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The Meat Racket: The Secret Takeover of America's Food Business
An investigative journalist takes you inside the corporate meat industry—a shocking, in-depth report every American should read.
The biggest takeover in American business that you’ve n ever heard of
The American supermarket seems to represent the best in abundance, freedom, choice. But that turns out to be an illusion. The rotisserie chicken, the pepperoni, the cordon bleu, the frozen pot pie, and the bacon virtually all come from four companies.
In The Meat Racket , investigative reporter Christopher Leonard delivers the first-ever account of how a handful of companies have seized the nation’s meat supply. He shows how they built a system that puts farmers on the edge of bankruptcy, charges high prices to consumers, and returns the industry to the shape it had in the 1900s before the meat monopolists were broken up. At the dawn of the twenty-first century, the greatest capitalist country in the world has an oligarchy controlling much of the food we eat and a high-tech sharecropping system to make that possible.
Forty years ago, more than thirty-six companies produced half of all the chicken Americans ate. Now there are only three that make that amount, and they control every aspect of the process, from the egg to the chicken to the chicken nugget. These companies are even able to raise meat prices for consumers while pushing down the price they pay to farmers. And tragically, big business and politics have derailed efforts to change the system.
We know that it takes big companies to bring meat to the American table. What The Meat Racket shows is that this industrial system is rigged against all of us. In that sense, Leonard has exposed our heartland’s biggest scandal.
The biggest takeover in American business that you’ve n ever heard of
The American supermarket seems to represent the best in abundance, freedom, choice. But that turns out to be an illusion. The rotisserie chicken, the pepperoni, the cordon bleu, the frozen pot pie, and the bacon virtually all come from four companies.
In The Meat Racket , investigative reporter Christopher Leonard delivers the first-ever account of how a handful of companies have seized the nation’s meat supply. He shows how they built a system that puts farmers on the edge of bankruptcy, charges high prices to consumers, and returns the industry to the shape it had in the 1900s before the meat monopolists were broken up. At the dawn of the twenty-first century, the greatest capitalist country in the world has an oligarchy controlling much of the food we eat and a high-tech sharecropping system to make that possible.
Forty years ago, more than thirty-six companies produced half of all the chicken Americans ate. Now there are only three that make that amount, and they control every aspect of the process, from the egg to the chicken to the chicken nugget. These companies are even able to raise meat prices for consumers while pushing down the price they pay to farmers. And tragically, big business and politics have derailed efforts to change the system.
We know that it takes big companies to bring meat to the American table. What The Meat Racket shows is that this industrial system is rigged against all of us. In that sense, Leonard has exposed our heartland’s biggest scandal.
384 pages, Hardcover
First published February 18, 2014
95 people are currently reading
2720 people want to read
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Displaying 1 - 30 of 176 reviews
September 28, 2017
“Consumers pay more, farmers make less, and corporations in the middle grab a windfall.”That pretty much sums up the story of The Meat Racket, a remarkably well-written, skillfully woven story by Christopher Leonard about how Tyson Foods has forever changed the landscape of meat production and processing, farming and, more importantly, rural America. Although it focuses primarily on Tyson, the practices it pioneered have been replicated by its three other major “competitors”—which Leonard shows is a veiled form of collusion. Having recently read Thomas Piketty’s Capital in the 21st Century, I find that Leonard’s reporting provides a case study of how one small segment of the one percent have manipulated the economic and social game to the detriment of so many and so much.
“…the bank extended the mortgages and car loans to the lower-income workers at Tyson’s plant. It provided farm loans to the company’s chicken farmers. The plant workers never really jumped an income bracket. The farmers never really left their cycle of indebtedness. People might complain, but there really wasn’t an alternative.”
This is a dispiriting account that once again highlights the timidity of the Obama administration to address fundamental societal questions when confronted by highly sophisticated, well-funded corporate interests. This is a story of interest to more people than just Americans. These practices are expanding to Brazil, China, India and other nations to feed much of the developed and developing world with a lot of obesity-causing food.
January 8, 2014
Fast Food Nation made many people aware of the dangers of our current food system to consumers. The Meat Racket uncovers and explains the development of monopoly in the American meat industry that has largely destroyed the independent family farm level control of meat production. Through careful and thorough research, Leonard is able to explain how a few large companies, led by Tyson in the poultry industry and followed by Smithland and a few others in the pork and beef industries, have entrapped farmers into contract farming that makes them basically powerless employees in vertically integrated production. The meat we buy at the grocery store may have labels that imply different companies produce and market it, but, in fact, most of the meat we eat is produced by a few companies through a system that bankrupts farmers and limits our choices as consumers.Leonard uses lots of examples but he is also careful to demonstrate that his examples are representative of what is happening across the nation. I thought I was well informed on this topic, but Leonard's book clarifies food production trends that are troubling for consumers and farmers alike.
April 7, 2014
Christopher Leonard certainly did his homework. This book is also extremely well written. It is obvious that Leonard is intelligent.
I learned a lot while reading this book and went over a lot that I already know.
I know that Tyson owned chickens, but I guess I never really thought about pigs and cows in that area. I mean I did, but I didn't think there were Tyson owned, but I really wasn't surprised at all.
Tyson is this huge soulless company, who just destroy everything that it touches; people, companies, farms, animals, ect. Most of this book made my stomach hurt based on cold hard facts about what happened to America's food system.
We are not eating food anymore we are eating food-like products, and that is so sickening.
I learned a lot while reading this book and went over a lot that I already know.
I know that Tyson owned chickens, but I guess I never really thought about pigs and cows in that area. I mean I did, but I didn't think there were Tyson owned, but I really wasn't surprised at all.
Tyson is this huge soulless company, who just destroy everything that it touches; people, companies, farms, animals, ect. Most of this book made my stomach hurt based on cold hard facts about what happened to America's food system.
We are not eating food anymore we are eating food-like products, and that is so sickening.
February 28, 2022
A sad book to read. While there are a lot of documentaries and books on the horrors of commercial farming, this one is my favorite. Don Tyson was clearly an incredible person who changed farming forever. The book outlines his life and his team of lawyers that helped him swerve around antitrust regulations and build the monopoly that it is today. Don helped build a small meat company into one of the worlds biggest corporation that every meat eating American consumes. Fascinating to read about the political pressures, Obama’s role, the Clintons and all the other factors that have left Tyson the giant it is today. None of it was insanely surprising but definitely saddening.
A common argument is that it helps rural communities and farmers but that appears not to be the case. “The data suggests that Tyson’s is a suffocating economic force on the communities in which it derives its wealth”. The entire idea of being paid through a tournament system was also completely new to me. Overall, definitely worth a read.
A common argument is that it helps rural communities and farmers but that appears not to be the case. “The data suggests that Tyson’s is a suffocating economic force on the communities in which it derives its wealth”. The entire idea of being paid through a tournament system was also completely new to me. Overall, definitely worth a read.
December 22, 2014
5 stars for fine business journalism.
Every person who lives in America and buys foods and pays taxes should read this excellent piece of investigative business journalism.
It introduces you to members (and former members) of the disappearing breed known as independent farmers (that became producers) and the tycoons that took over hatchery and meatpacking operations and transformed the competitive open-market system for selling farmed animals into an anti-competitive, super-high production contract system in which a handful of vertically integrated mega-corporations set the price and control every aspect of so-called production.
The author shines a light on the shrewd and disturbing practices and maneuvers of business entrepreneurs like the Tyson dynasty (chief architect of the industrial animal production business model) that built those mega-corporations using tax loopholes, farm bill opportunities and independent farmers (producers), frequently bankrupting the latter in the process. Discover how quickly farms became factories. And how big agribusiness effectively played the political game to stop efforts to reform the system and help small farmers.
Long-term perspectives also elucidate the issues. For example: “In the 1930s chicken had been a luxury dish. When [then-President] Herbert Hoover talked about putting a chicken in every pot, he meant that every American family would achieve a certain measure of alluence. But Don Tyson had seen firsthand how the new model of chicken farming had changed that. The big chicken houses, the mechanized slaughterhouses, the advanced breeding, had all come together to make chicken the cheapest meat available. McDonald’s, Wendy’s, and Burger King couldn’t afford to keep it out of their product lines. Don Tyson would make sure of it.”
Advanced breeding techniques to “create the ideal industrial animal”: In 1925, it took 15 weeks to raise a chicken that weighed 2.2 pounds. By 1990, it took only about 4 weeks.
Notes taken while reading:
The Meat Racket: The Secret Takeover of America’s Food Business
by Christopher Leonard
Tyson complex Waldron Ark.
Provides the tax base for towns it overran.
Vertical integration: economic principle buy up firms that supply them. Pharma, trucking. Tyson controls and owns everything that happens inside the corporation. No free market determines price at which baby chicks sold to farmer or at what price grown chickens are sold back to a slaughterhouse.
Poultry to hogs, within 2 decades America’s independent hog industry was wiped out and replaced with a vertically integrated, corporate-controlled model.
Less money for farmers.
Now cattle industry buckling under pressure.
1960s to 90s industrial meat machine benefit to Am consumers, Tyson’s system rewrote the biological equations that once constrained the meat industry. Between 1955 and 1982, the amount of time it took to raise a full-grown chicken fell from 73 days to 52 days. And the chickens got bigger, expanding from an av 3.1 pounds to 4 lbs. ANd took less and less chicken feed each year to accomplish this feat Trend also for pigs and to a lesser degree, cattle.
Cheaper meat.
Growth hormone Zilmax cattle put weight on much faster. Quietly became the industry standard.
Could flood the market to make proces collapse, drive smaller out of business.
Oligarchy.
Antibiotics chicken feed, spray chems at slaughterhouses to kill microbes and prevent foodborne illness.
Farms became factories.
Least profitable part left to contract chicken farmers.
With every flock, the farmer racing against his debt.
Dead birds, biohazard suits.
Claim not know which batch of chicks healthy or not, but had the metrics to know that older hens higher risks.
Bankruptcy.
Pressure drove them down and out. Laotians bought the farms.
John Tyson Great Depression farmer. Don processing designed, new age.
Don Tyson, took out loan, hatchery. His young company benefited from being a new kind of animal. It was both a farm and a manufacturer. It was a biological system and an industrial machine. THis hybrid quality allowed it to dodge taxes and evade regulations that constrained the power o f other meat companies, like beef meatpackers.
Outsourced the time-intensive, lowest-profit and highest risks components of the process. The people building the chicken houses and raising the chickens suffered.
They try running their own farms, but hired hands didn’t work as hard as farmers who had to make a profit on their heavy investments.
