Agribusiness and Society

Corporate Responses to Environmentalism, Market Opportunities and Public Regulation

Kees Jansen, Sietze Vellema, Kees Jansen, Sietze Vellema

• Publisher: Zed Books
• Year: 2013
• ISBN:
  9781848136083
• Edition: 1
• Topic: Economics
• Subtopic: Economic Conditions
• Index: Economics

This volume examines how far agribusiness corporations are responding to the opportunities and pressures resulting from emerging environmental awareness. In particular, in what ways are they changing their R & D and business practices in order to develop new environmentally oriented products, services and methods of production? And what can they change of their own volition, and where is external direction a necessary condition of environmentally friendly innovation? These questions are explored through investigations of particular biotech and agribusiness companies -- including Monsanto, Ciba Geigy, Dole, and Chiquita -- and their behavior in situations as diverse as California, Europe, Australia, Brazil, and Central America. The volume explores how some have responded to environmental pressures by exploiting new consumer-created markets; some changed their production practices in a sustainable way; while others have complied with (or resisted) state environmental regulation, notably labelling systems and certification. Each study explores how institutional, cultural, economic, political and technological contexts shape the strategies of big business. Topics include 'green bananas', genetically modified tomatoes and soy, the new markets in organic produce, health and pesticides, and access to justice. The book explains why some corporations are successful in introducing environmentally friendly innovations, and others are not. The key to understanding contrasting outcomes is examining the interaction between internal corporate environments where profit and efficiency considerations predominate, and external environments where consumer preferences, NGO pressures and government regulation are important. The book also explores possible new roles for the public sector. The result is a sophisticated and critical analysis of business practices and regulatory systems in the agro-food sector.

ONE | Agribusiness and environmentalism: the politics of technology innovation and regulation

KEES JANSEN AND SIETZE VELLEMA

§ By the start of the twenty-first century, agriculture had definitively lost its image as a natural and harmless activity. Consumer and environmentalist organizations in Europe, farmers’ organizations in India and political coalitions in Brazil, are taking action against the introduction of genetically modified crops, which they view as a corporate appropriation of nature, an infringement of farmers’ choice in seed selection and as an attack on agro-biodiversity.

Leading writers, cabaret performers and musicians in the Netherlands have launched cultural platforms against intensive pig-farming. Recent outbreaks of mad cow disease (BSE), foot and mouth disease, avian influenza, and other food scares, such as GMOs, pesticide residues and chemical food additives, have put organic agriculture definitively on the policy agenda, even though some prominent scientists fiercely condemn it as backward-looking. General discontent with the industrialization of agricultural production and food provision systems has put agribusiness and the food industry at the core of societal debates.

Life sciences industries, Monsanto in particular, are fiercely criticized for their biotechnology programmes. Pesticide industries are being charged with systematically contaminating the environment, their workers, our drinking water and the products we eat. Food producers are being criticized for promoting monocultures that lead to a higher use of agro-chemicals, an increase in soil erosion, a loss of agro-biodiversity and high energy use.

Growing discontent with conventional, industrialized agriculture is not only putting pressure on agribusiness but creating new opportunities for sustainable business strategies and opening up market niches for environmentally-friendly products. Supermarket chains turn towards organic and other environmentally-friendly foodstuffs as high-value products. Banana producers procure environmental certification for their bananas to enlarge, or at least maintain, their market shares in European countries. Food processing industries take up organic brands to lure green consumers seeking healthy foods. Research and Development (R&D) departments of agribusiness firms develop new technological tools for creating healthy food products or new farming methods.

The motives for agribusiness’s responses to environmental concerns within society are thus diverse. These may include a strategy to lower social and political resistance by pressure groups against their production methods or products. Or it may be that firms have to comply with environmental regulations or improve their environmental management in order to avoid new and stricter regulations. These responses to external factors interact with internal ones: business managers who become adherents of the ‘ecological paradigm’ may be vital to the internalization of environmentalism in their firm (Vorley, ch. 2; Johnson, 1998). Last but not least, firms can profit from environmentalism if they succeed in capturing the green consumer. They can extend or renew their product range to include organic food (Lyons et al., ch. 5) or try to convince buyers that their products are more environmentally-friendly than those of their competitors in order to sustain or enlarge their market share (Jansen, ch. 7).

Given this multiplicity of responses it is not surprising that ‘sustainable development’ as undertaken by business has been evaluated in contrasting ways. Some authors argue that companies are genuinely committed to environmental issues, because firms have adopted environmental management systems, appointed board members with corporate environmental responsibilities and invested in improving environmental performance (Beloe, 1999; Shrivastava, 1996). Several chapters in this book describe how, over the last decade, the array of responses to environmental concerns has shifted from end-of-pipe or control technologies, including more rational use of polluting inputs such as pesticides, to sustainable technologies and the design of cleaner production methods, ranging from organic food to hi-tech integrated pest management in plantations with monocultures of high-value export crops (Jansen, ch. 7; Guthman, ch. 6; Lyons et al., ch. 5). Businesses have conceded that the environment is an issue they must address and have moved in different ways to accommodate it within their strategies (Blair and Hitchcock, 2001; Reinhardt, 2000).

