The Official Journal of
The North Carolina
Sociological Association: A Refereed Web-Based Publication
ISSN 1542-6300
Editorial Board: Editor: George H. Conklin, North Carolina Central University Board: Richard Dixon, UNC-Wilmington Chien Ju Huang, North Carolina Central University Ken Land, Duke University Miles Simpson, North Carolina Central University Ron Wimberley, N.C. State University Robert Wortham, North Carolina Central University
®
Volume 2, Number 1
Spring 2004
Feeding the Hog Industry in North Carolina: Agri-Industrial Restructuring in Hog Farming and Its Implications for the US Periphery by
Donnie Charleston
North Carolina Central University
The emergence of vertically integrated pork production is the central focus of this study. Agricultural enterprises like any other are profit seeking entities that need a nurturing economic and social-political environment to flourish. This study seeks to assess the relationship of these sociological relationships in a specific spatial context. North Carolina is the case of reference due to its emergence as the second leading hog producer in the US. A longitudinal panel analysis is conducted utilizing Census of Agriculture data for years 1982, 1987, 1992, & 1997. Findings indicate that hog population was predicted by the presence of large farms poised to assume capital risks and low population densities. However, consistent with the hypothesis, the number of small scale farms was not a predictor of hog population. Notably, race was not found to be significantly related to the increase in hog population. Median income was found to be negatively related to swine concentration. Social and economic networks are identified as important factors. The results reinforce the need to examine the embedded nature of social and economic processes in a local context.
Introduction
North Carolina has a rich agricultural history. It has historically been the home of “big tobacco” and more recently has emerged as one of the second largest hog producing states in the nation (United States Department of Agriculture, 2003). There is a plethora of research available focusing on the potential environmental and health effects of concentrated hog farming facilities (Edwards and Ladd, 2000; Cecelski and Kerr, 1992; Warrick and Stith, 1995; Schiffman et al., 1998). There is however, limited research available regarding the antecedents that facilitated this unprecedented growth in the hog population. This paper presents a case study of hog industry proliferation in North Carolina. Much of the available research focuses on economic and or scientific aspects of the industry. Agricultural journals and other publications have tried to explain the industry's growth in terms of market forces and competition; economies of scale; and profit margins. And, anthropologists have supplied insightful studies focused on the human component. These explanations offer little insight into the social dynamics of the industry. Taken as a whole, in both literatures there exist a wealth of information. However, there is currently no research available that gives an adequate, comprehensive and thorough analysis of the vertically integrated hog industry. This work is an attempt to go beyond these limitations and endeavors to synthesize the available research in a holistic fashion.
The goal is to provide a framework for assessing the context specific factors associated with this growth with attention paid to not only the social but the political and industrial as well. North Carolina’s relatively quick rise to prominence as a hog producer and the resultant effects necessitates an analysis of the temporal agri-business specific, social, and economic conditions that paved the way. Drawing upon work founded on regulation theory, the aim is to contribute to the political economy literature through the use of a comprehensive framework capable of explaining agricultural change within the context of larger economic forces, while simultaneously reinforcing the importance of embeddedness.Much of political economy research focuses on regions and seeks to extrapolate from analyses whether relationships hold up in different social contexts. There is a tendency to focus on regions seeking to assess and predict regional convergence. While laudable, the efficacy of such theories is called into question. There is support for more nuanced theories that recognize the uniqueness of areas and the embedded nature of socio-political and economic processes (Lobao et al., 2003). The argument herein focuses on two key points. First, the hog industry in its present form is increasingly becoming vertically integrated and Fordist modeled. This specific modality has tendencies that drive continued development. Secondly, the farm structure in a locality impacts the trajectory of future agribusiness development. In the face of a changing economic climate, this reality has far reaching implications for rural agriculturally dependent communities. This study utilizes the proposed framework while synthesizing other theories in an effort to explicate the recent developments in the hog farming industry.
Findings demonstrate the efficacy of this approach as support is found for the major propositions. Proper historical accounting combined with data analysis together lend credence to the proposition that the hog farming industry was highly dependent upon the existence of formal and informal networks; a ready infrastructure; and predicated upon the existence of a farm structure with the necessary components. Results show that these factors spurred initial growth and created the necessary climate for future expansion. Furthermore, it is clearly evident that the social and political history of the region created a fecund environment for industrial hog production to flourish. The industry’s need for a low wage labor force combined with the impoverished conditions of the area made for an ideal venue.
