ti 1 I 5 2 1 199} FARMER CHARACTERISTICS AND ATTITUDES RELATED TO BARGAINING ASSOCIATION MEMBERSHIP BY Frank K. McCalla A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE Department of Agricultural Economics 1966 1. . N. \u“ \ "9‘ x r ‘~. ~<3 ACKNOWLEDGMENTS The author wishes to express his thanks to the staff and faculty of the Department of Agricultural Economics for their instruction and encouragement during his study at Michigan State University. I wish to especially thank Dr. Richard L. Feltner, my major professor, who gave generously of his time to guide my course of study and direct the writing of this thesis. I also wish to express my appreciation to Dr. L. L. Boger for encouraging me to enroll at Michigan State University and for providing financial assistance. Finally, I would like to thank the fellow graduate students, the clerical staff, and all other friends who have made my graduate study interesting and enjoyable. ii ABSTRACT FARMER CHARACTERISTICS AND ATTITUDES RELATED TO BARGAINING ASSOCIATIONVMEMBERSHIP by Frank K. McCalla The significance of bargaining associations in future agricultural marketing will depend to some extent upon how willing farmers are to accept and participate in these asso- ciations. The purpose of this study is to identify farmer characteristics and attitudes related to bargaining associa- tion membership. A survey of Michigan farmers conducted in the spring of 1965 was the primary source of data for this study. Ex- tensive personal interviews were made with Operators of ran- domly selected farms. The farmers who were interviewed were classified ac- cording to their affiliation with bargaining associations. Those who had been bargaining association members in the past five years were classified as "members". Farmers who were not "members" but who expressed a willingness to join were termed "potential members". Those Who were not "members" and Who expressed an unwillingness to join were termed Frank K. McCalla "nonjoiners". Descriptive information related both to farm and per- sonal characteristics was examined with regard to bargaining association membership. Generally, the procedure involved grouping related items of information, analyzing each item in- dependently, and then viewing the group of items as a Whole. Attitudinal items regarding farmers' conceptions of group action and governmental activities in agricultural mar- keting were examined with regard to bargaining association membership. An approach similar to the one used in the analy- sis of the descriptive information was employed. It was found that bargaining association members have devoted a larger portion of their time and resources to farming than nonmembers have° Generally, potential members have attitudes that are similar to those of members. However, the farm and_personal characteristics of potential members are more like those of nonjoiners° Thus, it appears that potential members' personal and farm characteristics, not their attitudes, are factors which might be reasons why "potential members" are not already "members." Some of the reasons nonjoiners prefer to refrain from farmer collective bargaining are: (1) their desires for inde— pendence, (2) their failures to recognize the need for supply Frank K. McCalla control measures, and (3) their desires to remain free riders. These factors could be considered some of the barriers which prevent nonjoiners from becoming bargaining association mem— bers. Most farm and personal characteristics of potential members are practically identical with those of nonjoiners. However, age and land tenure arrangements are two exceptions to this rule. Potential members are generally younger than nonjoiners. Mortgages, land contracts, and rental arrange— ments are held by more potential members than nonjoiners. Thus, the principal reasons why potential members are not actual members appear to rest on the fact that, compared with members, they have only about half the time and resources com- mitted to farming. 1James D. Shaffer, “Collective Bargaining Institu- tions," Michigan Farmers in the Mid-Sixties, Michigan State University Agricultural Experiment Station, East Lansing, Michigan, Research Report 54, August, 1966, p. 20. TABLE OF CONTENTS ACKNOWLEDGMENTS . . . . . . . . . . . . . . LIST OF TABLES O O O O O C C O O C O O O O 0 Chapter I. INTRODUCTION . . . . . . . . . . . Objectives . . . . . . . . . . . Bargaining as an Institution . . Legal Backing for Bargaining . . Early Farmer Group Marketing Efforts . . . . Market Structure and Market Power. Relationships among Market Structure, Conduct and Performance. . . . Efficiency and Equity. . . . . . The Practicability of Bargaining II . METHODOLOGY. 0 o o o o o o o o o 0 Membership Classifications . . . Methods of Analysis. . . . . . . Statistical Tools. . . . . . . . III. FARM AND FARMER CHARACTERISTICS RELATED TO BARGAINING ASSOCIATION MEMBERS, POTENTIAL MEMBERS, AND NONJOINERS. . . . . Planning Span. . . . . . . . . . Education and Experience . . . . Commitment to Farming. . . . . . Satisfaction with Income . . . . Major Farm Enterprise. . . . . . C O O O 0 IV. FARMERS' EVALUATION OF PROBLEMS IN AGRICULTURE AND THEIR CONCEPTIONS OF POSSIBLE SOLUTIONS Problem Identification . . . . . iii Page ii 21 22 24 27 32 33 34 37 44 44 49 50 Chapter Farmers' Conceptions of Solutions to Farm Problems . . . . . . . . V. BARGAINING ASSOCIATION MEMBERSHIP RELATED TO FARMERS' CONCEPTIONS OF GROUP ACTION The Need for Group Action. Group Action and Power Problems. . . Group Action and Free Riders . . . . Group Action and Supply Control. . . VI. BARGAINING ASSOCIATION MEMBERSHIP RELATED TO FARMERS' CONCEPTIONS OF ACTIVITIES IN AGRICULTURAL MARKETING . Government Services. . . . Price Support Programs . . Government Regulation. . . VII. SUMMARY AND CONCLUSIONS. . . LIST OF REFERENCES. . . . . . . . . . iv GOVERNMENT Page 54 58 58 68 74 79 87 88 92 100 106 112 3-4. 3-6. LIST OF TABLES Bargaining association membership related to years managing a farm. . . . . . . . . . . Bargaining association membership related to number of acres of crOpland Operated . . . Bargaining association membership related to land tenure. . . . . . . . . . . . . . . . Bargaining association membership related to the number of enterprises for which a farmer had gross sales of $500 or more in 1964. . . . . . . . . . . . . . . . . . Bargaining association membership related to SOCiO—economic status 0 o o o o o o o o o o Bargaining association membership related to satisfaction with income from farming. . . Bargaining association membership related to farmer's single most important source of gross sales from farming . . . . . . . . . Bargaining association membership related to conceptions of the greatest problems that farmers face today . . . . . . . . . . . . Bargaining association membership related to conceptions of solutions to the greatest problem farmers face today . . . . . . . . Bargaining association membership related to conceptions of consumer prices and equitable farm income 0 O O O O O O O O O O O O O O O Bargaining association membership related to conceptions of consumer prices and the influence of middlemen upon farm prices. . Bargaining association membership related to conceptions of consumer prices, bargaining Page 36 38 4O 41 42 45 46 52 55 61 64 Table 5-4. 5-5. methods, and the need for bargaining aSSOCiatj-ons O O O O O O O O O O O O O O O Bargaining association membership related to conceptions regarding government regulation of market power attained by organized groups . . . . . . . . . . . . . . . . . . Bargaining association membership related to conceptions regarding the free rider problem. . . . . . . . . . . . . . . . . . Bargaining association membership related to conceptions of supply control as a means of achieving market power . . . . . . . . . . Bargaining association membership related to conceptions of differences between temporary withholding action and permanent volume reduction as efforts to secure higher prices. . . . . . . . . . Bargaining association membership related to attitudes toward government services . . . Bargaining association membership related to response to the statement: "Suppose that all government price support programs were ended in 1966. Compared with 1965, do you think that average net income per farm in the U.S° in 1967 would be the same, higher, or lower.. 0 O O O O O C O C O O O O O O O O Bargaining association membership related to responses to the statement: "Suppose that _all government price support programs were ended in 1966. Compared with 1965, do you think your net income from farming in 1967 would be the same, higher, or lower?". . . Bargaining association membership related to response to the statement: "Suppose that all government price support programs were ended in 1966. Compared with 1965, do you vi Page 67 7O 78 81 85 91 94 95 Table think that average net income per farm in the U.S. in 1972, would be the same, higher, or lower?" . . . . . . . . . . . . 6-5. Bargaining association membership related to response to the statement: "Suppose that all government price support programs were ended in 1966. Compared with 1965, do you think your net income from farming in 1972 would be the same, higher, or lower?". . . 6-6. Bargaining association membership related to conceptions concerning government regula- tion of vertical integration and absolute size of nonfarm firms as means of control of nonfarm firm market power . . . . . . . vii Page . . 97 . . 98 . . 104 CHAPTER I INTRODUCTION Bargaining associations will likely play some role in future agricultural marketing. Whether that role is signifi- cant, negligible, or somewhere in between will depend to some extent upon how willing farmers are to accept and participate in these associations. The purpose of this study is to iden- tify farmer characteristics and attitudes related to bargain- ing association membership. Farmers' characteristics and attitudes are observ- able factors that give some insight regarding the thought pro- cesses through which one proceeds in making decisions. The number of bargaining association members relative to the total number of producers in a particular commodity market depends largely upon the characteristics and attitudes of the farmers in the relevant market. The study of these characteristics and attitudes will assist in evaluating the role of bargaining associations as institutions involved in the marketing of agricultural commodities. Objectives The purpose of this study is to achieve a better understanding of the reasons behind the decisions of farmers regarding bargaining association membership as a step toward assessing the potential of bargaining associations in the agricultural market structure. The major questions which this study attempts to answer are: (l) (2) What characteristics and attitude patterns are exhibited by farmers—- (a) who are members of bargaining associations? (b) who are not members but who expressed a willingness to join a bargaining association? (c) who expressed an unwillingness to join a bargaining association? How do these attitude patterns and farmer characteris- tics differ among a, b, and c above? The findings of this study can be useful to existing bargaining associations or to those interested in forming a new association. Specifically this information can aid in: (l) (2) (3) establishment of cause—and-effect relationships between farmer characteristics and attitudes on the one hand and farmer actions on the other. detection of attitudes which are unfavorable toward bargaining associations and which might be considered barriers to bargaining association success. develOpment of educational and promotional programs 3 to cultivate attitudes which are favorable to bargaining associations and which would motivate farmers to join bargaining associations. Bargaining as an Institution Early bargaining efforts in the United States were not accepted as a part of the institutional framework of the economic system. During the early stages of economic devel- Opment, formal bargaining was not practiced because employers and employees were closely associated in their daily endeavors. They communicated their feelings more on a person to person basis. Production occurred on a small scale. An employer's role involved making major decisions regarding production and employment. The employee was often expected to comply unques- tioningly with the dictates of the employer. As the economy grew, specialization occurred and the factory became a part of the economy. Employers became less closely associated with their employees, and thus the lines of communication between entrepreneurs and laborers began to fade. Some employees attempted to influence the decision— making processes of employers through bargaining. However, society continued to View employers as those who made deci— sions and employees as those Who accepted such decisions. Courts ruled against bargaining groups, labeling them as 4 criminal conspiracies.l Gradually group action, particularly in the form of labor union bargaining, began to be accepted. Courts, as well as society in general, began to take the View that it is legally and ethically acceptable for employees to form organizations specifically for the purpose of bargaining with employers. The economic and political atmosphere changed, and eventually bargaining became an accepted institution in the American economy. Legal Backing for Bargaining Antitrust laws, especially the Sherman Act of 1890, were invoked to prevent the establishment and growth of agri- cultural and labor bargaining groups. Eventually new laws were enacted which not only exempted bargaining groups from antitrust legislation but also facilitated and regulated col- lective bargaining. The Wagner Act of 1935 gave labor legal grounds upon which to organize and engage in collective bargaining. It also required that employers recognize and negotiate with such labor organizations.2 The Taft-Hartley Act of 1947 lRoss M. Robertson, History of the American Economy (New York: Harcourt, Brace and World, Inc., 1964), p. 215. 2Vernon A. Mund, Government and Business (3rd ed.; New York: Harper and Brothers, 1960), p. 230. ,4— 5 further specified bargaining rules for unions as well as employers. The Clayton Act of 1914 made it legal for farmers to form bargaining associations under certain conditions. How- ever, even after the Clayton Act was passed, there remained some uncertainty regarding the legality of farmer groups that were organized to raise prices of agricultural commodities. Therefore, the Capper+Volstead Act was passed in 1922. This act permitted farmers to market their commodities collectively and raise prices, so long as prices were not unduly enhanced. It was left to the Secretary of Agriculture to determine whether or not prices were I'unduly enhanced." This legisla— tion still applies today. If agricultural bargaining associ— ations cause monOpoly problems, the Secretary of Agriculture is authorized to take whatever action is necessary to correct the situation.2 Thus, the Clayton Act and the Capper-Volstead Act gave legal backing to farmer bargaining organizations, while providing some protection to the general public against the misuse of farmer group action. Over the years the political and economic environment in the United States has grown more favorable to bargaining —_ 1Paul A. Samuelson, Economics: An Introductory Analysis (5th ed.; New York: McGraw-Hill Book Company, Inc., 1961) ' ppo 171-720 2Mund, pp. 236-37. 7—.._,_..—-— MW!— -‘.-—— 6 organizations. Today bargaining is definitely a recognized institution in the economy. Early Farmer Group Marketing_Efforts Bargaining associations are not a new structural fea- ture of agricultural marketing. Agricultural c00peratives in the United States originated as small, unincorporated soci- eties. As early as 1810, some dairymen in Goshen, Connecticut, joined in a c00perative effort to manufacture and market butter. In 1856 a group of farmers in Bureau County, Illinois, estab- lished a pool to improve their bargaining position in the swine market. In the following year the first cooperative grain elevator was built by farmers in Madison, Wisconsin. Thus, marketing agricultural products through farmer—owned facilities has occurred in the United States for well over 100 years. Market Structure and Market Power One of the major reasons why c00perative bargaining has become a part of agricultural marketing is the fact that market structure in agriculture is predominately atomistic. ‘ 1J. Kenneth Samuels and Martin A. Abrahamsen, "Milestones in C00peration," After a Hundred Years: The .Xgarbook of Agriculture,_l962 (Washington: U. S. Government Printing Office, 1962), p. 498. .7 Structural characteristics often make the economic signifi- cance of the output from a single farm minute relative to the total output in the relevant commodity market. Some of the more prominent structural characteristics at the farm level are as follows: (1) (2) (3) (4) (5) a large number of producers all of whom take the prices of the commodities they market as given be- cause no one farmer produces a large enough portion of the total output of any commodity to have a sig— nificant influence on price; essentially homogeneous products, in that gains from market control through product differentiation are negligible: barriers to entry are low relative to entry barriers in nonfarm enterprises; barriers to exit are high relative to barriers to entry; output can be expanded rapidly to meet rising demand, but when demand falls output is reduced relatively slowly since many factors of production in agriculture are fixed because of their seasonality and limited alternative uses; buyers in many agricultural markets are few and, therefore, alternatives available to farmers in the marketing of most products are limited. 