New breed of indentured farmer was born.
Science breakthrough - turn petrochemicals into nitrogen fertilizer.
New pesticides
Monocrop age.
1940 farmers bought only 34% of their inputs.. 1960s 63%. Aggregate farm output rose 54%.
Get big and specialized made them more dependent on corps like Tyson.
Prices down, but so did profit margins. So they raised more crops or livestock to stay afloat, increasing supply and driving down prices even more.
Tyson CPA was told to convince IRS to classify them as a family farm. Because of loophole: family farms allowed to use cash-basis accounting, simpler recordkeeping, figuring ff not have accountants. So, even though multi-million dollar corporation, could claim family farm and get simplified recordkeeping, defer income claims and can claim losses each year, and pay just minimal taxes. He set up a dummy cor p that was a wholly owned subsidiary of Tyson’s. Like an interest-free loan from the taxpayers.
And keep 2 sets of books.
Bought up competitors.13 years push into fast food, cheapest meat easy pre-processes. McNuggets 1983.
Tournaments
Don Tyson stoked competition among chicken producers and his staff. Magnetic personality they felt compelled to impress.
Even when resigned as CEO, became chairman, created Class B shares, maintained control and veto power.
In late 1990s, expansions into seafood and hogs faltering. Taxpayer gift worth billions of dollars to help it reconstruction -- this would underpin the profits of every major corporate meat producer for more than a decade.
Subsidies - central planning by US govt. Limited overproduction.
New farm program Freedom to Farm 1996. Now free to overproduce. Prices plummeted, farmers lost money, taxpayers covered losses. Made corn cheaper to buy than grow, so benefited Tyson.
Freedom to Farm delivered about $947 million a year in savings to industrial hog producers alone.
Smithfield had copied Tyson playbook and took the lead.
Iowa: Iowa Beef Producers: IBP beef factory early 1980s in Garden CIty KS, could kill over 5,000 cows a day, one every 11 seconds or so over 2 eight-hour shifts. Super-sized slaughterhouse enabled them to produce and ship millions of pounds of boxed beef (innovation, easier and cheaper to ship to Seattle and Florida, retailers and restaurants, so immerse market advantage). Needed a dependable supply of animals. Proved hardly to vertically integrate cow production compared with Tyson’s vertical integration of chicken and hog farming. Efforts hampering by 2 of the cow’s internal organs: the rumen and the uterus. By nature 4-chambered stomach to digest the cellulose in grass. Not supposed to eat corn...and uterus: one baby at a time, one year at a time. So tinker with biology to boost profits.
And contracts with formula prices with ranchers and feedlot (instead of them taking finished animals to auction).
Iowa is the lead producers of cheap corn and soybeans, so it benefited them to alter farmed animals’ diets.
Chickenization of other agribusiness:
Like chickens, after Tyson changed the markets, hogs sold by contract instead of open market, pushing independent sellers/dealers out. No longer an open, competitive cash market.
By 2011 98% of all hogs were grown and sold under contract through vertically integrated companies like Smithfield.
Ended a system begun with hwy system that enabled national transport.
Now, not competitive, a few corps determine price and supply.
Cowboys now ride around massive feedlots.
Tyson, Cargill, JBS Swift and National Beef control the beef market. Producers pitted against meatpackers. Contract system for feedlot operators created de facto vertically integration, guaranteeing supply to 4 corps without risk borne by suppliers.
Spirit-killing culture took over by 1990s. One rancher who spent years as a buyer for a big beef packer: If you crawl in bed with a rattlesnake and think you ain’t going to be bit, then you’re pretty stupid.”
No premium for quality, no matter what goes into choice - steak - or select - hamburger. Don’t bother to appraise the animals in pens. Carson quit as National cattle buyer when realized that and founded Maverick Feeders (shrinking free market/cash market)...but found the big 4 would prevail. When bidding the big meatpackers win most of the time, like a cartel.
Tyson’s use of the growth hormone Zilmax little-known because public disclosure is not required.
Juices up the cattle’s growth rate and yield of beef at slaughterhouses. Leaner and lower quality.
Cargill caved in 2012 and began accepting Zilmax-treated cattle. By the time Cargill folded, JB and National followed Tyson’s lead.
Then in Aug 2013 notified feedlot operators to it wouldn’t accept Z-treated cattle until further notice.
Cheap meat has changed rural America and American business.
Sec Ag Mike Espy, under Bill Clinton, indicted for bribery charges for accepting gifts from Tyson Foods.
At Tyson, earnings were falling due to decreased demand. Throttled back production, boneless skinless chicken breast rose 20 cents, profitable again. Under Donnie Smith.
Lawsuits that Tyson, ConAgra and Pilgrim’s Pride manipulating scales at their slaughterhouses to underweigh loads of birds so they could underpay farmers. Tysons employee described how plant managers delivered lower-quality chicks to farmer the company considered troublemakers. A jury found that Tyson tactics depressed prices paid to ranchers and feedlots by billions of dollars, even as grocery store beef prices climbed.
Reform:
1996-2006: some attempts to curb vertical integration (market domination of meat oligarchy). Bill Heffernan 31 yrs research 1969-2000, shows why it’s detrimental. Tracked debt and how the farmers felt - powerlessness has a toll.
Eric Tabor and Tom Miller 1995 in Iowa began investigating contract farming...rise of Monsanto, only 2 big grain corps ADM and Cargill. Iowa wanted preserve some farmer freedom. Smithfield may have been main target, but all of the big corps stepped up to stave the effort that could affect the national meat industry (protested interference). Appeared nearly like serfdom.
Steve Moline, who had been a hog farmer, raised concerns over big corps controlling the breeding, as genetics are the key to livestock success. Leaving the farmers with just fattening the adult hogs was the lowest-profit part. Price collapse 1998, hog farmers met at Moline’s home...they feared being spotted by corporate field technicians. Moline thought it was sufficient that in Iowa the corps could own the individual animals.
But in 1999, Smithfield bought a huge contractor of hog farms in Iowa, completing the whole circle of vertical integration, which Iowa banned. Iowa brought lawsuit against Smithfield and tried to establish the Producer Protection Act 1999 for 16 farm states (except Ark, home to Tyson)....the act required contract terms be posted publicly, 3 days to have an attorney review a contract). Problem: Smithfield rep told James R. Baker at GIPSA (antitrust regulator of meat industry est. in the 1920s meat trust age) the act is anti-free enterprise and would hamper market dev in China.
Antitrust is not anti-big, but is aimed at keeping competition from being eliminated.
So: simply some rules to minimize unfair competition. Instead of Act.
And powerful lobbyist don’t lash out. You don’t see it coming, just wake up one morning and it’s over. “Didn’t want to drive the hog industry out of Iowa.”
Then in 2000, Tim Daschle SD: less stringent bill defeated by lobbyists, who also copied memo to agribusiness and food industry giants like Monsanto, ConAgra and industry associations.
Then Smithfield sued Iowa claing ban against complete vert integration was a trade barrier affecting interstate commerce. Part of a (successful) effort to tamp down on state laws restricting corporate farming.
Smithfield was allowed to keep the vertical integration 10 years but with no tournament system and no canceling producer contracts and allow them to air grievances. Tyson, Cargill and Hormel signed similar agreements.
Integration not just a means of efficiency, but an instrument of power.
Disparity between state laws indicated that meaningful reform would be need to be made on the federal level. There was hope that new president Obama could institute reform 2007-2011. But with the financial meltdown, agricultural reform fell off the priority list. Climate: companies argued that mergers, cost cutting and market control were critical to staying profitable.
Obama appointed Tom Vilsack, former gov of Iowa, as Sec of Ag. VIlsack did stand behind Attorney General Tom Miller a he fought the rise of vertically integrated pork production. And wanted to reform the Packers and Stockyards Assn. Hard, though, to bring suit to assert USDA’s power b/c working between depts and agencies (Dept of Justice). Christine Varney avowed vigorous antitrust enforcement to protect consumers.
Pushback: Trades like American Meat Institute and corps fought: reform would affect supply chain, cost jobs, profits needed to fund jobs, be competitive, turn back the clock on efficiency that made the U.S. the most innovative meat processing system, etc. So Vilsack’s team lost control of the public narrative (at the time the Tea Party gained power, fighting health care reform). Then big business enlisted regular people -- including farmers who were favored in the tournament system -- to contact lawmakers to mirror the wishes of big business.
One farmer who was enlisted to speak out about the need for the tournament system in order to foster innovation and motivate farmers to work harder and invest in updating houses actually ended up declaring bankruptcy.
National Chicken Council said banning the tournament system would wipe out all innovation in the industry...paying farmers a bonus wasn’t incentive enough to get farmers to work hard or update their houses - “there needed to be the threat of financial penalties.”
Locavore movement helped keep indie farmers in business. Niche markets.
Vilsack’s team fractured: reformers vs. pragmatists.
Managed during the rule revision to keep one key protection for farmers: force companies like Tyson to restrict the tournament to farmers who owned similar chicken houses.
Then Kansas Republican senator Pat Roberts framed the reform initiative as the USDA’s attack on agriculture.
Obama admin backpedaled.
Don Tyson set sights on Brazil, India and China “like US in the 60s, eating more meat.”
Don Tyson - running biography through the book. Powerful, self-made, created a new system of agriculture. Girlfriends and illegit children.
Boom year for Tyson 2011, 2012. Price hikes and production cuts became central to its business model. And, always, about how efficiently the producers can convert feed into meat.
Employs many, but their communities lag economically behind others in the same states.
Every person who lives in America and buys foods and pays taxes should read this excellent piece of investigative business journalism.
It introduces you to members (and former members) of the disappearing breed known as independent farmers (that became producers) and the tycoons that took over hatchery and meatpacking operations and transformed the competitive open-market system for selling farmed animals into an anti-competitive, super-high production contract system in which a handful of vertically integrated mega-corporations set the price and control every aspect of so-called production.
The author shines a light on the shrewd and disturbing practices and maneuvers of business entrepreneurs like the Tyson dynasty (chief architect of the industrial animal production business model) that built those mega-corporations using tax loopholes, farm bill opportunities and independent farmers (producers), frequently bankrupting the latter in the process. Discover how quickly farms became factories. And how big agribusiness effectively played the political game to stop efforts to reform the system and help small farmers.