Literature Review
The US economy has undergone significant changes in the wake of transitions in what has been termed the Fordist regime of accumulation. These changes are well documented as many have explained these changes as the ushering in of the post-Fordist era and the new industrial/political/economic arrangements (Piore and Sabel 1984; Storper and Walker, 1989; Lyson and Geisler, 1992). Situating agriculture within the context of the larger economy is a task that has been undertaken by such historical figures as Marx, Lenin, and Kautsky. Each of these, while making notable contributions to the political economy literature, are limited in their applicability across time and context.
Marx forms the starting point for many theorists. His analysis of agriculture primarily focused on: the extent of exploitation of simple commodity producers; the persistence of what can be termed family farming outside of the capitalist mode of production; the relationship between ground rent and the crisis of capitalism; and his political analysis set forth in the Eighteenth Brumaire (Friedland, 1991). Despite the ubiquity and influence of Marx, his particular theory is largely viewed as being applicable to the economic and political landscape of England (Kenney et al., 1989).
The work of Kautsky, places emphasis on the relationship between capital and the peasantry. His theory explains how the influence of capital would eventually penetrate every sphere of agriculture, incorporating the peasant [family farmer] into the capitalist mode of production (Alavi and Shanin, 1988). He surmised that this would lead to the eventual demise of the family farmer. His analysis provides invaluable insight on the process by which this phenomenon occurs. Lenin similarly was concerned with the relationship between the peasantry and capitalism. But like Kautsky, concern for issues like revolution and the historically specific focus limit their applicability to contemporary capitalist economies.
These three theorist succeeded in linking agriculture to the larger economy, whereas contemporary theorists for the most part have neglected this approach. Many have followed the lead of the aforementioned theorist, but the tendency has been to narrowly focus on certain aspects of agriculture and political economy. A notable exception is the rural restructuring literature which is concerned with the qualitative change from one form of social organization to another (Hoggart, 2001). The primary focus is usually on the transition from modernism to post-modernism or Fordism to post-Fordism. It places emphasis on an integrated and holistic approach to the study of economic transformation (Marsden, 1990). This approach has generally been empirically tested only in urban arenas, but is viewed as having great potential in its applicability to agricultural political economy (Friedland, 1991).
Kenney et al. provides a rich analysis of the agriculture industry that assesses its historical development and current state by explaining the penetration of Fordism into US agriculture (1991). Founded upon the regulation school, this view seeks to identify the time-specific institutional framework and accompanying norms of economic periods. Largely this school seeks to explain the dynamics of economic cycles (specifically capitalist cycles) both in periods of stability and transition (Aglietta, 1979; Lipietz, 1992). By focusing on the larger economic forces and processes, this allows for the subsuming of other more debated theories regarding agriculture and rural economy. Furthermore, this allows for a greater understanding of agriculture in a post-Fordist environment and the articulation of spatial realities.According to this perspective, farmers were integrated into circuits of finance capital following the establishment of New Deal farm credit system and related policies. This coincided with advances in technology that increased the dependence of farmers on purchases of fertilizers, pesticides, feed, seed, and farm machinery. Sufficient infrastructure development spurred integration of rural areas in to the Fordist consumption norm (Kenney et al. 1991). Farmers simultaneously became entrenched in mass production and consumption, becoming key players in the Fordist transition.
The creation of a mass consumer market for agricultural products was brought on by the institutional arrangements between labor, industry, and the state that guaranteed a sufficient wage for the increasing numbers of blue and white collar workers in American cities. Many of the institutional arrangements have changed as the industry experienced a major crisis beginning in the 1970’s. However, the fundamental structure of the agriculture industry remains much the same. Regulationist recognize that there is futility in designating a specific direction for capitalist development or identifying the next phase of capitalism. Regulation theory draws upon a variety of theories with the goal being speculation of possible outcomes (Elam, 1994).
A contrasting approach is found in the neo-Schumpeterian approach. This body of work is distinctive in that it promotes the idea that cycles of capitalist development correspond with technological developments and advancement (Freeman and Perez, 1988; Schumpeter, 1979). Much emphasis is placed on the past cycle of capitalism and the dependence upon industrial innovation. It posits that information technology and the corresponding advances in computers and electronics will be important to the new stage. Similar to other approaches, the demise of Fordist organization is decried while promoting the emergence of flexibly specialized agglomerations of industry and economies of scale (Freeman and Perez, 1988; Schumpeter, 1979).
The deterministic bent of the neo-Schumpeterians and its focus on technology, leaves it open to criticism. According to this perspective, there will be an all encompassing eventual diffusion from the nation-state to the individual firm. Recognition is given to the interplay between social norms and technology, but emphasis is placed on the fact that technological innovation will fuel the new economic age. The theory leaves no room for the emergence and persistence of variegated forms of industrial organization [and accompanying institutional norms].