8 When farmers sell their commodities, they often nego- tiate with buyers who are relatively oligOpsonistic or mon— Opsonistic. Therefore, it is frequently held that farmers are at a disadvantage in the market place. If one defines bargaining power as the ability to influence prices and other terms in the sale or purchase of a commodity, farmers in gen— eral have a weak position in the markets in which they sell commodities relative to the position of the parties to Whom they sell. Perhaps at this point it should be emphasized that it is not the market structure in agriculture alone which ac- counts for the weak power position of farmers. Theoretically, if every sector of the economy were atomistic in structure, no one individual or firm would have an advantage or dis- advantage in the market relative to other individuals and firms. In the early history of the United States a major portion of the population was engaged in farming. Many mar- keting problems that are evident today were nonexistent be— cause of the integrated nature of self—sufficient farming Ilnits. As specialization occurred, the advantages of econ- omies of scale were reaped. Farmers began to specialize more Eflki more in the production aspects of agriculture While the Prtlcessing and retailing functions were assumed to a large 9 extent by nonfarm sectors of the economy. As agriculture grew, complementary sectors did also. Transportation networks were formed, and these networks facil- itated the movement of agricultural commodities from the plains and valleys where they were produced to the pOpulation centers and seaport markets. Railroads were among the first methods of long-distance tranSportation used to carry agricultural commodities from remote farms to harbors and populous cities in which marketing facilities existed. In fact, rail trans- portation was often the one and only avenue through which farmers could market their products.1 Thus, the monOpoly power exercised by the railroads precipitated one of the first market power struggles that the American farmer faced. Farmers sought and obtained state and federal legislative protection from firms and industries which possessed superior market power positions. Since the days of the railroad mon— 0polies, farmers have utilized with varying degrees of suc— cess, the following methods to improve agriculture's power position in the market: (1) antitrust laws to reduce the concentration of market power in monOpsonistic and oligOpsonistic industries. (2) collective action by farmers to increase the lRobertson, p. 287. 10 concentration of market power in the hands of the farmer. Relationships among Market Structure, Conduct and Performance Organization of collective action by farmers and im- plementation of antitrust laws bring about changes in the market structure. However, the end result which farmers de- sire is not merely change in market structure, but change in market performance. Many market policies, programs, and organizational efforts, including the establishment of bar— gaining associations, are based upon the premise that market structure influences market conduct and performance. Bain defines market structure as "those characteristics of the organization of a market which seem to influence strategi— cally the nature of competition and pricing within the market."1 He defines market conduct as "the patterns of be— havior which enterprises follow in adapting or adjusting to the markets in which they sell (or buy)."2 Again, according to Bain, "Market performance refers to the composite of end Iresults in the dimensions of price, output, production cost, 1Joe S. Bain, Industrial Organization (New York: JOhn.Wiley and Sons, Inc., 1959), p. 7. 2Bain, p. 9. ll selling cost, product design, and so forth, which enterprises arrive at in any market as the consequences of pursuing What- ever lines of conduct they espouse." Few economists would contend that there are no rela— tionships among structure, conduct, and performance. Both economic theory and empirical studies support the premise that structure is a significant determinant of market conduct and performance. However, because no precise cause-and-effect relationships have been established between market structure and performance, and because factors other than structure have influenced performance, one might question the validity Of predictions concerning market performance if those pre— dictions were based solely on the study of market structure. Many economists regard structure as gag of a number of factors that affect performance: Opinions vary as to the importance of structure relative to other factors. During the past few years the significance of market structure as a determinant of market performance and the validity of market structure analysis have been questioned. This questioning has served to caution researchers to consider social, political, and <>ther economic factors along with market structure in efforts to predict performance from conduct. lBain, p. 110 11:59.6; m. 12 The same logical extension of economic theory Which suggests that structure is causally related to performance also suggests that the structure-performance relationship is somewhat indeterminate and inexact at points on the continuum between perfect competition and monOpoly. Suppose one visual- izes a structure—performance continuum with the situation de- scribed by the perfectly competitive model at one end, the monopolistic model at the other end, and a series of various models in between depicting monOpOlistic competition and oli- gOpoly. The two end points of the continuum are rather spe- cific and exact regarding the relationship between structure and performance. The points in between represent various models of monOpOlistic competition and OligOpoly and are rather indeterminate with regard to structural—performance relationships. Because, in general, exact cause-and-effect relation- ships between structure and performance have not been proven, many economists might question the validity Of the premise that market structure influences market conduct and perform- ance such that performance can be accurately predicted from a knowledge of structural characteristics. Whether social, psychological, political, and other economic factors are structural or nonstructural is perhaps merely a matter of definition. On the other hand, defining the term market 13 structure so broadly that it must include every factor which could conceivably affect market performance, or defining the term so narrowly that it omits many relevant factors, con- tributes little to research methodology. Instead, the re- searcher"must examine the traditional prominent market struc- tural characteristics--the number of buyers and sellers in the market, the degree of product differentiation, and bar— riers to entry and exit--in the "context" of information re- garding interpersonal, interfirm, and inter—industry'relation- ships; existing and future institutions; values and beliefs of key decision makers in the market economy as well as those values and beliefs of society in general. The concept of workable competition has served to emphasize the fact that some industries which have monOpOlistic or OligOpOlistic structures have been shaped and moulded by institutions and inter-industry relationships and, as a result, perform as if they were competitive industries. Thus, this concept empha- sizes the importance of considering nonstructural as well as intra-industry and inter-industry structural factors when attempting to predict performance by examining structure. Efficiency and Equity Over the years of agricultural economists have been concerned with both efficiency and equity in marketing. 14 During the postwar years the efficiency aspects of marketing were emphasized. More recently interest has risen in the equity aspects--farmers' bargaining position in the market. Although efficiency and equity are both desired in marketing, often policies designed to increase one decrease the other in the process. For example, effective antitrust action may eliminate an imbalance of power between buyers and sellers and thus prevent one group from exploiting another; yet in the process a few large efficient firms may be split into many small inefficient firms. On the other hand, if the small firms are large enough to attain most of the economies of scale found in the large firms, then price competition may stimulate the small firms to continually search for methods to improve efficiency. Thus, efficiency and equity in terms of maximizing the welfare of society might both be improved. Bargaining associations have potential for increasing efficiency in marketing agricultural products and improving farmers' power position in the market simultaneously. When farmers join a bargaining association, they may not only increase concentration of power on the farmers' side of the marketing endeavor, but they may also benefit from economies lHerman M. Southworth, "Historical Evolution of Important Marketing Problems," Journal of Farm Economics, XLV (December, 1963), p. 1250. 15 of scale and thus improve the efficiency of the market Opera- tion. That is, without a bargaining association each farmer might have to gather market information, transport commodities from farm to market, negotiate with buyers, and finally make a sale. On the other hand, with a bargaining association many of these marketing activities could be performed by marketing specialists hired by the association. Thus, many small vol— ume nonprofessional marketing agents could be replaced by one or a few large-volume marketing specialists. Farmers would gain increased market power and efficiency in marketing. Be- cause buyers Of farm commodities would be purchasing from a large-volume association rather than from many small-volume farmers, transaction time could be saved by firms that pur- chase agricultural commodities for processing and retailing. Achieving economies of scale is often one way of im- proving efficiency in any type of enterprise, whether it be farm or nonfarm. Yet the power associated with large, ef- ficient operations can become a threat to those who have little or no economic power if they have to negotiate with, or in some way can be eXploited by, those who have power. Bressler has suggested that agricultural COOperatives could be a solution to this predicament regarding equity and efficiency. It is a common observation that in local aspects of marketing we find ourselves in a 16 dilemma-~we can have either a relatively large number of small, high-cost plants (or stores), or we can restrict the number to one or two large and efficient units--but this exposes us to the difficulty of some kind of monOpOl- istic exploitation. If we can devise a type of firm whose interests and goals are consist- ent with the interest and goals of the exploited group, however, this dilemma can be avoided. In this example, a COOperative seems the obvi- ous answer—-and this was in fact a major con- sideration in the early develOpment of agri- cultural COOperatives. Possibly we should de- vote more time to this type of organization where the goals of firms or industry are more closely identified with those of society.1 The above quotation implies that changes in the mar- ket by vertical integration through COOperatives could improve farmers' marketing efficiency and power position at the same time. The fact that bargaining associations could improve both efficiency and equity in farm marketing is one reason to be Optimistic about the future for farmer group action. The Practicability of Bargaining Bargaining associations should not be prescribed as the panacea for all marketing problems. The phrases "bar— gaining association" and "marketing COOperative" suggest one of the conditions necessary for successful group marketing efforts. That is, farmers must have common interests and 1R. G. Bressler, Jr.,"Summary Remarks" in Market Structure Research, ed. Paul L. Farris (Ames, Iowa: The Iowa State University Press, 1964), p. 169. 17 Objectives; conflicting interests could destroy an associa- tion and make COOperation impossible. At the same time, farmers must not only have common production and marketing problems and thus be in general agreement concerning the ob— jectives and goals that their marketing association should have, but the problems Which one seeks to solve through group action must lend themselves to such problem solving techniques. Determining whether a bargaining association could be successful in a particular market setting requires a de- tailed analysis taking into account specific information for each market in question. Among the factors to be considered are: (1) potential for farmer unity based on homogeneity of interests, objectives, ideologies, farm problems, and commodities. (2) potential for raising farm incomes and prices of a given commodity taking into consideration elasticities Of demand and supply, cross—elasticities with competing commodities, and elements of monOpoly in the market. Supply control and withholding farm commodities from the market are powerful tools which bargaining associations often use to gain bargaining power. To increase market power Often requires that an association obtain control over larger and larger percentages of the total volume of the commodity. 18 Controlling a large portion of the total volume can be achieved by obtaining more members. But as the number of farmer-members increases, the homogeneity of interests, Ob- jectives, and characteristics of the association members generally decreases. At times some degree of unity must be sacrificed to increase volume control. Many of the success- ful marketing COOperatives have had few members, controlled large volume of production (in absolute as well as relative terms), specialized in one commodity, and concentrated upon a small geographical area. Thus, both large volume control and maximum group unity could be achieved. Rather specialized commodities produced by a small group of farmers tend to lend themselves to COOperative marketing more readily than do commodities that are produced over a vast geographical area by a large number of farmers. For example, special fruits (i.e. cranberries, oranges, and cherries) are produced in rather small geographical areas and by a rather small number Of farmers. In contrast, corn, cotton, and wheat are produced by a relatively large number of farmers in large geographical areas. In addition to group cohesiveness and volume control, price elasticities should be considered in assessing the potential for a bargaining association. For example, bar- gaining efforts that bring about higher prices Of products 19 for which demand is price elastic might result in lower pro- ducer incomes. As another example, raising the price of a commodity that has close substitutes (high cross-elasticities with other commodities) may cause consumers to switch to competing products. The elements of monOpoly that exist in the market might be evaluated also to determine the potential gains that could result from bargaining associations. Some of the factors which one might examine are as follows: (1) present bargaining power of individuals Who might become members of the association. (2) bargaining power of firms with whom the association might attempt to bargain. (3) knowledge, control, comparative abilities of buyers and sellers in the market without bargaining associa- tions and how introduction of a bargaining association would change these factors. (4) available marketing alternatives that exist without a bargaining association. (5) the bargaining strengths of individual farmers relative to the bargaining strength of those buyers with Whom they negotiate. Generally, the difference between the equity and efficiency conditions that could reasonably be eXpected to 20 result from farmer-group bargaining in the market is a rough measure of the potential for a bargaining association in a particular market. Summary Collective bargaining has become a recognized and inte- gral part of the American economy. Many factors should be considered when one evaluates agricultural bargaining as an study focuses upon one set of characteristics and attitudes tion membership. the present and future roles of economic institution. This those factors, namely farmer related to bargaining associa- CHAPTER I I METHODOLOGY A survey conducted in the spring of 1965 was the pri— mary source of data for this study. A stratified random sampling procedure1 was used to select a sample of approxi- mately one percent of the farms2 in Michigan. Good geographic and type of farming coverage was obtained. Twenty-two coun- ties were included in the sample. Types of farming enter- Lxrises were represented in approximate prOportion to their cxontribution to Michigan agricultural income. Extensive personal interviews were made with Oper— ailors of the farms which had been randomly selected. A farm OEDerator was defined as the major decision maker in the farm— irlg operation. Questions were asked that dealt with attitudes ‘ lDale E. Hathaway, Richard L. Feltner, James D. S'l'liaffer, and Denton Morrison, Michigan Farmers in the Mid- £§£izxties, Michigan State University Agricultural Experiment Station, East Lansing, Michigan, Research Report 54, August 1966, p. 65. 