart was number 10, ahead of Spain, Australia and the Netherlands. I’ve updated the list for 2016 (see below). Walmart is now number 9 on the list, and there are 26 corporations in the top 50 in terms of revenue.

What does it mean when corporations are as large and economically powerful as governments? Is this a good thing? Governments can coerce people, while companies grow by persuading people to buy their products, unless businesses use their economic power and resulting political influence to suppress competition—a common practice in both the developed and developing world. But are governments a more effective and appropriate steward over the vast wealth they control than corporations? Politicians and government bureaucrats are not likely more altruistic or caring of people than business executives and managers. (This reminds me of an excellent interchange between the late Milton Friedman, a Nobel Prize winning economist and academic at the University of Chicago, and talk show host Phil Donahue about the relative greed of people in business and government, here). Perhaps the more important question is whether appropriate checks and balances remain between business and government when businesses rival the size and economic power of governments. I don’t know. I’m just asking questions.

Here is the ranking of governments and corporations by revenue in 2016. Data on government revenue (not GDP) from the CIA World Factbook for 2016 and on business revenue from the Fortune Global 500 list.

Rank Type Name Revenue, $billion
1 Government United States 3,363.0
2 Government China 2,300.0
3 Government Japan 1,696.0
4 Government Germany 1,523.0
5 Government France 1,308.0
6 Government United Kingdom 996.3
7 Government Italy 842.5
8 Government Canada 594.7
9 Corporation Walmart (US) 485.9
10 Government Spain 461.3
11 Government Australia 420.5
12 Government Netherlands 340.8
13 Corporation State Grid (China) 315.2
14 Government Brazil 311.9
15 Government South Korea 297.3
16 Government India 273.3
17 Corporation Sinopec Group (China) 267.5
18 Corporation China National Petroleum (China) 262.6
19 Corporation Toyota (Japan) 254.7
20 Government Sweden 248.3
21 Corporation Volkswagen Group (Germany) 240.3
22 Corporation Royal Dutch Shell (Netherlands) 240.0
23 Government Belgium 232.3
24 Government Mexico 224.3
25 Corporation Berkshire Hathaway (US) 223.6
26 Government Switzerland 215.9
27 Corporation Apple (US) 215.6
28 Corporation Exxon Mobil (US) 205.0
29 Government Norway 199.8
30 Corporation McKesson (US) 198.5
31 Government Austria 187.3
32 Corporation BP (UK) 186.6
33 Government Russia 186.5
34 Corporation United Health (US) 184.8
35 Corporation CVS Health (US) 177.5
36 Corporation Samsung Electronics (South Korea) 174.0
37 Corporation Glencore (Switzerland) 173.9
38 Corporation Daimler (Germany) 169.5
39 Corporation General Motors (US) 166.4
40 Corporation AT&T (US) 163.8
41 Government Denmark 156.9
42 Corporation Exor (Italy) 154.9
43 Corporation Ford Motor (US) 151.8
44 Government Saudi Arabia 149.7
45 Corporation Industrial & Commercial Bank of China (China) 147.7
46 Government Turkey 146.4
47 Corporation AXA (France) 143.7
48 Corporation Amazon (US) 136.0
49 Corporation Foxconn (Taiwan) 135.1
50 Corporation China Construction Bank (China) 135.0