The pork industry like the broiler industry which preceded it, has established a foothold in the southern United States. In its present state, the industry possesses the characteristics of a Fordist-modeled enterprise. Though the post-Fordist literature is limited scope and applicability, the dynamics of the post-Fordist period definitely dictate the behavior of firms and actors. Regulation theory provides a foundation from which to understand this phenomenon. This approach forms the backbone of the proposed framework for this analysis. Rather than acceptance of the notion that Fordism and its practices are completely dead, this study proposes that during this phase of transition Fordist modes of production and organization will persist in certain industries.
The technological focus of the neo-Schumpeterians offers vital insight as well. Recognizing the importance of technology is crucial especially in light of the extent to which technology has been the catalyst that enabled the transition [in the hog industry] to this mode of production. As alluded to above, determining the nature and direction of the new economic order and the resultant institutional arrangements is a lofty endeavor. History has shown and contemporary analysis reveals, differing modes of production arrangements and accompanying institutional norms can co-exist. These arrangements can and do vary by nation state and the degree to which technology plays a factor will differ by industry. Together each of these approaches will be drawn upon to develop a comprehensive framework that recognizes the importance of technology and emphasizes the cyclical nature of capitalist development.
Pork Industry Organization
With the advent of the grocery store, processed foods, and fast food restaurants, changes in the meat industry have kept pace by developing mass production systems for the production of meat (Blackbird and Kerr, 1986). Up until recently, the pork industry relied heavily upon traditional, less intensive networks of production centered in the Midwest. There has been a substantial shift in the production capacity of this region as the South has emerged as a large producer of hogs for market. New production arrangements have materialized with the emergence of the vertically integrated hog production facilities.
The characteristics of the hog and other meat industries demonstrate that the heralding of the demise of mass production Fordist norm may be premature (Chul-Kyoo and Curry, 1993). The characteristics of post-Fordist era enterprises are typically cited as being: flexible working times, individualized consumption and mass production for individual needs, horizontal integration, flexible production and maximization of market share as prime goal of economic activity, and integrated logistics (Piore and Sabel, 1984; Storper and Walker, 1989; Hirst and Zeitlin, 1990; Lyson and Geisler, 1992).
However, this study will attempt to show that the post-Fordist literature is limited in its scope and applicability to the agriculture industry. The agriculture industry has yet to embrace and become integrated into these new arrangements preferring the adoption of Fordist practices. This is especially true of the meat industry (pork, poultry and beef). The meat industries are focused on mass production and consumption arrangements; dependent upon a controlled wage labor force; and increasingly aligned with the state to ensure their viability (Blackford and Kerr, 1986). A hallmark of Fordism was the use of technology to increase productivity. The new reality of the meat industry is that the infusion of technology into the production process has reached unprecedented new heights. This has accelerated the integration of producers into the Fordist consumption and production norm (Benjamin, 1997).
Vertical integration is defined as the control of two adjacent stages in the vertical marketing channel from producers to consumers (Ward, 1998). Contract integration is the preferred method in the pork industry. An increasing percentage of all pork is produced through contract arrangements wherein the contracting corporation controls all phases of production (Ward, 1998). Centralization has become an important aspect of the industry both in terms of physical location and operational efficiency. In this new mode of pork production, pork processing companies have extensive control of the hog production phase and product finishing. By concentrating all stages in a geographic location and controlling each stage through restrictive contract arrangements, the industry ensures maximum realization of profits.
This centralization is dependent upon the use of technology to automate and reduce the dependence upon labor [during growing phases]. However, it is most important to note that the industry is heavily dependent upon cheap labor in the processing phase. Pork slaughterhouses can process hundreds of carcasses in a 24 hour time period to meet the growing demand of consumers in the domestic and world markets (Benjamin, 1997). Typically pork processing units are organized as labor intensive multishift operations designed to extract the most value from the labor inputs of the employees.
Through this arrangement, vertically integrated firms are positioned to respond to the needs of a growing industry. The processed pork supplies grocers with everything from pork roast to lean cutlets that have become popular among today’s health conscious consumer. Supermarket shelves are now dominated by “ready to eat and “heat and serve” meals that include all manner of processed meat products including pork. Additionally, there is a fast food market emerging as companies like McDonalds have introduced products like the McRib, a pork based meat sandwich. Aggressive ad campaigns by the industry falsely tout pork as “the other white meat”, the goal being to tap into the healthy food market.
