The new value of signing your work

January 2002

Recently the pork industry has followed a predictable pattern established in poultry (and somewhat in cattle) of consolidation and contract production. Pork, it seems, is a protein of a different color, though. Contract pork production has suddenly been revealed as a major threat to our way of life.

Hogs have always been the great chance for the hardworking individual farmer to pull himself up. Perhaps, it is the loss of this virtually guaranteed opportunity many now mourn. With ambition and effort, thousands of farmers have farrowed their way to better incomes, all the while oblivious to the market conditions that made this possible: consumer acceptance of variable meat quality and a fragmented distribution system.

Both factors are largely gone. I doubt if Wal-Mart and Albertson’s will be giving way to butcher shops soon. Moreover, I believe franchises will dominate the restaurant sector, which now claims most food dollars. The implication is that meat demand will be determined by fewer decisions, and center on large volumes of uniform products. 
The production response has been to deploy huge facilities with identical, specific genetics. Farmers have been able to participate in the trend via contractual agreements that supply them with the inputs they needed (genetics, expertise) and utilized their assets (labor, land, capital).

However, many see such alliances as usurpations of the Jeffersonian agrarian ideal – a concept as outdated as it is misinterpreted. Perversely, even while despising the change in markets, producers have seen pork demand climb as a result of attention to consumer preference.

Now it seems the same concerns have spilled over to grain production. “Indentured servitude”, is how one Minnesota professor put it. Farmers will “lose their freedom to manage”. Poor analogy, I suggest, since indentured servants were invariably drawn from the bottom of society, while contracting entities typically recruit from the top. Besides, if a producer can be duped into one-sided arrangement, how good of a manager is he in the first place?

Give me a break. I have been producing corn under contract for several years – entire crops, in fact. Jan and I have found the premiums make a big difference. Changing how we plant, cultivate, harvest, and document our crop is one way that we can compete. While we have given up the freedom to plant whatever bag was handy, spray whatever had a cute commercial, harvest any field with the combine set how we like it, and keep all our records in our heads, these are hardly liberties worth manning the barricades for.

Such loaded language makes lively magazine text, but little sense. Agriculture has, in my opinion bred a producer population with real “commitment issues”, and this is a prime example. Yielding modest autonomy in exchange for equivalent constraints on the buyer’s part can benefit both parties. Yet critics sound like confirmed bachelors contemplating marriage.

It is easy to imagine we are Masters of our Domains, given our isolation. But in fact, we are more connected than ever before. Sending anonymous products to the marketplace is a strategy of minimum effort. A better hope for producers is to capitalize on personal strengths. Put more simply, advantages now accrue to those who will identify and stand behind their production – signing your work, as it were. By contracting, this is what I agree to do. Those who consider it boot-licking are largely those who fear to be judged by any precise standard, preferring anonymity and bulk to cover their mistakes. Contracting means the end of blending off poor quality products, for example.

Contracts also hide economic details from public scrutiny. This is good news, I believe. Keeping my business private gives me some small advantage by adding an element of surprise for my competition. Such discretion is one small step toward emphasizing personal responsibility instead of relying on herd treatment. It also means that negotiating skills and market judgment take on immense importance in addition to production skills. My business in the grain buyer’s office is the same as my business in my lawyer’s office: my business. This willingness to negotiate alone is often seen as a betrayal of solidarity by those who depend on inclusion as a substitute for initiative.

Above all, it is important to remember that virtually all grain producers now operate under a contract with the USDA. If contracts are the root of evil shouldn’t we start by attacking the most pervasive threat first?