Monday, August 19, 2019

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Vernellia Randall
Founder and Editor
Professor Emerita of Law
The University of Dayton School of Law

Pamela A. Vesilind

Excerpted from: Pamela A. Vesilind , Nafta's Trojan Horse & the Demise of the Mexican Hog Industry , 43 U. Miami Inter-American Law Review 143 ()(135 footnotes omitted).

 

In late March 2009, a five-year-old boy in La Gloria, Mexico came down with the flu. This typically unremarkable event took on significance when, two weeks later, over 800 people in nearby Perote also became sick and the little boy was labeled "patient zero" of the 2009-10 swine flu pandemic. Epidemiologists from around the world converged on Perote Valley, as 60% of Perote's citizens eventually fell ill. dgar Hernndez's mother sobbed to the Washington Post reporter that her son could not have caused this disaster. She and her neighbors blamed the hog factories.

Perote, the capital of the state of Veracruz, is about 120 miles from Mexico City. Surrounded by mountains on all sides, Perote Valley is home to around 35,000 people and more than one million pigs at any given time. Residents have long complained about the hog factories. The odors from the massive manure cesspools baking in the sun, some less than two miles from the city of Perote, permeate their homes, clothes, and belongings. Dust clouds of dried manure travel for miles, whipped up by the hot winds. It is difficult to breath. They are often sick.

These are not traditional hog farms; these are the Granjas Carroll de Mexico ("GCM") hog factories. They are the most productive hog facilities in Mexico, owned in part by the world's largest hog producer and packing corporation, Smithfield Foods. Many of the traditional commercial farms and backyard "camposinos" have given up trying to compete with high-tech facilities like these. Although not a new problem, it took the swine flu (rebranded "H1N1" by the hog industry) to attract the world's attention.

In the last twenty years, Mexican animal agriculture--breeding, raising, and slaughtering pigs, cattle, and poultry (chickens and turkeys)--has undergone a radical transformation that has left the country with more meat but far fewer farmers. In many ways, this transformation echoed the industrialization of agriculture in the southern and mid-western United States in the late 1980s and the 1990s, with one critical distinction: in the U.S. domestic corporations led the agriculture transformation. In Mexico, the catalysts were primarily foreign-owned multinational corporations, generally second-generation corporations connected to the American agriculture "revolution." These industrial farming corporations thrived in Mexico, and their success was simultaneously devastating to Mexican agriculture. How did this happen? The answer lies in the trade liberalization policies of the North American Free Trade Agreement (NAFTA), signed by Canada, Mexico, and the United States in 1993. Using the Mexican hog industry, this article illustrates how poorly-negotiated NAFTA provisions were manipulated to exploit Mexican consumers, farm owners, and laborers.

. . . Prior to crafting the North American Free Trade Agreement, the United States, Canada, and Mexico had become members of the World Trade Organization (WTO) and signatories to the General Agreement on Tariffs and Trade (GATT), the primary WTO trade agreement. GATT allows member nations to create "free trade areas," such as the one created by NAFTA, by tailoring trade guidelines in certain markets to further desired economic policy. NAFTA was promoted as a vehicle to "reduce distortions to trade" among the three neighbor countries, with "mutually advantageous" trade rules. It entered into force on January 1, 1994. In many respects, NAFTA has failed to deliver "mutually advantageous" benefits. In the U.S., it is often criticized as the catalyst for an exodus of manufacturing jobs to Mexico--the fulfillment of former presidential candidate Ross Perot's prediction that NAFTA would create a "giant sucking sound" of companies moving south. In Mexico, NAFTA policies have had crippling effects on certain agricultural sectors. Within a decade, over 1.3 million Mexican agricultural jobs were lost; by 2008, another million jobs disappeared. Partially to blame was emigration to the U.S. by displaced Mexican agriculture laborers, which was at an all-time high until the 2008 recession. Of those who remained, many left their rural communities to seek alternative employment in cities that were ill-prepared to accommodate such rapid population growth. In 2009, the Carnegie Institute concluded that NAFTA has left Mexico's "most vulnerable citizens . . . facing a maelstrom of change beyond their capacity, or that of their government, to

The effect on the Mexican hog sector was manifest. Its supply and demand balance were in flux, much of its labor force was rendered unnecessary, and prices were depressed so low that traditional commercial farms began facing nearly insurmountable odds. Although Mexico had hoped that liberalized trade with the U.S. and Canada would modernize its agriculture processes and increase production, NAFTA policies hastened the adoption of industrialized practices at a pace too rapid to contain. To appreciate the impact of this accelerated industrialization, it helps to consider how the CAFO model of hog production differs from the pig farms these CAFOs replaced. A. CAFO Hog Production: Commoditization Replaces Husbandry.

