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JEREMY:
Hello and welcome to another episode of Eat This podcast with me, 
Jeremy Cherfas.

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Modern industrial agriculture depends on four basic inputs.

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There's the farm machinery that prepares the land and harvests the 
crops.

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There are the seeds, and there are the fertilizers that crops need to 
grow and the chemicals that protect them from pests and diseases.

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Now, you might be aware that as far as industrial agriculture is 
concerned,

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there are actually very few companies that supply those four basic 
inputs.

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These giant companies are the subject of a new book called Titans of 
Industrial Agriculture:

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How a Few Giant Corporations Came to Dominate the Farm Sector and Why 
It Matters.

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The author is Jennifer Clapp, a professor and Canada Research Chair at 
the University of Waterloo in Ontario.

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Size and market concentration matter because both factors enable 
companies to behave in ways that aren't good for either their direct

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customers or for those of us who just eat food.

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Typically, economists reckon that when the top four firms control 40% 
or more of the market,

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you start to see bad things happen.

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And when it's over 60% for the top four firms, 
bad things -- like high prices and political manipulation --

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become much more likely. So how concentrated are the markets for farm 
inputs?

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JENNIFER:
It's a bit tricky because there's global levels of concentration in 
terms of the global market that's controlled by these firms,

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and there's also national level and even subnational levels of 
concentration that matter.

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But to give the global picture: Today, 
the top four pesticide companies,

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which are also the top seed companies, 
they control around 70% of the global pesticide market and around 60%

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of the global seed market. But that can be much more concentrated, 
as I said,

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at the national level. So, for example, 
in something like 15 countries,

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the concentration ratio for maize seeds alone is over 80% for the top 
four firms.

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So it's different in different markets.

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S imilarly in the farm machinery industry, 
around half of the machineries,

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the farm machinery, sold in the world is controlled by the top four 
firms.

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And in fertilisers it's a little bit different.

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We actually don't have really good data because that market is a bit 
more fragmented. But at the national level, we know for in North

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America, for example, the top four firms control around 75% of the 
nitrogen fertilizer market.

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JEREMY:
Let's start with farm machinery, because the kind of standard 
mythology is that McCormick invented the

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reaper and it was better than all the other reapers and that's why 
McCormick became a giant company.

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What's the real story?

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JENNIFER:
It's a good question. The real story is a little bit more complicated. 
He was ...

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Cyrus H. Mccormick wasn't, in fact, 
the first to invent a reaper.

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T here was one invented in Scotland, 
several years before Cyrus McCormick came up with his model.

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T he story is complicated in the sense that there were multiple 
inventors of reapers,

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but the technology fit quite well in the North American context 
because of the relative scarcity of labour.

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And so because the reaper machinery saved labor, 
it sort of took off there a bit more.

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And there was in fact, another ... Obed Hussey had also developed a 
machine around the same time that Cyrus McCormick did,

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and he actually, he submitted his patent, 
got it, got a patent for that machinery before McCormick did.

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What I talk about in the book is that Cyrus McCormick's firm, 
the McCormick Harvesting Machine Company,

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really was able to take off, not simply because it made better 
machines ,

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it was more that it was in the right place at the right time.

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It had privileged access to finance and financiers.

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It had access to this expanding market westward because of the 
building of the railways .

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And because it had that capital, it could offer credit to its 
purchasers.

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And then after his death, and I should say as well, 
he was very aggressive in suing any other company that he thought was

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stealing his designs or his features.

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And this made him a wildly wealthy man.

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But after his death, his family actually went on a major campaign 
trying to create this public image of Cyrus H.

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Mccormick as this very generous American who invented this, 
you know,

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game changing technology and benefited everybody.

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But it was it was more complicated because he was not a very well 
liked man at the time of his his great wealth and fame,

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and not unlike the big tech moguls we talk about today.

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JEREMY:
I'm trying hard to avoid the big tech moguls of today , 
though we may get to them later.

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But the whole business of farm machinery consolidation ...