Long-term perspectives also elucidate the issues. For example: “In the 1930s chicken had been a luxury dish. When [then-President] Herbert Hoover talked about putting a chicken in every pot, he meant that every American family would achieve a certain measure of alluence. But Don Tyson had seen firsthand how the new model of chicken farming had changed that. The big chicken houses, the mechanized slaughterhouses, the advanced breeding, had all come together to make chicken the cheapest meat available. McDonald’s, Wendy’s, and Burger King couldn’t afford to keep it out of their product lines. Don Tyson would make sure of it.”
Advanced breeding techniques to “create the ideal industrial animal”: In 1925, it took 15 weeks to raise a chicken that weighed 2.2 pounds. By 1990, it took only about 4 weeks.
Notes taken while reading:
The Meat Racket: The Secret Takeover of America’s Food Business
by Christopher Leonard
Tyson complex Waldron Ark.
Provides the tax base for towns it overran.
Vertical integration: economic principle buy up firms that supply them. Pharma, trucking. Tyson controls and owns everything that happens inside the corporation. No free market determines price at which baby chicks sold to farmer or at what price grown chickens are sold back to a slaughterhouse.
Poultry to hogs, within 2 decades America’s independent hog industry was wiped out and replaced with a vertically integrated, corporate-controlled model.
Less money for farmers.
Now cattle industry buckling under pressure.
1960s to 90s industrial meat machine benefit to Am consumers, Tyson’s system rewrote the biological equations that once constrained the meat industry. Between 1955 and 1982, the amount of time it took to raise a full-grown chicken fell from 73 days to 52 days. And the chickens got bigger, expanding from an av 3.1 pounds to 4 lbs. ANd took less and less chicken feed each year to accomplish this feat Trend also for pigs and to a lesser degree, cattle.
Cheaper meat.
Growth hormone Zilmax cattle put weight on much faster. Quietly became the industry standard.
Could flood the market to make proces collapse, drive smaller out of business.
Oligarchy.
Antibiotics chicken feed, spray chems at slaughterhouses to kill microbes and prevent foodborne illness.
Farms became factories.
Least profitable part left to contract chicken farmers.
With every flock, the farmer racing against his debt.
Dead birds, biohazard suits.
Claim not know which batch of chicks healthy or not, but had the metrics to know that older hens higher risks.
Bankruptcy.
Pressure drove them down and out. Laotians bought the farms.
John Tyson Great Depression farmer. Don processing designed, new age.
Don Tyson, took out loan, hatchery. His young company benefited from being a new kind of animal. It was both a farm and a manufacturer. It was a biological system and an industrial machine. THis hybrid quality allowed it to dodge taxes and evade regulations that constrained the power o f other meat companies, like beef meatpackers.
Outsourced the time-intensive, lowest-profit and highest risks components of the process. The people building the chicken houses and raising the chickens suffered.
They try running their own farms, but hired hands didn’t work as hard as farmers who had to make a profit on their heavy investments.
New breed of indentured farmer was born.
Science breakthrough - turn petrochemicals into nitrogen fertilizer.
New pesticides
Monocrop age.
1940 farmers bought only 34% of their inputs.. 1960s 63%. Aggregate farm output rose 54%.
Get big and specialized made them more dependent on corps like Tyson.
Prices down, but so did profit margins. So they raised more crops or livestock to stay afloat, increasing supply and driving down prices even more.
Tyson CPA was told to convince IRS to classify them as a family farm. Because of loophole: family farms allowed to use cash-basis accounting, simpler recordkeeping, figuring ff not have accountants. So, even though multi-million dollar corporation, could claim family farm and get simplified recordkeeping, defer income claims and can claim losses each year, and pay just minimal taxes. He set up a dummy cor p that was a wholly owned subsidiary of Tyson’s. Like an interest-free loan from the taxpayers.
And keep 2 sets of books.
Bought up competitors.13 years push into fast food, cheapest meat easy pre-processes. McNuggets 1983.
Tournaments
Don Tyson stoked competition among chicken producers and his staff. Magnetic personality they felt compelled to impress.
Even when resigned as CEO, became chairman, created Class B shares, maintained control and veto power.
In late 1990s, expansions into seafood and hogs faltering. Taxpayer gift worth billions of dollars to help it reconstruction -- this would underpin the profits of every major corporate meat producer for more than a decade.
Subsidies - central planning by US govt. Limited overproduction.
New farm program Freedom to Farm 1996. Now free to overproduce. Prices plummeted, farmers lost money, taxpayers covered losses. Made corn cheaper to buy than grow, so benefited Tyson.
Freedom to Farm delivered about $947 million a year in savings to industrial hog producers alone.
Smithfield had copied Tyson playbook and took the lead.
Iowa: Iowa Beef Producers: IBP beef factory early 1980s in Garden CIty KS, could kill over 5,000 cows a day, one every 11 seconds or so over 2 eight-hour shifts. Super-sized slaughterhouse enabled them to produce and ship millions of pounds of boxed beef (innovation, easier and cheaper to ship to Seattle and Florida, retailers and restaurants, so immerse market advantage). Needed a dependable supply of animals. Proved hardly to vertically integrate cow production compared with Tyson’s vertical integration of chicken and hog farming. Efforts hampering by 2 of the cow’s internal organs: the rumen and the uterus. By nature 4-chambered stomach to digest the cellulose in grass. Not supposed to eat corn...and uterus: one baby at a time, one year at a time. So tinker with biology to boost profits.
And contracts with formula prices with ranchers and feedlot (instead of them taking finished animals to auction).
Iowa is the lead producers of cheap corn and soybeans, so it benefited them to alter farmed animals’ diets.
Chickenization of other agribusiness:
Like chickens, after Tyson changed the markets, hogs sold by contract instead of open market, pushing independent sellers/dealers out. No longer an open, competitive cash market.
By 2011 98% of all hogs were grown and sold under contract through vertically integrated companies like Smithfield.
Ended a system begun with hwy system that enabled national transport.
Now, not competitive, a few corps determine price and supply.
Cowboys now ride around massive feedlots.
Tyson, Cargill, JBS Swift and National Beef control the beef market. Producers pitted against meatpackers. Contract system for feedlot operators created de facto vertically integration, guaranteeing supply to 4 corps without risk borne by suppliers.
Spirit-killing culture took over by 1990s. One rancher who spent years as a buyer for a big beef packer: If you crawl in bed with a rattlesnake and think you ain’t going to be bit, then you’re pretty stupid.”
No premium for quality, no matter what goes into choice - steak - or select - hamburger. Don’t bother to appraise the animals in pens. Carson quit as National cattle buyer when realized that and founded Maverick Feeders (shrinking free market/cash market)...but found the big 4 would prevail. When bidding the big meatpackers win most of the time, like a cartel.
Tyson’s use of the growth hormone Zilmax little-known because public disclosure is not required.
Juices up the cattle’s growth rate and yield of beef at slaughterhouses. Leaner and lower quality.
Cargill caved in 2012 and began accepting Zilmax-treated cattle. By the time Cargill folded, JB and National followed Tyson’s lead.
Then in Aug 2013 notified feedlot operators to it wouldn’t accept Z-treated cattle until further notice.
Cheap meat has changed rural America and American business.
Sec Ag Mike Espy, under Bill Clinton, indicted for bribery charges for accepting gifts from Tyson Foods.
At Tyson, earnings were falling due to decreased demand. Throttled back production, boneless skinless chicken breast rose 20 cents, profitable again. Under Donnie Smith.
Lawsuits that Tyson, ConAgra and Pilgrim’s Pride manipulating scales at their slaughterhouses to underweigh loads of birds so they could underpay farmers. Tysons employee described how plant managers delivered lower-quality chicks to farmer the company considered troublemakers. A jury found that Tyson tactics depressed prices paid to ranchers and feedlots by billions of dollars, even as grocery store beef prices climbed.
Reform:
1996-2006: some attempts to curb vertical integration (market domination of meat oligarchy). Bill Heffernan 31 yrs research 1969-2000, shows why it’s detrimental. Tracked debt and how the farmers felt - powerlessness has a toll.
Eric Tabor and Tom Miller 1995 in Iowa began investigating contract farming...rise of Monsanto, only 2 big grain corps ADM and Cargill. Iowa wanted preserve some farmer freedom. Smithfield may have been main target, but all of the big corps stepped up to stave the effort that could affect the national meat industry (protested interference). Appeared nearly like serfdom.
Steve Moline, who had been a hog farmer, raised concerns over big corps controlling the breeding, as genetics are the key to livestock success. Leaving the farmers with just fattening the adult hogs was the lowest-profit part. Price collapse 1998, hog farmers met at Moline’s home...they feared being spotted by corporate field technicians. Moline thought it was sufficient that in Iowa the corps could own the individual animals.
But in 1999, Smithfield bought a huge contractor of hog farms in Iowa, completing the whole circle of vertical integration, which Iowa banned. Iowa brought lawsuit against Smithfield and tried to establish the Producer Protection Act 1999 for 16 farm states (except Ark, home to Tyson)....the act required contract terms be posted publicly, 3 days to have an attorney review a contract). Problem: Smithfield rep told James R. Baker at GIPSA (antitrust regulator of meat industry est. in the 1920s meat trust age) the act is anti-free enterprise and would hamper market dev in China.
Antitrust is not anti-big, but is aimed at keeping competition from being eliminated.
So: simply some rules to minimize unfair competition. Instead of Act.
And powerful lobbyist don’t lash out. You don’t see it coming, just wake up one morning and it’s over. “Didn’t want to drive the hog industry out of Iowa.”
Then in 2000, Tim Daschle SD: less stringent bill defeated by lobbyists, who also copied memo to agribusiness and food industry giants like Monsanto, ConAgra and industry associations.
Then Smithfield sued Iowa claing ban against complete vert integration was a trade barrier affecting interstate commerce. Part of a (successful) effort to tamp down on state laws restricting corporate farming.
Smithfield was allowed to keep the vertical integration 10 years but with no tournament system and no canceling producer contracts and allow them to air grievances. Tyson, Cargill and Hormel signed similar agreements.
Integration not just a means of efficiency, but an instrument of power.
Disparity between state laws indicated that meaningful reform would be need to be made on the federal level. There was hope that new president Obama could institute reform 2007-2011. But with the financial meltdown, agricultural reform fell off the priority list. Climate: companies argued that mergers, cost cutting and market control were critical to staying profitable.
Obama appointed Tom Vilsack, former gov of Iowa, as Sec of Ag. VIlsack did stand behind Attorney General Tom Miller a he fought the rise of vertically integrated pork production. And wanted to reform the Packers and Stockyards Assn. Hard, though, to bring suit to assert USDA’s power b/c working between depts and agencies (Dept of Justice). Christine Varney avowed vigorous antitrust enforcement to protect consumers.
