Business structure helps producers
address power disparity in the marketplace
By Thomas W. Gray, Ph.D.
Rural Sociologist
USDA Rural Development, Cooperative
Programs
Editor’s note: The author welcomes feedback from readers on
this article and more generally on farmers, collective actions,
and social movements at: Thomas.Gray@usda.gov.
hen cooperatives are in their early
formative stages, they can often
resemble social movements. Social
movements are a kind of group action,
composed of individuals with common
interests, seeking to achieve some larger socioeconomic,
political, and/or cultural change.
Social movements go through various stages, from
pre- and early-mobilization, through organizational
formation and sometimes closure. In the case of market
failures and economic grievances, businesses may form
as cooperatives. This article focuses on the importance
of common belief systems, grievances and identities,
participation and leadership during mobilization.
Role of re-awakened belief systems
Berton Klandermans, (2001, “Why Movements
Come into Being and Why People Join Them”) says
social movements and collective actions seldom invent
ideas they form around. Rather, they build upon a
heritage of ideas, values and earlier actions in a group’s
history. During the early stages of a collective action,
people’s historically held belief systems and cultural
inheritances may sometimes be re-awakened. Farmers
have a long history of actions that have waxed and
waned with the booms and busts of the farm economy,
and the cycling of government intervention and freemarket
policies.
Farm history is, in fact, rich with movements that
resulted in the creation of cooperatives. Examples
include, among others, the Grange, the Northern and
Southern Farmer Alliances, the Farmers Union, the
National Farmers Organization and the Federation of
Southern Cooperatives (see, respectively, books by
Patrick Mooney, “Farmers and Farmer Movements”;
Jon Lauck, “American Agriculture and the Problem of
Monopoly”; and Bruce Reynolds, “Black Farmers in
America”).
Many of these movements have at their core farmers
who wish to continue to live and operate as farm
families, with values that embrace civil liberties,
property rights, civic participation and decentralized
democracy. As Kendall Thu and E. Paul Durrenberger
of the University of Iowa put it, they seek: the social
and human character benefits of “learning honesty,
hard work, ingenuity, flexibility and fairness as part of
being reared in a farm environment.” Cooperatives
themselves are embedded within a series of values that
include, among others: mutual self-help, equality,
equity, democracy, voluntarism and service.
These embedded belief systems can link farmers to
contemporaries who may be struggling in similar
situations, as well as to mutual histories as surviving
farmers in particular regions, raising particular
products. Klandermans suggests such belief systems —
when re-awakened in collective actions — can help
facilitate a greater sense of life-meaning among members, as
well as provide a grounding and vehicle for voicing feelings
of injustice.
Farmers and market grievances
Farmers have formed social movement groups, or focused
their collective action, for several reasons. Frequently
(though not exclusively) an economic or market grievance is
involved. Potential members come to realize they have
certain unmet needs, and/or are positioned in certain
disadvantaged market relationships.
For example, farmers may find that input prices are too
high, or prices for their product too low, leaving them to
operate in only a minimally solvent (or less than solvent)
manner. Or some needed service or product may be lacking,
and not easily obtainable.
They might also discover in operating and engaging in
their various farm transactions, that they are forced to deal
with a single business or a very limited number of large
businesses. They may have few, if any, alternatives beyond
these firms. Historically, when these situations have occurred
it has not been unusual for power disparities to evolve
between the larger business and the much smaller farm
operation. Various terms have been constructed to help
describe these different power relationships, including
“monopoly.”
Generally speaking, a monopoly exists when there is but
one seller of a product or service in the market place, and
many buyers. A monopolist may be in a position to
potentially dictate prices for products and assume a “take it
or leave it” market stance. Since there are no alternative
businesses for buyers to go to, and there are many buyers,
individual purchasers have little power in the monopoly
situation. The monopoly firm can dictate a given price,
knowing full well buyers have no choice but to buy their
product or go without.
What if several producers are trying to sell a product to a
single purchaser? Similar to the single-seller situation, a
single buyer may be able to make an offer to buy products at
a certain price and rebuff potential sellers who argue the
price is too low. The term used in this situation is
“monopsony.”
In a monopsony, sellers have no choice but to sell their
products to the single buyer. There are no alternatives. Since
there are many potential sellers, the monopsonist firm can
dictate a price, knowing there are many sellers to buy from,
and no alternatives for sellers, regardless of the price set.
Again, there is a “take it or leave it,” mentality and approach
to the market.
Of course, in either of these situations, monopoly or
monopsony, the price cannot be either so high or so low that
it drives all of the many sellers or buyers out of business. The
firm with predominant market-power must be careful not to
destroy its own market.