2The U. S. Census definition of a farm was used in ti}lis survey. A farm is defined as a place Of 10 acres or n“(Drefrom which the sales of farm products amounted to $50 or more in 1964 or a place of less than 10 acres from which SSEiles Of farm products amounted to $250 or more. 21 22 and Opinions of Michigan farmers regarding various marketing problems and their possible solutions. Information regarding farmer attitudes toward government and Michigan farm organi- zations was also obtained. Contacts were made on a total of 1,084 farms. From these contacts 804 useable schedules were obtained. Membership Classifications For purposes of this analysis the respondents were divided into three groups. Two questions in the survey pro— ‘vided the basis for these groupings. The first question was iJl regard to present or past bargaining association member- sfliip. Those who answered "yes" when asked whether they had tween bargaining association members in the past five years “were classified as "members." Those Who answered "no" to tlie bargaining association membership question were asked 't}1e following question: "Would you be willing to sign a c3C>zntract with an agricultural bargaining association making tTlem your exclusive sales agent if they were able to show 3?c:i.ation?" Those who answered "yes" to the question \ lMichigan Farmers in the Mid-Sixties, p. 66. 23 immediately above were classified as I'potential members" of bargaining associations, While those who answered "no" were termed "nonjoiners”. Of all the farmers in the survey who answered the apprOpriate questions used as a basis for group- ing, 31 percent were in the "members" category, 37 percent were "potential members" and 32 percent were "nonjoiners." A word of caution is apprOpriate here. Note that the question above regarding willingness to sign a contract with a bargaining association is in terms of an exclusive sales agreement. "Members" were not asked about their "willingness 'to sign." Some members are not aware that their contracts Viith bargaining associations specify exclusive sales agree- Huants. Thus, it is possible that some current members of huargaining associations might have answered "no" if they had been asked about their willingness to sign. It is also im- IDertant that the terms of the contract were not specified in Under specific conditions a farmer who gave ‘tTIis question. 51 "no" answer might consider association membership. There- f<>J:e, the groupings based on this question cannot be con— Sidered as an exact indication of the proportion of farmers _______ 1James D. Shaffer, "Collective Bargaining Institu- tlJLCDns," Michigan Farmers in the Mid-Sixties, Michigan State tIlliversity Agricultural Experiment Station, East Lansing, I“Ill—(:higan, Research Report 54, August, 1966, p. 20. ZShaffer, p. 20. 24 who would become bargaining association members; rather they must be viewed as an indication of general attitude.l Of the 804 useable schedules, 751 contained answers to the appropri- ate questions regarding bargaining association membership and willingness to join such that the interviewees could be clas- sified as members, potential members, or nonjoiners of bar- gaining associations. Members 234 Potential Members 275 Nonjoiners 242 751 Effective Sample {Those who gave complete useable schedules but who failed to answer apprOpriate questions so that tflney could be classified regarding lDargaining association membership 53 804 Initial Useable Sample Methods of Analysis Descriptive and attitudinal information that might EJj;Ve some insights regarding why farmers had made decisions Eirld taken actions which placed them in particular membership cIategories was drawn from the survey and analyzed using the t11'11‘ee way breakdown--members, potential members and non- :JCDiners. \ 1 Shaffer, p. 20. 25 Descriptive information Descriptive information related both to farm and per— sonal characteristics was examined with regard to bargaining association membership. Generally, the procedure involved grouping related items of information, analyzing each item independently, and then viewing the group of descriptive items as a Whole. By viewing items of information separately, each item's contribution to or contradiction with an argument be- hind a particular conclusion could be detected. By examining related pieces of information concurrently, a broader founda- tion of factors for arguments behind a particular conclusion could be synthesized. _yttitudinal information Attitudinal items regarding farmers' conceptions of sgzroup action and governmental activities in agricultural rmarketing were examined with regard to bargaining associa- tlj.on membership. An approach similar to the one used in the Eirialysis of the descriptive information was employed. Related attitude items were examined simultaneously so that a broader (lease of information for arguments underlying particular con- <3ILtmions could be synthesized. Another reason for examining nn<>re than one attitude item at a time was to check the con- $3istencywith which farmers responded to various related Eattitude items. Implications regarding the reasoning of 26 farmers which could be drawn from the particular response patterns were recorded at various places in the analysis. An example showing the method used to present attitudinal information.--At various times in this study, two or three attitudinal items were examined simultaneously and related to the bargaining association membership categories. When three items were examined together, there were eight possible an- swer patterns that could be exhibited by farmers in each membership category. A respondent might agree with all three attitude items, disagree with all three items, or agree with some and disagree with others. Let "X", "Y", and"Z" repre- sent three attitude items. Let "A" represent agreement and "D" represent disagreement. The following diagram presents all possible answer patterns when three items are considered simultaneously. Possible answer patterns Attitude items l 2 3 4 5 6 7 8 X A A A A D D D D Y A A D D A A D D Z A D A D A D A D In the actual analysis, the information in the fore— going diagram appears in the heading of tables in an abbreviated form. Y'Ap Z-A 0 tables. For example, 27 answer pattern one is represented by x-A, ApprOpriate explanatory footnotes accompany the The following is an example of a table involving three attitude items related to bargaining association membership: Attitude-item response patterns (b) Membership * (a) X-A X-A X-A X-A X-D X-D X-d X D Y-A Y-A Y-D Y-D Y-A Y-A Y-D Y D Total Z-A Z-D Z-A Z-D Z-A Z-D Z-A Z D Percent giving various answer patterns Members 100 Potential members 100 Nonjoiners 100 All farmers 100 (a) In this footnote results of the chi square test are recorded. (b) In this footnote the attitude items under study are stated. first attitude item stated in full. second attitude item stated in full. third attitude item stated in full° The The = The Nr<>< ll Generally, this basic format was used for tables con- taining information about groups of attitude items. Slight modifications were made when answer patterns were combined. Statistical Tools The questions raised in this study could be expressed 28 as the following null hypothesis: There are no differences among members of bargaining associations, potential members and nonjoiners with regard to their characteristics and attitudes. Relative frequencies and chi squares were used as tools to assist in the analysis of data. However, because some cells included less than five observations, the data used in this study did not always readily lend themselves to chi square tests. When meaningful groupings could be made, response patterns were grouped to increase the number of Observations per cell and thus permit valid chi square tests to be run. In other cases it was difficult to isolate spe- cific causal factors or to be certain that the "apparent" causal factors were the "actual” causal factors with regard to a particular effect. Therefore, in some instances dif- ferences in the frequencies with which the various member- ship categories gave particular responses were of interest even though they were not statistically significant "differ— ences." At this point, one warning sounded by many statistics books should be reiterated. Although causality implies de- pendence, dependence does not imply causality. If A is caused by B alone, then A is dependent upon B. Without B, A cannot exit. Therefore, if A does exist, one can conclude 29 that B exists also. Thus, an effect depends upon its cause: causality implies dependence. 0n the other hand, C may appear to depend on A. Yet both A and C depend on B. The causal factor may be B while A and C are interrelated only through B. Thus, when the con- clusion is reached through a chi square test that two items of information are dependent, the caution that dependence does not imply causality should be remembered. The conclusion reached through a chi square test that two items are depend- ent can be an apprOpriate point from which to investigate whether or not a logical argument supporting a causal rela- tionship could be develOped. As an example, it was found in this study that bar- gaining association members had, on the average, higher levels of formal education than did nonmembers.l We cannot immediately conclude, however, that higher levels of edu- cation cause farmers to join bargaining associations. It is conceivable that education serves as a screening process. That is, individuals with high ambitions and greater than average levels of initiative Obtain higher levels of formal education, while others drOp out of the formal educational system. It is possible that high ambitions and above average lShaffer, p. 21. 30 levels of initiative are causal factors for higher levels of formal education, as well as for greater tendencies to join bargaining associations. Thus, formal education and the bargaining association membership may be positively related only because the same causal factors are behind each of them. However, formal education may not be causally related to bar- gaining association membership. W Two of the problems apparent in interpreting the re— sults from such a survey are: (1) identifying all the factors that might possibly have influenced a response and (2) iso- lating those factors which actually influenced the farmer's response. In some cases, the reasoning behind certain re- sponses can be synthesized and subsequently be better under- stood, if two or more responses are examined simultaneously. By examining the consistency with which respondents answer a group of related items, some information regarding farmers' decision-making processes can be obtained. This analysis provides some insights regarding causal factors and bargaining association membership. Essentially, each farmer's responses were analyzed, and farmers were clas- sified according to the particular answer patterns which they exhibited. Answer patterns were then related to bargaining 31 association membership. Thus, in some instances more ”depth" of analysis could be achieved by looking at a group of items instead of only one at a time. CHAPTER III FARM AND FARMER CHARACTERISTICS RELATED TO BARGAINING ASSOCIATION MEMBERS, POTENTIAL MEMBERS, AND NONJOINERS By definition, each of the individuals in a particular membership category had one characteristic in common. All "members" had been members of a bargaining association some- time during the past five years. All "potential members" indicated a willingness to join, and all "nonjoiners" indi- cated an unwillingness to join a bargaining association. It was thought that individuals in each of these membership cate- gories might also have other characteristics that were similar to those exhibited by other individuals in the same membership grouping. In this chapter farmers in the various membership categories are described with regard to farm and personal characteristics. A farmer's planning span, education and experience, commitment to farming, satisfaction with income from farming, and his major enterprise are some of the factors that may influence his decisions regarding bargaining association membership. These factors were examined. The results pro- vide some insights regarding how bargaining association 32 33 members and their farms differ from nonmembers and their farms. Planning Span An individual's planning span with respect to bar- gaining association membership can be defined as the length of time an individual could be expected to participate in and receive benefits from the activities of a bargaining as- sociation. A thirty year Old farmer can expect to be farming more years in the future than a sixty year old farmer. On the other hand, the younger farmer probably has greater occu- pational mobility than the Older farmer. However, over 90 percent of the farmers in each of the membership categories said they plan to continue farming until retirement. Age is one of the major determinants of an individual's planning span. Shaffer found that farmers in the sample who were members of bargaining associations tended to be younger than those who were nonmembers. With regard to the two sub- groupings of nonmembers, he found that potential members tended to be younger than nonjoiners.1 One possible explana- tion of why age is associated with bargaining association membership in the manner described above is that younger farmers tend to have longer planning spans than older farmers lShaffer, p. 21. 34 and, thus, are more inclined to join bargaining associations. Older farmers are less inclined to join because they have a shorter time period than younger farmers to obtain benefits from bargaining activity. Education and Experience Formal education and experience provide individuals with information that can be used as a basis for decision making. The fact that bargaining association members tended to be better educated and more experienced than nonmembers might be an indication that educational programs for farmers could be an effective method for increasing membership in a bargaining association. It was thought that more educated farmers would be more aware Of the alternatives that they face when making a decision than would those with less education. 0n the other hand, it was expected that experience would first increase an individualis awareness of the alternatives but eventually reach a point of diminishing returns. That is, inexperienced farmers might be unaware of the alternatives available to them. As farmers gained more experience they might become more aware of available alternatives. However, after they had been farming for a number Of years, it was thought that some farmers might be less diligent in their search for new 35 alternatives and more inclined to utilize solutions upon which they had traditionally relied. Of course, some farmers with a number of years of experience may be planning to re- tire in the near future, and therefore, have decided not to join a bargaining association. Shaffer found that bargaining association members had somewhat more education than nonmembers in terms of the number of school years completed. The educational differential be- tween potential members and nonjoiners was negligible.1 Thus, it appears that education conditions farmers' attitudes in a way conducive to bargaining association membership. When age was examined with regard to membership, members tended to be youngest; potential members were the middle group with regard to age and nonjoiners tended to be the oldest. But with regard to years managing a farm, there were relatively fewer inexperienced (less than ten years managing a farm) farmers among bargaining association members than there were among the other two groups (Table 3-1). Ap- parently, bargaining association members in the sample tended to assume farm management responsibilities at an earlier age than nonmembers. One of the factors determining the maximum possible lShaffer, p. 21. 36 Table 3—1 —— Bargaining association membership related to years managing a farm (a) Years managing a farm Membership Total Less than 10-19 20—30 Over 10 30 Percent Members 15 31 31 23 100 Potential members 22 31 26 21 100 Nonjoiners 22 19 27 32 100 All farmers 20 27 28 25 100 (a) Membership distributions significantly different at the 1 percent level. Chi square was 20.9 with 6 degrees of freedom. number of years a farmer could manage a farm is his age. Al- ' most a third of the nonjoiners reported having managed a farm for over 30 years. This followed the age data closely, in that 36 percent of the nonjoiners were over 54 years of age.1 Perhaps these older farmers have favorable attitudes toward bargaining associations as a result of their years of experi— ence, but have decided not to join because their planning span is short. Sixty—two percent of the members, 57 percent of the potential members, and 46 percent of the nonjoiners had lShaffer, p. 21. 37 managed a farm from 10 to 30 years. Apparently experienced farmers who have a long planning span tend to become bargain- ing association members more frequently than farmers who are less experienced or who might anticipate retiring in the near future. Commitment to Farming Generally, farmers who have devoted a major portion Of both their time and resources to farming tend to join a bargaining association more frequently than less fully com- mitted farmers. Bargaining association members tend to Operate larger farms than nonmembers (Table 3—2). Over three-fourths of the members Operated 100 or more acres of crop-land compared with less than half the potential members and nonjoiners. About one-fourth of the potential members and nonjoiners Operated less than 50 acres of crOp-land compared with only five per- cent of the members. Thus, members have more land resources committed to their farming Operations than potential members and nonjoiners do. One of the problems confronting supply COOperatives is that of obtaining and maintaining the patronage of large farmers.l Based on this Observation, it might be expected 1Richard L. Feltner, "COOperative Buying and Selling Organizations," Michigan Farmers in the Mid-Sixties, p. 16. 