Pushback: Trades like American Meat Institute and corps fought: reform would affect supply chain, cost jobs, profits needed to fund jobs, be competitive, turn back the clock on efficiency that made the U.S. the most innovative meat processing system, etc. So Vilsack’s team lost control of the public narrative (at the time the Tea Party gained power, fighting health care reform). Then big business enlisted regular people -- including farmers who were favored in the tournament system -- to contact lawmakers to mirror the wishes of big business.
One farmer who was enlisted to speak out about the need for the tournament system in order to foster innovation and motivate farmers to work harder and invest in updating houses actually ended up declaring bankruptcy.
National Chicken Council said banning the tournament system would wipe out all innovation in the industry...paying farmers a bonus wasn’t incentive enough to get farmers to work hard or update their houses - “there needed to be the threat of financial penalties.”
Locavore movement helped keep indie farmers in business. Niche markets.
Vilsack’s team fractured: reformers vs. pragmatists.
Managed during the rule revision to keep one key protection for farmers: force companies like Tyson to restrict the tournament to farmers who owned similar chicken houses.
Then Kansas Republican senator Pat Roberts framed the reform initiative as the USDA’s attack on agriculture.
Obama admin backpedaled.
Don Tyson set sights on Brazil, India and China “like US in the 60s, eating more meat.”
Don Tyson - running biography through the book. Powerful, self-made, created a new system of agriculture. Girlfriends and illegit children.
Boom year for Tyson 2011, 2012. Price hikes and production cuts became central to its business model. And, always, about how efficiently the producers can convert feed into meat.
Employs many, but their communities lag economically behind others in the same states.
January 4, 2025
The first three or four chapters provided a very interesting look at the lives of farmers whose livelihood and health were drastically effected after contracting to work under Tyson. After that there are many informative chapters- how Tyson started, how to grew to be one of the top 4 meat industry companies, and how its fought and continues to fight against reform that would rid farmers of the strict contracts that put them in debt. But towards the end it really lost its way- I feel like the author forgot to tie the story back to people who lost their land and lost all their savings. Still interesting tho.
February 19, 2014
When did chicken become tasteless? I can remember some years ago when it actually had a flavor. Same with beef. According to journalist Christopher Leonard, this is the result of a decades long "chickenization" of the meat industry.
Most of The Meat Racket follows the history of Tyson Foods and its transformation of the chicken industry in America. It isn't a simple story of either big bad corporation or of the genius of unfettered capitalism. You can draw your own conclusions about the benefits versus the drawbacks, but you have to know the story first, and this is as good a place as any to start. Leonard's research is impressive and he's covered a lot of ground to get the facts.
In the same week I read this book, I also happened to read George Packer's article in The New Yorker about Amazon.com and was struck by the similar way that Tyson and Amazon scoop up competitors and make no bones about trying to eliminate competition. Tyson early on began buying out their competition, even when they weren't particularly interested in owning the companies, because they wanted to prevent others from buying them and possibly getting an advantage on Tyson. As a customer, you appreciate the low prices they provide and the predictable quality. But after the competition has been neutralized, the giant that's left can dictate conditions and prices to suppliers and to customers as well. The supplier and customer have little choice since their are no longer other options.
Leonard also describes the lack of action on the part of the government, at state and federal levels. Several attempts to apply anti-trust laws have been unsuccessful for a variety of reasons.
Some people may admire the business genius of John and Don Tyson, while others will wonder if chickenization is the future of food, retail, and even books.
Most of The Meat Racket follows the history of Tyson Foods and its transformation of the chicken industry in America. It isn't a simple story of either big bad corporation or of the genius of unfettered capitalism. You can draw your own conclusions about the benefits versus the drawbacks, but you have to know the story first, and this is as good a place as any to start. Leonard's research is impressive and he's covered a lot of ground to get the facts.
In the same week I read this book, I also happened to read George Packer's article in The New Yorker about Amazon.com and was struck by the similar way that Tyson and Amazon scoop up competitors and make no bones about trying to eliminate competition. Tyson early on began buying out their competition, even when they weren't particularly interested in owning the companies, because they wanted to prevent others from buying them and possibly getting an advantage on Tyson. As a customer, you appreciate the low prices they provide and the predictable quality. But after the competition has been neutralized, the giant that's left can dictate conditions and prices to suppliers and to customers as well. The supplier and customer have little choice since their are no longer other options.
Leonard also describes the lack of action on the part of the government, at state and federal levels. Several attempts to apply anti-trust laws have been unsuccessful for a variety of reasons.
Some people may admire the business genius of John and Don Tyson, while others will wonder if chickenization is the future of food, retail, and even books.
May 28, 2015
If you’ve ever thought about becoming a vegetarian, this book will give you the push you need. I’ve long known about the cruel and inhumane treatment given many of the animals that are our food. What I didn’t realize was why that was, and how it came to be. Most of it can be laid at the feet of one family: the Tysons.
It begins with John Tyson, a man so scarred by the Depression that he decided he needed all the money in the world. One step at a time, he took over the chicken industry, at the same time infecting his son, Don, with the same psychotic need for money and power. Don’s contribution would be to carry on their production practices to the pork industry. Eventually, even the beef industry would be infected.
But I don’t agree with the author’s claim that the driving force behind the system was the American consumer. Yes, once in place, the American consumer became just as captured as the farmers who signed the misleading contracts; they had little choice. Both would pay a huge price, inexorably caught in Tyson’s web. Except for those few who are able to buy their meat from local farms (and I thankfully count myself in their number,) everyone buys either Tyson meat, or that of one of the only three other meat producers. All use a system where the farmers’ income is slowly being eroded, while the buyers’ price continues to rise. Where the money ends up isn’t hard to figure.
Because of the destruction of many farming communities, the brutal and horrifying treatment of the animals, and because of the continued gouging of the American public (and now the world’s,) I can only hope that both John and Don burn in hell.
It begins with John Tyson, a man so scarred by the Depression that he decided he needed all the money in the world. One step at a time, he took over the chicken industry, at the same time infecting his son, Don, with the same psychotic need for money and power. Don’s contribution would be to carry on their production practices to the pork industry. Eventually, even the beef industry would be infected.
But I don’t agree with the author’s claim that the driving force behind the system was the American consumer. Yes, once in place, the American consumer became just as captured as the farmers who signed the misleading contracts; they had little choice. Both would pay a huge price, inexorably caught in Tyson’s web. Except for those few who are able to buy their meat from local farms (and I thankfully count myself in their number,) everyone buys either Tyson meat, or that of one of the only three other meat producers. All use a system where the farmers’ income is slowly being eroded, while the buyers’ price continues to rise. Where the money ends up isn’t hard to figure.
Because of the destruction of many farming communities, the brutal and horrifying treatment of the animals, and because of the continued gouging of the American public (and now the world’s,) I can only hope that both John and Don burn in hell.
December 11, 2013
We all like meat but don't want to think about where it comes from. And I'm kind of fine with that. Presumably regulation - well enforced - protects animals from undue cruelty. So we remain complicitly sheltered. For the alternative, expensive and rare meat, study dietary habits of the Middle Ages. I have.
But The Meat Racket blows apart our happy myths in its chronicling of the human cost of cheap, plentiful meat. It records the dominance integrated corporations hold over farmers and national food supplies, with the concomitant powerlessness of rural entrepreneurs to even consider negotiation. And up to a point I'm fine with the free market economics of all this. But both sides need retain some power for these relationships to be true exercises of competitive capitalism. And this isn't the case. In fact, we've almost returned to the feudal age. Only now with lots of meat.
Christopher Leonard has written an essential book that asks where our unlabelled grocery meat comes from - an eye opener that's an argument for right-wing vegetarianism. It could be written with a bit more poetry, but I don't think it needs that. His revelations are story enough.
Follow me on Twitter: @Dr_A_Taubman
But The Meat Racket blows apart our happy myths in its chronicling of the human cost of cheap, plentiful meat. It records the dominance integrated corporations hold over farmers and national food supplies, with the concomitant powerlessness of rural entrepreneurs to even consider negotiation. And up to a point I'm fine with the free market economics of all this. But both sides need retain some power for these relationships to be true exercises of competitive capitalism. And this isn't the case. In fact, we've almost returned to the feudal age. Only now with lots of meat.
Christopher Leonard has written an essential book that asks where our unlabelled grocery meat comes from - an eye opener that's an argument for right-wing vegetarianism. It could be written with a bit more poetry, but I don't think it needs that. His revelations are story enough.
Follow me on Twitter: @Dr_A_Taubman
July 4, 2017
Non-fiction book all about how Tyson's Food (chicken conglomerate) took over the chicken business in America. Tyson's was one of the main players (perhaps THE main player) that made factory farming A Thing.
Make no mistake--this is a non-fiction book about chicken factory farming, but I found it completely fascinating. Unlike other writings on this topic, it did not focus on the ethics and/or cruelty of the practice; it focused on the finance and economics aspects.
Before factory farming existed in the U.S. (mid-20th century), there were no laws and regulations really set up to control it. The government had yet to "catch up" to the reality of the new booming business model, and Tyson's took full advantage of it.
It used 2 systems of accounting--a cost-basis one for the I.R.S., which allowed it to defer reporting on profits until the following quarter (making Tyson's appear much less profitable than it actually was), and an accrual-basis one for when it was trying to get bank loans, which allowed it to report even signed contracts (yet to be fulfilled) as earnings, making Tyson's appear as profitable as it could (for the purpose of getting bank loans). Tyson's milked this for years before the government wised up, allowing its business model to grow like a cancer.
Just goes to show you... really smart private-sector lawyers and entrepreneurs will usually outpace and outwit the slow churning cogs of government.
Make no mistake--this is a non-fiction book about chicken factory farming, but I found it completely fascinating. Unlike other writings on this topic, it did not focus on the ethics and/or cruelty of the practice; it focused on the finance and economics aspects.
Before factory farming existed in the U.S. (mid-20th century), there were no laws and regulations really set up to control it. The government had yet to "catch up" to the reality of the new booming business model, and Tyson's took full advantage of it.
It used 2 systems of accounting--a cost-basis one for the I.R.S., which allowed it to defer reporting on profits until the following quarter (making Tyson's appear much less profitable than it actually was), and an accrual-basis one for when it was trying to get bank loans, which allowed it to report even signed contracts (yet to be fulfilled) as earnings, making Tyson's appear as profitable as it could (for the purpose of getting bank loans). Tyson's milked this for years before the government wised up, allowing its business model to grow like a cancer.
