The dynamic processes of agricultural proletarianisation and concentration of production, leading to large-scale agricultural production units based on hired labour, are developing throughout the world at a rate much slower than was expected at the end of [the] nineteenth century
Chayanov turned to the sugar-beet contract farming agroindustry which had emerged on the Western borders of Russia for an alternative vision of the future of capitalist development in agriculture. This vision is based on the idea that the vertical concentration of large-scale capitalist investment in processing and marketing will prove more profitable than horizontal concentration in large scale farming units. Working from this idea, Chayanov proposed a series of stages of capitalist transformation of peasant agriculture:
Picture shows an avocado packing plant, Michoacán
In a third stage, processing of raw materials and input supply is taken out of the hands of the family farm entirely. Big capital invests in these sectors, along with transport, grain elevators, packing plants and other facilities. Ownership and control of processing and marketing are concentrated in the hands of a small number of corporate capitalist enterprises, so that, as Chayanov put it: "the farmers are converted into a labour force working with other peoples means of production".
As a prediction of the future, this aspect of Chayanovs analysis was really quite prescient. He himself, of course, wanted to argue for the development of Soviet agriculture on a non-capitalist basis, with popular, self-managing, cooperatives taking on the functions performed by big capital in capitalist countries. But the wider implication of his analysis is that 'classical' development of a capitalist agriculture in Lenins sense is only possible where:
The second two conditions have often been found historically in 'Third World' countries. But even assuming that the conditions are there for capitalist farms to compete with middle peasants in purely economic terms, their ability to do so will depend on whether agrarian interests can remain politically dominant if national industrial capitalist interests, or transnational companies which can influence state policies, find advantages in exploiting a peasant agriculture. In general, we can conclude that:
Nevertheless, despite Chayanov's foresight in recognising the significance of agribusiness development through vertical concentration, there are other respects in which his models obscure quite fundamental transformations of rural livelihood strategies throughout the world, transformations which make it increasingly difficult to conceptualize rural people as "peasant farmers" in any classical sense.