There is evidence of a growing niche market for organic pork products, like the “free range chicken” market, these product are marketed as being a healthy alternative (Wheatley, 2003). But with the level of control exerted by dominant companies and the resultant closing of small independent processing units, those wishing to access this market may be forced into contract arrangements with the larger producers. The result could potentially be mass produced variety if control stays in the hand of the mega-processing corporations.
Markets are not random occurrences whose existence is dependent solely upon economic forces and the rational actions of individuals or firms. Markets coexist with and are shaped by other social relations (Carruthers and Babb, 2000). This is the crux of the embeddedness thesis. The emergence of a particular industrial arrangement will depend upon the confluence of multiple factors germane to a locale and time period. Recognition of this reality allows for a better understanding of all related variables.
In the post-Fordist era, industry has a tendency toward overcoming the limitation of regions and avoiding entrenched unionized labor regions in favor of more welcome havens (Kenney et al., 2003). Industries participate in rent seeking, searching for low land cost to increase profitability. The US South has become such a place because of right to work laws, low unionization; and overall impoverished conditions. Industrial hog production has grown considerably in this region since the early 1980’s. The historical concentration of pork production in the Midwest is no longer the reality. It is too early to tell whether this is a signal of a looming wholesale regional shift in production. Moreover, it is uncertain whether the mode of production common in the South is the new gold standard of the industry. Determining what direction the industry will ultimately take is beyond the scope of this study, however it is clear that there is a clear pattern emerging with regard to its development.
As compared to the Midwest, the states of the southeastern United States are more diversified in terms of commodity production. Farms typically produce multiple crops in an effort to overcome the instabilities of the market. North Carolina has traditionally been heavily dependent upon tobacco production. This single commodity dependence combined with the demise of the family farmer and the rise of industrial agriculture assisted in the creation of a situation wherein the structure of agriculture in the state facilitated the quick adoption of industrial hog farming. Obviously, this structural transition was not particular to North Carolina. So the question remains: Why did North Carolina experience such a surge in pork production?
This study proposes that communities in distress are being targeted for industrial hog production. The model for this study asserts that this is an emerging pattern and seeks to explain this development as a function of the confluence of the factors mentioned above. Essentially, industry seeks environments with favorable market conditions for survival. These conditions are dependent upon social institutions and realities endemic to a specific locality. In the case of North Carolina and the hog industry, overall economic conditions contributed to the creation of an environment conducive to hog proliferation. In addition to the economic conditions, social and political factors were at work. The argument posed here is that these variables acted through the intervening variable, distress and the rise in industrial hog production and is a result of this dynamic (see Figure 1).
Historical Background In the case of NC, there was a distinct internal homegrown investment strategy undertaken in its garnering of a larger market share in pork production. The organization of the industry facilitated this process. Smaller producers were marginalized and unable to compete in an emerging market which required sufficient capital investments. The state’s agriculture is highly diversified but has historically been heavily dependent upon tobacco.
For over 100 years North Carolina’s fortunes have been linked to tobacco. Since the 1800’s and the discovery of the flue cured method of tobacco curing, there has been intensive production of the cash crop throughout the Piedmont and Coastal Plain regions. Over the years, the tobacco industry in NC has undergone significant changes. The industry was not insulated from the penetration of Fordism into agriculture, tobacco farmers were integrated into consumption circuits as farmers strove to survive.
With the development of the mechanical harvesters the industry shifted from being labor dependent. Combined with acreage and poundage restrictions, this forced consolidation and repercussions throughout the state as smaller farmers left farming because of an inability to keep pace with change (Hart and Chestang 1996). The deep entrenchment of tobacco in NC set up a situation in which there was a race by farmers to diversify their operations for fear of economic ruin (Hart and Chestang 1996). Hart and Chestang provide an overview of how corn, soybeans, cotton, and later broilers were easily used to provide supplemental income for farmers seeking to change their fortune (1996). Many of these products required relatively low start-up cost allowing for the adoption of the requisite technology for the transitions. Transitioning to hog farming represents the latest diversification strategy which coincided with the agricultural crisis and tumultuous changes in the national and global economies.