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I was stunned to read in your book that in 1902, 
there was this mega-merger,

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I think you and others have called it, 
that resulted in 85% of all tractors in North America being sold by

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one company. How did that come about?

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JENNIFER:
Yeah, it's a really fascinating story.

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And I was surprised when I was reading about this as well and that's 
why I felt really very much like I had to convey this story,

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because it really reinforced for me that this kind of consolidation 
and mega-mergers we experience today is not new.

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It goes back well over a century. So that particular merger happened 
in the farm machinery industry.

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So McCormick invented his machinery in the 1830s.

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But by the 1860s and 70s, these had become really big companies.

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The patents, patents on his basic designs had expired, 
other companies had come into the mix.

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And there was these ... It's important to understand these companies 
were benefiting from the fact that America was expanding westward,

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taking lands of indigenous peoples.

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Expanding farming machinery also led to larger farms, 
but it maintained this kind of demand for farm machinery until about

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the 1870s. And around that time, a lot of the land had already been 
taken and the demand for farm machinery started to decline.

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And that led to what, you know, what they call, 
you know, these harvester wars,

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where there were this really intense competition between the firms and 
the sector.

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And that was, you know, the panic of 1873.

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There was a great depression in that period and that really put 
pressure on these firms if they wanted to survive.

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They felt they had to merge. But of course, 
in the US, there was the passage of the Sherman Act,

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which outlawed monopoly. Basically, 
no one firm can control the entire market.

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And so, interestingly, you know, these firms had gone back and forth 
with these merger talks across the 1890s.

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And finally, in 1902, they agreed to this mega -merger of seven 
different farm machinery firms together,

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and they controlled 85% of the market.

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And their advisor from, I believe it was JP Morgan Bank, 
George Perkins,

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he said to them, "oh, don't worry, 
we won't , we won't be busted by the Sherman Act because it's not a

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complete monopoly. It doesn't contain all the firms in the market". 
But it gave the resulting firm,

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which was called International Harvester, 
a commanding lead over the market.

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And as you said, it controlled 85% of the farm machinery sales in the 
US at that moment.

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It was quite incredible and much more concentrated than what we see 
even today.

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JEREMY:
L et's move to fertilisers. I mean, 
fertilisers sort of come after farm machinery to some

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extent. S o I think one of the things that's interesting about 
fertilisers is,

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to begin with it was all kind of mined.

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It wasn't being manufactured , it was things like, 
like bird guano and bat guano and things like that .

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Was there concentration in that market?

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JENNIFER:
When it became clear that you could bring in these nitrogen resources 
from elsewhere,

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that's when the trade in guano really took off, 
because it was understood around that time,

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around the 1840s and 50s, that guano, 
bird guano, specifically from the Chincha Islands off the coast of

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Peru, was like specifically, very, 
very rich in the right kinds of nitrogen for plant growth.

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So that led to the mining of those islands within just a few short 
decades.

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They had basically taken hundreds of feet deep of guano and mined it 
out in horrible conditions.

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And workers died. And it was, you know, 
indentured labour from China.

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It was really awful conditions.

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But yes, there were monopolies on that trade that the government of 
Peru actually had taken a cut.

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And then these international traders of the fertiliser, 
these merchant companies from Britain,

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for example. And so there was a degree of cartelisation in the 
fertiliser industry from really early on.

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And when the guano was depleted, then they started a similar process 
with nitrate mining in Chile,

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and that is responsible for tensions in the region.

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A war between various countries over the borders and, 
you know, access to resources.

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And again, very wealthy financial and trading interests from Britain 
in a cartel -like kind of setting.

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JEREMY:
But when you get chemists -- Haber-Bosch process -- 
being able to synthesise nitrogen using lots of energy ,

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was it the same people who continued to control synthetic fertilizers?

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JENNIFER:
Well, the synthetic fertiliser, the synthetic nitrogen was first ...

