Agricultural sheds in Lula, Mississippi, Prints & Photographs Division, Library of Congress, LC-DIG-highsm-42290

The American Countryside Was Collectivized Within a Generation

The countryside was collectivized within a generation. The process was accompanied by immense spikes in violence, social dislocation and privation, and political chaos and backlash, but in the end, agricultural production was successfully collectivized. Nearly two-thirds of agricultural production was produced by just one percent of farmers. The result was plummeting costs of foodstuffs, a critical requirement for the explosion in capital, and maintaining downward pressure on wages in cities. Yes, the process of forcing consolidation of agricultural production required spasms of violence and immiseration: but the net effect—low consumer cost—was undeniable.

There was an odd twist, however: despite the nakedly evident process of collectivization, and its almost startling triumph, it was never trumpeted by the powers that be. It was never announced as a policy project, update reports were never issued, and in fact, the more collectivized the countryside become, the more the people valorized the independent, yeoman farmer. At the same time that the farmer was being forced off the land and the process of agricultural production was collectivized, the society around them was propping up a myth of the family farm as the backbone of a healthy society.

Collectivization and the violence and social dislocation associated with it isn’t unique to the United States, of course. U.S. collectivization was different from some of its predecessors, however in at least a few ways: whereas in previous forms of agricultural collectivization, the state absorbed millions of small farms and held the land in trust for the public, in the U.S., a combination of debt peonage and consolidation of agricultural input and output firms forced millions either off the land or converted them from independent farmers to farm workers. Rather than land and production going into a public trust, it devolved into the ownership of fewer and fewer private mega-producers, or went into a debt-peonage relationship with agricultural banks, and “input” industry firms–such as seed and pesticide producers or agricultural machinery manufacturers. In short, despite the massive financial and social costs to individual farmers and farming communities, and the ecology of rural regions, the profits accrued to fewer and fewer private individuals.

The story of U.S. agricultural collectivization follows with the story of late capitalist consolidation more generally. The pressure on small businesses to produce ever cheaper goods advantaged large-scale operations who could live on small margins across an immense level of production, whereas smaller farms found themselves floundering. In 1987, 57 percent of all U.S. farmland was operated by midsize farms—farms with between 100 and 999 acres—while 15 percent was operated by large farms with at least 2,000 acres. By 2012, farms with 100-999 acres held 36 percent of cropland, the same share as that held by large farms. Even this does not tell the whole story: farms with over $1,000,000 in sales, only three to four percent of U.S. farms, account for 60 percent of all agricultural output. According to the U.S. Department of Agriculture’s Economic Research Service and National Agricultural Statistics Service, this amounts to about 60,000 farms, out of a total of over two million farms.

Even this doesn’t tell the whole story. This relatively minuscule number of farms are still considered “family farms,” as defined by the USDA. Specifically this means that over fifty percent of the farm is owned by a single decision-maker (the “principal operator”) either alone or with relatives. By implication, about 60,000 families own the means of two-thirds of U.S. agricultural production—that is indeed an immense collectivization, but the truth is the consolidation is even greater. Two dynamics have contributed to this: consolidation of agricultural input and distribution firms and mounting debt peonage for mid-sized and small farmers.

In essence, fewer than ten firms—in fact, closer to five—provide all of the inputs (seed, fertilizer, and pesticides) and output or distribution of agricultural products. The story on the input side is of particular interest. Since just 2015, an orgy of mergers and acquisitions has made farmers reliant on just a handful of firms. The German chemical giant Bayer—which came into being just four years before Karl Marx published Capital—acquired Monsanto (which is awaiting regulatory approval); ChemChina, the Chinese ag giant, purchased the Swiss megafirm Syngenta. Two fertilizer behemoths, Agrium and Potash of Saskatchewan, merged into Nutrien. Dow Chemical and DuPont merged to create a new seed and pesticide firm that matched Monsanto (pre-acquisition) in size.

Earlier this year, another mega-merger, between Archer Daniels Midland (ADM) and Bunge, major agricultural traders (meaning buyers of crops), was proposed. Should these pending deals go through, U.S farmers would have three buyers, the functional equivalent of distributors: ADM/Bunge, the Dutch Louis Dreyfus Company, and Cargill. The picture of U.S. agriculture would be this: five firms would supply nearly all of the inputs to about 60,000 farmers, who would sell their production to three firms.

The implications of this level of consolidation in agriculture are tremendous. With so few firms at both ends of the food supply chain, there will be a monopoly power selling the inputs, and monopsony power buying them. With so few sellers of inputs and so few buyers of production, the “independent businesses” (i.e., the farmers) in the middle become closer to sub-contractors than true independent businesses; when a firm has so few options for purchasing materials and selling its products, their capacity to set prices or “innovate” in any meaningful way is limited to the point of irrelevance. With costs and prices so tightly set, the farmers—even the large farmers—are little more than pass-throughs. The structure of contractual agreements becomes standardized and rigid. The incentive for the input sellers to deal with fewer farmers increases—it allows for greater standardization of agreements, and reduces the risk of long-term purchasing agreements. This creates an upstream standardization in price, because the production costs are increasingly standardized across the farms.

The U.S. farmer has been reduced from an entrepreneur to a middle-man and is kept in this position through debt peonage. U.S. farm debt has seen a slow-motion explosion for 30 years. In fact in just five years between 2010 and 2015, U.S. farms added nearly $80 billion in debt, growing from $279 billion to $357 billion. In roughly the same period, the number of “farm banks,” defined as banks with at least 25 percent of their credit in farm loans, declined seven percent. In the Midwest, where 60 percent of all farm banks reside, there was a decline of over 100 banks, consolidating debt into fewer and fewer institutions. The situation would be even more dire if the majority of real estate farm debt (farm debt secured by farmland) was not held by the federal Farm Credit System Insurance Corporation. The FCSIC, as you can expect, provides relatively borrower-friendly rates and terms; so in essence, the U.S. public is lending to farmers to keep them afloat as the middle-men between the monopoly sellers of inputs and the monopsony buyers of agricultural goods.

