Monday, March 29, 2010

Vertical and Horizontal Integration in the Food Industry-Maybe a Good thing?


Introduction to Horizontal and Vertical Integration




The family farm is dead. The noble farmer being able to take care of his family and provide for his community is a thing of the past. Now, farmers are simply cogs in the great industrial wheel, being used and reused as cheap and dispensable labor for big business gain. As it was put by Heffernan in his portion of Hungry for Profit entitled Concentration of Ownership and Control in Agriculture, “the yeoman crop farmer will soon resemble the broiler grower,” as all realms of food production become subject to capital demands. Everything I read concerning the industrialization of food products seems to lament the loss of the agrarian America as championed by such leaders as Thomas Jefferson, and demonizes big business. It is easy to side with the nostalgic farmer squeezed out of existence by penny-pinching executives, but perhaps there are qualities in vertical and horizontal integration that make our current food model better than what it was.

First of all, America and capitalism are two sides of the same coin. The fact that such diverse, powerful and successful companies have managed to be born out of American soil and onto our tables acts as a testament to the opportunity presented by free enterprise. On the other hand, the small, local and family-owned companies that have been ground to dust in the industrial mill act as a grim reminder of capitalism’s downfall. As monopolies, horizontal integration, vertical integration and other capitalistic tactics take hold, smaller companies find themselves increasingly helpless and subject to the demands of a few mega–corporations. While the death of the independent farmer may seem disheartening, there are many positive aspects to having small farms absorbed into larger businesses.

The giants of the American food industry, such as Cargill, ConAgra, Tyson and many others as mentioned by Heffernan is his writing, have a reputation to maintain. In business competition, once a company loses its good name through contaminated food, immoral work practices or a variety of other downfalls, it is almost impossible to recover from the damage done. Though driven by monetary gain instead of honor or the desire to serve a good product, these big businesses are forced to comply with high standards of food safety as dictated by such organizations such as the USDA, FDA and by their competitors. Due to the international nature of the big food companies, there is an unprecedented amount of availability and diversity of food around the world, something that would not be possible with a world dependent on the local farm. This international stance also safeguards societies against crop failure. If a cluster of farms cannot produce food, there is a globe of other fields ready for harvest. The large companies also employ thousands and thousands of people in decent jobs with benefits, something a society of family owned farms could never facilitate.

In addition to all the benefits listed above, it IS still possible for farmers to have their own farms. Many times, farms are contracted by certain companies to produce a particular product as detailed by Heffernan. This way, a farmer can still practice his/her way of life while being a part of the greater industrial process. Also, there will ALWAYS be a market for locally grown, family owned farms. Now more than ever, people are recognizing the benefits of supporting their local agricultural community, and with the push for a greener, simpler, healthier world, this demand will only increase. There is even opportunity for scientific discovery in vertical integration. As companies absorb the components of their production line, seemingly unrelated businesses are in neighboring offices, such as biotechnology and farming. Great scientific discoveries are much more likely to be made with these unlikely fields juxtaposed.

To every statement made championing a big food industry, a counter argument can be made citing an instance where a large company has failed in that respect (example 1, example 2). While this is true, every industry is rife with problems which can be addressed and fixed. It is easy to complain about the loss of classic farming, but instead of dwelling on this loss, it is much more viable to embrace the change of society from small to large scale food production. There are many problems with the current food system, but by addressing these issues, and incorporating some of the values of the small, family owned farm back into these large companies the food industry can greatly improve. Many of the problems in the food industry, such as abuse of workers, unclean and unsafe working conditions, a general lack of pride and quality in the product among other problems are reminiscent to those faced during the Industrial Revolution. By learning from our past rather than dwelling on it, and working towards the future instead of giving up on it, unbelievable beneficial and novel ideas could be discovered in this vertically/horizontally integrated food system we have.

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