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The process for that was first developed by BASF, 
which is still one of the big chemical companies in the world,

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and that , it shifted the power dynamic within the fertiliser 
industry,

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especially with respect to nitrogen, 
to these chemical companies that were on the rise in the early 20th

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century when synthetic nitrogen came around, 
it was more about access to the methods to use it and access to

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energy. So it was quite constrained at the beginning because of patent 
protection over these techniques.

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JEREMY:
So how did it then stay concentrated, 
because patents expire?

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JENNIFER:
Yeah. And in fact, at the end of the war, 
there was this -- the First World War --

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there was this taking of of the technological know-how from Germany 
and making sure that it got into the hands of the companies in the US

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that were frantically trying to figure out how to replicate this 
process.

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And the US wasn't very successful in doing that, 
though.

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In Canada, we had a big cyanamide factory in Niagara Falls that was 
using energy from the falls to develop this fertiliser process.

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W hat's interesting, obviously, is the synthesis of nitrogen was 
really important for bomb making.

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That's sort of ... It was this desire to get away from dependence on 
Chile for nitrates,

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where, you know, now you could produce it yourself to make bombs.

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So there was definitely government interest and involvement in the 
sector.

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And that kind of helped the firms in a way to gain some of that 
dominance in the sector.

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JEREMY:
Mhm. I t's a bit sort of Four Horsemen of the Apocalypse, 
but let's do pesticides.

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A gain, natural pesticides, synthetic pesticides.

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Let's focus on synthetic pesticides because that's also chemistry like 
fertilisers,

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it's chemistry. So is it the same firms?

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JENNIFER:
M any of the same firms indeed were producing pesticides and 
fertilisers in the early 20th century.

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And I wouldn't be surprised if we go back to that, 
you know, scenario again in the future.

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But at the time, the rise of organic chemistry, 
synthetic, in the development of synthetic chemicals from

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coal tar and other kinds of fossil fuel derivatives, 
led to the screening basically of a lot of new chemical compounds to

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see what might be useful as a pesticide.

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And that's what delivered us DDT and other organic ...

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organochlorines and organophosphates that were , 
at the beginning, very effective in terms of handling pests.

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A nd pesticides were the result. And that was a big ...

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a big market for those firms. And again, 
it was entangled in the Second World War.

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There was like a government, US government, 
interest in having access to DDT,

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which they got from the Swiss firm that had developed it.

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And then they handed those -- basically the the production methods -- 
over to the US firms to produce it for the US military.

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And that gave those firms a big leg up, 
you know, by providing these kind of products that were both useful in

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war contexts as well as in farming, 
you know.

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It allowed those firms to basically really consolidate their power.

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JEREMY:
Yeah, because they had government purchases on the one hand.

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And in peacetime, maintained that.

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JENNIFER:
Exactly.

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JEREMY:
Seeds! N owadays, concentration in the seed industry is associated 
specifically with F1 hybrid

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seeds, which are, you know, force you to as a farmer, 
you have to go back and buy new seed every year.

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But to begin with, when they were being developed, 
they weren't that much better than open pollinated seeds.

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So how did they get going? How did they achieve superiority?

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JENNIFER:
There's been a lot of historical research looking into this question, 
which I found completely fascinating to dive into ,

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because you're right that the selected seeds were often performing 
just as well as these new,

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you know, newfangled hybrids, which had been developed in the 1920s.

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And that was sort of selecting and inbreeding and then inbreeding 
again,

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and then you end up with this hardy hybrid that has potentially, 
you know,

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good yields, but it can't reproduce itself.

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So you have to buy new seeds every year.

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A nd that gave the firms producing those seeds kind of a trade secret 
because they didn't reveal what the inbreeding lines were.

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And so then they could actually make sure that nobody could copy what 
they were doing.