38 .Eoomwnm mo mmmummp NH £ua3 H.m0H mm3 mumovm ago .HO>OH uswoumm H mnu um ucwnmmmflp NHDGOUHMHcmHm mcoflusnflnymflo mflnmuwafiwz Amy OOH N d n ma mm mm ma mnwfiumm Had 00H m m m e am am om mumqflonaoz OOH H m u m mm Hm gm mHmQEOE HOflpcmuom OOH m n ma mm mm ma m mHmQEmz uswouwm mOHUM mOHUm wOHUM mOHUm mOHOm mOHUm mmHUM Om , mnos no mmeuooe mmmuoom ammuoo~ moanooa mmuom swap mmmq Hmuoe 00m QHSmHmQEOE Umumnmmo monum Mo HOQEDZ Amv omumnmmo UGMHQOHU HO mmhom m0 MOQEDE Op OOUMHOH mflflmhmflfimfi COHDMHOOmmm mcflaflmmumm II Nlm OHQME 39 that bargaining associations would also have difficulty Ob- taining and maintaining large farmers as members. However, when size was measured in terms of acres Operated, it appeared that large farmers were more interested and active in bargain— ing associations than were small farmers. A study of land tenure arrangements of farmers pro- vides more insight regarding differences in the commitments of members, potential members and nonjoiners. More nonjoiners than members or potential members own, free of mortgage or land contract, some of the land they farm (Table 3-3). Per— haps this can be explained by the fact that nonjoiners tend to be older than members and potential members, and thus, have had more time to accumulate financial resources. More members than potential members or nonjoiners have a mortgage or land contract on some of the land they farm. Also, more members than potential members or nonjoiners rent some of the land they farm. Perhaps this can be explained by the fact that members tend to Operate more acres than potential members and nonjoiners. Thus, because larger Operations re- quire more capital to command more resources for production, methods other than accumulation of resources through savings from income must be employed. Apparently, members have en— gaged in land contracts, mortgages, and rental arrangements to increase the resources available to them for farming more 40 Table 3-3 -— Bargaining association membership related to land tenure Land tenure Membership Own some land Have mortgage or Rent free Of mortgage land contract on some or land contract some land land Percent Members 53 54 41 Potential members 59 41 28 Nonjoiners 68 35 24 All farmers 60 43 31 frequently than potential members and nonjoiners. Information regarding the diversification of farming Operations was consistent with the fact that bargaining asso- ciation members are more committed to farming than potential members and nonjoiners (Table 3-4). More bargaining associ- ation members than nonmembers had diversified farming Opera» tions. More specifically, a higher percentage of bargaining association members (82 percent) than nonmembers (less than 60 percent) had two or more enterprises from which they had gross sales of $500 or more in 1964. There was little dif- ference between potential members and nonjoiners with regard to diversification of farm enterprises. Following the completion of a schedule, each inter- viewer formulated a rough subjective estimate of each farm's 41 Table 3-4 -- Bargaining association membership related to the number of enterprises for which a farmer had gross sales of $500 or more in 1964 . Number of enterprises Membership Total 0 l 2 3 4 5 6 7 8 Percent Members 1 17 28 23 15 10 4 1 l 100 Potential members 15 29 27 15 7 4 2 l 0 100 Nonjoiners 14 29 27 14 10 5 l 0 0 100 All farmers 10 25 27 18 10 6 2 l l 100 sociO-economic status. Comparisons were made with others in the community with respect to the general condition and size of houses and farm buildings. Bargaining association members tended to have higher "levels of living" or socio-economic status ratings than nonmembers (Table 3-5). There was little difference between potential members and nonjoiners regarding this matter. The following income measures were obtained in the survey: (1) gross income from farming; (2) income from non- farm employment, and (3) net family income. Bargaining asso- ciation members reported higher gross income from farming than nonmembers. There was little difference between potential lDenton Morrison, "The General Farm Organizations,” Michigan Farmers in the Mid-Sixties, p. 52. 42 Table 3—5 -— Bargaining association membership related to sociO-economic status (a) Socio—economic status Membership Total Below Above average Average average Bengal}. Members 11 62 27 100 Potential members 18 62 20 100 Nonjoiners 17 66 17 100 All farmers 16 63 21 100 (a) Membership distributions significantly different at the 2.5 percent level. members and nonjoiners in regard to the distribution of gross income from farming.1 On the other hand, bargaining associa- tion members had less income from nonfarm employment than non- members. There was little difference between potential mem- bers and nonjoiners in regard to the distribution of income from nonfarm employment. Net family incomes tended to be highest for those groups who reported the lowest gross farm income. Those who had low gross farm incomes generally had enough nonfarm in- come to more than compensate for their low incomes from farming. Bargaining association members had slightly lower lShaffer, p. 21. 2Shaffer, p. 21. 43 net family incomes than did nonmembers.l Over 60 percent of the bargaining association member- ships reported in the survey were memberships in the Michigan Milk Producers Association.2 MMPA members were classified as "members" of a bargaining association. Because they were a dominant group within the "members" category, they had an in- fluence upon the results of the survey.3 In fact, it is pos- sible that many of the differences between members and non- members could be explained by the fact that dairy farmers often have different characteristics and interests than non- dairy farmers do. Relatively few dairy farmers have engaged in Off- farm work.4 This factor had its influence on the income re— sults that were reported, as well as on information regarding off-farm work and union membership. While between one-fourth and one-third of the bar— gaining association members worked on the farm 20 or more hours per week, slightly over one-half of the potential members and a little less than one-half of the nonjoiners reported 20 hours or more of Off-farm work per week.5 lShaffer, p. 18. ZShaffer, p. 18. 3Shaffer, pp. 20-23. 4Shaffer, p. 200 SShaffer, p. 21. 44 Thus, both income and off-farm work figures indicate that bargaining association members devote a larger portion of their time and efforts to their farm enterprises than po— tential members and nonjoiners. Satisfaction with Income Traditionally those who are satisfied with the status quo have attempted to stifle change or at least have not agitated for it. On the other hand, unrest and dissatisfac- tion have been factors that have motivated individuals and groups to seek changes over the years. It was thought that individuals who were satisfied with their income from farming would be less likely to join bargaining associations than farmers who were dissatisfied with their incomes. More members and potential members were dissatisfied with their income from farming than nonjoiners (Table 3-6). Apparently, dissatisfaction with income moti- vates some farmers to seek bargaining association membership. Majpr Farm Enterprise Some farm commodities lend themselves more‘readily to bargaining activities than others. Generally, specialized commodities produced in a small geographic area can be mar~ keted more easily and effectively through bargaining 45 Table 3-6 —- Bargaining association membership related to satisfaction with income from farming (a) Satisfied with income Membership from farming Total "Yes" "No" Percent Members 27 73 100 Potential members 29 71 100 Nonjoiners 36 64 100 All farmers 31 69 100 (a) Membership distributions significantly different at the 10 percent level. Chi square was 5.2 with 2 degrees of freedom. associations than staple commodities produced over a wide geographic area because organizational problems are not as great as in the first case. Farmers who produce competing commodities Often have conflicting interests which make group action difficult or impossible. Those who produce the same commodity usually have similar interests and goals based on the commodity they produce. The survey indicated that members of bargaining asso- ciations are a much more homogeneous group in terms of major farm enterprise than are potential members or nonjoiners (Table 3—7). The fact that over 60 percent of the bargaining 46 OOH NH m w m a HH m OH O Hm mnmfihmm HH< ooH mH m m m HH NH m Hm a om mumcHoHcoz OOH SH m n O NH mH O OH O OH mHOQEmE HOHucmuom OOH O OH N O N O O m N MO mumnfimz .uamouwm mummn wHEmH mmouu mmHHmu HmmDm hm: mmmm O mmmflm HOHDO Hash Immm> mamehOO mumo cHOO mwmxuse mm>Hmo mmom MHHEL momma Mun ummsz mHmHHOHm mHuumo Hmuoe mmmm mHgmumnswz OGHEHOM Eonm memm mmoum mo mousom ucmuuomEH umoE mHmch m.HmEHmm OGHEHOM Eonm mmHmm mmoum mo OUHDOO ucm luHomEH umoE OHmch m.HmEHmm on OODMHOH QHHOHOQEOE GOHDMHUOmmm OGHchmHmm II him OHQOB 47 association members were members of the Michigan Milk Pro- ducers Association is evident in information regarding the farmer's single most important source of gross sales from farming (major enterprise). Sixty-three percent of the bar- gaining association members reported milk as their single most important source of gross sales from farming and 10 per- cent reported fruit crOps. Seven other categories of major enterprises accounted for the remaining 27 percent of the re- sponses by members, but no one category accounted for more than six percent of the major enterprise responses. Potential members and nonjoiners gave rather diverse responses to the major enterprise question. NO one of the ten categorical groupings of major farm enterprises had as many as one—fourth of the potential members or nonjoiners. Fifteen percent of the potential members reported milk as their major enterprise and another 15 percent re- ported their major enterprise as an endeavor that fell into the beef cattle, calves, sheep, and lambs category. Thirteen percent reported corn as their major enterprise while 12 per- cent reported in the category wheat, oats, and hay. The distribution of nonjoiners regarding major enter- prise was very similar to the distribution Of potential mem— bers. The beef cattle, calves, sheep, and lambs category was reported as major enterprise by 21 percent of the non- 48 joiners, milk by 19 percent, corn by 12 percent, and Wheat, oats, and hay by 11 percent. Summary The length of a farmer's planning span, his years of formal education, and his commitment to farming are directly related to the tendency to join bargaining associations. Dis- satisfaction with income is a factor that motives farmers to become members of bargaining groups. The effect that the number of years of farm management experience has upon the tendency for a farmer to join a bargaining association is influenced by the length of an individual's planning span. Farmers with a few years of experience and long planning spans tend to join bargaining associations more frequently than farmers who are inexperienced or who have relatively short planning Spans. CHAPTER IV FARMERS' EVALUATION OF PROBLEMS IN AGRICULTURE AND THEIR CONCEPTIONS OF POSSIBLE SOLUTIONS The farmers who were interviewed in 1965 were the decision-makers of the farm enterprises which they Operated. Textbook discussions of the decision—making process Often in- clude "recognition of the problem'I as one of the steps that is to be encountered as a vital part of the problem solving and decision-making process. Logical methods of problem solving include, at an early point, a statement Of the prob- lem. Specifically, before deciding Egg to solve a problem, it is important to decide yhap the problem is, because Egg; the problem is will have bearing upon ghag_alternative solu- tions are relevant. A farmer's Opinions concerning the need for, as well as the usefulness of, collective bargaining were thought to be related to his views regarding the problems he faced. It was expected that a farmer's conceptions concerning problems and solutions differed, relative to bargaining association membership. However, only a few differences were detected in the way farmers in each of the membership categories ex- pressed themselves regarding conceptions of problems and 49 50 solutions. In the first part of this chapter, the relationship between problem identification and membership classifications is examined. The last portion of this chapter deals with farmers' conceptions of solutions to agricultural problems. Problem Identification Almost all farmers in each of the three membership categories agreed with the statement: "If you want to solve agriculture's problems it's the production and marketing sys- tem as a whole that needs to be changed, not just the prac- tices of individual farmers." Over four—fifths of the mem- bers, potential members and nonjoiners disagreed with the statement, "Farmers should be primarily concerned with pro- ducing farm products and let someone else worry about the marketing problems." Thus, it appears that most farmers, regardless of their affiliation with bargaining associations, believe (1) that there is a need for changes in the marketing system, and (2) that farmers have a re5ponsibility for imple- menting them. Respondents were asked what they considered to be the greatest problem facing farmers today. Responses were coded into the following five categories: (1) economic, (2) government and political, (3) market system, (4) problems 51 caused by or related to farmers, and (5) technical production problems and weather. Essentially problems classified as economic were those related to low product prices and high costs. Seventy—seven percent of the potential members and 70 percent of the mem- bers listed economic problems as the greatest problem faced by farmers, while 64 percent of the nonjoiners did so (Table 4-1). Potential members and members tend to feel the effects of low product prices and high costs somewhat more keenly than non— joiners. Of course, the question was phrased in terms of the greatest problem; it is possible that those Who named a par- ticular problem as the greatest might consider other problems to be almost as important. Most of the responses in the government and political problems category involved high prOperty taxes or government "interference" in market and farming Operations. Twenty—two percent of the nonjoiners listed government and political problems as the major problem confronting farmers, While 13 percent of the members and 14 percent of the potential members recorded this type of problem. When nonjoiners were asked why they were unwilling to become bargaining association members, the reasons given most frequently were related to a desire . l . . for independence. Thus, some nonJOiners appear to be very lShaffer, p. 27. 52 .mmmcHMHO cam .moumpcmum COHuUOmmGH OHOHH .mEOHHonm wmmmmHO .muowmcH .HOSHOOB UOODHUGH Amy .OOOOH3OGH HMHHOOOCOE mo HUOH 0cm umeEHmm MOHU pom mane; .OEHquumm “mHmEumm maoEm muHcs mo HomH “mumsumm HMDOH>HOGH mo mwODuHuum DCOOGOQOOGH OOODHOGH HOV .mummeE mumsUmOOGH cam “muHmOHm cmEmHOOHE O>Hmmmoxm .mchHmE mcHummeE HOHS o» mucmummmn Hmumcmm “mHOHHmuOH pom mHOmmmUoum mo mocmn may GH Hm3om UHEOGOUO O>Hmmmuxm “OGOHGS HOQMH mo mHOBOm O>Hmmmoxm “muOEHmm m9 Hw30m OCHGHMOHOQ mo HOOH UOODHUGH HOV .mmxmu wuummoum HOHS Ocm coHucm>HmucH ucmfidum>om OOODHUGH HOV .GOHumNHHmHommm com .ucmEumO>:H OmHmH .Enmm OOHOHIIONHO How OHSOmOHm “coHuUSOoumHm>o Ocm momsHmHsm “HOQMH mo muHHHanHw>m 0cm %UHHMSU .umoo “OEOOQH 30H “OOmmnuusm musmaH HOQmHIcoc MOM mOUHHm 30H: “meHum DODOOHQ 30H OOODHOOH ADV .EOOOOHM mo mmmnmmp m SDHB n.ON mm3 mumsvm HQO .HO>OH ucmoumm H mflu um ucwnmmmHO mHuchHMHGOHm mcoHuanHumHO mHHmHOQEmz HOV OOH m m O OH Hm mnmfiumm HH¢ OOH m O O NN OO mHOGHOnGOZ OOH N O m OH hm mHOQEOE HOHucmuom OOH N m h mH Oh muOHEmz ucwuuwm GO Ame :3 A3 3O umnumm3 mHOEHmm mEOHQoum mEmHQOHm mEOHQoum Hmuoe Ocm mEmHQOHm on OmumHOH Ewummm HOOHDHHOQ pom UHEOCOUM mHzmHmQEmz coHuUsOonm Ho >9 mesmu uwxnmz ucmacnm>oo HOUHCSUOB mEOHQoum Amy mmpou momm mHmEHmm umnu mEmHQOHQ ummummum may mo mcoHummocoo ou UmumHmH mHflmHmHEmE GOHOMHOOOmm mchHmOHmm II HIO OHQMB 53 consistent in their views, since they place a high value on independence and at the same time believe that government interference is the greatest problem. Those references by farmers to problems involving high marketing margins, excessive middleman profits, inadequate markets, lack Of bargaining power by farmers, and other market structure-power problems were categorized as "market system problems." It appears that the tendency to View market sys- tem problems (especially market structure—power problems) as the greatest problem facing farmers today is about the same for members (7 percent), potential members (3 percent) and nonjoiners (6 percent). Problems caused by or related to farmers that were mentioned included lack of unity among farmers and their organizations; independent attitudes of individual farmers; part-time, hobby and city farmers; and the lack of managerial knowledge. Eight percent of the members listed problems caused by or related to farmers as the greatest problem. Four percent of the potential members and five percent Of the nonjoiners listed this type of problem as the greatest problem farmers face today. About three-fourths of the mem— bers listed either lack of unity among farmers and their organizations, or independent attitudes of individual farmers, as problems caused by or related to farmers which they 54 considered to be the greatest problem. Perhaps members are more aware (than potential members and nonjoiners) of the problems encountered when attempting to promote group action. Members have had experience through bargaining associations and have faced organizational problems first hand. There was little difference among the three member- ship categories regarding responses in the technical produc- tion problems--weather category. In fact, farmers in general seemed to be least concerned with this type Of problem and most concerned with economic problems. Farmers' Conceptions Of Solutions to Farm Problems Solutions to the farm problem were given in terms of yhap Should be done. Generally, most of the economic solu- tions offered involved