Just goes to show you... really smart private-sector lawyers and entrepreneurs will usually outpace and outwit the slow churning cogs of government.
Read
September 5, 2024This is entirely about the economics of the meat industry and not at all about the treatment of the animals involved, fyi
I feel like I learned soo much about how farmers are screwed over and taken advantage of by the big corporations. This is a topic I knew very little about, but honestly I only realized how little I knew in the course of reading this book. I feel like reading this has opened up a new factor for me when thinking about how the world works.
/has the anti-trust division ever done anything? Are they just George Castanza-ing their jobs or what
I feel like I learned soo much about how farmers are screwed over and taken advantage of by the big corporations. This is a topic I knew very little about, but honestly I only realized how little I knew in the course of reading this book. I feel like reading this has opened up a new factor for me when thinking about how the world works.
/has the anti-trust division ever done anything? Are they just George Castanza-ing their jobs or what
May 24, 2024
Fantastic book. Amazing investigative journalism into the growth and consolidation of the meat industry. Noah you will not enjoy the message that unbridled capitalism doesn’t work in the meat industry and that regulation and government action is the probably the only way to give the farmers, who produce the value that companies like Tyson reap the profits on, a way to actually have an economically prosperous life and reinvigorate the rural middle class economy.
This entire review has been hidden because of spoilers.
June 22, 2022
Very informative and disturbing. This is a messed up system we've created...
February 12, 2023
I am pescatarian and thank god for that lol that’s all i will say.
November 1, 2023
Rare to read a book about economics that isn’t poorly done. A great book that gave me a lot of ideas.
January 3, 2025
What an educational and convicting experience this book is! It’s important for consumers to be educated and informed about the origins of food, and this book provides a great overview of the meat industry and all its shady complexities. My main takeaway is that if I have the extra dollars to buy meat farmed locally and ethically, it will be money well spent. Not only for a better quality product, but also as a vote for systems I want to see thrive into the future.
November 1, 2024
This is crazy!
May 23, 2014
Extremely torn - I think that this an important subject; I like the author's writing style; I admire the compassion that he has for all of the parties involved (whether farmer or meat conglomerate exec); and I respect the amount of research undertaken to write this book- but I wish there were more meat here. This would have made a compelling magazine expose- but because there's not enough here to support an entire book, it's quite redundant.
And the title is misleading. If you are going to call a book "The Meat Racket", you can't limit that racket to chicken, or devote most of the book to Tyson (there is a brief mention of Perdue's market share but not much more). This book would be better named "The Tyson Chicken Racket". Because you cannot write a book about the chicken industry without researching and covering other brands, like Bell & Evans and Murray's.
The chapters on the beef and pork industries seem like merely an afterthought.
On the other hand, if everyone read this book (at least the first third), Tyson, Smithfield, and others would lose a lot of their power over farmers. And perhaps more people would go back to eating organic, free range, delicious meat and poultry. One take-away is that the price we pay as a society for cheap, tasteless, meat is too high.
The author was on to something, and if he had spent a few more years looking for answers to half the questions swirling in my brain as I was reading, this would have been one extraordinary book.
Because it does give one pause. I've already stopped buying canned soup because I don't know where the chicken came from....
And the title is misleading. If you are going to call a book "The Meat Racket", you can't limit that racket to chicken, or devote most of the book to Tyson (there is a brief mention of Perdue's market share but not much more). This book would be better named "The Tyson Chicken Racket". Because you cannot write a book about the chicken industry without researching and covering other brands, like Bell & Evans and Murray's.
The chapters on the beef and pork industries seem like merely an afterthought.
On the other hand, if everyone read this book (at least the first third), Tyson, Smithfield, and others would lose a lot of their power over farmers. And perhaps more people would go back to eating organic, free range, delicious meat and poultry. One take-away is that the price we pay as a society for cheap, tasteless, meat is too high.
The author was on to something, and if he had spent a few more years looking for answers to half the questions swirling in my brain as I was reading, this would have been one extraordinary book.
Because it does give one pause. I've already stopped buying canned soup because I don't know where the chicken came from....
August 1, 2014
what was most valuable for me was this book's focus on rural America. when we hear of the big meat companies in the news, it seems they are mostly being attacked from a public health perspective, e.g. their mismanagement of animal waste, overuse of antibiotics, etc. but it's equally important to get a sense of what industry consolidation has done to the rural economy and its negative outcomes for low-income rural populations. the contract farming system, the tournament method for farmer pay, and the generally authoritarian position the companies take against farmers are all important things to be aware of, and this book covers them well.
also interesting was the story of corporate consolidation, as illustrated by Tyson, and the industry's subsequent ability to exercise cartel-esque influence over markets, court proceedings, and policy discussions to an alarming degree. i especially enjoyed the last few chapters on the work of Iowa Attorney General Tom Miller to regulate contract farming in the hog industry in the '90s, and the attempts of Ag. Secretary Tom Vilsack, on behalf of the Obama administration, to bring tougher antitrust enforcement to the meat industry, and remarkably failing. in fact, it seems a rather representative picture of the Obama administration's nominally effective use of executive authority
also interesting was the story of corporate consolidation, as illustrated by Tyson, and the industry's subsequent ability to exercise cartel-esque influence over markets, court proceedings, and policy discussions to an alarming degree. i especially enjoyed the last few chapters on the work of Iowa Attorney General Tom Miller to regulate contract farming in the hog industry in the '90s, and the attempts of Ag. Secretary Tom Vilsack, on behalf of the Obama administration, to bring tougher antitrust enforcement to the meat industry, and remarkably failing. in fact, it seems a rather representative picture of the Obama administration's nominally effective use of executive authority
February 6, 2014
I was already "the choir" for The Meat Racket in regards to the general overblown nature of the meat industry, but this book goes far beyond that.
This is a well-researched tale with elegant, simple prose that brings to life just how severely the uber-consolidation of an industry has affected every player in it. The historical perspective is so important here to realize just why companies like Tyson do what they do - why their mottos *must* be "expand or expire." Yes, greed is involved, but it's also a survival instinct. If there were no Tyson, there'd be another Tyson, which the author shows by explaining how competitive the industrial meat industry has always been.
This book is just the story of one industry, but it functions well as a template for every other industry that has seen rapid consolidation, degradation of law, and anti-competitiveness.
Also, there is a person named "Joe Fred" in it. Hats off to you, Joe Fred.
This is a well-researched tale with elegant, simple prose that brings to life just how severely the uber-consolidation of an industry has affected every player in it. The historical perspective is so important here to realize just why companies like Tyson do what they do - why their mottos *must* be "expand or expire." Yes, greed is involved, but it's also a survival instinct. If there were no Tyson, there'd be another Tyson, which the author shows by explaining how competitive the industrial meat industry has always been.
This book is just the story of one industry, but it functions well as a template for every other industry that has seen rapid consolidation, degradation of law, and anti-competitiveness.
Also, there is a person named "Joe Fred" in it. Hats off to you, Joe Fred.
March 28, 2014
It’s sad for the chicken farmer in Arkansas, indentured to a life of low wages and a real fear of the company that pays him, Tyson Foods, which makes a profit regardless of how the farmer is doing. But this book is not only about chicken, it’s about pork and beef and reading it will tend to make you want to be a vegetarian. Tyson Foods has “chickenized” the production of meat in this country, where meat farmers are serfs to the company. But we consumers are able to get our “cheap” chicken in all kinds of forms from this monster company that makes gazillionaires out of the owners and investors off of the backs of its low wage workers and farmers through “vertical integration”. Read the book to find out what vertical integration is, which Tyson more or less invented.
October 19, 2016
The title definitely oversells the excitement and reach of this book. In the end, it is a high-level history of the development of Tyson foods and it's rise to a dominant position in the oligopolistic chicken and pork industries. The book's primary focus along the way is the pressure Tyson and its brethren put on its powerless rural farmers.
Well written, pretty informative, and as uplifting as you would expect!
Well written, pretty informative, and as uplifting as you would expect!
June 6, 2021
Essential reading, if for nothing else, that people should have an understanding of where their food is coming from, how and why what we eat is what we eat. But it is so much more; There is a discussion in the Sentientism group . Feel free to join in.
August 1, 2014
Many books have tackled the issue of eating meat, especially in terms of humane issues. But none have gone as deep in looking at the impact of the current meat industry on the farmers who produce it. The picture is not pretty. Leonard does a terrific job of pulling back the screen and showing how the system works. It's a gripping story, well told.
February 7, 2014
Amazing reporting. Good writing, though heavy-handed with the old-school newspaper style at times. It's always "on the ragged edge of bankruptcy."
A minor miracle in learning about a highly secretive company.
A minor miracle in learning about a highly secretive company.
October 31, 2014
Very well researched. The scary truth about the huge corporations who control the worlds meat supply and so much more. It's disgusting to realize what we believe and what is really the truth is so widely separated. A real eye-opener that was easy to read and understand.
June 16, 2014
The Meat Racket explores the modern, industrial meat industry through the lens of one of the major companies - Tyson Foods. Christopher Leonard explores the rise of the industrial chicken industry that John and Don Tyson created and how that business model shaped all other industrial meat industries. I've read a lot about this topic and was very familiar with CAFOs (Concentrated Animal Feeding Operations), but had no idea that Tyson basically created the first CAFOs for chickens and the other meat industries followed suit because there was no other way to compete with Tyson without CAFOs. This book also reiterates the illusion of choice that consumers have with industrial meat - there are only a handful of companies that control almost all the consumer meat. There may be various company names on packages of meat at the grocery store, but almost all of those companies are fronts for the illusion of choice and are owned by one of the few meat giants like Tyson. Leonard also explores some of the most unscrupulous practices of Tyson and how terribly they treat their farmers. Basically the fastest way to work yourself to death and end up bankrupt is to become an industrial chicken farmer. Some of the stories from the ruined farmers are heartbreaking. This is a really great overview of the industrial meat industry by examining one of the biggest players and leaders in this horrific industry. Definitely an eye-opening book!
