Agribusiness

Walsh deserves more consideration

The Rise of the Midwestern Meat Packing Industry
Margaret Walsh, 1982

Margaret Walsh follows up on her 1972 book,
The Manufacturing Frontier, with a look at the transition (between 1840-1870 more or less) of pig butchering from a local, part-time activity to a major processing industry.  She says “pork packing is a good tool of analysis because agricultural processing early disseminated an industrial experience to newly settled farming country.” (ix)  I think this is an interesting claim, but it's not one I'm prepared to accept without some evidence. Sure, butchering a 400-pound animal and preserving the meat with salt is a strenuous process. But not much moreso than, say, butchering a bison and processing the meat into jerky. Would we call plains Indian practices industrial? Or are we just tempted to call early pork processing that because we know the end of the story?  Even so, I wonder if similar work could been done on flour milling, lumber, tanning, cooperage, and especially brewing and distilling?  By 1870, Walsh says, the Midwest was already “responsible for 27 percent of the nation’s value added.” (3)  William Cronon notwithstanding, a lot of that took place outside Chicago, and the things that made Chicago an interesting subject for Nature's Metropolis might also make its example less applicable to smaller, more "regular" places.

Early packers, Walsh says, were usually merchants in towns like Chillicothe, Hamilton, Circleville, Ripley, and Maysville Ohio, Terre Haute and Lafayette Indiana. (17)  Although she doesn’t elaborate much on the farmers raising these swine, Walsh says by the 1840s they had moved past semi-wild “razorbacks” to “foreign pigs, such as the Suffolk, Berkshire, Yorkshire, Irish Grazier, Poland, Essex, Chinese, and Chester Whites...They debated the merits of the different breeds...[and knew] the defects of particular strains could be countered by crossbreeding, a practice that most farmers quickly advocated” (19, sources for this include Towne and Wentworth, Clemen, H.D. Emery, Arny, and
The Prairie Farmer). But the same thing could be said about the breeding enthusiasm of the chicken fanciers who launched the "Hen Fever" of the 1840s. Most of them were not big producers or industrial in any sense of the word (I'll have more to say about chickens in a later post).

pork_packing_in_cincinnati_1873

A closer look at the supply side of  pork packing would help explain what was happening on farms during this period.  Walsh shows farmers were making business decisions about the market by the 1840s, calculating “the value of corn when sold in the form of pork” to determine whether to fatten hogs or sell their grain. (23)  This calculation required knowledge of feeding yields and prices, but also of transportation costs and risks. And it involved either knowledge of or guesswork about demand in faraway markets.  So, farmers needed to be aware of the wider world even before the railroads came to town. But as I've seen reading the Ranney brothers' letters to each other, farmers in Western New York and Michigan had ready sources of information. And at least some of them had access to markets and even financing through relatives left behind.

The operational costs Walsh reports for even a medium-scale packing operation were substantial.  Fixed costs were low, especially relative to “machinery plants or textile factories;” but the cost of hogs meant that a “country pork merchant in the Middle Ohio Valley in the mid-1840s might need $45,000 to process 6,000 hogs.” (27) The “city capitalist in Cincinnati, Louisville, or Madison might process 15,000 hogs...[and] needed between $100,000 and $125,000 to carry out his season’s work in the mid-1840s.”  (28)  This suggests two things.  City packers had the backing of capitalists (Walsh traces several of these formal and informal relationships), and rural packers had extensive networks of trust and credit.  Assuming the average general store owner could not raise the money to do a cash business, his ability to pack hogs testified to extremely solid relationships between farmers, packers, and possibly retailers in remote cities.

So while I don't accept her claims and conclusion uncritically, I think
The Rise of the Midwestern Meat Packing Industry explores a great topic and asks questions that deserve more consideration.

Market Failure in Minnesota

During a recent "special" session of the Minnesota legislature, a bill was snuck through the House and Senate eliminating the Minnesota Pollution Control Agency Citizen's Board. Established in the 1960s, the Citizens' Board had consisted of eight members and the Commissioner of the MPCA. Their bylaws called for one member to be "knowledgeable in the field of agriculture." According to former Board member Jim Riddle, "The Citizens’ Board came under fire from corporate agribusiness interests last fall, after we required an Environmental Impact Statement (EIS) for a proposed confined animal feeding operation (CAFO)."

The owners of the CAFO didn't have enough land to spread even half the manure they would generate. They had no idea (or interest) how much their water use would impact existing farms in the area. Their water plan consisted of building a twelve mile pipeline from a well that had been permitted seven years earlier for an ethanol plant that had never been built.

The Board's request for an environmental impact statement angered the
Agri-Growth Council, whose Directors include executives from Cargill, CHS, and General Mills. Although Riddle says the Board didn't prohibit the CAFO, apparently agribusiness is unhappy with the idea that anyone has the authority to insure that "more information be provided on the environmental and economic impacts of the proposed facility, in order to demonstrate that Minnesota’s laws would be followed and the health and safety of area residents and the environment would be protected."

Advocates for a lot of schemes like CAFOs, sulfide mining on the Iron Range and pipelines through the Headwaters like to portray the opponents of these schemes as head-in-the-sand Luddites. Elimination of the Board, says Riddle, will make it "easier for industrial agriculture, mines, pipelines and other extractive and polluting activities to be approved with little or no citizen participation."

The reality, it seems to me, is that the advocates of these schemes fear their plans won't stand up to close scrutiny. The point is not that CAFOs should never be built, that copper should never be mined, or that oil should never be transported. People could argue those points, but that's not the point here. The point is that politically powerful owners and corporations want to do these things in the cheapest, sloppiest way possible, with no oversight. This makes good economic sense, if your economic perspective extends only to the next quarterly or year-end report. The corporations are acting rationally, from their economic point of view, when they behave this way. CAFOs and companies like Enbridge and Polymet have a long history of cutting corners to save money, and then trying to evade the penalties and costs of cleanup when things go wrong.

But clearly this kind of sensible economic behavior is not in the public interest, or even in the long-term interest of the companies involved. The decision to do it anyway and try to silence the opposition is what economists call "market failure." It is precisely why we can't have a completely free market (despite the fantasies of Ayn Rand-readers), and why regulatory agencies and citizen boards need to exist.