There are no data available on the number of farmers who have attempted this or other transitions. But, as early as the 1960’s, the state began the promotion of hog farming as a viable alternative (Swine Odor Task Force, 1995). As stated above, there is a tendency in industry in the post-Fordist era to seek out opportunities conducive to the creation of profit through relocation. Beginning in the early eighties, coinciding with the farm crisis that devastated the entire nation, North Carolina began to increase its market share of pork production. From 1982 to 1987 the swine population in the state increased by 25 percent (State of North Carolina, Department of Agriculture, 1987, 1982). Profits from vertically integrated complexes were extolled by industry proponents and economist as having the potential to be greater than those of the typically small to moderate sized arrangements that dominate the Midwest (Hurt, 1994). In light of the states speedy adoption of hog production, determining the extent to which this adoption is linked to an areas declining fortune is critical. In analysis to follow, it will be demonstrated that North Carolina became a bastion of hog farming in part due to a welcoming economic climate; the emergence of investors willing to take on capital risks; a substantial infrastructure; and the lack of an organized political effort to forestall the advent of the industry.
An impediment to vertical integration is the presence of an organized lobby allied against it. This study draws upon the work of Havens and Newby, whose model recognizes that market forces alone do not account for structural change in agriculture (1982). Their work emphasizes the role of the state acting on the behalf of the public interest in negotiating with actors with varying degrees of political power and influence. In North Carolina the farming lobby has not taken on the same issues as states like Iowa, therefore the protections that exist for smaller corporate and family farming do not exist. In Midwestern states, the organized farm lobby, in order to guarantee their place and economic livelihood instituted laws preventing the entrenchment of vertically integrated systems (Benjamin, 1996). The political power and influence exerted in North Carolina initially came from wealthy business interest and entrepreneurs and not family farmers. The absence of influence from an organized political force effectively sealed the deal. This case highlights the fact that the vertical integration of livestock production is heavily dependent upon infusions of capital and that capital plays an important role in policy negotiation. The capital resources of the industry gave it a significant advantage with respect to the ability to influence the agriculture policy.
These policy influentials were successful on the legislative front. Specific laws were enacted in North Carolina to facilitate the growth of the industry. Spearheaded by entrepreneurs like Wendell Murphy, state congressman and one time owner of Murphy Farms (until 1997, the second largest hog producer in the nation), these laws blocked local opposition to the placement of CAFO’s (confined animal feeding operations). Right to farm legislation was enacted to limit the liability of farmers from nuisance suits brought on by community residents alleging that the smell of hog operations is sickening. In 1991 a law was enacted by the legislature to prevent counties from applying zoning regulations to limit the size of hog operations. Further legislation, exempted animal feed-lots from stringent state wastewater regulations and limited the tax liability of these industrialists (Warrick and Stith, 1996).
The hog industry is now primarily concentrated in the Coastal Plain region of North Carolina. In the short time period 1982-1997 there has been an explosion and an implosion in the industry’s geographical location (Furseth, 1997). North Carolina’s Coastal Plain is a part of the Black Belt region of the United States. This region extends from Virginia to Texas and is one of the most impoverished regions of the country (Wimberley, 2002; Wimberley and Morris, 1993, 1996, 1991; Wimberley et al., 1992; 1994, 1996). Critics allege that the concentration of massive hog complexes in this region was a deliberate targeting of rural minority communities (Edwards and Ladd, 2000; Bullard 1990; Warrick and Stith, 1996). North Carolina has a history of collusive partnerships between business and the state. Considerable effort has been expended to maintain a low wage labor force in the state by preventing high-wage manufacturing from entering. These efforts were initiated to protect the interest of local businesses like the textile industry (Wood, 1986). With post-Fordism, the exodus of these previously stable income job opportunities has increased. These communities are now struggling to find alternatives for survival.
Industry proponents tout the advantages of pork production as being: increased local tax base, jobs creation, and a boosting of the local economy through increased purchasing from indigenous companies. Seeking to boost the fortunes of rural North Carolinians, lawmakers paved the way through the passing of the aforementioned legislation. In recent years, the rural population of this area has been pitted against the industry. The work of Havens and Newby focuses on the actions of actors in the agricultural arena, but limiting the focus in this manner ignores the role of other factions who hold a vested interest. Currently there is a strengthening and growing network of groups and individuals allied against industrial hog farming. This response to industrial hog farming has moved beyond a local phenomenon to become regional and national in scope. These groups include the local community organizations, agencies with environmental interest, and universities [particularly historically black colleges]. The coming together of these groups has culminated in collective action. An engaged citizenry combined with resources as well as effective techniques for lobbying and organizing provided for a counter to the influence of capital and agricultural interest.
Actions initiated by these agents in conjunction with the increasing environmental problems associated with the hog industry, yielded concessions in the legislature. A moratorium was issued preventing the location of CAFO’s in 1999. In 1997, local communities also won back the ability to zone large hog operations. The growth in the industry is now at a standstill as North Carolina is now viewed as an unwelcome venue for further development.