Despite all the talk of regional “farm banks,” and the friendly government FCSIC, commercial banks still hold an immense amount of farm debt—in particular, Bank of America and Wells Fargo are huge lenders to farmers. Since farmers typically secure their loans with land, this puts these commercial banks in the rural real estate business. But it isn’t just banks: one of the five biggest lenders to farmers is John Deere, the Illinois-based farm machinery giant. John Deere is the fifth-biggest lender to farmers. Deere began by leasing equipment to farmers strapped for cash in the ag downturns of the 1990s, and then added a commercial lending elements to its business in recent years. As a result, today John Deere holds more than $2 billion in farm debt. The Deere lend-lease program allows farmers to avoid keeping depreciating assets on their books, but at the same time, saps them of an important asset when times are tough; they cannot sell their equipment for some liquid cash, and their lease agreements, amazingly, prevent them from repairing their own equipment, because of intellectual property rights Deere asserts to the software built into the machines.

While the megafirms at the top reap immense profits, the median farm income for 2017 was projected to be -$1,325. That is, the median farmer was expected to lose thirteen hundred dollars. That is debt peonage.

The final piece of this collectivization is the nature of the oft-debated “farm subsidies.” Farm subsidies take a number of forms, but in essence since the 1970s, in order to bring U.S. agricultural production in line with globalizing ag markets and encourage a supply that could support an export market, U.S. farm policy moved away from inducing higher prices for farm commodities (for example by buying up excess or paying farmers to set land aside) by managing supply, and towards keeping supply high, and offering counter-cyclical insurance or payments for times when commodity prices dropped. This resulted in regular oversupply, deflating prices and hurting small and mid-level farmers who did not have the volume necessary to make real profit. Although farm subsidies do help keep small and mid-level farmers afloat, the real benefits really accrue to the largest farming operations—and indirectly, to the monopoly input sellers and monopsony buyers. There is also a secondary benefit to the meat industry—they buy an immense amount of grains for feedlot operations, and keeping farm commodity prices low keeps their profit margins high.

The upshot of these policies is that, once again, the public is financing not only the small, less competitive farmer but is buttressing the agribusiness giant; so farmers find themselves faced with massive firms that in essence “can’t fail,” and bear little risk.

Here are three public policies that, working together, collectivized U.S. agriculture: antitrust policy, trade policy, and farm subsidy policy. (Another set of policies—environmental regulations—also privileged large operations by weakening environmental regulations that would have impaired large farming operations, particularly meat production). In essence, the public has created this collectivized agricultural system that has allowed the U.S. to produce immense agricultural supply with ever fewer entities. The public has created it, non-ag workers have benefited in the form of cheap (if not healthy, which is another issue) foodstuffs, but farmers have suffered. This is the violence referenced above.

In the U.S., as across the world, farmers face skyrocketing levels of suicides, violent crime, and self-abuse in the form of the public health crisis of opioid addiction. Farmers have the highest suicide rate of any U.S. occupation. The Centers for Disease Control identified “social isolation” as one of the factors contributing to the climbing suicide rate for farmers. Marxists know this phenomenon by another term: alienation. For people who are born and raised in a farming community, where farming is beyond a way to make a living but the very identity of people, the process of alienation is obvious working according to predetermined rates set by by Monsanto Seeds, John Deere Tractors, and Cargill. What was once the fulfilling and self-determined process of production and reproduction becomes the alienating experience of selling one’s labor for others—to pay your seed and fertilizer bill, to pay Wells Fargo and John Deere, to meet ADM’s prices. Farmers are becoming alienated en masse, undergoing a transformation that workers in cities and towns have lived for decades or centuries. This alienating experience has taken place in the course of a single generation, or maybe two—an extremely compressed time frame for such a drastic social dislocation. Suicide rates that go unaddressed through public health initiatives and caused by mass social dislocation is unquestionably a form of violence.

A study by the National Rural Health Association confirms what Marxists would predict about the process of alienation: as population in rural towns grew—i.e., as people migrated to towns and exurbs from farms—violent crime grew at a rate faster than population growth. Of course, this population growth was accompanied by the concentrated effects of trade policy, which were the closures of major manufacturing employers. The lack of social infrastructure to deal with violent crime don’t exist in these places.

New Deal liberals see a solution to these problems in the form of stricter enforcement of antitrust laws—meaning massive trust-busting—and supply-oriented farm policy. But the fact is, with U.S. integration into globalized agricultural markets, the collectivization of U.S. agriculture is irreversible. This is particularly true given the nature of property regimes in rural areas. Those 60,000 farmers are not going to become 1,000,000 farmers again; this would require, for one thing, breaking apart consolidated farmland, and reintroducing inefficiencies in production that would cause price shocks for consumers. Luring urban workers back to farmland is simply unlikely; the mass efficiencies that have been achieved through the process of late capitalist farm collectivization can’t simply be unwound. Nevertheless, the public has created and financed this process of consolidation, both through restraint and direct subsidy.

The U.S. has, sitting there, a vertically aligned food supply system managed by handful of entities and buttressed by public money and public resources. The toll on human lives and ecological resources has been immense and borne by the public. How much longer should a handful of firms be the primary beneficiaries?