Two business arrangements common within conventional agriculture are contract growing and vertical integration. These systems are largely responsible for the shift toward consolidation within agriculture and tend to be harmful to farmers, both those who have stayed outside of the industrial agriculture system and those that have become a part of it.  

Contract Growing
Contract growing is used primarily in the industrial production of hogs and chickens. In this arrangement, a corporation that owns livestock contracts with farmers to raise the animals to maturity. Without a contract, a farmer must manage slaughtering, processing, and distributing as well, all while keeping sale prices low enough to compete in a corporate-controlled marketplace. From afar, it might seem like a good deal.

Here's how a contract growing system works:

• A major food corporation delivers to the farm both feed and a large number of immature animals. (In the case of chickens, the animals often arrive on the same day that they are hatched.) This allows the corporation to control the breed of the animals and the content of their feed.
• The farmer raises the animals for a pre-determined amount of time, after which the company collects, slaughters, processes and distributes them.
• The corporation returns with another round of animals and feed, and the cycle repeats.

While this system guarantees farmers a market for their animals, it also burdens them with tremendous financial risk. Farmers must pay for all feed, and absorb any financial loss from animals that die. Farmers must invest considerable capital to build structures for housing the animals, a debt they carry for years, even decades. Once they own the buildings, they must pay for maintenance, utilities and insurance costs. Farmers are also responsible for disposing of the animals’ waste, which means either building receptacles for storage, selling it as fertilizer, or renting land where it can be spread.

Throughout the process, the corporation maintains full control over the animals involved.  If a farmer becomes "non-competitive'' (meaning he or she can't raise the animals cheaply enough), the corporation may choose not to renew the contract. But because banks will not renew loans unless a farmer has a contract, getting dumped by one corporation leaves no option but to sign up with another. Too long spent with empty barns and unpaid mortgages will drive a farmer into bankruptcy.

Because corporations rarely define exactly what “staying competitive” entails, farmers often find that the only way to survive is to cut every possible cost. Too often, that includes the costs involved with responsibly caring for the animals and appropriately handling their waste. The helpless farmer is reduced from a steward of the land to someone who manages an industrial process.

Vertical Integration
One way that major corporations maximize profits is by controlling all stages of the production and distribution processes – otherwise known as vertical integration. In addition to contracting with farms to raise their livestock, corporations will own a feed company, a farm supply company, and a processing and distribution company. This allows them to profit from every level of food production without investing in permanent assets like land or losing money to unpredictable elements such as animal mortality.

Vertical integration also gives corporations enormous control over meat and milk prices, in a fashion similar to trusts and monopolies. They buy from farmers at rock-bottom prices, then use the cheap product to drive prices down and force out competitors, which consolidates their power even more.

In theory there is nothing wrong with vertical integration, as long as corporations are operating within the boundaries of the law. After all, any business should have the right to adopt methods that maximize profits. But in agribusiness, the system has undeniable consequences. It forces farmers into debt, supports farming practices that harm the environment and abuse animals, and compromises the quality of the food we eat.