The resultant fallout from the political wrangling between stakeholders and the state affected the overall structure of the agriculture industry and had dire implications for the small producer. The new structure advantages larger producers over smaller as contracting takes over as the primary means of entering into the network. Smaller farmers are unable to enter into contracts due to the requirement for large capacity and output. Contract farmers receive considerably higher prices for their hogs for market as compared to independent producers (Cecelski and Kerr, 1992). Smaller producers were pushed out at an alarming rate as vertical integration took hold. In North Carolina the number of hog farmers has declined by 75% since 1982 (State of North Carolina, Department of Agriculture, 1982, 1987). This began with the farm crisis of the 1980’s when many small producers were pushed out, many of which produced hogs as a complementary or primary product. Nationally, this exodus created a gap and in North Carolina this gap was filled by those with continuing access to capital (Rhodes and Grimes, 1995).
The contract arrangements which now dominate, are touted by industry as risk sharing arrangements by farmers and the corporations that own the hogs. However, contract arrangements typically favor the agribusiness firm with many of the risks taken on by the contractor. Typically farmers are contracted to oversee the housing, feeding, and overall care of the animals until they are ready for slaughter. Ownership of the hogs remains in the hands of the firm throughout the chain of production. Strict control is exercised as farmers are only paid if they meet the requirements of the contracts that have specific hog weight and size requirements (Rhodes, 1995). Farmers have essentially become a semi-autonomous employees totally divorced from ownership. Increasingly CAFO’s are owned by a group of capital investors who hire a manager and labor to oversee production totally removing the role of the American farmer (Rhodes, 1992).
Development never occurs in a vacuum. As such, the political and economic climate of North Carolina created an ideal situation for hog industry growth. The lack of initial opposition from within the farming industry combined with the impoverished conditions of the region created an opening for industry penetration. The central aim of this study is to identify the context specific variables that assisted in the realization of this modality. These changes cannot be viewed without an understanding of the social power relations in North Carolina. In regards to agriculture, it seeks to answer the question: Does the changing structure of the agriculture industry act as a catalyst for further changes? Combined with the effects of globalization and the increasing access to international markets comes an increase in the mobility of capital. This reality reinforces the need to look at factors that predispose a locale.
Data and Methods
Analysis is based on the 100 counties of North Carolina. The county is the unit of analysis since the available farming data is reported at this level of measurement. Since this study is concerned with agriculture and farming, the US Census of Agriculture is the primary data source for information. Other data was pulled from the Bureau of Labor Statistics and the US decennial Census.
Farm Variables
Due to the changing industry and the continuing decline in the number of hog farms, the swine population was used as a measure of the increase in hog production. Absolute number of hogs concentrated in a geographic location (county) is a proxy measurement designed to be an indication of the industry structure. This measure captures the relationship between the emergence of a production facility [which houses thousands of hogs] and community factors such as a decline in smaller producers. Due to the highly skewed nature of this variable, the base 10 logarithm is used. This prevents distortion of the analysis by the presence of extreme outliers. This tactic was used to standardize all variables due to North Carolina’s diversity and extreme differences across all variables. Consistent with Brooks and Kalbacher’s typology of agricultural enterprises, farms were categorized according to product sales as reported by the Census of Agriculture for the given year. Rural residence farms and small commercial enterprises were collapsed into one category. This category includes all farms with sales less than $100,000 (small scale). All farm enterprises with sales above $100,000 were collapsed into a second category (large scale). A central focus of this study is to assess whether the presence of large scale farms contributes to the adoption of hog farming. The logic supporting this breakdown is that due to the capital intensive nature of the hog production, large scale enterprises potentially have sufficient access to capital via loans or other investment options. Whereas, small scale producers are less likely to have the requisite land and property as collateral for assuming said loans or enough reserve capital. Furthermore, this method solved initial issues with multicollinearity.
Social Factors
Utilizing the median income as an independent variable serves a useful analytical purpose. The hog farming industry touts the increase in jobs as a benefit to their locating in rural areas. Lawmakers acting on behalf of the public interest are eager to provide employment opportunities to constituents. This makes low income areas a target for the policies and development plans of lawmakers. Due to North Carolina’s history of maintaining a low wage labor force, it is hypothesized that counties with low median incomes will be more likely to have increases in hog populations. Furthermore, income has been demonstrated by Edwards and Ladd to be a good predictor of swine concentration (2000).