On the other hand, a critical view is emerging among environmental movements that firms address environmentalism merely as a sophisticated ‘greenwash’ strategy, manipulating the definition of sustainable development, bringing trade and environmental agreements in line with corporate agendas to convince the public that firms have moved into a new era of ‘green business’ (Greer and Bruno, 1996; Bruno, 2002).¹

This debate leads to the crucial question about the extent to which the industry is capable of carrying through profound changes in production processes and product development to become proficient in developing new, environmentally-friendly products and services. This book focuses on one particular issue in this debate: the interaction between internal corporate environments where efficiency, profit and share price considerations predominate, and external environments where consumer preferences, NGO pressures and government regulations are decisive. This book examines the permeable boundaries between agribusiness and society in an attempt to clarify what enables firms to be innovative and to change their business strategies in the context of a growing societal concern for the environment. It provides a sociologically informed analysis of the internal dynamics within agribusiness firms, the possibilities for interest groups to change agribusiness performance, the role of the public sector in innovation and the mode of regulation of agribusiness operations.

Agribusiness firms, particularly the larger ones, are major actors in shaping the future of socio-technological and environmental landscapes in agriculture and food provision worldwide because they are financially capable of investing in technological innovation and are able to assess the environmental impact of their operations. The diversity of agribusiness operations cannot be covered in one book, but some of the most contentious firms and topics are included in our analysis: among them, the biotechnology firms Monsanto, Calgene and Zeneca, the pesticide producers Ciba-Geigy, Dow and Shell, the banana companies Dole and Chiquita, and the food industries Uncle Tobys and Heinz Wattie. Guthman’s chapter (ch. 6) complements the analysis of larger corporations that shape agricultural modernization at the input and output side of the farm, with a closer examination of the other element of agribusiness, namely the large growers and grower-shippers which are at the heart of constructing ‘the factories in the field’.

Following corporate activities in diverse places (including the USA, Europe, Australia, Brazil, Sierra Leone and Central America) we will be able better to understand the operation of agribusiness in different socio-technical and regulatory environments. This also requires specific research into the issues of dominance of, and resistance to, agribusiness operations in developing countries. Various chapters analyse the impact of state regulation or political campaigning by non-governmental social movements on agribusiness performance. The topics addressed in this book include ‘green’ bananas, genetically modified tomatoes and soya, the new markets in organic produce, occupational health and pesticides, and access to justice.

The starting point of this book is the proposition that the emergence of environmentalism in the late twentieth century has reshaped performance and innovation in agribusiness. ‘Environmentalism’ is here not used in the sense of a social movement of environmental organizations; rather, as a term ending in -ism, it indicates principally a set of ideas. Environmentalism refers here to a set of guiding principles for the preservation and enhancement of the environment. This set of ideas is no longer unilaterally defined by environmental movements; it has become incorporated into government policy, has been internalized by companies, has become part of international agreements and has guided consumer behaviour. Despite the borrowing of the term ‘environmentalism’ by more and more actors, we assume that it still connotes a recognizable and distinct set of ideas, even though the precise meaning of these ideas will continue to be the subject of controversies.² This use of the term environmentalism implies that this book not only looks at how environmental pressure groups are changing agribusiness performance but also how companies respond to the environmentalism present in regulatory and market demands.

This is not to say that the changing behaviour of firms in agriculture and food can be solely attributed to shifting ideas, to the rise of environmentalism and public awareness about sustainability. Guthman’s analysis of Californian organic agriculture (ch. 6) shows how agribusiness change is embedded in regional agrarian economies and reproduces structuring factors for the behaviour of individual firms. High land values push farms into a process of intensification. The organic farming movement criticizes such forms of intensification and intends to develop alternatives. However, it is precisely the success of organic agriculture in California, developing into an organic agribusiness sector, which further contributes to increasing land values. The chapters by Harvey (ch. 4), comparing how Monsanto and Zeneca approached the GM tomato, and Pelaez and Schmidt (ch. 10), analysing Monsanto’s confrontation with a restrictive regulatory regime in a Brazilian state, emphasize the importance of specific configurations of market opportunities and public regulation. Complex configurations rather than environmental concerns per se seem to be the principal driver of the responses and strategies of companies.

The greening of agriculture is part and parcel of a redirection and further intensification of agro-industrialization, featuring both changes in the relation between agriculture and the food or pharmaceutical industries, and changes in the farming sector itself (Reardon and Barrett, 2000). The size and impact of agro-processing, distribution and provision of farm-inputs, undertaken by agribusiness firms, continue to expand. Increasingly, value is being added in processing, branding and marketing, and less in production, or, in other words, farm production value-added decreases relative to value-added by non-farm actors in the food chain (Cook and Chaddad, 2000; Pritchard, 2000).