higher product prices and lower pro- duction costs. Thirty-nine percent of the potential members, 32 percent of the nonjoiners and 26 percent of the members gave economic solutions (Table 4-2). Fifty-two percent of the nonjoiners listed govern- ment solutions. Almost half of these government solutions included reference to less government interference. Thirty- six percent of the members and 38 percent of potential members listed government solutions. Although most of the farmers who mentioned government solutions suggested less government 55 .OOHuom HOEHOM OmumaHOHOOU Op mmocmummwn OOODHUGH HOV .muoxumfi Ocmmxm Ocm “mumfiumm Op O>HumHmH mHmHHmp Imp cam .mHmHHQQSm .mHOmmmUOHm mo HOBOQ UUHHumOH “mchnmE OGHuwamE Hm3oHll=muHmoum cmEmHOOHE: m>Hmmmuxm wumcHEHHm “mQOHus HOQOH mo HOBOQ Ommmmuuww OOODHUGH HOV .Honmmmmn Odm “mmHoHHom uuomxm cam OHOQEH .m.D CH mmmsmnu uucmfimHHpmH OGOH cam .mHouucoo .mpHOQQSm mH> OHSUHSUHHOO CH ucmacnm>om mo OHOH OmmmmHUGH “GOHUMUDOO “pomecum>om ECHO mocmummumusH mmmH OOODHUCH HOV .GOHUONHHMHUOQO cam .monuUmHm OO>OHQEH .ucmfimmmcmfi Hmuumn .GOHumEousm mm £05m mcoHusHOm mHOEHmm HODOH>HOCH com “mmmDHmusm 0cm :OHDODOOHQ mummoummm mmmmnump "HOHOH huHHmsv HOHS .mHQmHHm>m NHHOOOH OHOE “OEOUQH HOHOHS “musmcH no mumoo HOBOH on OMOH was» mwmm3 hnouomm HO3OH..mucwfi IOHHDUOH HQOEumm>cH HOBOH .mumoo HO3OH “mmUHHm uUDOOHm HOSOHH OOOSHOGH Any - .EOOOOHM mo mmmnmmu O HUH3 m.mN mm3 Onmnvm HHO .HO>OH uswoumm H may um pamHOHMHO MHOQOOHMHGOHm mcoHuanHumHO mHHmumHEmz HOV OOH OH OH NO Nm mHOEumm HH< OOH O OH Nm Nm mHOcHoncoz OOH OH O mm mm muOQEOE HwHuamuom OOH ON m Om ON manEOz usmoumm 7.: 8... BO 8: HOOOB coHuom HOEHmm Emumhm unmacnw>ow UHEocoom mHamHOHEOZ wummmumm< umxnmz Hwy hmcou womm mumfiumm EOHQOHQ ammumwum Gnu on mcoHusHOm mo mGOHummUGOU ou OOUMHOH QHSmHmHEmE aoHOmHUOOmm OCHGHmmHmm II NsO OHQOB 56 interference, some of the farmers in each of the membership categories suggested that the role of government in agricul- ture be increased with regard to price supports, controls, and land retirement. Market system solutions were suggested by about ten percent of the farmers in each Of the membership categories. There was some indication that more nonjoiners than members are interested in decreasing theipower of the firms with which they negotiate, while more members than nonjoiners are interested in increasing their own (members) power position in the market. Bargaining association members prescribed aggregate farmer action as a solution much more frequently than did non- joiners and somewhat more Often than did potential members. Twenty-nine percent of the members suggested aggregate farmer action solutions, while 14 percent of the potential members and only six percent of the nonjoiners did so. Evidently, membership in a bargaining association has a positive influ- ence upon farmers' Opinions regarding the feasibility of aggregate farmer action as a solution to the greatest prob- lems farmers face. Summary A farmer's willingness to pursue a particular solution 57 is related to his conceptions of the problems he faces. Specifically, more bargaining association members than non- joiners see as major problems, those which have been solved or can potentially be solved through the activities of a bar— gaining association. The fact that they recognize bargaining associations as a relevant and sometimes necessary solution to these problems is one Of the motivating factors which prompts their membership in a bargaining association. Poten- tial members generally recognize as their problems those for Which bargaining association membership is a relevant possible solution. On the other hand, potential members are less aware (than members) of some of the limitations and problems asso— ciated with group efforts. Membership in a bargaining asso— ciation appears to increase members' knowledge of some of the limitations and problems related to group efforts. CHAPTER V BARGAINING ASSOCIATION MEMBERSHIP RELATED TO FARMERS' CONCEPTIONS OF GROUP ACTION It was thought that a farmer's conceptions regarding (l) the need for group action, (2) the desirability of antici- pated effects of group action, and (3) the personal costs and benefits involved would influence his relationships with bar— gaining associations. In this chapter these attitudes toward group action are examined with reSpect to the three bargaining association membership categories. The Need for Group_Action The statement is sometimes made that an organization which is created to fill a need has a greater probability of being successful than an organization for which there is no real need. This is probably also true for a collective bar- gaining association. It was thought that the difference in the degree with which farmers in the three membership cate— gories recognized the need for bargaining associations might partially account for why various farmers reached different decisions regarding bargaining association membership. 58 59 Three attitude groups, each composed of two or more attitude items, were studied in an effort to gain insights regarding farmers' conceptions of the need for group action. The first group, "Attitude group 5-1", contains items related to farm prices, incomes, and changes in consumer prices. Attitude grOpp 5—1 1. On the average, farmers are faring about as well in terms of income as city workers at the present. 2. Consumers ought to pay more for the farm products than they are now paying. 3. Consumers ought to pay enough for food to enable farmers to have an income equal to nonfarm workers. When attitude Item 1 in group 5-1 was examined alone, 90 percent of all farmers disagreed with the statement. Thus, most respondents expressed the belief that farmers have lower incomes than city workers. This belief is well founded. Disagreeing with Item 1 while agreeing with Items 2 and 3 could imply the belief that high profits by wholesalers, processors, and retailers as well as by other "middlemen" are not the only reasons why prices paid to farmers are low. The implication is that giving more of the profits retained by middlemen to farmers would not alone raise prices to a level that would give farmers an income equal to that of nonfarm workers. The price of farm products to consumers would also 60 have to be raised. It was expected that more members than nonjoiners would disagree with Item 1 While agreeing with Items 2 and 3. It is reasonable to expect that more members than nonjoiners would expect bargaining associations to be able to raise prices, since expected gain might have been one of the moti- vating factors which prompted members to join. More members than nonjoiners or potential members disagreed with Item 1, while agreeing with Items 2 and 3 (Table 5-1). It should be noted that Item 2 is phrased in terms of farm product prices while Item 3 is in terms of food prices. An individual might consistently disagree with Items 1 and 3 while agreeing with Item 2. That is, an individual might desire low food prices and still approve of bargaining action which would raise the prices of other agricultural products-—nonfood items. However, very few of the farmers in any of the membership categories exhibited the pattern of disagreeing with Item 1, agreeing with Item 2, and disagreeing with Item 3. About the same percentage of nonjoiners and potential members exhibited the following answer pattern: disagreeing with Items 1 and 2 while agreeing with Item 3. A someWhat lower percentage of members responded with this answer pat— tern. Such an answer pattern could imply that "middlemen"-- 61 Table 5-1 -- Bargaining association membership related to conceptions Of consumer prices and equitable farm income (a) Attitude-item response patterns (b) Membership Total l-D l—D l—D l-D l-A All other 2-A 2-A 2-D 2-D 2—A answer 3-A 3-D 3-A 3-D 3—A patterns Percent Members 61 5 13 ll 6 4 100 Potential members 50 6 20 14 5 5 100 Nonjoiners 46 5 21 14 8 6 100 All farmers 53 5 18 13 6 5 100 (a) Membership distributions significantly different at the 30 percent level. Chi square was 13.1 with 10 degrees Of freedom. (b) Symbols for attitude—item response patterns 1 = On the average, farmers are faring about as well in terms Of income as city workers at the present. 2 = Consumers ought to pay more for the farm products than they are now paying. 3 = Consumers ought to pay enough for food to enable farmers to have an income equal to nonfarm workers. A = agree D = disagree processors and retailers—-are the ones responsible for low farm incomes. Prices that consumers pay are high enough to allow prices for farm products at the farm level to yield equitable incomes, but high margins for middlemen keep farmers from.obtaining their share. According to some farmers, con- Stuners are paying enough for food now to enable farmers to 62 have an income equal to nonfarm workers. Implicit in this answer pattern is the belief that higher consumer prices are not the answer to the low farm income problem. A few poten- tial members, nonjoiners, and members disagreed with all three attitude items in group 5-1. As was eXpected, slightly more nonmembers than members showed a tendency to Oppose higher consumer prices. Thus, bargaining association members tend to more frequently express the belief that higher con- sumer prices are necessary if farm income is to be raised while potential members and nonjoiners tend to express the belief that this is not necessarily so. In the discussion of attitude group 5-1, it was sug- gested that some farmers feel excessive middleman profits are more significant than low consumer prices as a cause of low farmer income. To further investigate farmers' conceptions concerning the causes of agricultural price and income prob- lems, a second group of items was examined. Attitude gpoup 5—2 1. Consumers ought to pay more for farm products than they are now paying. 2. Large supermarket chains tend to use their buying power to hold down farm prices. 3. Farm prices are largely determined by large processors and retailers. 63 Generally, it was expected that the two most meaning- ful and frequently exhibited patterns would be to agree with all three statements or to disagree with Item 1 while agreeing with Items 2 and 3. By agreeing with all three statements, a farmer ex- pressed the Opinion that profits are low throughout the mar— keting system at every stage, from the farm level to the re— tailer. If prices are to be raised at any stage, the final price of the goods will also have to be raised. That is, according to farmers who answered with such a pattern, con- sumers must pay more; as prices are raised at the retail and processor level, excess profits will permit prices to rise at the farm level. Sixty percent of the members, 48 percent of the potential members, and 40 percent of the nonjoiners agreed with all 3 statements in attitude group 5-2 (Table 5-2). It appears that more bargaining association members than non- members believe that the levels of prices of farm products to consumers are among the major factors causing low farm incomes. On the other hand, disagreeing with Item 1 while agreeing with Items 2 and 3 might point to margins made by Imhddlemen as a significant contributor to problems of low a91Eicultural income. By exhibiting such a pattern farmers suggest that processors and retailers could pay higher prices 64 Rable 5-2 -- Bargaining association membership related to conceptions of consumer prices and the in- fluence of middlemen upon farm prices (a) Attitude-item response patterns (b) Membershi Total p l-A l-D All other 2—A 2-A answer 3—A 3-A patterns Percent Members 60 20 20 100 Potential members 48 24 28 100 Nonjoiners 40 27 33 100 All farmers 50 24 26 100 (a) Membership distributions significantly different at the 1 percent level. Chi square was 16.3 with 4 degrees of freedom. (b) Symbols for attitude-item response patterns 1 = Consumers ought to pay more for farm products than they are now paying. 2 = Large supermarket chains tend to use their buying power to hold down farm prices. 3 = Farm prices are largely determined by large processors and retailers. A = agree D = disagree to farmers for inputs without charging consumers more for the final output. About one-fourth of the farmers in each member- ship category disagreed that consumers should pay more, while agreeing that supermarkets hold farm prices down, and pro- cessors and retailers determine farm prices. Thus, it appears that more nonjoiners and potential 65 members than members hold the Opinion that farm prices can be raised without raising consumer prices. More members than nonjoiners and potential members feel that in order to obtain higher farm prices, the prices of farm products paid by con- sumers must also be raised. A third group of attitudes, containing items related to consumer prices, bargaining methods, and the need for bar- gaining was examined. Attitude group 5-3 1. Consumers ought to pay more for farm products than they are now paying. 2. Farmers should use the same methods to get higher prices that make it possible for organized labor to get higher wages. 3. Farmers must get together in bargaining organizations to deal effectively with processors and retailers. A large majority of members (98 percent), potential members (94 percent), and nonjoiners (78 percent) agreed with Item 3. However, even though most farmers recognize the need for bargaining associations, it was expected that Opinions regarding which bargaining methods are acceptable and which effects upon consumer prices are acceptable would differ aHKJng the membership categories. 66 Agreement with Items 1 and 3 above was interpreted as an endorsement of both group action and the results of group action when such results were in the form Of higher consumer prices for farm products. Seventy percent of the members, 59 percent of the potential members, and 46 percent of the non- joiners agreed with both Items 1 and 3; that is, they agreed that farmers must bargain together and consumers must pay more (Table 5-3). The attitude answer patterns showed, however, that some difference exists within each of the membership categories regarding the bargaining methods that should be used. More members (41 percent) and potential members (40 percent) than nonjoiners (25 percent) expressed the feeling that farmers must bargain together to deal with processors and retailers, that consumers should pay more, and that farmers should use union tactics. At the same time, more members (29 percent) than nonjoiners (21 percent) or poten- tial members (19 percent) believe that consumers should pay more, that farmer collective bargaining is necessary and that farmers should not use labor union methods. A few members (14 percent), potential members (21 percent), and nonjoiners (19 percent) disagreed with the Statement that consumers should pay more, but agreed to farmer-group bargaining and the use of labor-union—type tactics. Perhaps these respondents are either inconsistent 67 Table 5-3 —- Bargaining association membership related to conceptions of consumer prices, bargaining methods, and the need for bargaining associations (a) Attitude-item response patterns (b) Membership ' Total l-A l-A l-D l-D All other 2—A 2-D 2—A 2-D answer 3-A 3-A 3-A 3—A patterns EEEEEEE Members 41 29 14 14 2 100 Potential members 40 19 21 14 6 100 Nonjoiners 25 21 l9 16 19 100 All farmers 35 23 18 15 9 100 (a) Membership distributions significantly different at the 1 percent level. Chi square was 56.1 with 8 degrees Of freedom. (b) Symbols for attitude-item response patterns 1 = Consumers ought to pay more for farm products than they are now paying. 2 = Farmers should use the same methods to get higher prices that make it possible for organized labor to get higher wages. 3 = Farmers must get together in bargaining organizations to deal effectively with processors and retailers. agree = disagree U > II in the expression of their attitudes or are of the opinion that bargaining efforts will not bring about higher consumer prices. Apparently some farmers envision farmer bargaining associations as a type of stop-gap measure which could serve to curb high marketing margins. According to a few farmers, 68 bargaining associations should not use labor-union-type tactics and should not bring about higher consumer prices on farm products. Some members (14 percent), potential members (14 percent), and nonjoiners (16 percent) did p23 agree to higher consumer prices or labor-union-type tactics, but did agree to the statement regarding the need for farmer bargain- ing organizations. Group Action and Power Problems Earlier in this chapter it was mentioned that many Michigan farmers in the survey agreed that farmers should bargain together for higher prices and that consumers should pay more for farm products. Indications are that some farmers expect bargaining activities to result in higher prices at the farm level for farm products and, in turn, higher con- sumer prices for those products. More bargaining association members than nonmembers tended to view higher consumer prices as an acceptable result of the farmer bargaining process. However, it appears that higher consumer prices which result from bargaining efforts of nonfarm groups are not acceptable to either members or potential members. The following atti- tude items were examined concurrently: Attitude group 5-4 1. The government should step in and protect the public 69 interest whenever organized groups get enough power to substantially raise prices and the cost of living. 