Agriculture
is the backbone of the U.S. industrial food economy. The economics of
agribusiness, however, can be difficult to grasp. As agriculture has evolved
and changed the economic practices governing all the aspects of the industry
have changed as well. Although agribusiness draws on certain aspects of both
Keynesian and neoclassical economics and adapts them as needed, the U.S.
industrial food economy resides and flourishes (depending on where you’re
seated) in the neoclassical economic reality.
The
industry started out with independent farmers growing and selling the
revolutionary crop, corn. They were in sole control of every aspect of corn
production, though that process was simpler than it is today. Neoclassical
economics is based on low restriction in the free market and a certain amount
of deregulation. Supply and demand are the most influential factors in
neoclassical economics, as well as in the corn industry. This is evident in the
dramatic increase in grain prices during 1972 when Butz sold copious amounts of
corn to Russia. This decision eventually forced farmers to grow excess corn
because of subsidies from the government increasing supply, without a
necessarily high demand, making the price and potential of grain uncapped.
Other key elements of neoclassical economics are present in
the corn industry. The many stages corn goes through, industry to plate, all
possess different free market attributes. The ethanol fueling the vehicles
transporting the corn to the massive feedlots where all of America’s beef and
chicken ingest the golden grain. As Friedman says, government enforcement of
what he calls “cartels” (I think they can be thought of as each part of the
agribusiness process for our case) can perpetuate monopolies on the industry. I
definitely agree that the government has made the corn industry easily susceptible to monopolies. The USDA
has its fingers in all aspects of the food economy ranging from dealing with
farmers to ensuring that the feedlots use corn. However, despite these monopolizing
forces, agribusiness remains under the neoclassical economy veil because each
of these businesses are separate and simply enacting in the free market, with
some government sway. The economics of agribusiness now encompass so many
different parts and businesses that neoclassical economics and a free market is
necessary. Granted, government intervention has been influential, but any
attempt at controlling the entire business of simply corn would be a daunting
and unattainable task.
I agree with your selection of neoclassical as the main economic model that is guiding the US Food Industry currently. I am interested in seeing how and where in Pollan's book you find most of your supporting ideas. You introduce some good thoughts and the introduction of Russia's corn industry is interesting. Your final thought about managing the entire corn business would be daunting is very true. Many people forget that there are many other crops and things that go into agriculture in addition to corn. Where in Pollan do you think he supports your ideas?
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