The farming sector worldwide is undergoing changes in product composition, technology, and sectoral and market structures. The research focus, in both the private and the public sector, has shifted from farmer to food processing firms, from the public financing of research and development to private financing, and from the functions of plant and cropping systems (or animal and animal husbandry), to the functions of cells, proteins, enzymes and genes. With regard to market structures the shift in economic power from the production side to the retail side is remarkable. This shift has led, among other things, to diminishing returns in the pesticide industry and has given rise to intensified operations by corporate fresh food producers, increasingly defining themselves as food marketeers sourcing fresh produce on a global scale. These general developments make up the context wherein agribusiness and food industries take up environmentalism and decide on investments in technology innovation, the implementation of environmental standards and the inclusion of public regulatory measures into their operations.

The question as to how and to what extent environmentalism makes companies change their strategies and performance is approached from two angles in this book. First, the authors examine what leads firms to include environmentalism in their business strategies, to be innovative in technology development and to change performance in production processes. Part I, ‘Agribusiness’s Responses to Environmentalism in the Market’, takes up the issue of the incorporation of environmentalist concerns into agribusiness strategies and their technology agendas as an expression of a politics of technology innovation. A particular point of concern is whether the growing incorporation of environmentalism into corporate strategies is changing the restricted pallet of choices and constraining variety in technology innovation, exemplified by the strong reliance on biotechnology or genetic engineering. Moreover, even apparently more environmentally-friendly technological alternatives such as organic farming seem to be shaped by the general process of agro-industrialization and its corresponding technological trajectories. The greening of agriculture and food is in the first place an issue of technological innovation in production processes and product development. Unlike the more conventional approaches of technology, technological innovation is here not viewed as a neutral outcome of science nor as a simple result of market forces. Below we will introduce the concept of ‘politics of technology innovation’ to explain the important influences of institutional and social dynamics, negotiation and contestation, and history and power, on the pace and direction of technology innovation.

The focus on struggles around technology innovation is further deepened in Part II, ‘Regulating Corporate Agribusiness: New Roles for the Public Sector’, which examines how changes in regulation and legislation and a redefinition of the tasks of the public sector may impact on corporate behaviour. The issue of regulation is the second angle from which we explore agribusiness–society relationships. The analysis starts from the notion that the many subtle ways of restructuring the marketplace are often not recognized as such. Two decades of deregulation and market-led innovation have raised the question as to how governments, citizens and social movements can govern corporate practice and how the selection of technological options can be supported by representative forms of decision-making. The classical division between state-led and market-led development is increasingly viewed as an unsatisfactory framework for a definition and a defence of public interests. The search for new forms of regulating agribusiness activities touches upon the balance of power between state, corporations and social movements. This part discusses technological innovation in relation to the rather limited scope of regulatory instruments, to the shifting balance in public and private control over agricultural development, to the lack of democratic procedures for governing the selection of technologies and opening up viable alternative technological trajectories, and to the lack of judicial instuments for making corporations liable for the unwanted consequences of the technologies they create. Part II calls for a new phase of rethinking and reconstructing public regulation and intervention in agrarian development, after the phases of state-led modernization and its demolition by a combination of its own contradictions and free market ideology.

AGRIBUSINESS STRATEGIES AND ENVIRONMENTALISM

With the 1992 UNCED Earth Summit in Rio de Janeiro the business community incorporated into their discourse the concept of ‘sustainable development’, developed earlier in the Brundtland report (WCED, 1987). At the follow-up summit in Johannesburg ten years later, corporations were at the centre-stage of the new environmentalism, and self-regulation of environmental performance was considered a core strategy within sustainable development. Agribusiness firms are heavily involved in the wider business and research initiatives that address environmentalism, such as the World Business Council for Sustainable Development <www.wbcsd.ch>. In particular, agribusiness corporations which sell technologies that are subject to environmentalist critique, including pesticides and genetically modified food, have undertaken efforts to participate in the so-called ‘greening of agriculture’ (cf. Vorley and Keeney, 1998). After years of strategy development and the initial implementation of sustainable agriculture programmes by agribusiness, it is time to take a critical look at where they are at this moment and to understand why some corporations are more successful than others in introducing environmentally-friendly innovations. For this purpose, this book tries to come to grips with the variety of possible business strategies and technological solutions that agribusiness firms and food industries propagate to solve environmental problems.

The chapters in this book show the wide range of responses and strategies adopted by agribusiness companies to cope with environmentalism. The first type is a rather defensive, or in any case reactive, one and claims that the firm’s products and production processes are not harmful to humankind and nature. These claims are ma...