2. The government should do something to prevent the big unions and big companies from negotiating wage contracts that bring increases in consumer prices. It was expected that bargaining association members would be more inclined to Oppose any type of government regu- lation on organized groups,such as labor unions or large busi- ness combines. It was thought that members would identify such regulation as a type of tool which could be employed to nullify the power of farmer bargaining associations once the associations had attained enough power to raise prices of farm products. Thus, it was expected that a higher percentage of members than nonmembers would disagree with the two attitude items above. However, more nonjoiners than members or poten— tial members disagreed with both statements (Table 5—4). This response pattern was interpreted as an indication that more nonjoiners object to government intervention or regula- tion pg; g3 than do members or potential members. Apparently bargaining association members and poten- tial members are either someWhat inconsistent in their re- sponses to the pair of attitude items above, or they consider farmer group bargaining efforts and nonfarmer group bargaining efforts to be quite different. Perhaps farmers have a double 70 Table 5—4 —- Bargaining association membership related to conceptions regarding government regulation of market power attained by organized groups (a) Attitude-item response patterns (b) Membership 1_ Total l-A l-A l-D l-D 2—A 2-D 2-A 2-D EEEEEEE Members 42 14 26 18 100 Potential members 44 16 20 20 100 Nonjoiners 38 l6 19 27 100 All farmers 42 16 21 21 100 (a) Membership distributions significantly different at the 30 percent level. Chi square was 7.4 with 6 degrees of freedom. (b) Symbols for attitude-item response patterns 1 = The government should step in and protect the public interest whenever organized groups get enough power to substantially raise prices and the cost of living. 2 = The government should do something to prevent the big unions and big companies from negotiating wage con- tracts that bring increases in consumer prices. A = agree B = disagree standard with regard to group bargaining. Assuming the re- spondents did not respond inconsistently, answer patterns suggest that, in the Opinion of some farmers, the bargaining power of large unions and businesses should be subject to government control, while the bargaining power of agricul- tural bargaining groups should be exempt from such controls. Specifically, some bargaining association members (26 percent) 71 and potential members (20 percent) disagreed with the state- ment, "The government should step in and protect the public interest whenever organized groups get enough power to sub- stantially raise prices and the cost of living", While agree- ing with the statement, "The government should do something to prevent the big unions and big companies from negotiating wage contracts that bring increases in consumer prices." Perhaps the view that farmers should be exempt from govern— ment regulations related to market power was prompted by the belief that farmers occupy a poor power position relative to the positions of others in the market system. For members and potential members to agree with this pair of attitude items seems to be inconsistent. That is, the belief that farmers can organize into bargaining groups and obtain higher prices for their products is one of the factors which supposedly has motivated farmers to seek bar- gaining association membership. It appears to be inconsist- ent for these farmers to favor government intervention which could conflict with farmer group interests and efforts. More than half of the members and potential members who agreed with Items 1 and 2 also agreed that, "Consumers ought to pay more for the farm products than they are now paying." Appar— ently, some farmers failed to realize that government regula— tion of organized groups which have power to raise prices 72 could neutralize bargaining associations as a force to im- prove farmer income. Forty—two percent of the bargaining association members, 44 percent of the potential members, and 38 percent of the nonjoiners agreed to the pair of statements in group 5—4. Evidently some members and potential members interpret the statement, "The government should step in and protect the public interest whenever organized groups get enough power to substantially raise prices and the cost Of living" to be inapplicable to agricultural bargaining asso- ciations. Perhaps some respondents feel that this statement does not refer to government regulation of farmer bargaining association activities because they hold an interpretation similar to one of the following: (1) the phrase "organized groups" does not include agri— cultural bargaining associations in this case; (2) agricultural bargaining associations may obtain enough power to raise prices and the cost of living somewhat but never to an extent that could realistically be termed detrimental to the public interest; (3) the government should control rises in prices and costs that are caused by unions and big businesses as this statement implies; (4) the regulation suggested in this statement would not curb the power Of farmers or farmer groups, but it could 73 help farmers by reducing the power of those with whom farmers negotiate in the marketing process; (5) efforts to raise prices tO a "fair" level are accept- able, but attempts to raise prices substantially and exploit buyers should be prohibited. A few members (14 percent), potential members (16 per- cent) and nonjoiners (16 percent) agreed that, "The government should step in and protect the public interest whenever organ- ized groups get enough power to substantially raise prices and the cost of living" while disagreeing to the statement, "The government should do something to prevent big unions and big companies from negotiating wage contracts that bring in- creases in consumer prices." One explanation to this answer pattern is that respondents felt price rises resulting from union and business contracts have not been harmful to the public interest, but that if such increases become harmful in their estimation, then the government should protect the public. Thus, in general, more nonjoiners than others are Opposed to government intervention in the marketing system. Members and potential members have mixed feelings about gov- ernment regulation of organized bargaining groups. They do not identify farmer bargaining associations with organized labor or large businesses. According to their conception of 74 market power struggles, members and potential members seem to think of the interests of organized labor and business as being in conflict with the interest of agricultural bargain- ing associations. Yet, they do not seem to envision the public interest as being in conflict with the large category Of interests of labor, agricultural groups, and nonagricul- tural bargaining groups. Group Action and Free Riders Those who share benefits but not the costs Of a par- ticular good or service are often called "free riders." One of the problems which groups encounter in attaining and main- taining membership and in bargaining effectively is the free rider problem.1 When the efforts Of a bargaining association result in higher market prices received by all producers for their agricultural commodities, both members and nonmembers benefit. Yet the net benefit for nonmembers is greater than that for members, since members pay the costs of the bargaining efforts while nonmembers do not. Thus, nonmembers would reduce their net benefits by joining an association, because they would have to begin paying the costs of the bargaining association lShaffer, p. 17. 75 but would receive no additional benefits for doing so. Mem— bers could actually increase their net benefits by dropping out of the association because doing so would mean they no longer paid part of the bargaining costs but still received just as much benefit. Of course, if all members dropped out, then there would be no association and no benefits from bar- gaining for any producer. If both members and nonmembers receive the same prices for commodities, nonmembers will probably be making higher net profits since they will not have incurred the costs of bargaining efforts. Thus, nonmembers could sell to processors and retailers at lower prices and still net as much as members. Processors and retailers may secure com- modities from nonmembers at lower prices than those asked by a bargaining association and thus destroy the effective- ness Of withholding efforts organized by bargaining associa- tions. Firms which purchase farm commodities can fail to recognize bargaining associations as bargaining agents and thus ignore their demands if alternative sources of supply exist. Agricultural bargaining associations and labor unions have had similar problems with regard to excluding nonmembers from bargaining benefits and Obtaining recogni- tion as bargaining agents. Unions have sought to solve these 76 panrcoblems by writing "closed shOp" provisions into their con- tLJrzacts with employers. Under such agreements, employers can lugigre only union members. Thus, employers cannot ignore the 'L1zntion demands and hire nonmembers at lower wages. Since all eeruuployees are dues-paying union members, the costs of union bargaining efforts are borne by all those who benefit from such efforts. It was expected that bargaining association members vvcruld recognize the free rider problem.as one of the problems facing them and would favor policies that might help eliminate free riders. On the other hand, it was expected that most nonjoiners and some potential members would Oppose policies designed to prohibit free riding, since nonjoiners and poten- t:ijal members are sometimes free riders themselves. The fol— lxavving two attitude items were examined concurrently to gain innssight regarding conceptions of the free rider problem: £2 t i tude_group_5- 5 1. Buyers of farm products who sign a contract with a bargaining association should not be allowed to buy farm products from farmers Who do not belong to the bargaining association. 2. 'Union contracts that make it possible for a company to only hire union members are a good idea. 77 Contrary to expectations, the distribution of re— sponse patterns given by potential members was almost the same as the distribution of response patterns exhibited by members (Table 5—5). More members and potential members than nonjoiners agreed with the pair of attitude items in group 5-5. Evidently these respondents recognize the similarity between the free rider problems of agricultural bargaining associations and those of labor unions and approve of contract provisions which could assist in solving such problems. A great many more nonjoiners than members or poten- tial members disagreed with both statements in group 5-5. Apparently, nonjoiners are Opposed to contract provisions that would forbid them to continue to receive benefits as free riders. Certainly this is consistent with their inter— est in their own welfare. About one—fourth of the members, potential members, and nonjoiners agreed with Item 1 but disagreed with Item 2. Perhaps respondents exhibiting this answer pattern recognize the free rider problems experienced by agricultural bargain- ing associations and labor unions. But these respondents, particularly bargaining association members, are concerned mainly with solving the free rider problem faced by agricul- tural bargaining associations and have little concern for the problems faced by labor unions. They may even wish to prevent 78 'Tailole 5-5 -- Bargaining association membership related to conceptions regarding the free rider problem (a) Attitude-item response patterns (b) Membership Total l-A l-A l—D l-D 2-A 2-D 2-A 2-D Percent Members 28 32 13 27 100 Potential members 28 27 17 28 100 Nonjoiners 13 22 12 53 100 All farmers 24 27 14 35 100 (a) Membership distributions significantly different at the 1 percent level. Chi square was 39.7 with 6 degrees of freedom. (b) Symbols for attitude-item response patterns 1 = Buyers of farm products who sign a contract with a bargaining association should not be allowed to buy farm products from farmers who do not belong to the bargaining association. 2 = Union contracts that make it possible for a company to only hire union members are a good idea. A = agree B = disagree labor unions from solving problems, feeling that the interests of labor unions are in conflict with those of farmers. It appears that nonmembers want to retain the privi— lege of being free riders. Apparently, more than half the members and potential members would approve of solving the free rider problem. They might suggest as a solution the use of contracts provisions which would prohibit buyers of farm 79 products who sign a contract with a bargaining association from purchasing products from nonmembers. Group_Action and Supply Control Perhaps the greatest source of power which a bargain- ing association can possess is the ability to control supply. The scarcity or abundance Of a commodity on the market usually is a significant influence on the market price. Monopoly theory illustrates the fact that the market price of a com- modity can be manipulated by controlling the amount of the commodity Which is sold. A farmer's willingness to accept bargaining associa- tion supply control efforts may depend upon how closely the farmer's conception of an adequate supply control program coincides with supply control programs Which are actually implemented by bargaining associations. Two pairs of attitude items regarding supply control have been examined. The first pair of items was concerned with relating supply control to bargaining power. Attitude_group75—6 l. The producers cannot make their bargaining power felt and will always be forced to yield, unless they can and do out off the available supply to processors. 80 2. In order to be effective, bargaining associations that attempt to get higher prices for farmers must be able to control the output that individual farmers market. The reference tO supply control methods made in Item 1 could be interpreted to mean that the quantity of output produced would remain unchanged, while the time at which the output reached the processor could be varied. The shortage caused by withholding the commodity would only be a temporary one. On the other hand, Item 2 implies that a bargaining association needs the power to bring about a reduction in the overall level of production. Agreeing with both statements in attitude group 5—6 was interpreted as an expression Of the belief that supply control is a necessary prerequisite to successful bargaining as measured by higher prices. A much higher percentage of members and potential members than nonjoiners agreed with both items (Table 5—6). Thus, more members and potential members than nonjoiners believe that the bargaining power Of associations is derived from the ability to control supply. Responses to the items in group 5-6 can also be interpreted as a measure Of the extent to which farmers understand the relationships between group action and indi- vidual action. A farmer who agreed with Items 1 and 2 seems to understand that when a group attempts to control supply, 81 Table 5-6 -- Bargaining association membership related to conceptions of supply control as a means of achieving market power (a) Attitude—item response patterns (b) Membership Total l-A l-A l-D l-D 2-A 2-D 2-A 2—D Percent Members 57 15 16 12 100 Potential members 61 16 12 11 100 Nonjoiners 27 26 20 27 100 All farmers 50 19 15 16 100 (a) Distributions significantly different at the 1 percent level. Chi square was 54.9 with 6 degrees of freedom. (b) Symbols for attitude-item response patterns 1 = The producers cannot make their bargaining power felt and will always be forced to yield, unless they can and do out off the available supply to the processor. 2 = In order to be effective, bargaining associations that attempt to get higher prices for farmers must be able to control the Output that individual farmers market. A = agree D = disagree the contribution to total supply, made by each of the indi- viduals in that group, must be controlled. Supply control and the free rider problem are inter- related. The free rider complicates supply control efforts. Even though members of a bargaining association COOperate to withhold commodities from the market or reduce the output Of individuals in the association, if the association has no 82 control over nonmembers, then the nonmembers are a threat to effective supply control. The association may impose penal— ties on members who produce more than their quotas or sell commodities in the midst of a withholding effort. But buyers can defeat the efforts of bargaining associations by encour- aging nonmembers to produce more when associations impose quotas on members and to sell commodities When associations withold the commodities of members. Apparently, many members and potential members recog- nize the importance of supply control and elimination of the free rider. Some nonmembers also recognize these two concerns of present and potential bargaining associations. Evidently, some members and potential members view the supply control problem and the free rider problem as two significant prob- lems that can and must be solved; some nonjoiners take the attitude that these problems are formidable Obstacles to effective group action. In order to further investigate farmers' attitudes toward supply control, another pair of attitude items was examined. AttitudepgrOpp75-7 l. Withholding products from the market in order to fix prices above the true market level cannot achieve a 83 lasting improvement in farmers' market power. 