Some of the many quotes I really enjoyed:
"Just a handful of companies produce nearly all the meat consumed in the United States, and Tyson is the king among them. The company sits atop a powerful oligarchy of corporations that determines how animals are raised, how much farmers get paid, and how meat is processed, all while reaping massive profits and remaining almost entirely opaque to the consumer...[this is]a system that keeps farmers in a state of indebted servitude, living like modern-day sharecroppers on the ragged edge of bankruptcy." (p. 3)
"Tyson could roughly predict which chicks would be healthy based on the age of the hens that laid the eggs. Older hens produced weaker chicks, while younger hens laid more vigorous broods. Edwards noticed that some farmers were consistently receiving chicks produced by the healthiest, youngest hens. Whoever was setting up the deliveries in the Broiler Office was giving these farmers the cream off the top. And he noticed something else: Other farmers were consistently getting the batches of culls. As Perry Edwards pored over the shipping logs, he saw that the pattern was the same. When there were bad batches of birds, they went to the same group of farms. And the healthiest birds also went to a select group of farms that, not coincidentally, always ranked as the highest paid farms in the network." (p. 37)
"Cash-basis accounting is simple. A company records its expenses only when it pays out the actual cash for them. And it only books income when the actual cash comes in the door. By contrast, companies using accrual accounting methods record their expenses when they sign a contract to pay someone, even if the cash hasn't actually left their account yet. Farmers were allowed to use cash-basis accounting because it was simpler, and Congress didn't think small farms had the money to hire accountants for complicated recordkeeping...By 1985, Tyson's Foods had avoided paying $26.5 million in annual taxes through the cash-basis loophole, according to a report written by two economists with the U.S. General Accounting Office. The morality of the ploy didn't seem to be a matter of much debate inside Tyson. When the company saw a loophole and a chance to make a profit, Tyson took it, a strategy that became part of the company's culture for decades to come...In 1986 Tyson was forced to quit using the scheme when the Tax Reform Act closed the loophole for farms with more than $25 million a year in gross recipts." (p. 72-4)
"At the end of any given week, a series of letters is mailed out from the Tyson complex in downtown Waldron...The letters are several pages long and packed with complicated financial figures. The farmers call them settlement sheets. The one critical piece of information the settlement sheets contain is the going price of chicken, or, more accurately, the price that Tyson deems appropriate to pay. Each farmer receives his own price, determined by the tournament system that ranks each farmer against his neighbor. At the end of each week, Tyson makes a competitive pool out of all the farms that have delivered chickens to the plant. The company has far more data about the farms than their owners; the company can compare how much feed each farm consumed compared to its neighbors, how many birds died and how much weight gained overall...All this information is fed into an equation that spits out a simple ranking: the most efficient farms on top, the least efficient at the bottom...But there are critical pieces of information that Tyson keeps secret. The company doesn't tell the farmer whom he competed against in a given tournament...If a farmer ranks near the top, he might earn 5 cents a pound for his labor. If he ranks in the middle, he would get paid 4.5 cents. Close to the bottom, he would make 4.1 cents...When a farmer gets hammered in the tournament, it might seem prudent for him to approach his neighbors and ask what they were doing differently. This is tough to do, and not just because the names on the tournament ranking are left blank. Each page is clearly marked with the warning: 'Confidential and Proprietary Information of Tyson Foods, Inc.' If farmers were to meet and compare their settlement sheets, or show them to a journalist or lawyer, Tyson can sue them for leaking confidential information." (p. 115-117)
"The tournament system is kept afloat by an obscure federal organization called the Farm Service Agency. The FSA spends hundreds of millions of dollars in taxpayer money to make sure that there will always be cheap loans for a new chicken farm when an older one is put out of business...While the agency was limited in how much money it could loan directly to farmers, it had far more leeway in the size of the loan it could guarantee. Under the guaranteed loan program, the FSA would pay back the bank more than 90 percent of the loan value if a farmer defaulted...Between 1999 and 2009, the Arkansas FSA office alone guaranteed more than $797 million in new loans, leaving taxpayers on the hook if the farms failed...It's difficult to determine how much money taxpayers spend every year to support Tyson's system of contract farmers. Clearly, billions of dollars underpin the construction of new chicken farms in the United States. This steady flow of easy credit allows Tyson and its competitors to cast off farmers without worrying that banks will hesitate to lend money to the next chicken grower in line." (p. 139-143)
"The free market had very little to do with the U.S. food market anymore. The USDA, for example, centrally controlled how many acres of corn were planted each year. This wasn't as completely Sovietesque as it sounds: The production controls weren't mandatory. Farmers could plant as many acres of corn or wheat as they wanted. But if they didn't comply with the USDA's state production levels, the farmers got cut out of government subsidies. In essence, the USDA bribed farmers to go along with its central planning regime. And it worked remarkably well...In 1996, Congress ended the farm subsidy program with a new farm bill called the Freedom to Farm Act. Strangely enough, Freedom to Farm only enlarged the farm subsidy program and made it much more expensive...In 1998 taxpayers handed over $12.4 billion to farmers, and in 1999 they paid $21.5 billion, nearly triple what they paid before Freedom to Farm was passed. While it didn't end subsidies, Freedom to Farm made one critical change that benefited Tyson Foods. The law disbanded production controls. Farmers got their government checks, and they could grow whatever they wanted. When the production controls went away, farmers did what they do best: They massively overproduced. The world was glutted with corn, wheat, and soybeans. Prices plummeted, farmers bemoaned the low prices, and taxpayers subsidies grew rapidly to cover farmers' losses. This cycle led to a remarkable gift for meat producers. Feed grains were the biggest cost that Tyson Foods had to pay to raise animals. If feed grains got too expensive, the company's profits could quickly vanish. Freedom to Farm didn't just make grains cheaper for Tyson. The federal program went so far as to produce an upside-down food economy, where corn was actually cheaper to buy than it was to grow....For industrial hog producers alone, Freedom to Farm delivered about $947 million a year in savings, according to one study." (p.165-6)
"On the meatpacking side, there are now just four companies that buy 85 percent of the cattle sold in the country. Tyson is the biggest, followed by Cargill, JBS Swift, and National Beef. As meatpackers have become bigger, feedlots have tried to keep pace, expanding to meet the needs of their corporate buyers...What has evolved is a kind of de facto vertical integration, with whole networks of feedlots tied to meatpackers under contract. The cattle market is technically an open one, but no one behaves that way, and it's an open secret that they don't. There is ample evidence that the big four meatpackers have chosen to divvy up the market, picking territories where they can buy all the cattle from a feedlot without facing a competing bid." (p. 208-9)
"While Tyson has been the architect of this system, the driving force behind it has been the American consumer. Americans have decided that meat must be cheap and plentiful. It must be consistent in its attributes and predictable in its taste. It takes factory farms to raise meat like that. It takes companies like Tyson. It takes networks of chicken farmers integrated tightly with big slaughterhouses like the one in Waldron. It takes a steady flow of genetically selected pigs from the nursery in Holdenville, Oklahoma, that are shipped to contract farms in Iowa for raising. It requires massive feedlots, controlled by contracts, that can guarantee a nonstop supply of cattle. The system also requires the rules that Tyson has imposed. This is what delivers the cheap pork chop, the Zilmax-infused hamburger patty, and the ever-ready supply of chicken McNuggets." (p. 226-7)
"Industrial food lobbyists know it's smart to stick together. A regulation over one of them could open the door to regulation over others. By pooling their money and time, they present a united wall against any legislation that might change the power structure of American agribusiness. They fight together, and they profit together. Meat lobbyists hold regular conference calls, sharing tips and news and planning future campaigns." (p. 251-2)
"The biggest meat companies - Tyson Foods, ConAgra Foods, Cargill, Smithfield, and JBS - spent a combined $5.94 million on lobbying during 2010 alone, according to an analysis of disclosure reports. Tyson had the biggest lobbying operation by far, spending $2.59 million." (p. 286)
"In 68 percent of the counties where Tyson operates, per-capita income has grown more slowly than the state average over the last forty years. Tyson counties, in other words, were worse off in terms of income growth than their neighbors, even as Tyson's profits increased...But the data suggests that Tyson is a suffocating economic force on the communities from which it derives its wealth. Without question, the company provides thousands of jobs and steady paychecks. But its cost-cutting ethos and the lack of competition restrains income growth in rural America. The company has expanded in economically marginal areas, and it has kept those areas economically marginal. Tyson Foods is feeding off the lowly economic position of rural America, not improving it." (p. 315-6)
Some of the many quotes I really enjoyed:
"Just a handful of companies produce nearly all the meat consumed in the United States, and Tyson is the king among them. The company sits atop a powerful oligarchy of corporations that determines how animals are raised, how much farmers get paid, and how meat is processed, all while reaping massive profits and remaining almost entirely opaque to the consumer...[this is]a system that keeps farmers in a state of indebted servitude, living like modern-day sharecroppers on the ragged edge of bankruptcy." (p. 3)
"Tyson could roughly predict which chicks would be healthy based on the age of the hens that laid the eggs. Older hens produced weaker chicks, while younger hens laid more vigorous broods. Edwards noticed that some farmers were consistently receiving chicks produced by the healthiest, youngest hens. Whoever was setting up the deliveries in the Broiler Office was giving these farmers the cream off the top. And he noticed something else: Other farmers were consistently getting the batches of culls. As Perry Edwards pored over the shipping logs, he saw that the pattern was the same. When there were bad batches of birds, they went to the same group of farms. And the healthiest birds also went to a select group of farms that, not coincidentally, always ranked as the highest paid farms in the network." (p. 37)
"Cash-basis accounting is simple. A company records its expenses only when it pays out the actual cash for them. And it only books income when the actual cash comes in the door. By contrast, companies using accrual accounting methods record their expenses when they sign a contract to pay someone, even if the cash hasn't actually left their account yet. Farmers were allowed to use cash-basis accounting because it was simpler, and Congress didn't think small farms had the money to hire accountants for complicated recordkeeping...By 1985, Tyson's Foods had avoided paying $26.5 million in annual taxes through the cash-basis loophole, according to a report written by two economists with the U.S. General Accounting Office. The morality of the ploy didn't seem to be a matter of much debate inside Tyson. When the company saw a loophole and a chance to make a profit, Tyson took it, a strategy that became part of the company's culture for decades to come...In 1986 Tyson was forced to quit using the scheme when the Tax Reform Act closed the loophole for farms with more than $25 million a year in gross recipts." (p. 72-4)
