Evolve or Die

If you want a case example of bad management in big business—rigid adherence to the status quo, lack of innovation—look no further than the current circumstance of American car companies, columnist Tom Friedman wrote in The New York Times last week. While Japanese car makers were thinking ahead and developing a fleet of fuel-efficient vehicles, Detroit was spinning its wheels and staying in place by churning out SUVs and other gas-guzzlers. As fuel prices shot up earlier this year, and as Americans moved to more fuel-efficient cars out of economic self-defense, it was as if Detroit had been stuck in time. The car companies are now burning through cash and appear headed for the crash wall. They might as well have had their crash dummies in the executive suites and the board room.

© HSUS
A downer cow at Hallmark/Westland.

Some sectors of American agribusiness strike me as having the same field of vision as the American automobile executives. They are wedded to their current model, and consumer opinion be damned. We saw that on the downer issue. For years, all of the leading executives of agribusiness trade groups and producer groups defended slaughtering downer cows. First, they were jolted when a downer cow with BSE was found in Washington state, resulting in more than 50 nations closing their markets to U.S. beef. And then earlier this year, the Humane Society of the United States’ Hallmark/Westland investigation came to light, and it, too, had a billion-dollar impact.

It’s just not good business not to think ahead, and the downed animal case proved that. The industry was penny-wise and pound foolish.

But that’s hardly the only example in the agribusiness sector. The egg and pork factory farming industries, and their allies in the American Farm Bureau Federation, just took a drubbing in the polls on Proposition 2 in California. They spent nearly $9 million trying to defeat a measure to give animals just a little more space, and they fell well short of even getting 40 percent of the vote. It was the third of three ballot measures urging more humane treatment of animals that voters have approved by wide margins—first in Florida, then Arizona, and now California.

Michael Pollan, Eric Schlosser, and other writers have published devastating critiques of the agro-industrial complex, as the Pew Commission on Industrial Farm Animal Production called it, in their recent bestsellers. But the academics in the employ of agribusiness at the land-grant universities, the executives of many of these companies, their trade associations, and many of the factory farmers themselves just circle the wagons and think they can ignore the vast numbers of Americans concerned about food safety, environmental protection, and animal welfare.

They can start to innovate, in terms of animal welfare and environmental protection, or they will face more bills, ballot measures, legal actions, and consumer disdain. All will be costly to them, in terms of dollars and reputation.

The agriculture industry is not quite so centralized as the American automotive industry, but it’s pretty tightly controlled by a finite number of corporations and trade associations.

© iStockphoto

The Obama Administration has a major selection to make in the form of an Agriculture Secretary and other high-ups in the USDA. If the president-elect wants change in this area, the American public is ready (you can write to Obama to make your voice heard). But the USDA and agribusiness have always just marched along, immune to the political ups-and-downs of the Democrats and Republicans. Both parties have exhibited obeisance to the industry, providing it with subsidies and asking little in return in the form of consumer protection, environmental protection, and animal welfare.

I am not holding my breath for change from within, although change is most likely to come from the retail sector (the supermarkets, the food service providers, and the restaurants—more attuned to the opinions of the public and not beholden to any single food-producing interest). I assume the industry will fight these calls for change kicking and screaming, and only then when the case for change is overwhelming or forced upon them, will they submit.

Let’s hope the politicians and agribusiness leaders are paying close attention to the lessons of Detroit.