Corporate Power in Agribusiness: Latin America

Throughout history, the practice of agriculture has gradually developed from small, self-sustained plots of land to a largely structured and hierarchical business market that has been strongly influenced by technology. With this capitalization and industrialization of agriculture, there have been significant changes not only to the strategies and processes of cultivation, but also to the roles that farmers and business owners have. This process can be most clearly illustrated by the evolution of agribusiness within the Americas: specifically in regards to the relationship between the United States and Latin America.

Since the globalization of capitalism has brought significant economic success to certain areas, capitalists suggest that the solution to Latin America’s poverty is the extensive modernization of their agrarian sector by implementing modern practices and technology to make their agriculture more like a business market. Currently, Latin America’s agrarian reality is testimony that this strategy has not been successful. The integration of transnational corporations and large business owners into Latin American agriculture has only deepened their crisis of hunger and poverty for rural Latin Americans.

After drawing from the research on the history of agribusiness within the Americas and analyzing the patterns of corporate involvement in agriculture and livestock production, it has become inevitably clear that the power of large corporations has diminished the abilities and importance that farmers and rural laborers have within the agricultural field.

Latin America, a vast and fertile region, has a relatively low population density with rich water resources, valleys, and climates that are capable of growing every crop, yet they struggle with malnutrition, starvation, poverty, and underemployment. In Roger Burbach and Patricia Flynn’s book titled Agribusiness in the Americas, they suggest that the capitalist revolution of Latin American agriculture has only worsened the issues they have been dealing with, and that the root of the issue lies in large-scale corporate ownerships. Large American transnational corporations have capitalized and technologized Latin American agriculture, with false promises that a capitalist model of economic development will put an end to their agrarian crisis. The authors argue that the presence of these U.S. agribusiness corporations has significantly modified the agricultural system for their own profit, driving out vast numbers of small farmers off their land into urban unemployment.

By analyzing the activities of ‘Del Monte Corporation’ in Mexico and Guatemala as an example, they illustrate how the profit of multinational corporations have come from the exploitation of poorly paid agricultural workers, reinforcing the power of larger and wealthier growers at the expense of small farmers. They explain how the Del Monte Corporation was able to monopolize the canning industry to become the world’s largest producer of canned goods, also emphasizing the fact that the canning industry has a low dependency on technology, making it very labor intensive. Since canning companies are unable to cut costs by using efficient machinery, these corporations will try to keep the costs of labor as low as possible by seeking out the cheapest labor pool that they can find. Yet, the seasonality of the canning industry only provides their workers with short-term employment. To maintain this low expense for labor, Del Monte also has taken a large part in busting unions and repressing labor militancy of any kind, keeping the undeveloped and developing world from making progressive changes.

Del Monte and many other agribusiness corporations have moved into areas that struggle with hunger, land distribution, and poverty by promoting their business as a way to expand food production and create more opportunities for employment. However, these TNCs end up dominating most of the economic life of these countries and have immense control over their foreign exchange. Since only about 4 percent of the economically active population of the United States participates in farming, the agribusiness sector is primarily dominated by the economies of developing countries that have a large portion of their population living in rural areas.

Globally, a majority of animal commodities and livestock are produced by poor rural populations: smallholder farmers who are often excluded from the benefits of the rising demand in the animal market. These large agribusiness corporations maintain their profit and control by keeping poor farmers at a low class level so that the United States can be provided with their demand for food that is worth around $180 billion. These TNCs will exploit impoverished foreigners who are willing to provide cheap labor (in the search for work) to maximize their corporate profit, without really providing a way for these communities to better themselves and move up in the constructed economic hierarchies. This development of large-scale corporate ownership has only polarized the rural social structure.

Another principal example of a transnational corporation that has belittled and exploited numerous impoverished Latin American populations is the United Fruit Company. The United Fruit Company specialized in the trade of tropical fruit from Latin American plantations to provide fruit to the United States and Europe. Due to the poor working conditions that were imposed by this corporation, groups of workers in Colombia went on strike to protest their inhumane treatment. In 1928, the Colombian state forces used their army to massacre around 3,000 United Fruit Company workers who refused to stop protesting.

The Colombian government worked in compliance with the United Fruit Company to maintain corporate profit and continue their foreign economic ties, treating their laborers as disposable animals in their game of business. This corporation’s relentless pursuit for profit pressured the armed forces of the government to satisfy their interests, which resulted in the assassination of innocent workers who were only demanding the improvement of their life conditions. This is a clear example of how the power of a corporation can manipulate the political, civil, and social life of their subordinates.

The primary way that these TNCs like Del Monte and the United Fruit Company can control their labor force is through the use of contracts. For a wide variety of food products, over 50% of its production is controlled by contracts. The integration of large agribusinesses in Latin American agriculture has limited the level of information and decisions provided to the farmers, by using contracts that restrict the farmer’s control over pricing, product choice, vending location, and the overall production process. The implementation of contracting allows TNCs to retain control over farmers in several ways.

First, the detailed specifications put into place by the contractor demands a high standard of expectations with which the farmers must comply. This way, many farmers end up drowning in debt to meet the standards for their facility by purchasing new machinery and materials. These expectations may also entail unreasonable production quotas that they are still required to meet even if their herd size has shrunk from disease or environmental factors. Their debt is further increased by the attempt to make up for these losses, along with their responsibility for pollution clean-up costs. These contracts shift the risk of loss and damage from the company over to the farmer, forcing them to personally deal with any setbacks.

Since these contracts are written by the firm and not the farmer, the broad wording can be ambiguous, allowing the TNC to manipulate the agreement for their advantage. Many smallholder farmers sign these contracts out of fear of financial insecurity or their inability to compete with the market created by these agribusiness firms. By taking advantage of this, contracts give businesses the power to transform farmers from entrepreneurs to growers that have little to no power over the decision-making regarding the farm. TNCs use contracts as the key to unlock their control over the market, sustain their dominance in the field, and to perpetuate a continuous supply of cheap labor.

It has become unmistakably evident that many transnational corporations will use any means necessary to maximize corporate profit, even if it involves risking the lives of others. Although the industrialization of agricultural practices has provided ways to cater to the expanding world populations, the systems of agribusiness have only continued to polarize the rural social structure and widen the gap of inequality between impoverished farmers and large business owners. This allows TNCs to draw in huge profits while draining off important resources from developing countries, having a significant effect on the allocation of resources by providing the developed world with a majority of their production.

However, it is especially important to take into account that these transnational corporations only obtain their profit by catering to the demand of the developed world. For example, the United Fruit Company only acquires their profit by satisfying the demands of those living in the United States and Europe. The consumers, or the general public, has the power to decide what they purchase and thus create the market through which the transnational corporations must operate.

With this idea, it is crucial to emphasize the importance of being conscious consumers that are informed of the processes executed to produce the commodities that are purchased. If the buyer decides that they will not buy products that involve the degradation of the undeveloped world, then the seller must cater to that demand. This buyer awareness becomes critical in the current market by directing these firms to be attentive when making decisions regarding their workers. This corporate hegemony has potential to be reduced as the consumers of the developed world continue to be informed of these atrocities.