"At the end of any given week, a series of letters is mailed out from the Tyson complex in downtown Waldron...The letters are several pages long and packed with complicated financial figures. The farmers call them settlement sheets. The one critical piece of information the settlement sheets contain is the going price of chicken, or, more accurately, the price that Tyson deems appropriate to pay. Each farmer receives his own price, determined by the tournament system that ranks each farmer against his neighbor. At the end of each week, Tyson makes a competitive pool out of all the farms that have delivered chickens to the plant. The company has far more data about the farms than their owners; the company can compare how much feed each farm consumed compared to its neighbors, how many birds died and how much weight gained overall...All this information is fed into an equation that spits out a simple ranking: the most efficient farms on top, the least efficient at the bottom...But there are critical pieces of information that Tyson keeps secret. The company doesn't tell the farmer whom he competed against in a given tournament...If a farmer ranks near the top, he might earn 5 cents a pound for his labor. If he ranks in the middle, he would get paid 4.5 cents. Close to the bottom, he would make 4.1 cents...When a farmer gets hammered in the tournament, it might seem prudent for him to approach his neighbors and ask what they were doing differently. This is tough to do, and not just because the names on the tournament ranking are left blank. Each page is clearly marked with the warning: 'Confidential and Proprietary Information of Tyson Foods, Inc.' If farmers were to meet and compare their settlement sheets, or show them to a journalist or lawyer, Tyson can sue them for leaking confidential information." (p. 115-117)
"The tournament system is kept afloat by an obscure federal organization called the Farm Service Agency. The FSA spends hundreds of millions of dollars in taxpayer money to make sure that there will always be cheap loans for a new chicken farm when an older one is put out of business...While the agency was limited in how much money it could loan directly to farmers, it had far more leeway in the size of the loan it could guarantee. Under the guaranteed loan program, the FSA would pay back the bank more than 90 percent of the loan value if a farmer defaulted...Between 1999 and 2009, the Arkansas FSA office alone guaranteed more than $797 million in new loans, leaving taxpayers on the hook if the farms failed...It's difficult to determine how much money taxpayers spend every year to support Tyson's system of contract farmers. Clearly, billions of dollars underpin the construction of new chicken farms in the United States. This steady flow of easy credit allows Tyson and its competitors to cast off farmers without worrying that banks will hesitate to lend money to the next chicken grower in line." (p. 139-143)
"The free market had very little to do with the U.S. food market anymore. The USDA, for example, centrally controlled how many acres of corn were planted each year. This wasn't as completely Sovietesque as it sounds: The production controls weren't mandatory. Farmers could plant as many acres of corn or wheat as they wanted. But if they didn't comply with the USDA's state production levels, the farmers got cut out of government subsidies. In essence, the USDA bribed farmers to go along with its central planning regime. And it worked remarkably well...In 1996, Congress ended the farm subsidy program with a new farm bill called the Freedom to Farm Act. Strangely enough, Freedom to Farm only enlarged the farm subsidy program and made it much more expensive...In 1998 taxpayers handed over $12.4 billion to farmers, and in 1999 they paid $21.5 billion, nearly triple what they paid before Freedom to Farm was passed. While it didn't end subsidies, Freedom to Farm made one critical change that benefited Tyson Foods. The law disbanded production controls. Farmers got their government checks, and they could grow whatever they wanted. When the production controls went away, farmers did what they do best: They massively overproduced. The world was glutted with corn, wheat, and soybeans. Prices plummeted, farmers bemoaned the low prices, and taxpayers subsidies grew rapidly to cover farmers' losses. This cycle led to a remarkable gift for meat producers. Feed grains were the biggest cost that Tyson Foods had to pay to raise animals. If feed grains got too expensive, the company's profits could quickly vanish. Freedom to Farm didn't just make grains cheaper for Tyson. The federal program went so far as to produce an upside-down food economy, where corn was actually cheaper to buy than it was to grow....For industrial hog producers alone, Freedom to Farm delivered about $947 million a year in savings, according to one study." (p.165-6)
"On the meatpacking side, there are now just four companies that buy 85 percent of the cattle sold in the country. Tyson is the biggest, followed by Cargill, JBS Swift, and National Beef. As meatpackers have become bigger, feedlots have tried to keep pace, expanding to meet the needs of their corporate buyers...What has evolved is a kind of de facto vertical integration, with whole networks of feedlots tied to meatpackers under contract. The cattle market is technically an open one, but no one behaves that way, and it's an open secret that they don't. There is ample evidence that the big four meatpackers have chosen to divvy up the market, picking territories where they can buy all the cattle from a feedlot without facing a competing bid." (p. 208-9)
"While Tyson has been the architect of this system, the driving force behind it has been the American consumer. Americans have decided that meat must be cheap and plentiful. It must be consistent in its attributes and predictable in its taste. It takes factory farms to raise meat like that. It takes companies like Tyson. It takes networks of chicken farmers integrated tightly with big slaughterhouses like the one in Waldron. It takes a steady flow of genetically selected pigs from the nursery in Holdenville, Oklahoma, that are shipped to contract farms in Iowa for raising. It requires massive feedlots, controlled by contracts, that can guarantee a nonstop supply of cattle. The system also requires the rules that Tyson has imposed. This is what delivers the cheap pork chop, the Zilmax-infused hamburger patty, and the ever-ready supply of chicken McNuggets." (p. 226-7)
"Industrial food lobbyists know it's smart to stick together. A regulation over one of them could open the door to regulation over others. By pooling their money and time, they present a united wall against any legislation that might change the power structure of American agribusiness. They fight together, and they profit together. Meat lobbyists hold regular conference calls, sharing tips and news and planning future campaigns." (p. 251-2)
"The biggest meat companies - Tyson Foods, ConAgra Foods, Cargill, Smithfield, and JBS - spent a combined $5.94 million on lobbying during 2010 alone, according to an analysis of disclosure reports. Tyson had the biggest lobbying operation by far, spending $2.59 million." (p. 286)
"In 68 percent of the counties where Tyson operates, per-capita income has grown more slowly than the state average over the last forty years. Tyson counties, in other words, were worse off in terms of income growth than their neighbors, even as Tyson's profits increased...But the data suggests that Tyson is a suffocating economic force on the communities from which it derives its wealth. Without question, the company provides thousands of jobs and steady paychecks. But its cost-cutting ethos and the lack of competition restrains income growth in rural America. The company has expanded in economically marginal areas, and it has kept those areas economically marginal. Tyson Foods is feeding off the lowly economic position of rural America, not improving it." (p. 315-6)
December 4, 2020
“But the data suggests that Tyson Foods is a suffocating economic force in the communities from which it derives its wealth. Without question, the company provides thousands of jobs and steady paychecks, But its cost-cutting ethos and the lack of competition restrains economic growth in rural America.
“...Interestingly, the situation is worse in the one state where Tyson has the most power. In Arkansas fully 89 percent of the counties where Tyson operates are worse off than the state as a whole.”
Inspired by The Humane League's book club choice, I picked up a 2014 book called The Meat Racket: The Secret Takeover of America's Food Industry by Christopher Leonard. While the food industry has also been taken over by American's obsession with sugar, Leonard discusses in stark detail how it's been tragically taken over by big consolidated corporations across rural America, leaving small towns of middle-class, small farmers to wither away on the vine.
This book may be a revelation to many of you in the cities, but it isn't—and hasn't been—a revelation to rural Americans. After two long interviews with Don Tyson and dozens with chicken, hog, and cattle farmers, plus pages of people in his Acknowledgments,he warns us that Arkansas is the future for states—or countries—that have been 'chickenized' as well.
Tyson Foods emerged from the Great Depression years, a vision cooked up by young John Tyson who was struggling to feed his little family.
Leonard helps us to clearly understand how he built up his chicken empire, which his more aggressively risky son took over and added pork and beef production and slaughtering to Tyson's conquests.
Farmers sometimes refer to Tyson's dominant influence on meat production as the chickenization of the food industry. Leonard assures us that most of what we eat has come to us through Tyson, even if it's not labeled. Fast-food and family restaurants all use their cheap, sub-quality meat, groceries stores and fairs sell it, you name it.
As a farm girl growing up, I wondered why we no longer raised chickens or hogs. I watched the growth of our noisy, smelly cattle herd in feedlots. I noticed a new, industrial-size cattle feedlot a mile away.
I became a vegetarian after moving away to college and happily became a vegan eighteen years ago.
Some of this book disgusted me as it described the diseased birds being unloaded on contract farmers who couldn't do anything to save them from all suffering and dying and then being told by Tyson field technicians that it's their fault for not being attentive farmers.
Tyson uses a tournament system to determine how much farmers will be paid that encourages farmers to keep investing in new equipment or bigger productions. The small farmer has been wiped out.
I had some hope that the Obama administration was going to do something to support the farmer. His team in the departments of agriculture and justice were working together and made a visible effort to restructure the neglected antitrust law, but meat lobbyists convinced them their effort was unconstitutional and hardly anything changed. I hope the Biden administration has more courage.
Highly recommended for anyone contemplating a contract with Tyson and those still eating their chickenized food products.
November 22, 2016
This is an interesting and generally enjoyable book written in the journalistic expose' style of the "muckrakers" about worrisome development in the consolidation of the meat business, generally defined in terms of chicken, pork, and beef over the last forty years or so. For someone unfamiliar with the business, the book is indeed startling and even concerning. The impetus for the book appears to be the only very limited success that the regulators enjoyed in taking on big business here during the first Obama administration. As a case study, the book, which focuses on Tyson and its success in the Chicken business and its efforts to spread it approach ("chickenize") the pork and beef businesses. It is an effective presentation. The book is less successful, however, in explaining the economic rationale behind this industry development and the nature of the threat that it poses to consumers. Put another way -- I get it, big is bad, especially for small farmers, but are there any ways in which this development is understandable and perhaps not as bad as claimed? I am not a fan of "big food" but it might be beneficial to understand why this is happening.
Start with "vertical integration", the key to the Tyson model. To see what this means, imagine that for any business area there is a set of linked activities connecting the initial raw materials with the manufacture of the product and its eventual transport and sale to an ultimate consumer. Vertical integration concerns the extent to which a firm decides to own some set of those activities in order to conduct its business. The more steps in the chain of activities that you own, the more vertically integrated you are. Businesseas change their degree of vertical integration all the time. Ford used to be almost completely vertically integrated. The movie business in the US was almost completely integrated until 1948, when the Supreme Court split it up - now count the number of production companies you see in the credits for the next blockbuster you watch. Apple used to be vertically integrated until it got rid of its production and let Foxconn do it in China (or outsourcing).
Why vertically integrate? To get the best cost structure so that your products are cheaper to purchase than alternatives, such as due to scale economies or economies of scope. What about quality? Your products need to be good enough (whatever that means) or else consumers won't purchase them and you won't reach the necessary scale, but in this line of thinking - which Leonard raises in the book -- most of the effort is around controlling costs. What gets integrated? Those activities that are less risky and more controllable. This is important because vertical integration is associated with large capital intensive firms, that have lots of resources at risk if they cannot be controlled. This may sound a bit harsh, but it is how capitalism works in industrial and even post-industrial economies. It is not unusual for producers to want to do this.
