Network consequences due to oligopolists and oligopsonists in the hog industry, pollution from hog production, and the failure to regulate ecological criteria.

Author:Hayden, F. Gregory

Humans have been in a symbiotic relationship with hogs since the time humans became a species. That relationship evolved into a set of transactional (as defined by instrumentalists) processes beginning with the hunter-gatherer tribes. The network of relationships has continued to become more numerous, intense, and complex. Hogs have served in social systems with humans as societal symbols for prowess for numerous groups (with wild boars, for example, on coats of arms in Europe), as religious symbols (both positive and negative), as a source of human disease in the hog-chicken-human cycle for generating flu in Asia, and, more recently, as a source of organs to be transplanted into humans. We usually think of the hog as a proven converter of waste material and low-cost crops into human food and leather. That use of hogs--which has become an inefficient system--is the area of concern here.

This analysis is based on the transactional network of institutional economics, as outlined in figure 1. The purpose is threefold. The first is to review the model of the relationship between the oligopsonistic corporations which slaughter hogs and the farmer-feeder hog producer. The second is to further develop the normative theoretical connection between ecological systems and social institutions ([N.sub.E] in figure 1). Most analysis in ecological economics has concentrated on the impact of socioeconomic institutions on the ecological system. The analysis here emphasizes the delivery of ecological criteria ([N.sub.E]) to institutional organizations from the ecology. Glen Atkinson has emphasized the importance of investigations of real world problems for improving the theoretical base of the institutionalist paradigm (2003, 5). That is a purpose here with regard to [N.sub.E]. The third purpose is to draw policy conclusions about the relationship between the pollution created by the concentrated hog confinement systems of oligopolistic pork processors and the concentrated ownership of the hog production system.


Concentration in the Hands of a Few Corporations

Recently, issues regarding hog production have been controversial in political and judicial arenas in many parts of the world. The most controversial issues have been about how to (1) control the corporate power of pork packers so that packers do not continue to destroy farm-based hog production with prices that are exploitative and too low to cover production costs, (2) prevent the ecological pollution and human health problems created by the large concentrated hog production centers owned by oligopolists, and (3) allow local communities to "zone out" large concentrated hog producers in order to prevent odor, disease, and ecological damage in the local area. After numerous legislative efforts and court decisions, there has been little success.

Thorstein Veblen explained in his Theory of Business Enterprise that the outcome of production processes that are conducted for pecuniary gain has been to disassociate the interests and decisions of business managers from the interests of the community and from productive efficiency. Current corporate hog production and slaughter systems are a confirmation of Veblen's thesis. The current corporate system (1) led to the destruction of farmer feeders due to unequal bargaining positions in the hog market between buyers who are oligopsonists and farmers, (2) implements technology that leads to serious pollution and disease problems, and (3) provides rural communities with low incomes and social problems. Thus, the overarching issue has been the design of production technology that allows for the concentration of ownership and control rather than for community welfare. The concentration engenders large profits that in turn provide for further empire building through investment, acquisition, and political power. Institutionalists have followed Veblen's lead to establish a literature that well defines the functioning of cooperative oligopolies. That literature is taken as given and need not be reviewed here.

The price exploitation of farmers can be simply explained with the two graphs in figure 2. On the left (graph A) is the firm of a farmer feeder with limited production in a competitive setting in which each producer is a price taker. Figure 2 demonstrates the price situation for recent years with price [P.sub.1]. Since it is below the cost of production, large numbers of small producers have been destroyed. The price for fat hogs is dictated by oligopsonistic slaughter firms in an industry in which a few firms do most of the hog slaughtering in the United States...

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