The Hidden King
Nobody ever visits the stranded little community of Waldron, Arkansas. But even if they did, a tourist would never see the place for what it really is. Most outsiders would be fooled into thinking it was an actual small town.
On any given morning, the residents awaken and begin their routines along Main Street. Old men park their pickup trucks by the curb in front of the Rock Café, which opens early for breakfast. As the café’s booths and tables fill up, a congregation of old-timers in cowboy hats gathers in a loose ring of aluminum chairs out front, smoking and talking and stubbing out their cigarette butts in a bucket full of sand. Later in the morning, Chambers Bank on the south end of town opens up and the tellers cheerfully greet customers by name. On Thursday at noon, the livestock auction opens in a cavernous barn on the north side of town, drawing crowds of ranchers who haul steel trailers behind their trucks, with cows staring out between the horizontal slats. In the late afternoon, teenagers park their cars by the gazebo south of the auction barn, proudly displaying their Mustangs and Broncos like big game trophies.
This book aims to explore the vast, hidden territory between the remote farms and towns like Waldron where Tyson raises millions of animals, and the final point of contact where consumers buy the company’s meat.
These events have a rhythm of their own, the clockwork functioning of a small-town economy. But it’s just window dressing. All of it could cease to exist in a moment and have no impact whatsoever on the true Waldron, or its true economic reason for being. The real tempo of the town’s economic pulse is measured by the coming and going of semi-trucks that roll down Main Street at periodic intervals, 24 hours a day, seven days a week. In the middle of the night tanker trucks full of animal feed rumble past the empty stores and out onto country roads that lead into the hilly terrain that surrounds town. At dawn, other trucks trundle in from the hills, heaped high with battered metal crates full of chickens that exude clouds of white feathers along the highway. The tempo can be measured in the regular arrival of train cars full of grains and oilseeds that dump their loads at a feed mill that clanks and hums and churns all night, and in the parade of refrigerated trucks that pull up to a slaughterhouse near the feed mill and get loaded with pallets of frozen meat. This is the real functioning of Waldron, Arkansas, and its true reason for being. This is the heartbeat of Tyson Foods, the nation’s biggest meat company.
The Tyson plant on the north end of Waldron is the only thing that keeps the town on the map. Appropriately, many residents simply refer to it as “The Complex.” That’s because the Tyson plant isn’t just a factory; it’s more like an entire small-town economy consolidated into one property. The complex contains its own feed mill and hatchery, its own trucking line and a slaughterhouse that covers several acres of land and processes about one million dead chickens a week. The complex is like an economic dark star that has drawn into itself all the independent businesses that used to define a small town like Waldron, the kinds of businesses that were once the economic pillars of rural America.
Of course, tourists to Waldron would never see the Tyson plant, and not just because it sits on the northern fringe of town and away from Main Street. Visitors are stopped at its front gate and forbidden from exploring the grounds. So a tourist would have to be content to stroll along the sidewalks downtown, observing the fake Main Street, the deceptive array of little businesses that make it seem like a community.
This illusory appearance cloaks Tyson’s existence all the way from its roots in rural America to the grocery store shelves and restaurant menus where its products finally reach consumers. The average shopper is usually fooled when he or she peruses the meat aisle, seeing what appears to be an abundance of choices and products. The Tyson brand name wouldn’t necessarily stand out, with its logo gracing just a handful of products. But the rotisserie chicken slowly turning in its oven, the Bonici brand pepperoni, the Lady Aster brand chicken cordon bleu, the frozen chicken pot pie and the Wright Brand bacon all come from the same company: Tyson. And then there is all the unlabeled meat that Tyson floods into the U.S. food system every day: The meat served in cafeterias, nursing homes, fast food restaurants, and suburban eateries where more and more Americans eat their meals. There is a very good chance any of the meat purchased in these places was made by Tyson. Even if Tyson did not produce a given piece of meat, the consumer is really only picking between different versions of the same commoditized beef, chicken and pork that is produced through a system Tyson pioneered. Tyson’s few competitors have resorted to imitating the company’s business model just to survive.
This book aims to explore the vast, hidden territory between the remote farms and towns like Waldron where Tyson raises millions of animals, and the final point of contact where consumers buy the company’s meat. Unseen between these two poles is a hidden power structure that has quietly reshaped U.S. rural economies while gaining unprecedented control over the nation’s meat supply. Just a handful of companies produce nearly all the meat eaten 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. Because Tyson and its imitators are based in the geographic and economic fringes of America, in forgotten places like Waldron, the company has managed to escape the scrutiny it deserves.