Intensive swine production facilities typically target areas with low population densities (Bonanno and Constance, 2001; Hart and Mayda, 1997). In the South, North Carolina being no exception, rural areas have difficulty drawing industry. High concentrations of minority populations in the South coincide with persistent low socioeconomic status (Wimberley et al., 1996). The impoverished Black Belt region of the South has historically been underdeveloped with little policy efforts aimed at ameliorating this condition. Percent black population will be used as an independent variable in the analysis to gauge the extent to which minority concentration determines the placement of facilities and the increase of hog populations.
Analysis
The study includes cross-sectional and longitudinal, panel analysis of data. A lagged value of the dependent variable is used to determine if the value of the variable (hog population) affects the subsequent value at later years. This will hopefully provide insight as to whether early entrenchment is a determining factor of adoption in later years. Ordinary least squares multiple regression is employed in the analysis. Overall, this method allows for the examination of the effects of the independent variables on changes in the hog industry. The study encompasses a fifteen year time period. This allows us to view the changes in the industry beginning with the initial changes and concluding with the period of corporate consolidation. Descriptive statistics are available for all years in Table 1.
Table 1: Descriptive Statistics of County Characteristics
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The variance inflation factor measures indicate that multicollinearity did not pose a problem for the analysis. Autocorrelation is typically a problem in time series data analysis. Durbin Watson measures ranged between 1.8 to 2.15 suggesting no problem with autocorrelation. The results in Tables 2 to 4 show the standardized betas and the t values for the independent variables. These tables displays the cross-section model and the longitudinal model for all years included in the study.
Hypothesized Relationships
This study proposes the following hypothesized relationships. The presence of large scale farming enterprises will contribute to more favorable conditions for the emergence of industrial hog farming. The prediction is that the presence of small scale enterprises will have no effect on the adoption of hog farming. Figure 1 displays the model depicting the variable relationships. This study proposes that the independent variables will impact the emergence of industrial hog farming. This relationship exists as a function of the existence of an intervening variable, community distress. Consistent with Goldschmidts theory, it is suspected that the changing dynamics of the agriculture industry affect the socioeconomic conditions of a community. This in turn makes the community an inviting target for the infusion of industrial hog farming.
Findings
The cross sectional models reveal substantial variation in the net effects of the independent variables across time. The 1982 cross section explains about 53 percent of the variance in the hog population, indicating a substantial amount of predictive accuracy. Counties with higher numbers of large scale farms have significantly higher hog populations (beta .501). Small scale farming was not related to the hog population for that year. Results of other measures were mixed. Population density had significant impact (beta -..253). Median income was found to have a significant relationship to the hog population (beta .331), whereas percent black was found to have no significance (see Tables 2, 3 and 4).
For years 1987 through 1997, cross-section models reveal the same pattern for large scale farming. Small scale farming was found to be significantly related to the dependent variable for years 1987 and 1992, but for 1997 there exist no statistically significant relationship. A different pattern exists for median income. There is a significant finding for years 1982 and 1987 but none for the remaining years. Population density was found to be significantly related in all years with the exception of 1997. Percent black exhibited no significant relationship in any of the models.
The longitudinal models demonstrate the effects of the 1982, 1987, and 1992 independent variables on hog population levels at the next five-year mark. The explained variance in each of the models is above 62 percent. Therefore, farm scale combined with social factors explained a large amount of the variance in the dependent variable. Looking at the lagged hog variable, we can conclude that a county's hog population in year one was a good predictor of the subsequent population in year two. This variable was significantly related for all three models. Results for the other farm variables were mixed as was the case in the cross-sectional models. Small-scale farming showed no impact. However, for year 1987 the variable approaches significance (beta .116). Large scale farming was found to be a good predictor for all years with the exception of 1992. Looking at the social factors, we see that median income had a significant impact for panel analyses one but no impact in analyses two and three. Population density in 1982 impacted the hog population in 1987 (beta -.179), but had no effect on other years. Black population resulted in no significantly finding in any of the models.
Table 2
Regression Models of Hog Farm Location, 1982 and 1987
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Table 3
Regression Models of Hog Farm Location, 1992 and 1997
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Table 4
Panel Analysis of Hog Farm Location 1982-1997
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pendent Variables |
1982 Independent & Lagged Standard- ized Beta |
1982 Independent & Lagged Unstand- ized Beta |
1982 Independent & Lagged Standard- ized Beta |
1982 Independent & Lagged Unstand- ized Beta |
1992 Independent & Lagged Standard- ized Beta |
1992 Independent & Laggged Unstand- ized Beta |
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Discussion
The focus on North Carolina limits the ability of the results to be generalized. But, the findings do offer pertinent insight. The mixed results from the social factors across each model indicate that very different forces were at play during the evolution. One surprising result is the lack of a consistent impact of population density in the lagged models. This may be due to the fact that the initial explosion in the hog population occurred across the state as tobacco farmers and other growers sought to diversify in the wake of the financial crisis of the early eighties. In 1982 the hog population was dispersed across the state among many smaller producers in rural counties. Later growth became more centralized in the Coastal Plain region among fewer counties. Though the findings appear conflicting, this region is less densely populated than the other regions of the state supporting the contention that density plays a factor in the placement of CAFO’s.The predictive ability of race was not salient as expected. This can only be explained by the use of Eastern county as a control variable. The inclusion of this variable brought out the effect of region on the dependent variable, but suppresses the effect of race. The eastern region of North Carolina has the highest concentration of minorities in the state with percentages reaching up to 60 percent. In other analyses using the 41eastern counties as the population as opposed to the 100 counties (not shown), race was found to be significantly related to the dependent variable for all models.