There are very few actual unregulated large monopolies or
monopsonies in the United States. Where they do exist,
typically they are heavily regulated by government oversight.
Where such power disparities exist, small numbers of large
firms, rather than a single firm, hold large proportions of
market share in particular product areas.
When these firms are sellers, they are “oligopolies” (rather
than monopolies); if they are purchasers of products, they are
called “oligopsonies” (rather than monopsonies). While their
actions in the marketplace are complex, their power over
large numbers of small firms parallels the monopoly and
monosopony situation.
Researchers argue that U.S. farmers have had to deal with
these various power disparities historically (see, for example,
analyses of Cargill, ADM, ConAgra and Dean Foods by
William Heffernan of the University of Missouri, and various
writings on market concentration by Ronald Cotterill,
University of Connecticut, Richard Sexton, University of
California-Davis and Bruce Marion, University of
Wisconsin-Madison.) John Craig of York University suggests
that when these situations have occurred, farmers have
historically off-set (or countervailed) some of their respective
power disadvantages by forming cooperatives.
Coming together as a group does not just happen
spontaneously because a need exists however. Farmers are
famous for being rugged individuals. Some kind of collective
identity has to develop, grievances have to be identified and
leadership, loyalty and commitment have to evolve.
Role of identity and participation
The grievance may often be associated with a person’s
farming, or social identity. Dairy farmers, or grain farmers, or
family farmers may find commodity prices too low, or supply
prices too high, for example, and in turn, may suffer solvency
problems (the grievance). Typically, some precipitating event
has occurred, such as a series of farm foreclosures or a
business has closed that was providing needed services.
Buyers of farm production may have been arbitrary in their
pricing and/or in its product acceptance-policies; or sellers of
supplies may be gouging customers with exorbitantly high
prices (respectively, the oligopsony and oligopoly problems).
Some rudimentary leadership must emerge to facilitate
early meetings among those feeling aggrieved. Common
identities among participants (e.g., livestock, vegetable, fruit,
and grain farmers/ranchers) can ease discussion and facilitate
discovery of other similarities, as well as differences. The
sharing of current grievances will likely predominate.
As discussion occurs, members discover ways their
grievances overlap. Together, they gradually construct
(sometimes through conflict and negotiation) joint meanings
and explanations for their situation. Members begin to
develop a sense of themselves as a collective group; a concept
of “we” evolves. Pre-existing, and re-awakened belief systems
can play a particularly important role at this point, helping
members solidify their common needs and history.
Once a common collective identity begins to take shape
and members more easily join in and participate, the more
they participate. Participation engenders more participation.
The more members are involved, the more they build
alliances, the more they are heard, the less their individual
differences interfere and the more the group is empowered as
a group.
Role of leadership
During these early phases of development, a more
permanent leadership — beyond leadership for the initial
facilitation of meetings — tends to take shape. Characteristics
of a successful leader are beyond the scope of this article.
However, a few aspects will be mentioned (see James
Wadsworth “Director Leadership,” “Rural Cooperatives”
Nov./Dec. 2003, for a more detailed article on cooperative
leadership).
Successful leaders generally come from the communities
they help mobilize. They must be able to read the
environment for opportunities for grievance resolution, as
well as constraints to resolution. Being able to assign causes
of the problem and assign blame to someone, something
and/or some process is frequently key to bringing a focus to
the movement. Equally important, leaders must be able to
communicate to the members that taking collective action as
a group can be fruitful.
These determinations generally come about through
group discussion, as speakers gradually build credibility
among the membership. In a process of articulation,
negotiation and re-articulation, members begin to internalize
conceptions of a leader (or leaders) as someone who can
speak for them and who does so in a manner that does not
create group schisms, splits or alliances via scapegoating.
Constructing whole-group solidarity is emphasized.
Leaders may also be attuned to calling up and reminding
members of the sets of values and beliefs they all grew up
with, and share with each other in the community, and
historically.
Summary
These several influences — existing belief systems,
identities, grievances, participation, leadership — tend to act
together to reinforce each other. Members with similar
identities and common grievances may come together in a
group such that discussion and planning for action are
facilitated. Collective identities tend to emerge from this
group participation.
In successful movements, leaders emerge who can bring
greater clarity to grievances, assess opportunities and
engender hopefulness about possible actions. Leaders may
also be adept at calling up and articulating sets of belief
systems that ground members to their histories and build
solidarity across members. As members participate with other
members, participation itself deepens collective identity and
builds greater commitment, increasing the likelihood that
participation will continue.
