Abstract
We review research on power, dependency and the concentration of agrifood industries and report updated concentration figures for selected agrifood sectors. We then utilize network exchange theory to identify principles of dependency and network relations and describe network relationships within the broiler, beef and commodity crop sectors. We argue that this study demonstrates that network analysis can inform on the nature, source and extent of differential dependencies and asymmetric power relationships within the agrifood sector.
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- 1.
Five different workshops on competition within the agrifood system were held in 2010 in the US, in locations that allowed access and participation by farmers and producers. Transcripts of the hearings can be found at USDA-DOJ (2010).
- 2.
Domina and Taylor (2009) and Carstensen (2008) are concerned that buyer power and seller power have different measures and impacts. Analysis of market share is hard to calculate because of the difficulty in establishing the parameters of the market – in particular the geographical nature of markets; the inelasticity of particular market sectors like most in the agrifood industry, and the fact that competitive circumstances are very different in different sectors of the food system (e.g. the poultry industry has completely different parameters than the beef industry).
- 3.
Chen’s (2008, p. 247) definition: “Buyer power is the ability of a buyer to reduce price profitably below a supplier’s normal selling price, or more generally the ability to obtain terms of supply more favorably than a suppliers’ normal terms. The normal selling price, in turn, is defined as supplier’s profit-maximizing price in the absence of buyer power. In the case where there is perfect competition among suppliers, the normal selling price of a supplier is the competitive price, and the buyer power is monopsony power. On the other hand, in a case where competition among suppliers is imperfect, the normal selling price is above the competitive price, and the buyer power is countervailing power.”
- 4.
- 5.
US v. Cargill and Continental. United States District Court for the District of Columbia. Civil No. 1: 99CV01875. Section VI, Paragraphs 20–26.
- 6.
Emerson (1962, p. 32) provides this specific definition: “The dependence of actor A upon actor B is (1) directly proportional to A’s motivational investment in goals mediated by B, and (2) inversely proportional to the availability of those goals to A outside of the A-B relation.”
- 7.
A critique of the green revolution is that hybrids required higher levels of inputs such as fertilizer and irrigation water, thus the suggestion by Vandana Shiva that they not be called “higher yielding varieties” but “high responsive varieties” (Shiva 1991).
- 8.
McDonald and Korb (2006) showed that 30% of broiler growers reported no other operation near them.
- 9.
The Department of Justice has argued that such a “captive draw” area in grain should trigger antitrust concerns. In their suit opposing the acquisition of Continental Grain by Cargill, the Department of Justice argued that there were significant geographic areas where the two firms competed for grain products that would be reduced to a captive draw area if the acquisition was approved. See US v Cargill and Continental. US District Court for District of Columbia. Civil No. 1: 99CV01875.
- 10.
Weinberg (2003) gives the example of a North Georgia family who were able to upgrade from a four room house with no indoor toilet to a seven room house with two baths after 20 years in the poultry business (1961–1982). “We all owe that to Gold Kist,” [the farmer] said. “Chickens have been mighty good to this family.” However, Heffernan (January 2012, personal conversation) says that farmers in Louisiana in his 1982 restudy were starting to show signs of distress but almost every survey participant would say ‘go talk to so and so, you’ll see what’s happening’ rather than openly reporting issues. Thus, he was unable to document this discontent for his study.
- 11.
Today, the top 20 grocery stores have a combined 65% of the grocery market (Shelansky 2010), with estimates for Wal-Mart’s share running from 23 (UFCW 2010) to 33% (Clifford 2011). Regardless, Mitchell (2011) and UFCW (2010, p. 5) note that Wal-Mart grew from 6% of grocery sales in 1998 to having larger grocery sales today than the “combined sales of its three closest competitors….”
- 12.
It is also important to note that beef processing plants largely left unionized areas of the Midwest in the 1980s and 1990s after the introduction of boxed beef production created the opportunity for beef packers to build larger plants with faster processing speeds (and deskilled, less costly labor) in the Great Plains (Gouveia 1994; Stull et al. 1995). Thus, a system of relatively dispersed slaughter plants and farmer feeders changed to a more geographically concentrated industry accompanied by changes in the CR4 where 36% of steers and heifers were slaughtered by the top firms in 1980 compared to 81% in 2009 (GIPSA 2011).
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- 14.
It is not possible to provide a comprehensive list of contributors. However, we are reminded of Davis and Blomstrom’s (1971, p. 95) Iron Law of Responsibility, which states that “in the long run, those who do not use power in a manner which society considers responsible will tend to lose it.”
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James, H.S., Hendrickson, M.K., Howard, P.H. (2013). Networks, Power and Dependency in the Agrifood Industry. In: James, Jr., H. (eds) The Ethics and Economics of Agrifood Competition. The International Library of Environmental, Agricultural and Food Ethics, vol 20. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-6274-9_6
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