While Tyson’s operations are remote, the company’s business practices affect virtually everyone. About 95 percent of Americans eat chicken, which means they almost certainly eat chicken produced by Tyson. Because of this, American consumers are using their money to support a system that keeps farmers in a state of indebeted servitude, living like modernday sharecroppers on the ragged edge of bankruptcy. The system extracts its costs from consumers as well. There is so little competition in the meat industry today that companies like Tyson can raise the price of meat at will. And these companies have been raising prices more and more in recent years, even as the wages of U.S. households have stagnated. This situation is nothing new. When companies gain power over a market, they use it. Back in the early 1900s, a similar oligarchy of meat companies controlled the industry and earned the nickname The Meat Trust. These companies depressed the prices they paid farmers for meat, while raising the prices they charged consumers. Tyson Foods is doing the same thing today. But unlike the last time around, the modern Meat Trust isn’t facing significant resistance from government officials. There is no Teddy Roosevelt in sight, no president willing to fight corporate power on behalf of consumers and farmers. The Obama administration launched a halting attempt to reform the industry in 2010, and its failure to do anything meaningful only entrenched the power of Tyson and its allies. If change is to come, it will have to originate with the people who buy meat and those who raise it.
The first barrier to change is the fact that everything about Tyson Foods seems hidden, from its industrial farms behind locked gates to the company’s pristine headquarters in Springdale, Arkansas. Until very recently the only way to get to the company’s main offices was to drive down a winding country highway, past dilapidated old chicken farms and feed mills until the road crested a hill, suddenly bringing into view a pristine campus of black steel-and-glass buildings. Even in its splendor, Tyson seeks obscurity. Examining the company is all the more difficult because of the code of silence of its employees, and fear of retaliation on the part of virtually anyone who works with it.
The first barrier to change is the fact that everything about Tyson Foods seems hidden, from its industrial farms behind locked gates to the company’s pristine headquarters in Springdale, Arkansas.
But there is no way to better understand the way our food is produced than to understand Tyson Foods. Tyson hasn’t just insinuated itself into virtually every corner of the modern food system; Tyson helped invent the very system itself. The company was founded in the depths of the Great Depression, just as American agriculture was undergoing the greatest upheaval in its history. The company helped redraw the new system that emerged. By doing so, it wrote the blueprint for modern meat production.
At the core of Tyson’s strategy is an economic principle called vertical integration. In a nutshell, this refers to the way companies buy up the outside firms that supply them—picture what would happen if Apple Inc. bought the company that sold it microchips. When a company becomes vertically integrated, it takes under its control and ownership all the independent businesses that once supported it. In Tyson’s case, the company has swallowed up all the businesses that used to make up a small-town economy. It owns the feed mill, the slaughterhouse and the hatchery. It owns the trucking line and the food processing plant where raw meat is packaged and cooked into ready-to-eat meals. While Tyson doesn’t directly own most of the farms that supply it with animals, it controls them through the use of restrictive contracts. The best way to picture Tyson’s vertical integration is to imagine the broad-based network of small businesses that were once the backbone of rural America being sucked into a single, towering silo. That silo is Tyson Foods. The company controls and owns everything that happens inside it. There is no competition between the various entities, no free market to determine the price at which baby chicks are sold to farmers or at what price grown chickens are sold back to a slaughterhouse. It all happens within the walls of Tyson’s corporate structure.
Tyson first pioneered this model in the poultry business. Then the company expanded into raising hogs. Within two short decades America’s independent hog industry was wiped out and replaced with a vertically integrated, corporate-controlled model. Ninety percent of all hog farms disappeared. The amount of money spent at grocery stores went up, but the amount of money farmers received went down. Companies like Tyson keep much of the difference. The cattle industry is the last holdout against vertical integration, but even the cowboys are starting to buckle under the pressure to surrender their independence. Tyson and three other companies so dominate the beef industry that they have been able to short-circuit the once vibrant cash market for buying cattle in the United States, giving them power to control the nation’s ranches and feedlots even if they can’t own then outright.
Tyson’s way of doing business has come to define the rural American way of life, replacing broad-based rural economies comprised of independent businesses with a system of centralized control and corporate ownership. The rise of vertical integration has been attended by the decline in open cash markets that were the lifeblood of competition and economic efficiency. Now just a tiny fraction of hogs and chickens are sold in a free market where competition determines their price. The rest are raised using confidential contracts. This system has upended the notion of farming by borrowing an old model of sharecropping and marrying it to high-tech factory farms whose owners are indebted sometimes up to millions of dollars.
No other company dominates each sector of the meat industry as Tyson does. Its level of output is unprecedented in history and it sells all three major meat products: chicken, beef and pork. This single firm raises and slaughters more than 40 million chickens every week, translating into a supply of 2.1 billion chickens delivered each year into a supply chain of refrigerated trucks and containers for distributing nationwide, 24 hours a day. On top of that, Tyson kills 20.5 million pigs, and 7.2 million cows every year, churning out a stream of hamburgers, bacon, pepperoni and ground beef that stocks grocery stores, restaurants, and school cafeterias. In all, Tyson produces one-fifth of all meat eaten in the United States.