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B ut in terms of farmer adoption of those seeds, 
it wasn't automatically at first that everyone was really excited

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about them, because the yields weren't that much higher. And the price 
of those seeds was actually quite a bit more. So the companies tried

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all these different, you know, methods to try and get farmers to adopt 
them by saying,

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"we'll give you free seeds for this part of your field if you share 
with us half the proceeds from whatever you are able to grow on that

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field, and you'll see, you know, sort of like, 
you'll see you'll have higher yields and you'll do better". B ut

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really, what led to the rapid adoption of hybrids was kind of a weird 
confluence of events.

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There was a drought in North America in the early 1930s.

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And interestingly, the hybrid seeds, 
it wasn't that they were producing more corn,

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you know, per plant, but they had stiffer stalks and they could 
withstand fertiliser application.

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And there was a lot of synthetic fertiliser left over from the war 
effort.

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So there was this like pile of fertiliser that they could use.

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And what it meant was that those plants survived the drought.

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And also they didn't fall over like other plants would do if you over 
apply fertiliser.

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And then combined with that was US government policy trying to 
discourage farmers from producing too much,

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because it was overproduction and depressed prices at that time.

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So they put constraints on how many acres they could actually farm.

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And by using the hybrid seeds, they could actually plant them more 
closely together and pile on tons of fertiliser.

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And so we get this impression that hybrids were these really 
productive crops,

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but really they were just being planted much more closely together and 
doused with fertiliser.

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I'm talking about maize here specifically because those were the first 
hybrid crops, but that basically gave this illusion that it was a

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higher production. And then many farmers at the time, 
because they were adopting tractors,

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like, adopting hybrids made more sense because they, 
you know, the ears of corn,

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for example, would all be at a more or less uniform height on the 
plant because they were uniform,

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genetically plant ... genetically uniform plants.

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Then it was harvesting was much easier.

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So it kind of was like a bit of a lock in was already beginning.

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And plugging in the hybrid seeds kind of helped make sense of the farm 
machinery adoption.

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And it also made sense of the fertiliser adoption.

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Of course, then it led to a need for more pesticides because 
monocultures tend to attract these kinds of pests.

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But it was this rapid adoption because of these weird, 
you know, weather patterns,

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government policies, that sort of thing.

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But once it happened, it was really hard to turn back for many farmers 
because of those other inputs,

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especially like machinery.

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JEREMY:
That lock in thing that you mentioned is really interesting because of 
course,

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when you think of seeds, modern seeds, 
you think of companies like what used to be Monsanto --

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was Monsanto at the time -- breeding seeds that actually required 
farmers to use the herbicides that the company was

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producing. B ring in machinery as well, 
a nd I suppose fertilizers as well,

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and it seems like a sort of self-reinforcing flywheel.

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JENNIFER:
And yes, in fact, people call it , 
you know, this technological treadmill.

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Once you're on it, you almost have to start running faster and faster 
and it's really hard to get off.

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B ut for sure that development of agricultural biotechnology in the 
1990s,

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those crops were first commercialised , 
what they did was put a lot of effort into engineering the crops to be

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resistant to the application of their own brand of herbicides.

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And that really encouraged more herbicide use.

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And in fact, in the decades that followed, 
we saw a massive increase in the use of herbicides.

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In fact, you know, we used to be concerned in the 1940s and 50s about 
pesticide use ,

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largely talking about insecticides.

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But now most of the chemicals farmers use are actually herbicides , 
that that attack weeds but leave the crops standing.

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JEREMY:
S o far we've been talking, it's sort of all been good for the 
companies and possibly good in some ways for people who eat food.

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M aybe even for farmers if they got out of debt and so on.

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But are there any real benefits? I mean, 
I'm thinking, for example, of research and development.

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I mean, a company ... maybe a well capitalised company is better 
placed to find new pesticides or

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new GMOs. I sn't that a good reason to have big companies?

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JENNIFER:
Well, that's a good question. And I would say that's a long standing 
argument that especially,

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that you hear from the large companies, 
is that they're the only ones with a large enough research and

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development budget to actually make these kinds of really innovative 
new technologies that transform the farming sector.

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And there are reasons to be a little bit skeptical of that argument.