2. Farmers must reduce the total amount of products going to market if they are going to receive a higher price for those products. Item 1 suggests that withholding commodities from the market cannot bring about lasting price increases. Item 2 suggests that it is necessary to reduce total agricultural output to obtain higher prices. Since the attitude items in group 5-7 parallel the items in group 5-6, and because the responses of the three membership categories were significantly different for group 5-6, it was expected that the responses for group 5-7 would differ significantly among the membership categories. How- ever, such was not the case. In fact, the answer patterns expressed by members, potential members, and nonjoiners were very much alike. Agreeing with both statements in group 5-7 was inter- preted as an expression of the belief that withholding action alone is not sufficient to obtain higher prices on a long-run basis; instead, the total volume of products marketed must be reduced. Long-run reduction of total output is a surer way of achieving higher prices than temporarily withholding products. If output is reduced and demand is constant, price will be higher than before. However, withholding products 84 might cause only a temporary shortage. Buyers might postpone purchases until the time when the withheld output was released for sale on the market. Thus, it would be logically consist- ent to believe that withholding action might not bring lasting improvement in farm prices, but that a reduction in agricul- tural output could bring about long-run improvements in prices. Thus, it was expected that a large percentage of all farmers would express themselves by agreeing with both items in group 5-7. Of the four possible answer patterns, agreeing with both statements was most frequently exhibited by all three member- ship categories (Table 5-7). About one—fourth of the farmers responding to the items in group 5—7 feel that withholding action cannot bring about long—run price improvements, but that reducing total output in the market is not necessary in order to obtain higher prices. That is, some members, potential members, and nonjoiners agreed with Item 1 but disagreed with Item 2. Perhaps these respondents reasoned somewhat as follows: (1) withholding action will not achieve lasting price im- provements but temporary price improvements can be achieved without reducing the total amount of products going to mar- ket; or (2) withholding action will not achieve lasting price improvements, but lasting price improvements can be achieved without reducing the total amount Of products going 85 Table 5-7 —- Bargaining association membership related to conceptions of differences between temporary withholding action and permanent volume re- duction as efforts to secure higher prices (a). Attitude-item response patterns (b) Membership Total l-A l-A l-D l—D 2-A 2-D 2-A 2—D Percent Members 47 24 17 12 100 Potential members 50 24 17 9 100 Nonjoiners 47 30 11 12 100 All farmers 48 26 15 11 100 (a) Distributions significantly different at the 50 percent level. Chi square was 7.0 with 6 degrees of freedom. (b) Symbols for attitude-item response patterns 1 = Withholding products from the market in order to fix prices above the true market level cannot achieve a lasting improvement in farmers' market power. 2 = Farmers must reduce the total amount of products going to market if they are going to receive a higher price for those products. A = agree D = disagree to market if groups are willing to employ another method, i.e., withholding action combined with methods to stimulate demand for agricultural output. About eleven percent of all farmers responding to group 5-7 felt that withholding action could bring about long-run improvements in the market power position of farmers, 86 and thus, reduction of total output was unnecessary. That is, nine percent of the potential members and twelve percent of the members and nonjoiners disagreed with both statements in attitude group 5-7. Thus, attitude groups 5-6 and 5-7 give some insights regarding farmers' attitudes on supply control. It appears that in group 5-6 farmers have expressed their feelings about the need for supply control. According to their answers to group 5-6, members and potential members appear to be more aware of the need for supply control in efforts to improve bargaining power positions, especially with regard to price determination. On the other hand, it seems that in their responses to group 5-7, farmers have expressed their views regarding how one method of supply control compares with another. Almost half of the farmers in each membership cate- gory seemed to have more confidence in reduction of total output as a method of gaining bargaining power and higher prices as compared to withholding action as a method of achieving such goals. CHAPTER VI BARGAINING ASSOCIATION MEMBERSHIP RELATED TO FARMERS' CONCEPTIONS OF GOVERNMENT ACTIVITIES IN AGRICULTURAL MARKETING It was thought that a farmer's conception of the role of government in agricultural marketing would be related to his conceptions regarding the role of bargaining associations in agricultural marketing. What role should government play in agricultural marketing? In which roles is government per- forming well with regard tO agricultural marketing, such as providing marketing information, supporting agricultural prices, and regulating processors' and retailers' market power? If farmers believe that government is performing well in particular roles, this might be an indication that farmers would see little need for bargaining associations to play the same role. 0n the other hand, if farmers believe that gov— ernment should not perform a particular function, or is not performing a particular function well, they might view bar- gaining associations as a preferred alternative method of filling a particular need or performing a particular func- tion. 87 88 Government Services Do government services affect the power position of farmers? If government services increase the relative power position of farmers, then these services could reduce the need for bargaining associations. On the other hand, if farmers believe that certain government services decrease the relative power position of farmers, these services could, in the Opin- ion Of farmers, increase the need for farmer group bargaining. The following attitude items regarding government marketing services to agriculture were examined: Attitude groupy6-l 1. Farmers cannot count on government assistance in solving their marketing and price problems. 2. Government estimates of crOp production and of lives- stock receipts are accurate and unbiased. 3. Government estimates of crOp production and of live- stock receipts tend to strengthen the position Of the buyers and weaken the position of the farmers in farmer bargaining arrangements. The attitude items in group 6-1 were first examined individually and then as a group. It was thought that more members than others would View bargaining associations as a complement or substitute for government assistance in solving their marketing and 89 price problems. If a farmer agrees with the statement "Farmers cannot count on government assistance in solving their marketing and price problems" then he might also be inclined to seek a substitute or complement for government assistance. By the very fact that members have sought as- sistance in marketing other than that provided for by the government, it was expected that members would be more in- clined to agree with Item 1 in group 6—1. However, such was not the case. There was no statistically significant differ- ence among the responses given by the farmers in the member- ship categories, even at the fifty percent level of signifi- cance. Seventy-four percent of all farmers agreed or tended to agree, while 26 percent disagreed or tended to do so. A farmer who believed that government marketing in- formation was inadequate to serve as a guideline for market- ing decisions might disagree with the statement "Government estimates of crOp production and Of livestock receipts are accurate and unbiased." However, it was thought that there was no particular reason to believe that farmers in one membership category would be more likely to disagree with this statement than others. Members might have better sources of market information provided by the bargaining associations; however, bargaining associations depend to a great extent upon information provided through government agencies. Thus, 90 it was expected that the desire for better market information would seldom motivate farmers to become members. Almost two- thirds of all farmers agreed with Item 2 in group 6-1. There was a statistically significant difference among the responses given by farmers in the membership categories only at the fifty percent level. It was eXpected that members more frequently than others would believe that a number of factors contribute to the strong market power position of buyers; government esti— mates of crOp production and livestock receipts could be one of those factors. Thus, it was hypothesized that more members than others would agree with the statement "Government esti- mates Of crOp production and of livestock receipts tend to strengthen the position of the buyers and weaken the position of the farmers in farmer bargaining arrangements." There was a statistically significant difference among the responses given by farmers in the membership categories at the thirty percent level. A somewhat higher percentage of potential members (76 percent) than of members (68 percent) or non— joiners (68 percent) agreed with attitude Item 3 in group 6-1. When the three attitude items in group 6-1 were ex— amined simultaneously, it was found that the response pat— terns given by members, potential members, and nonjoiners 91 were very much alike (Table 6-1). Table 6—1 -- Bargaining association membership related to attitudes toward government services (a) Attitude—item response patterns (b) Member hi t S p l-A l-A 1-A l-A l-D 1-D l-D l-D To a1 2-A 2-A 2—D 2-D 2-A 2-A 2-D 2-D 3-A 3-D 3-A 3-D 3-A 3-D 3-A 3-D 22£E§EE Members 12 13 35 13 8 4 l3 2 100 Potential members 19 7 40 9 6 3 10 6 100 Nonjoiners 15 8 31 15 6 5 15 5 100 All farmers 16 9 35 12 7 4 13 4 100 (a) Membership distributions significantly different at the fifty percent level. Chi square was 16.4 with 14 de- grees of freedom. (b) Symbols for attitude-item response patterns 1 = Farmers cannot count on government assistance in solving their marketing and price problems. 2 = Government estimates of crOp production and of livestock receipts are accurate and unbiased. 3 = Government estimates of crOp production and of livestock receipts tend to strengthen the position of the buyers and weaken the position of the farmers in farmer bargain- ing arrangements. A = agree D = disagree There was a significant difference among the answer patterns given by farmers in the membership categories, but only at the fifty percent significance level. About one-third of the members (35 percent), potential members (40 percent) and 92 nonjoiners (31 percent) agreed with Items 1 and 3 while dis— agreeing with Item 2. Apparently discontent with government information services related to agricultural marketing is not one of the major factors that motivate farmers to join bar- gaining associations. However, it appears that such discon- tent, along with other factors, might have influenced some farmers to become bargaining association members. Price Support Programs Many Observers have cited price support programs, along with related production controls and land retirement programs, as principal factors in supporting the level of farm prices and incomes in the united States.1 Farmers in the study were asked what they felt would happen to farm incomes if all government price supports were ended in 1966. Their responses gave some insights regarding farmers' beliefs about the effect of price supports on individual and aggre- gate farmer incomes. It was thought that bargaining asso— ciation members and possibly some potential members would take into account the effect that they thought bargaining associations would have on the price level and agricultural income. lDale E. Hathaway, Problems and Prospects Seen by Farmers," Michigan Farmers in the Mid-Sixties, p. 6. 93 Nonjoiners tended to be more Opposed to government interference (e.g. production quotas) and less aware of the need for supply control in price—raising efforts than were members and potential members. It was expected that nonjoiners would be less aware of the significance of price support pro— grams in determining agricultural incomes than others would be. This appeared to be substantiated by information in Tables 6-2, 6—3, 6-4, and 6-5. Thus, it was thought that to non- joiners the significance Of the end of all price support pro- grams would be the discontinuance of production quotas. Farmers were asked to respond to the following ques— tion: "Suppose that all government price support programs were ended in 1966. Compared with 1965, do you think that average g§£_income per farm in the U.S. in 1967 would be the same, higher or lower?" Responses are given in Table 6-2. There was a significant difference among the responses of the farmers in the three membership categories. Relatively more members and potential members than nonjoiners expected that average net income per farm would be lower in 1967, if all price supports were ended; more nonjoiners than members or potential members felt that prices would be higher. Based on the information in Table 6-2, it appears that members and potential members are aware of the significant impact which price support programs have and 94 Table 6-2 -— Bargaining association membership related to response to the statement: "Suppose that‘gll government price support programs were ended in 1966. Compared with 1965, do you think that average p23 income per farm in the U.S. in 1967 would be the same, higher, or lower?" (a) Comparison of 1965 income with 1967 income Membership Total Same Higher Lower Do not know or depends Percent Members 26 7 53 14 100 Potential members 21 9 55 15 100 Nonjoiners 20 15 46 19 100 All farmers 22 ll 51 16 100 (a) Membership distributions significantly different at the 1 percent level. Chi square was 13.5 with 4 degrees Of freedom. The responses under "DO not know or depends" were not included in these calculations. feel that the efforts of bargaining associations would not overcompensate for the loss in income resulting from a dis— continuation of all price support programs. Next, farmers were asked to respond to the statement: "Suppose that all government price support programs were ended in 1966. compared with 1965, do you think ygg; net in- come from farming in 1967 would be the same, higher or lower?" The responses to this question are shown in Table 6-3. Appar- ently, farmers in each of the membership categories believe that they will be effected as individuals to a lesser degree 95 Table 6-3 -- Bargaining association membership related to response to the statement: "Suppose that all government price support programs were ended in 1966. Compared with 1965, do you think your net income from farming in 1967 would be the same, higher, or lower?" (a) Comparison of 1965 income with 1967 income Membership Total Do not know or depends Same Higher Lower Percent Members 52 9 30 9 100 Potential members 48 18 28 11 100 Nonjoiners 43 16 25 16 100 All farmers 47 13 28 12 100 (a) Membership distributions significantly different at the 20 percent level. Chi square was 6.2 with 4 degrees of freedom. The responses under "Do not know or depends" were not included in these calculations. than the "average" farmer in the United States. However, this belief is not well-founded, since as a general rule Michigan farmers have no unique monOpOlistic position in the marketing of their products.1 Perhaps a member might believe that bargaining asso- ciation efforts will help him maintain or increase his net income from farming. A relatively high percentage of farmers lHathaway, p. 7. 96 in each membership category felt their own incomes would be the same. Slightly more members than potential members or nonjoiners expressed this feeling. On the other hand, more nonjoiners and potential members than members believed they would have higher incomes without price supports. Apparently, bargaining association members and those who have shown a willingness to join tend to be more certain of their future income. Fewer members and potential members than nonjoiners responded "Do not know" or "Depends" when asked to compare their net income from farming with their ex- pected income from farming in 1967. The questions which appear in Table 6—2 and 6-3 were asked again with one modification: the year 1967 was re- placed by the year 1972. Thus, farmers were asked to compare 1965 average net income per farm in the United States with their estimate of 1972 average net income per farm, assuming all price support programs were ended in 1966. And, they were asked to compare their own individual net income from farming in 1965 with their estimate of their own individual net income from farming in 1972, assuming all price support programs were ended in 1966. The responses to these two questions are shown in Tables 6-4 and 6-5. The basic reasoning underlying the interpretation of Tables 6—2 and 6-3 also applies to Tables 6—4 and 6-5. 