 

1. Mass Confinement

The hallmark of CAFO production is mass confinement. Rather than keeping animals in fields or feedlots, CAFO facilities cage or pen animals individually or by the hundreds, inside enormous warehouses clustered around exposed manure collection tanks. The Smithfield GCM operation is typical: in 2008, GCM had approximately 56,000 breeding sows and 950,000 hogs in production for slaughter. The entire complex includes 16 facilities spanning across the Perote Valley. Each facility has multiple warehouse "units" dedicated to every step in the "farrow-to-finishing" (birth-to-fattening) cycle, with each unit made up of as many as 18 hog warehouses. The warehouses are windowless, poorly-ventilated, often sweltering, and the floor is typically slatted concrete designed to allow manure and urine to eventually drain away. Because the commoditization formula anticipates that a certain percentage of animals will fail to survive the warehouse conditions, sick and injured animals are typically left untreated, left to die.

Breeding sows spend most of their lives immobile. After being artificially inseminated, they are confined in "gestation crates." Once the piglets are born, they are moved to equally confining farrowing cages, where they are unable to nuzzle suckling piglets or shift their bodies to avoid pain. Male pigs do not fare much better, packed together in small pens, stressed to the point of attacking each other or themselves. It is common practice to "dock" (remove) the hogs' tails, without anesthesia, to prevent other pigs from gnawing at them. Moreover the enhanced feeding and genetic manipulation practices discussed below often result in body masses too large for their skeletons to support.

 

2. Specialization & Vertical Integration

Unlike traditional farms, industrial facilities "specialize" in certain segments of the hog production process. For example, a CAFO breeding facility would engage in only the insemination and gestation processes. After its piglets have been born and weaned, they are sold to a farrowing facility for feeding, and so on. This model allows each facility to focus exclusively on improving technologies and streamlining costs associated with its specialty.

Complementing the specialization strategy is another essential trademark of industrial animal production: vertical integration. As first developed by Tyson Foods for the poultry industry, this strategy involves either acquiring or establishing exclusive contracts with a business provider for every part of the production, processing, and sales chain (growing feed, breeding, birthing, farrowing, slaughtering, packaging, transporting, marketing, and Smithfield announced its first fully-integrated operation in Mexico in 1999, and integration continues to be the trend. Every member of an integrated operation benefits from the competitive advantage of streamlined costs. The effects of this business strategy were evident by 2003, when only 15% of the domestically-produced pork for sale in Mexico came from smaller commercial farms, while nearly 60% came from industrial facilities with an average herd size of 300-1000 pigs.

This expansion strategy was first used to great effect by Murphy Family Farms, Carroll's Foods, and Prestage Farms, in Iowa, North Carolina, Missouri, Minnesota, and Illinois. Such technologically superior and vertically integrated systems ushered in a new era of consolidated hog farming in the 1990s. Whereas there were almost 3 million hog farms in the 1950s, today there are only 67,000, with over 50% of pork producers in the U.S. processing 5,000 or more pigs per year. Between 1992 and 2004, the number of hogs processed in the U.S. remained steady, but the number of hog farms dropped from 240,000 to only 70,000.

 

3. Maximized Profits & Minimized Costs

CAFO operations are meticulously efficient. For example, birth-to-slaughter production cycles are shorter than they are in the traditional model, while the hogs are up to 20% heavier. This is accomplished through the use of hormones, antibiotics, and other pharmaceuticals to speed and enhance growth. Breeding animals that are genetically manipulated or selected for traits that deliver faster production also allows CAFO sows to produce more piglets per litter (but fewer litters due to shorter life CAFOs thus enjoy lower feeding costs because they need less feed for each production cycle and because they receive preferred pricing for high-volume purchases.

CAFOs also spend less on labor. Their average salaries are lower, even for the more intensive or dangerous slaughtering and packing positions. The plentiful and desperate Mexican agrarian workforce, estimated at 2.3 million, has little choice but to accept these low wages. Moreover, industrial operations hire fewer laborers to run the breeding and feeding facilities. Prior to slaughter, pigs raised in industrial sites have little interaction with humans. They do not need to be herded or moved from pasture to barn. Feeding and waste management are mechanized or built into the infrastructure. Labor needs are primarily in the slaughter and packing stage of production. B. How NAFTA Assisted the Hog Industry's Demise To explain NAFTA's role in transforming the Mexican hog industry, the next section describes how foreign interests deflected measures taken to protect Mexico's live hog and pork product industries. The following section describes the NAFTA "Trojan horse" that allowed foreign corporations to also capture the domestic Mexican markets. Together, these two trade and expansion strategies put millions of commercial and subsistence farmers out of business.

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