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And this is a long standing debate in the economics field as well, 
with,

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you know, Joseph Schumpeter, Schumpeter saying big firms are more 
likely to be innovators.

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Kenneth Arrow saying, well, wait a minute, 
we need competition to actually spark real innovation.

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And I would say that, you know, it's an interesting debate.

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I tend to agree with many, many of Arrow's critiques because he 
basically says,

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if you just have two or three or four firms at the top of the market 
and they're able to sell their products,

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what is the incentive for them to innovate if they don't have to?

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JEREMY:
Yeah, I would counter that what forces them to innovate is nature.

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Because, you plug pesticide resistance into plants, 
you get pesticide resistant insects.

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I mean, that's why they have to innovate.

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JENNIFER:
Yeah. And they have tried to deal with some of those issues.

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But as we've seen in in the case of the genetically modified organisms 
you raised earlier,

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this whole idea of making seeds resistant to herbicides was trying to 
make this argument that glyphosate,

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which was the chemical in that herbicide, 
was relatively safe compared to other chemicals that were quite toxic,

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acutely toxic. S o there is a history of firms trying to respond to 
these issues,

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but they often are responding in a way that benefits their bottom 
line,

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not necessarily benefits public, the public good more generally.

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But because, of course, there are companies that are beholden to their 
shareholders and they're trying to make innovations that are more

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profitable. So I think we can just assume that companies are always 
going to do that.

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JEREMY:
Let's talk about the future. I mean, 
the big trend at the moment, at least among the sort of wealthy

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farmers, but also in developing countries, 
is this idea of smart agriculture,

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of using information technology. A nd again, 
it's the same companies who will equip your equip your tractor with

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GPS so that it delivers the herbicide at just the spot that needs it.

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Is this the future of consolidation and of consolidation and bigness?

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JENNIFER:
I think that it's leading to pressures of further consolidation.

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And I wouldn't be surprised if we see consolidation across at least 
the chemical seed industry,

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which is one now, which used to be separate industries, 
but they merged with agricultural biotechnology. So we have a

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precedent that this happens. I t's happening in the farm machinery 
industry.

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They're also going all in on these digital farming platforms, 
as well as in the fertiliser industry.

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So we are at this moment right now where we have competition across 
these sectors,

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whereas they used to kind of stay in their lane, 
until seeds and chemicals merged in the 1980s and 90s.

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And now we're seeing all three of those sets of companies vying to be 
the dominant digital farming platform.

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And what I mean by that is, they're selling software packages that 
connect farmers to satellites and cloud servers and

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use of AI, basically, as you say, using sensors on machinery to detect 
what's going on in the soil here ,

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what's the weather like? Ssing little cameras to detect, 
oh, there's a weed there.

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We can spray exactly that weed. And it's, 
in a way, it's built on this idea of efficiency of resources.

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But these companies make a lot of profit off of the software packages,

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in fact, much more than the physical products that they sell.

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So I would say that data is becoming almost a fifth major input.

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It is a fifth input in the sector for those farmers that are moving 
towards digital farming.

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A nd so because they're all vying for this dominance in the platform, 
I wouldn't be surprised if we start to see some kind of consolidation

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across the sectors.

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JEREMY:
It's interesting that you mentioned data as a as a fifth input because 
it's always been there,

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but it's been in the farmer's head and their experience.

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So , time was when a farmer would decide what to do, 
when to do it, how to do it.

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But I mean, if you've got enough capital and you can buy all the 
machinery,

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anyone with land can become a farmer.

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There's no skill involved, is there?

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JENNIFER:
Yeah, exactly. It's ... I mean, some would say there's some skill in 
being able to use the digital technologies,

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but it's de-skilling.

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JEREMY:
It's not farming.

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JENNIFER:
Yeah. It's not farming. Yeah. Well, 
exactly.

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You think of farming as an art, that the decisions are coming from the 
farmer's own understanding of their land and the environment in which

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they are living. And so we've basically, 
with the rise of all of these technologies and especially digital

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agriculture, there's been this concern among scholars that it's 
leading to de-skilling.