....but wait, there is more. A parallel problem is that if your vertically integrated firms grow to large, they will run out of industry to control -- the concentration in the industry will increase to a point where two or three or four firms control most of the production. That is also happening here as the Tyson model succeeds in poultry and spreads to pork and beef. This is called horizontal integration and it is an issue in the book. This is actually more worrisome since it means that large firms can coordinate (mostly implicitly) their pricing and production and thus raise prices and reduce choices, which leads to much higher profits. This is the traditional concern of antitrust authorities. It is the combination of vertical and horizontal integration that is the concern in the book.
But just what is the problem? Is it that food will be priced out of the reach of most Americans? That cannot be the case, since if people cannot buy the product, the production system would be inefficient, profits would fall, etc. The entire system is premised on mass consumption of their food. Besides, the research on this shows that the cost of food as a portion of people's budgets has been declining, adjusting for packaging, convenience, and other factors.
Is the problem that the system will produce bad, unsafe, or unhealthy food? This is also a potential concern, but not a big one in the book. The implication may be that the food is less tasty or too homogenized, such as in the proliferation of chicken nuggets or tenders, but this is more a matter of taste and of giving the customer what they want.
The problem seems to be one of concern for the small producers - the small competitors who are being squeezed out of the business by consolidation or else unfairly pressured by contractual supply and tournament incentives, as in the case of the chicken farmers profiled in the first part of the book. The economic power on the part of the large firms is palpable and the small farmers appear to be caught in squeeze - a no win situation that will leave many of them bankrupt or nearly so with few alternatives, given their financial commitments to their farms. This is a real problem and Leonard's book is at its best in its profiles of these people and their situations.
What is to be done about this? Leonard effectively chronicles the difficulties in getting any regulatory reform. The arguments and counter-arguments are dizzying and the problem of sorting them out in a charged political situation with jobs and economic development on the line are real. His discussion of ways to improve the contracting process to permit litigation rather than arbitration seems reasonable, as are his concerns about unfair altering of contracts after commitments have been made. When all is said and done, however, it is unclear to me how to change the nature of these small farms, which have taken on the risk that the big firms have so well organized to avoid. The final defense of these farmers is to exit and force the big firms to find other chumps or provide a better deal. With the US farm financing agency supporting the ability of firms to find replacement farmers, this does not appear to be an area where substantial reform will come soon.
Part of my issue with the book is seeing how Leonard treats food as somehow different from other industries. It is different. It is consumed and the "product" is a living creature that appears to have feelings and a quality of life of sorts. The story in the book of the seller who cried after giving up his first pig for sale but never afterwards is poignant.
The trouble is that food has always been different. This is not a new story. The first mass production facilities of note in American business were arguably the disassembly plants in the meat packing industry in Cincinnati in the 19th century, which motivated Henry Ford and others. The success of "The Jungle" by Upton Sinclair was one of the major triumphs of the muckrakers and led to food quality regulation that we still benefit from today. The problem, as Leonard notes, is that Americans buy the food in increasing quantities. There is no coercion going on here and it is unclear the rationale that will lead to major industry change. The public is getting what it wants, even if the small farmers are suffering. That is unfortunate, but as American as apple pie. That is how the supermarkets triumphed over the smaller family markets. That is how Wal-Mart became one of the largest firms on the planet. That is why Tyson succeeded. What is there to do?
Start with "vertical integration", the key to the Tyson model. To see what this means, imagine that for any business area there is a set of linked activities connecting the initial raw materials with the manufacture of the product and its eventual transport and sale to an ultimate consumer. Vertical integration concerns the extent to which a firm decides to own some set of those activities in order to conduct its business. The more steps in the chain of activities that you own, the more vertically integrated you are. Businesseas change their degree of vertical integration all the time. Ford used to be almost completely vertically integrated. The movie business in the US was almost completely integrated until 1948, when the Supreme Court split it up - now count the number of production companies you see in the credits for the next blockbuster you watch. Apple used to be vertically integrated until it got rid of its production and let Foxconn do it in China (or outsourcing).
Why vertically integrate? To get the best cost structure so that your products are cheaper to purchase than alternatives, such as due to scale economies or economies of scope. What about quality? Your products need to be good enough (whatever that means) or else consumers won't purchase them and you won't reach the necessary scale, but in this line of thinking - which Leonard raises in the book -- most of the effort is around controlling costs. What gets integrated? Those activities that are less risky and more controllable. This is important because vertical integration is associated with large capital intensive firms, that have lots of resources at risk if they cannot be controlled. This may sound a bit harsh, but it is how capitalism works in industrial and even post-industrial economies. It is not unusual for producers to want to do this.
....but wait, there is more. A parallel problem is that if your vertically integrated firms grow to large, they will run out of industry to control -- the concentration in the industry will increase to a point where two or three or four firms control most of the production. That is also happening here as the Tyson model succeeds in poultry and spreads to pork and beef. This is called horizontal integration and it is an issue in the book. This is actually more worrisome since it means that large firms can coordinate (mostly implicitly) their pricing and production and thus raise prices and reduce choices, which leads to much higher profits. This is the traditional concern of antitrust authorities. It is the combination of vertical and horizontal integration that is the concern in the book.
But just what is the problem? Is it that food will be priced out of the reach of most Americans? That cannot be the case, since if people cannot buy the product, the production system would be inefficient, profits would fall, etc. The entire system is premised on mass consumption of their food. Besides, the research on this shows that the cost of food as a portion of people's budgets has been declining, adjusting for packaging, convenience, and other factors.
Is the problem that the system will produce bad, unsafe, or unhealthy food? This is also a potential concern, but not a big one in the book. The implication may be that the food is less tasty or too homogenized, such as in the proliferation of chicken nuggets or tenders, but this is more a matter of taste and of giving the customer what they want.
The problem seems to be one of concern for the small producers - the small competitors who are being squeezed out of the business by consolidation or else unfairly pressured by contractual supply and tournament incentives, as in the case of the chicken farmers profiled in the first part of the book. The economic power on the part of the large firms is palpable and the small farmers appear to be caught in squeeze - a no win situation that will leave many of them bankrupt or nearly so with few alternatives, given their financial commitments to their farms. This is a real problem and Leonard's book is at its best in its profiles of these people and their situations.
What is to be done about this? Leonard effectively chronicles the difficulties in getting any regulatory reform. The arguments and counter-arguments are dizzying and the problem of sorting them out in a charged political situation with jobs and economic development on the line are real. His discussion of ways to improve the contracting process to permit litigation rather than arbitration seems reasonable, as are his concerns about unfair altering of contracts after commitments have been made. When all is said and done, however, it is unclear to me how to change the nature of these small farms, which have taken on the risk that the big firms have so well organized to avoid. The final defense of these farmers is to exit and force the big firms to find other chumps or provide a better deal. With the US farm financing agency supporting the ability of firms to find replacement farmers, this does not appear to be an area where substantial reform will come soon.
Part of my issue with the book is seeing how Leonard treats food as somehow different from other industries. It is different. It is consumed and the "product" is a living creature that appears to have feelings and a quality of life of sorts. The story in the book of the seller who cried after giving up his first pig for sale but never afterwards is poignant.
The trouble is that food has always been different. This is not a new story. The first mass production facilities of note in American business were arguably the disassembly plants in the meat packing industry in Cincinnati in the 19th century, which motivated Henry Ford and others. The success of "The Jungle" by Upton Sinclair was one of the major triumphs of the muckrakers and led to food quality regulation that we still benefit from today. The problem, as Leonard notes, is that Americans buy the food in increasing quantities. There is no coercion going on here and it is unclear the rationale that will lead to major industry change. The public is getting what it wants, even if the small farmers are suffering. That is unfortunate, but as American as apple pie. That is how the supermarkets triumphed over the smaller family markets. That is how Wal-Mart became one of the largest firms on the planet. That is why Tyson succeeded. What is there to do?
October 27, 2021
It was quite good.
The star taken away is mostly because I'm not really that into journalism... Some journalism books are excellent, since the authors mix the description of the affair of things with law, ethics, philosophy and whatnot; however Leonard kept to the point. I understand that is a highly subjective point, but I believe it stopped me from being wowed, so I can't give it 5/5. (I like, for example, Michael Pollan better. His style feels more... personal, perhaps.)
He didn't make an ethics case per se or what constitutes good business practices, but he made an excellent case on how asymmetric (read: leonine) are those contracts and the impossibility of farmers to go to trial. Its clear his position on Tyson.
The author is extremely thorough. He definitely explains well the problems with the type of system Tyson has (or any big corporation that behaves in such a way), the repercussions in society and workers, the ethical implications with animals and humans living in such conditions, the aggressive lobbying and so forth.
The last part, for whatever reason, didn't seem to follow the line. (?) IDK... The whole politics and lobbying, it felt a little bit unorganised. (But it might have been me. It was a rough week.)
In a non-explicit manner he's inviting to understand what's the price behind price we see on our food. (Well, for people with omnivore diets.) For poor people is almost impossible (unless they do veg) not to chose this type of products but it does come with a heavy, but hidden, cost.
Must read for people into animal welfare, ethical agricultural/cattle business practices, journalism.
The star taken away is mostly because I'm not really that into journalism... Some journalism books are excellent, since the authors mix the description of the affair of things with law, ethics, philosophy and whatnot; however Leonard kept to the point. I understand that is a highly subjective point, but I believe it stopped me from being wowed, so I can't give it 5/5. (I like, for example, Michael Pollan better. His style feels more... personal, perhaps.)
He didn't make an ethics case per se or what constitutes good business practices, but he made an excellent case on how asymmetric (read: leonine) are those contracts and the impossibility of farmers to go to trial. Its clear his position on Tyson.
The author is extremely thorough. He definitely explains well the problems with the type of system Tyson has (or any big corporation that behaves in such a way), the repercussions in society and workers, the ethical implications with animals and humans living in such conditions, the aggressive lobbying and so forth.
The last part, for whatever reason, didn't seem to follow the line. (?) IDK... The whole politics and lobbying, it felt a little bit unorganised. (But it might have been me. It was a rough week.)
In a non-explicit manner he's inviting to understand what's the price behind price we see on our food. (Well, for people with omnivore diets.) For poor people is almost impossible (unless they do veg) not to chose this type of products but it does come with a heavy, but hidden, cost.
Must read for people into animal welfare, ethical agricultural/cattle business practices, journalism.
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