97 Table 6-4 -- Bargaining association membership related to reSponse to the statement: "Suppose that all government price support programs were ended in 1966. Compared with 1965, do you think that average net income per farm in the U.S. in 1972, would be the same, higher, or lower?" (a) Comparison of 1965 income with 1972 income Membership Total DO not know or depends Same Higher Lower Percent Members 22 47 9 22 100 Potential members 22 37 16 25 100 Nonjoiners 21 42 10 27 100 All farmers 22 42 12 24 100 (a) Membership distributions significantly different at the 5 percent level. Chi square was 9.5 with 4 degrees of freedom. The responses under "DO not know or depends" were not included in these calculations. The results in the latter two tables differ primarily because farmers were asked to make comparisons in different time periods. The probability of making accurate predictions about the near future is greater than the probability of making ac- curate predictions about the distant future. As the time span increases, more changes can take place and more uncer- tainty is introduced. Farmers in each membership category were more uncertain about long-run (1972) price comparisons 98 Table 6—5 -- Bargaining association membership related to_ response to the statement: "Suppose that all government price support programs were ended in 1966. Compared with 1965, do you think your net income from farming in 1972 would be the same, higher, or lower?" (a) Comparison Of 1965 income with 1972 income Membership Total Do not know or depends Same Higher Lower _ agrees: Members 33 1 42 9 16 100 Potential members 36 32 14 18 100 Nonjoiners 34 36 8 22 100 All farmers 35 36 10 19 100 (a) Membership distributions significantly different at the 10 percent level. Chi square was 8.0 with 4 degrees of freedom. The responses under "Do not know or depends" were not included in these calculations. than they were about short-run (1967) price comparisons. For purposes of discussion, expected income in 1967 will be termed "income in the near future" while expected in- come in 1972 will be called "income in the distant future." A majority of all farmers believe that if all price support programs were ended in 1966, then average net income per farm would be lower in the near future, but the same or higher in the distant future when compared with 1965 income. Members tend to be more optimistic concerning higher net incomes in the distant future than other membership categories; nonmembers 99 tend to be slightly more Optimistic regarding higher net in- comes in the near future. Sixty percent of all farmers believe their own in- comes from farming will be the same or higher in the near future if price supports are discontinued; seventy-one percent of all farmers believe their own incomes from farming will be the same or higher in the distant future. More nonjoiners (16 percent) than members (9 percent) or potential members ex- pect their own incomes to be higher in the near future without price supports. However, more members than potential members (32 percent) or nonjoiners (36 percent) expect their own net income from farming in the distant future without price sup— port programs to be greater than their own net income from farming in 1965 with price supports. Apparently, members believe that ending all price support programs would reduce net income from farming in the years immediately following the discontinuation of the pro- grams. The belief that net incomes would be higher in the long-run might have been based on the view that bargaining association efforts could eventually, but not immediately, replace government price support programs as means Of attain- ing higher agricultural incomes. Thus, more members than potential members and nonjoiners seemed to recognize this time lag. Perhaps more members than nonmembers might be 100 willing to give bargaining associations enough time to prove themselves as mechanisms for obtaining higher prices. Government Regulation Nonjoiners are more frequently Opposed to government intervention in agriculture than members and potential members. It was questioned whether one membership category of farmers would be more inclined to Oppose government intervention or regulation with regard to nonfarm firms. It was expected that nonjoiners would Oppose govern- ment intervention in nonfarm firms and industries, since non— joiners tend to Oppose government interferencepgggg.2 It was thought that members might favor government intervention in nonfarm firms and industries if they felt such interven— tion would reduce the market power position of firms and in- dustries with whom farmers must negotiate for prices of agri— cultural products. On the other hand, if members believed that a particular type of government regulation in nonfarm industry could be used as a precedent for regulation of farmer groups, then members might Oppose such government regulation. The following three attitude items related to govern- ment regulation of absolute firm size and vertical integration lAbove, Chap. iv, p. 51. 2Above, Chap. iv, p. 51. 101 were examined: Attitude groupi6-6 1. Some legal limits should be put on the size of food pro- cessing companies, retail food chains, and other marketing organizations. 2. Large retail food chains should be prohibited by law from owning food processing facilities. 3. Food processors and retail chains should not be allowed to own farm production facilities such as cattle feeding lots, dairy herds, and vegetables. The attitude statements in group 6-6 were first ex- amined one at a time and then were re-examined simultaneously. Because nonjoiners have not sought bargaining asso- ciation membership as a solution to market power problems, it was thought that more nonjoiners than others would view legal limitations of nonfarm firms engaged in agricultural marketing as a solution to farmers' power problems in the market place. At the same time it was felt that a majority of members and potential members would View legal limitations on size of nonfarm firms, not as a precident for rules which would curb bargaining association power, but as a method of reducing the power of firms with which farmers must negotiate in the market place. By reducing the power of nonfarm marketing organiza- tions through legal limitations and increasing the power of 102 farmers in the market through group bargaining, the relative position of farmers in the market place could be improved. Thus, it was expected that a majority of all farmers in each of the membership categories would agree with attitude Item 1 in group 6-6. Such was the case. Sixty-two percent of all farmers agreed with Item 1. There were essentially no differ- ences in the responses of members, potential members, and non- joiners. Perhaps those farmers who viewed vertical integration mainly as a method Of achieving better marketing efficiency through coordination would disagree with Item 2. If members thought that prohibiting large retail food chains from owning. food processing facilities could serve as a precedent for prohibiting large agricultural bargaining associations from owning food processing facilities when it would be advanta- geous to do so, then members would probably disagree with attitude Item 2. On the other hand, farmers who view verti- cal integration primarily as a method used by nonfarm firms to gain market power might agree that "Large retail food chains should be prohibited by law from owning food proces- sing facilities." At a twenty percent statistical signifi- cance level, farmers in the three membership categories gave significantly different responses to attitude Item 2. More potential members (62 percent) than members (56 percent) or 103 nonjoiners (55 percent) disagreed with Item 2 in group 6—6. It was expected that responses to Item 3 would re- flect not only the respondent's attitudes about vertical inte- gration but also feelings about market structural changes which could reduce his own market bargaining power or, in fact, eliminate the owner—Operator from farming. Thus, it was not surprising to find that a majority of members (67 per— cent), potential members (57 percent), and nonjoiners (61 per— cent) agreed with the statement "Food processors and retail chains should not be allowed to own farm production facili- ties such as cattle feeding lots, dairy herds, and vegetable farms." Based on the results When each attitude item in group 6-6 was examined independently, it was expected that the pre- dominant answer pattern would be to agree with Items 1 and 3 while disagreeing with Item 2. However, less than one—fifth of the members, potential members and nonjoiners responded with this answer pattern (Table 6—6). When the three attitude items were examined simultaneously, it was found that two attitude patterns—-agreeing with all three items and disagree- ing with all three items—-accounted for over forty percent of the responses given by farmers in each of the three member— ship categories. More members and nonjoiners than potential members agreed with all three statements. More nonjoiners 104 Table 6-6 -- Bargaining association membership related to conceptions concerning government regulation Of vertical integration and absolute size of nonfarm firms as a means of control of nonfarm firm market power Attitude-item response patterns (a) MemberShiP l-A l-A l-A l-A l-D l—D l-D l-D TOtal 2-A 2-A 2-D 2-D 2-A 2-A 2—D 2-D 3-A 3-D 3-A 3—D 3-A 3—D 3—A 3—D Percent Members 31 6 15 9 8 l l3 17 100 Potential members 22 6 17 16 7 1 10 21 100 Nonjoiners 30 4 10 15 9 1 7 24 100 All farmers 28 5 l4 l3 8 l 10 21 100 (a) Symbols for attitude item response patterns: 1 = Some legal limits should be put on the size of food processing companies, retail food chains, and other marketing organizations. 2 = Large retail food chains should be prohibited by law from owning food processing facilities. 3 = Food processors and retail chains should not be allowed to own farm production facilities such as cattle feeding lots, dairy herds, and vegetable farms. A = agree D = disagree and potential members than members disagreed with all three statements. Apparently, the difference in attitudes toward gov- ernment regulation of nonfarm firms is not a significant factor which can account for why some farmers join bargaining associations and others do not. 105 Summary Generally, farmers in the three membership categories do not differ in their conceptions of government's service and regulatory roles in agricultural marketing. However, more members than nonjoiners appear to be aware of the impact which government price supports have on their personal incomes from farming as well as on the national farm income. CHAPTER VII SUMMARY AND CONCLUSIONS Farmer characteristics and attitudes related to bar- gaining association membership.are identified and analyzed in the preceding chapters. Bargaining association members have devoted a larger portion of their time and resources to farming than nonmembers. One might describe a bargaining association member as an indi- vidual who: (1) (2) (3) (4) (5) is committed to farming in that he-— (a) is a full-time farmer, (b) Operates one hundred acres or more, (c) has many years left to farm, and (d) has entered into land contracts, mortgages, and rental arrangements to increase the resources available to him for farming. has more education than nonmembers. is dissatisfied with his income from farming. views some of his major problems as those which can conceivably be solved through collective bargaining. has attitudes which are favorable to bargaining 106 107 associations in that he-- (a) recognizes the impact that government price supports have on prices Of farm products, (b) recognizes the need for group action, (c) views higher consumer prices as necessary in order to have higher farm prices, (d) favors clauses in bargaining association contracts designed to eliminate the free rider problems, and (e) recognizes supply control as a necessary feature of bargaining efforts. Generally, potential members (farmers Who expressed a willingness to join a bargaining association) have attitudes that are similar to those of members. However, the farm and personal characteristics of potential members are more like those Of nonjoiners (farmers who expressed an unwillingness to join a bargaining association). Thus, it appears that poten— tial members' personal and farm characteristics, not their attitudes, are factors which might be reasons why "potential members" are not already "members". About 60 percent of the "members" were dairy farmers. Generally, dairy farmers have different characteristics and interests than nondairy farmers do. It is possible that many of the differences between members and nommembers could be accounted for by the fact that more members than nonmembers 108 are dairy farmers. Regardless Of their affiliation with bargaining asso- ciations, most farmers believe (1) that there is a need for changes in the market system, and (2) that farmers have a re- sponsibility for implementing these changes. Nonjoiners are not very Optimistic about bargaining associations as an insti— tution which can help solve farm problems. On the other hand, members and potential members recognize their problems as situations for which bargaining association membership is a relevant possible solution. However, potential members are not as aware as members are of the limitations and problems that accompany group efforts. Perhaps educational programs for farmers, relating to the role of bargaining associations to agricultural marketing, would help insure the success Of farmer collective bargaining. At the same time these programs might help individual farmers develOp realistic expectations with regard to farmer group action. Such educational efforts might provide farmers with information that would enable them to formulate Opinions with regard to: (1) the advantages of group action, (2) the limi- tations of group action, and (3) the role of the individual as a member of a group. Enough information should be provided so that farmers can make a realistic appraisal of the range and magnitude of price increases which bargaining associations 109 can be expected to achieve. Farmers' conceptions regarding the effectiveness of government's information service role in agricultural market- ing do not differ with regard to the three membership cate- gories. However, more members and potential members than non— joiner appear to be aware of the impact that government price supports have on their personal incomes from farming, as well as on the national farm income. More members and potential members than nonjoiners tended to be aware of the need for supply control in price—raising efforts. Nonjoiners tended to desire to minimize the role of government in agricultural marketing. In fact, more nonjoiners than members or potential members objected to government inter- vention pg; pg. More members than others tended to be Opposed to general regulation of organized bargaining groups but to favor specific regulation which would apply to nonfarm group efforts to raise prices. More members and potential members than nonjoiners recognized the similarity between the free rider problems of agricultural bargaining associations and those of labor unions. Members and potential members indicated a willingness to ap- prove of contract provisions which could assist in solving such problems. Apparently, nonjoiners are Opposed to clauses in contracts that would forbid them to continue to receive 110 benefits as free riders. This is consistent with their inter- est in their own welfare. It appears that more bargaining association members than nonmembers believed that the level of prices of farm products to consumers, not high margins by middlemen, is the major factor causing low farm incomes. Thus, more members than others tended to express the belief that higher consumer prices are necessary if farm income is to be raised. More nonmembers than members expressed the Opinion that higher farm incomes might be Obtained through bargaining efforts which would give farmers part of the high margins held by middlemen but which would not raise consumer prices. If farmers' belief that consumers should not pay more for farm products is based on a value they hold, then this value judgment could become a barrier to successful collective action. Some "consumer- farmers” might identify themselves more closely with the interests Of consumers rather than the interests of farmers. Unwillingness to accept higher consumer prices resulting from bargaining efforts could prevent some would—be members from joining. By definition, nonjoiners are those farmers who ex- pressed an unwillingness to join a bargaining association. Some of the reasons nonjoiners prefer to refrain from farmer collective bargaining are: (1) their desires for independence, 111 (2) their failures to recognize the need for supply control measures, and (3) their desires to remain free riders. These factors could be considered some of the barriers which pre- vent nonjoiners from becoming bargaining association members. Most farm and personal characteristics of potential members are practically identical with those of nonjoiners. However, age and land tenure arrangements are two exceptions to this rule. Potential members are generally younger than nonjoiners. Mortgages, land contracts, and rental arrange- ments are held by more potential members than nonjoiners. Thus, the principal reasons why potential members are not actual members appear to rest on the fact that, compared with members, they have only about half the time and resources committed to farming. LIST OF REFERENCES Bain, Joe 8., Industrial Opganization. New York: JOhn Wiley and Sons, Inc., 1959. Bressler, R. 6., Jr., "Summary Remarks" in Market Structure Research, ed. Paul L. Farris. Ames Iowa: The Iowa State University Press, 1964. Hathaway, Dale E., Richard L. Feltner, James D. Shaffer, and Denton Morrison, Michigan Farmers in the Mid-Sixties, Michigan State University Agricultural Experiment Station, East Lansing, Michigan, Research Report 54, August 1966. Mund, Vernon A., Government and Business. New York: Harper and Brothers, 1960. Robertson, Ross M., History Of the American Economy. New York: Harcourt, Brace and World, Inc., 1964. Samuels, J. Kenneth, and Martin A. Abrahamsen, "Milestones in COOperation," After A Hundred Ygars: The Yearbook Of Agriculture, 1962. Washington: U. 8. Government Printing Office, 1962. Samuelson, Paul A., Economics: An Introductory_Ana1ysis. New York: McGraw-Hill Book Company, Inc., 1961. Southworth, Herman M., "Historical Evolution of Important Marketing Problems," Journal of Farm Economics, Vol. XLV, American Farm Economic Association, George Banta Company, Inc., Menasha, Wisconsin, 1963. 112 ICHIGQN STQTE UNIV. LIBRRRIES lllll III III 1 WI ||l||| llllll 7 312930 08 8985