If we’re going to get anywhere protecting farmed animals, it’s vital to have some understanding of the people we’re up against.

Factory farming has taken over farmed animal production for a number of reasons, the most important of which is that the top firms are run by world-class businesspeople.  These people have reached leadership positions by demonstrating the skills to be ruthlessly efficient.

Let me briefly describe how factory farming CEOs generate these efficiencies.

The key to factory farming success is to create a system that generates meat, milk, and eggs at the lowest possible costs, while making society and taxpayers shoulder numerous negative externalities.  Let’s look at some of these externalities:

• Pollution.  All factory farms generate vast amounts of waste. This waste diminishes the quality of local drinking water, and can foul local air quality.  The methane and carbon dioxide associated with factory farming are a substantial contributor to global warming.
• Worker mistreatment. Modern slaughterhouses have horrendous records of worker abuse, union busting, and on-the-job injuries.  The communities in which these slaughterhouses are located often find their social services offerings overwhelmed by an influx of poorly paid workers.
• Public health. Farmed animal production has numerous negative effects on public health.  From heart disease to food safety to the ever-present threat of swine or avian flu, it’s clear that factory farms threaten the health of omnivores and vegans alike.

Meat, dairy products, and eggs are comparatively cheap largely because factory farms pay next to nothing for many of the negative externalities they generate.  Society and taxpayers pay the bulk of these costs.

Meanwhile, the top factory farming firms thrive and grow ever-larger because they manage to outsource the dirty work, and much of the monetary risk associated with their business, to local farmers.  It works like this: a top factory farm will dangle a fat contract for raising pigs or chickens.  To get such a contract, a farmer can go hundreds of thousands of dollars in debt, building pig or chicken sheds on his land.

Once the sheds are built and the contract is signed, the farmer can actually do quite well financially —- as long as demand for meat stays high.  But this demand is erratic, and whenever it heads south, the individual farmer can get knee-capped.

In essence, large growers like Smithfield and Tyson are virtual farms — with everything, especially risk, being outsourced to smaller players.  They’ll gladly sacrifice some day-to-day by contracting with individual farmers to grow their animals, because, by doing so, they’ve offloaded their risk.  When bad times come, it’s the contractors, rather than the big meat companies, that get creamed.

Notice that everything I’ve talked about here is about the business side of animal agriculture, and how it thrives by externalizing costs to society and offloading risk to individual farmers.  That’s what today’s mega-factory farming CEOs are great at.  These people are incredibly good at winning the game of squeezing the most possible money out of large-scale factory farming operations.

But what about the growing threat that animal protection advocates pose to this industry?  Here we have a topic that’s completely outside of the expertise of top agribusiness CEOs.  So in my next blog entry, we’ll look at how CEOs respond to this threat.

Here’s where things get interesting: as talented as these CEOs are at making tough financial decisions, it turns out they could not be more inept at understanding and neutralizing the threat posed by activists.