One of the most effective strategies being employed by activists against food companies and modern agriculture to force change is to identify the efficient pinch point in the chain from producer to consumer and to apply pressure there to extort compliance with their demands. In the modern food production and distribution system, this pinch point is centered in brand equity.
If an entity can seriously threaten the diminishment or destruction of brand reputation, it will usually be invited to the table for negotiations and to some extent accommodated. This approach is far more cost-efficient than any of the many alternatives, since decisions made at the pinch point are effectively pushed up-chain and back-chain, often as non-negotiable policy changes by brand holders.
How does this method of imposing demand preferences stack up with the classic process of open markets, where the preferences of the many are signaled by individual purchases (or the lack of them) to guide product attributes in the marketplace? The difference is similar to the methods and outcome of a monopoly vs. that of a competitive market. In the classic case of a monopoly, a single firm is able to control the production, distribution and sales of a product (and therefore its price, at least over a range). In addition, entry by other firms to compete is thwarted in one of a number of ways.
In a monopoly, a couple of things are usually the case compared to an open or competitive market outcome: less of the product will be produced and its price will be higher. This is the target outcome that activist groups desire for
much of animal agriculture – less production and higher cost to the public. As such, their tactics position them as emerging monopolists of the food system.
By acting as the gate-keeper of “approved” methods, technologies, participants and moralities, they create the outcome of a coercive monopoly. This tactic actively engages in blocking entry for competitors, in this case competing methods or technologies of which they disapprove.
These efforts by activists are often shaped to the media as their “David vs. Goliath” template, the small group or individual with meager or no resources striking a killing blow against the well-equipped corporate giants. Nothing could be further from the truth, especially when activists are able to politicize their demands and gain the force of government regulation and taxation to impose their point of view. It is hard to construe government as the underdog in very many battles.
What happens to a society when “David” is wrong, or a crook is really misguided but his template for getting his way is very effective? What happens is a very small, sometimes tiny group of people win the right to impose their demand, their preferences, their moral values and their other deeply held beliefs on the rest of society.
Any person or group, no matter how small, that can make its case in the public forum and win the approval of the majority for its viewpoint is perfectly legitimate in its victory. However, those who use politicization of food, biased research and mischaracterization as weapons to gain control of portions of the food production and distribution system not only raise cost but remove the natural corrective tendencies of markets that come into play when temporary excesses or disequilibria occur. Governments are much slower than markets to adjust when resources are discovered to be misallocated.
Imposing points of view or private moralities on the public market system create externalities of sometimes immense proportions. Activists create these externalities when they impose the costs of compliance with their privately held beliefs on everyone, including those who do not demand such things. In the classic case, an externality refers to private production costs that are borne by the public or another entity when they are not captured in the firm’s cost of production. When activists impose their privately held beliefs on a region or the nation, they redistribute the cost of their pet attributes to others, which they alone should bear. At the same time, they are throwing molasses in the processes, which adjust resource use to avoid waste or to fix inequities.
Editor’s Note: Dr. Dennis DiPietre is a swine consultant in Columbia, Missouri. His monthly commentary is sponsored by Elanco Animal Health. For more information, go to: www.elanco.com
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