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So it's de-skilling farmers. And it's going to lead, 
or it could lead,

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rather to a situation where farming is basically done by robots.

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All the decisions are made by AI. We don't need any farmers.

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And that's going to lead to further consolidation of farmland.

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JEREMY:
And what does it mean to be a farmer in a developing world?

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I mean, has it changed, or does it threaten the kind of small scale 
subsistence farming on which so much of the world

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depends for food?

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JENNIFER:
Yeah, that's a great question because many civil society organisations 
looking at these dynamics say that around 70% of the world is

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actually fed by small scale farmers.

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And it's the, you know, the 30% that is this large scale industrial 
agriculture that people are fed from that.

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But dynamics are constantly changing, 
and it's hard to verify all of these data.

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But definitely small scale farmers are really important in the global 
South and the small markets in which they market their goods are also

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really important for feeding people.

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But these big changes, I would argue, 
threaten the capacity of small scale farmers to continue the

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livelihoods that they have had for so many thousands of years.

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And this move towards digital farming, 
for example, i t's making its way to Asia,

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it's making its way to sub-Saharan Africa and to Latin America.

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A lot of new apps, farming apps, you know, 
digital applications, are being developed in these contexts,

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and while they look like they're local kind of initiatives, 
they're actually often connected to the big,

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big companies. So it's a situation where we're seeing, 
I would call it kind of like an onward march of the spread of

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industrial agriculture. And it does threaten that kind of more low 
input ,

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smaller scale agriculture.

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JEREMY:
You've gone through basically the downsides of big and consolidated 
agriculture.

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B ut, especially politically, given the current kind of political and 
market belief system,

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given that, how do you see any of this changing?

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Where will change come from? It surely won't come from the industries.

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JENNIFER:
Right. And I point that out in the book, 
that I don't think we can rely on corporations to suddenly see the

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light and change the model , because I think the model does need to 
rely less,

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or maybe not at all, on these expensive external inputs that cause a 
lot of problems.

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And the corporations, their innovation model is to basically earn 
money,

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and they're beholden to their shareholders, 
and they're often merging and acquiring one another because of this

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pressure from investors. So I don't think we're going to see the 
solutions coming from there.

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But I do think we have to have solutions.

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And what I found really interesting in writing the book was -- 
this real lesson to me was --

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that the transformation to industrial agriculture took, 
first of all,

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it took a long time. I t took over a hundred years.

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It's still evolving. B ut if we want to have a transition to a more 
sustainable agriculture,

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I think we have to think more long term than we have been, 
although we don't have a lot of time.

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So for me, this sort of keeps me up at night, 
this worry that if we don't have a quick transition,

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we're we're kind of cooked. So we have to push it along.

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So how do we push it along? How do we implement a real transformation 
more quickly than what happened over the past 150 years?

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JEREMY:
Jennifer Clapp, author of Titans of Industrial Agriculture: 
How a Few Giant Corporations Came to Dominate the Farm Sector and Why

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it Matters.

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I was a bit unfair ending the interview where I did, 
because Jennifer Clapp does have some good suggestions on how we might

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tackle the policy changes needed to rein in the power of those titans 
of industrial agriculture.

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And it will take tough government policy, 
because neither the companies nor their shareholders are going to do

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anything if they don't have to. If you want to pursue that, 
I'll put a link to the book,

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which is published by The MIT Press in the show notes.

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You can find them, along with an archive of all previous episodes at 
eatthispodcast.com .

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All we really covered in this talk was farm inputs, 
but there's concentration and bigness all the way along the industrial

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food chain, and they probably aren't all that benign either.

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I've dealt with some bits of that in previous episodes and hope to 
have some more soon,

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but that'll do for now. Don't forget you can get hold of me on 
Instagram and Mastodon links on the website if there's anything

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you want to share. For now though, 
from me, Jeremy Cherfas and Eat This Podcast.

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Goodbye and thanks for listening.