This juggernaut began in a humble way, in the rural home of a man named John Tyson, who founded the company and passed it onto his ambitious son Don. Don Tyson expanded Tyson foods through a series of bold and cunning acquisitions, ultimately building a multi-billion corporation that would have been unrecognizable to his father. But the company didn’t just grow because of Don Tyson’s risky bets, brilliant as they were. It expanded because of windfall profits it earned by replacing America’s independent meat industry with a vertically integrated one.
By being among the first meat producers to use this model, Don Tyson and his father invented a corporate food machine that grew larger and more profitable with each aspect of the industry it swallowed up. The company delivered ever-higher volumes of cheap meat to the marketplace, prompting consumers to respond by buying more of it. The cheaper chicken got, the more people ate it. This fed even more money back into Tyson’s system, allowing it to acquire yet more of the industry. The company grew this way in a kind of positive feedback loop, and the rest of the industry was forced to imitate it to compete.
From the 1960s through the 1990s, this industrial meat machine provided tremendous benefit to American consumers. By industrializing animal production, Tyson's system rewrote the stubborn 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 during that time, expanding from an average 3.1 pounds to 4 pounds. Perhaps most impressively of all, it took less and less chicken feed each year to accomplish this feat. In 1955, it took about 285 pounds of feed to grow 100 pounds of chicken. By 1982, it took less than 208 pounds. A similar trend held for pigs, and, to a lesser degree, cattle, during that time.
The benefits of this transformation were passed from the farms to the consumers as Tyson aggressively competed to win a bigger share of the U.S. market. People didn't see the radical transformation that was taking place on American farms, but the benefit invisibly accrued to their bank accounts with each pound of Tyson chicken, beef and pork they brought home.
But this benefit wasn't free. Consumers got savings up front, but they paid for it over time. Essentially, consumers traded away the U.S. farming system in order to get the up-front savings from industrial meat. Each new Tyson farm, and each new Tyson meat factory, ate away at the fabric of a profitable sector of Middle America's economy. American consumers traded a vibrant sector of small to mid-sized businesses that compete with one another for an oligarchy of giant companies that now control the vast majority of the food supply.
Ironically, just as consumers traded away control over the way meat is produced, the meteoric production gains of industrialized animal production started to fade away. After realizing the huge boost of savings that came from raising animals in factories, the growth curve started to flatten in the 1990s. It seems that the genetics of the poor chicken had been pushed about as far as they can go. Today, no matter what Tyson or its competitors do, they seem to have run up against a wall of just how cheaply you can raise a bird on a given amount of food. The same thing is happening with the hog and the cow, who appear to be getting as fat as the law of physics will allow on their given rations of feed.
This benefit wasn’t free. Consumers got savings up front, but they paid for it over time. Essentially, consumers traded away the U.S. farming system in order to get the up-front savings from industrial meat. Each new Tyson farm, and each new Tyson meat factory, ate away at the fabric of a profitable sector of Middle America’s economy.
The cost-savings from factory farming are slowing down, but Tyson’s control over the marketplace has not loosened. Once the broad-based meat industry was traded away for a vertically integrated one, the deal could not be easily undone. The economies of scale now make it almost impossible for new competitors to enter the field and compete head-to-head with Tyson and its imitators. The tallest ramparts that protect Tyson’s rule are its network of meat factories in places like Waldron. To compete against those facilities, a new company would need to invest hundreds of millions of dollars up front, before the first day of business. And a competitor would need animals, of course, and Tyson has much of the production locked down with its contracts. And a competitor would surely know that even if it built a plant and secured supplies of chickens or hogs, Tyson and its few competitors have the ability to flood the market with product and make prices collapse in the short term, a hardship they could surely endure while an upstart struggled. And a competitor would need to surmount these obstacles for the relatively lousy promise of just a one to three percent profit margin. Needless to say, upstarts are hard to find.
This makes the oligarchy of meat companies virtually impregnable, and as a result they don’t have to compete too fiercely with one another on price. That’s another key reason why the economic gains of the industrial meat’s early years have disappeared. Since the mid-1980s, when consolidation among Tyson and its peers really began, the price of meat has risen steadily, even as farmers have been getting paid less out of every dollar spent on food. In translation, that means Tyson is extracting savings from the farmer without passing them on to the consumer. In 2008, food prices jumped 6.4 percent. After falling during the Great Recession, prices have climbed ever since, and only the tepid competition between Tyson and two or three other companies can be expected to bring them down.