In fact, the case of tobacco in North Carolina is not unique. From the middle of the nineteenth century, agricultural policy has been influenced mainly by a handful of corporations and businesses which have lobbied at the federal level for regulations which would increase productivity and competitiveness for small farmers. Economics examiner Al Krebs defines this sector of the economy as agribusiness: companies that control the financing of agriculture and the manufacturing, transporting, wholesaling, and distribution of produce, fertilizers, chemical poisons, seed, feed, and packaging materials (Krebs, 1992:3). In general, for over a hundred years, agribusiness has monopolized the farmers’ inputs and their trade outlets, thus gaining the ability to both externalize its costs on farmers and exercise its pricing power over them (McWilliams, 1942; Hart, 2002). In this context, U.S. farmers have become virtually powerless to determine the prices that they pay for agricultural inputs, or the prices they receive for agricultural outputs. Conversely, the need to rely on overproduction to increase their profits has fostered at once the over-production of surplus in the U.S., the below-cost sale of U.S. surplus abroad, and a general situation of international competition characterized by the devaluation of agriculture. In this context, farmers across the border confront the same challenges: the corporate monopoly of agriculture and a widespread “race to the bottom”.
The integration of agriculture in a free market economy began in the early nineteenth century, when the development of trade and commerce became dependant on the creation of a new transportation system and trade routes (Hart, 2002; Geffert, 2000). The U.S. government transferred public land to private citizens through dozens of different “land grants,” which granted the railroad companies an extensive amount of land. The corporate control of the land was necessary for the expansion of trade. By the late nineteenth and the early twentieth century, the emerging industrial capital represented by companies such as the United States Steel Corporation, Ford Motor Company, or the Standard Oil Company needed railway lines to gain access to raw materials, labor, and trade outlets. Historians and social scientists looked at the U.S. railway system as the first example of monopoly. Lenin, for example, noticed how these companies had a voice at the political level, which gave them the power to apply discriminatory land rates; hold land grants and monitor farmers’ profit books, maintain mining operations, regulate transportation and grain terminals, grant mortgages and loans, and ultimately control entire regional economies (Lenin, 1917:26).
Already in the 1930s, a small directorate of railroad companies, industrial capital and finance capital governed U.S. agriculture. As McWilliams argues, during the 1930s California Lands, a subsidiary of Transamerica Corporation (Bank of America) was the largest farming organization in the world owning 600,000 acres of land. Companies like Campbell Soup both owned the land and used contracts to buy fruits and vegetables from “independent” growers; California agriculture was controlled by a small number of corporations:
Southern Californians Inc. (a group of employers); Southern Pacific Company, Santa Fe Railroad Company, Pacific Gas and Electric company, Industrial Association of San Francisco, Canners’ League of California, Holly Investment Company. … In whatever way you turn the investigation, you find the same complex of forces involved (McWilliams, 1942:50).
During the 1930s, the concentration of capital in agriculture was further increased by two major events: the Great Depression and the Dust Bowl. At the same time as the Great Depression pushed thousands of families into bankruptcy, a severe drought hit the Great Plains – at the time the “breadbasket of America”- setting records for dryness in twenty states. Farmers suffered a 60 percent decline in income, and millions had to abandon their farms (McWilliams, 1942:50). These events led to a new wave of foreclosures and bankruptcies in the U.S. countryside, causing an unprecedented concentration of the land. Slowly, the concentration of land ownership proceeded both horizontally and vertically: given the high costs and risks of land ownership, agribusiness has pursued a strategy of horizontal integration, trying to consolidate its ownership and control of production within the same stage of the food system. At the same time, the need to minimize its interaction with other companies led to a strategy of vertical integration, the control the entire process of production from “seed to shelf.” The vertical integration of production typically occurred through the use of contracts: agribusiness would ask the growers to provide the land and the buildings in exchange for a market outlet (Heffernan,1999). This great concentration in agriculture has dramatically affected farmers.
During the 1930s, many farmers were forced to foreclose, and others were dependent on the integrating companies for both their agricultural inputs and to ensure a market outlet for their crops. Throughout the decade, farmers organized against the growing power of U.S. agribusiness. In 1933, President Roosevelt was warned that “unless something is done for the American farmer we will have revolution in the countryside within less than 12 months” (Agricultural Adjustment Relief Plan, 72nd Cong., 1933:12, quoted in Dawkins, 2002:211). Roosevelt responded to the rural crisis with the New Deal, legislation that introduced a non recourse loan program in U.S. agriculture. This organized agriculture around the principle of “full cost accounting,” or “parity”: a non recourse loan program which forced the grain companies and other food manufacturers and exporters to pay farmers a minimum price in the marketplace. If the market price fell below parity (the cost of production), farmers could take a government loan worth up to 90 percent of the parity price and withhold their crops until the next year (Dawkins, 2002:210). If prices remained low, the farmer kept the loan and the government kept the crop (Dawkins, 2002:209). It is in this legislation that we find the origins for the “globalization” of the crisis on the U.S. farm.
The purpose behind the Farm Relief and Inflation Act (better known as the Agricultural Adjustment Act) was to raise farm incomes through price supports and production adjustments. This sort of “minimum wage” for growers encouraged farmers to reduce the acreage under cultivation in order to allow farm commodity prices to increase. In fact, throughout the rest of the century farmers have responded to this policy by increasing productivity. As Pollen explains: “farmers … have only one option if they want to be able to maintain their standard of living, pay their bills and service their debt, and that is to produce more” (Pollen, 2006:52). In this sense, while the notion of “parity” offered a “minimum wage” in exchange for policies of acreage reduction, farmers had to intensify productivity in order to increase their profits. Since the New Deal, U.S. farmers have found innovative ways to work around the acreage restrictions laws by taking their least fertile acres out of production and improving the yield of cultivated acreage with intensified capital input (Pollen, 206:50). While these policies reduced the total amount of cultivated acreage, their result was a steady increase in productivity and overproduction. Over