Farming variables lend insight into the interplay between the changing dynamics of the overall farming industry and hog farming. It has been suggested that community identity, the environment, and the health of community residents have all been impacted by the hog industry (Durrenberger and Thu, 1998). In this study the number of small scale farms was not related to hog population growth. Research has demonstrated that communities with larger numbers of small farms are potentially more distressed (MacCannel, 1988; Lobao and Meyer, 2001) .
However, the results of this study do not allow us to make any inferences regarding this relationship. The consistent impact of large scale farming signals that vertical integration in the industry was assisted by the presence of an available pool of farmers capable of assuming the financial risks associated with this brand of hog farming. The negative consequence is that this change in the industry has forced out of small producers who traditionally relied on hog farming as a supplemental commodity. The impact of the hog influx has had the impact of limiting the available options for small producers to diversify.
The effect of median income was only evident for the time period coinciding with the smallest increase in the hog population, between 1982 and 1987. This is the time period of greatest dispersion of hog farming as many sought to cash in on the opportunity. Hog farming was present in most rural counties of the state including the southern Piedmont and throughout the Coastal Plain. This precedes the time period wherein the industry began consolidating and the networks between producers and processors solidified. The need for labor for processing plants and hog farms potentially impacted the placement of facilities. However, more analysis is needed to tease out the relationship between other labor market variables and hog farming.
The effect of the social factors and farm variables viewed in the context of the socio-political history of the industry’s development reinforces the importance of a political economy approach focused on the importance of locality. In the case of North Carolina, it is evident that the interplay between race, politics, capital, and the agriculture industry can only be understood by utilizing a comprehensive framework.
Conclusion
Fordism’s penetration into agriculture set into motion processes that continue to dictate the direction the industry takes. This has far reaching implications for rural agriculturally dependent communities. This is evident across all commodities and aspects of the industry. As for the pork industry, there is no indication that the industry will embrace the much heralded practices of post-Fordism. This reality is viewed as the potential next crisis to face agriculture (Kenney et al., 1991; Goldschmidt, 1998). The benefits of mass produced meat is proving to be a mixed bag as the tax benefits and jobs for local communities are weighed against the loss of community identities, negative health effects, and the lost benefit of small scale producers.
The current state of the industry is one in which corporate takeovers have forced many of the previous locally owned companies to disappear. In North Carolina, Smithfield Foods and Premium Standard now control more than 75 percent of the state's industry (Freeze, 1999). The landscape of the industry is now permanently changed with all indicators pointing to a continuing decline in participation from small scale producers. Similar efforts are underway in other states as the industry seeks out welcoming areas with the right combination of factors.
Other areas in the rural South have similar characteristics as those of North Carolina’s Coastal Plain region. Each is typically characterized by low population densities, low labor costs, agricultural dependency, and worsening socioeconomic conditions. This has made this area a prime target for targeting by the pork industry. There has been a noticeable shift in the pork producing capacity of the previously dominant Midwestern region, as the south is garnering an increasing share of the market.
This study provides an overview of the industry and the factors associated with its recent transition. Another contributing factor is the necessary network arrangements that must exist between processing companies, entrepreneurs, and growers. Through their control of all phases of production and links to food packagers, this will prevent rival smaller competitors from entering the market. This arrangement is crucial for the emergence of vertical integration. Though not yet realized, differentiation and the mass production of variety appears to be the direction of the pork industry. As consumer taste diverge the market for organic and other pork products will rise. It has been predicted that rather than the emergence of niche marketing to discriminating consumer taste by specialized competitors, the Fordist modeled mass production organizations will turn to mass production of variety. Essentially, a Microsoft effect will be the result as extensive control is exercised over the network preventing individuals from entering and increasing pressure on those with whom the contracting corporation does business.
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