Tyson Foods — The Vertically Integrated Powerhouse of America

The secret takeover of America's food business

Tyson Foods — The Vertically Integrated Powerhouse of America

By industrialising animal production, Tyson Foods’ system rewrote the stubborn biological equations that once constrained the meat industry, fooled the average shopper into the lie of choice abundance in the shopping aisle, and cloaked its own existence all the way from its roots in rural America to the grocery store shelves and restaurant menus where its products finally reach consumers.

There is an unseen power structure between the hidden territory of America’s remote, rural farms and the final point of contact where consumers buy Tyson’s meat. Just a handful of companies produce nearly all of the meat consumed in the United States, and Tyson is the king among them.

Vertical Integration of Tyson Foods

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. They depressed prices they paid farmers for meat, while raising the prices they charged consumers—just like Tyson Foods is doing today.

At the core of Tyson’s strategy is an economic principle called vertical integration. This refers to the way companies buy up the outside firms that supply them. 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 read-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. There is no competition among the various entities, no free market to determine the prices. It all happens within the walls of Tyson’s corporate structure.

Tyson Foods made sure there was no free market to determine prices, no competition among the various entities.

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.

Middle America’s Economy

Tyson first pioneered the vertical integration model in the poultry business. Then the company expanded into raising hogs. Within two short decades America’s independent hog industry was wiped out. The amount of money spent at grocery stores went up, but the amount of money farmers received went down.

People didn’t see the transformation that was taking place on American farms, but the benefit invisibly accrued to their food budgets with each pound of Tyson chicken, beef, and pork they brought home. Essentially, consumers traded away the US 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.

Once the broad-based meat industry was traded away for a vertically integrated one, the deal could not easily be undone. The economics of scale now make it almost impossible for new competitors to enter the field and compete head-to-head with Tyson and its imitators. To compete against them, a new company would need to invest hundreds of millions of dollars up front, before the first day of business. It would need animals, of course, and Tyson has much of that supply locked down with its contracts.

Not Just Price, but Production

Not only does Tyson have control over how meat is priced, it also sets rules for how meat is produced. To take just one example: At the feedlots where cattle are raised for Tyson’s slaughterhouses, Tyson was among the first companies to aggressively use a little-known growth drug called Zilmax. The drug causes cattle to put on weight much faster than they would naturally, but it reduces the quality of the beef.

Because Tyson tightly controls production at vast feedlots, it can use such drugs on an industrial scale without most consumers ever knowing about it. Other companies started using Zilmax to keep up with Tyson, and the drug quietly became the industry standard. Tyson Foods has a similar discretion in deciding how much antibiotic drugs called ionophores it will feed to its chickens, or what kind of chemicals it will spray on chicken carcasses as its slaughterhouses to fight food-borne illness.

Industry Power

The view of Tyson looks different when you’re at the bottom, looking up. And that view provides the more accurate picture. Because Tyson doesn’t really exist on Wall Street. It doesn’t exist in the studios of CNBN or even at Tyson’s own headquarters in Springdale. Tyson exists within its footprint of slaughterhouses, feed mills, and farms. It lives in the widely dispersed network of industrial fortresses, like the Tyson complex in Waldron and other isolated rural towns like Berryville, Arkansas; Missouri, and Broken Bow, Oklahoma.

Tyson Foods exists within a widely dispersed network of industrial slaughterhouses, feed mill, and farming fortresses.

In these places, Tyson is the center of economic gravity. In these places, it is revered and feared. It provides the jobs. It provides the tax base. If Tyson ever closed up shop, the town itself would evaporate.

At its heart, Tyson’s power is economic, and it has used this power to redraw the laws of wealth and income in rural America. The way the company is structured has done more than revolutionise how meat is produced. It has also fundamentally altered the way money is distributed in America’s Heartland. In 2010 alone Tyson Foods sold $28.43 billion worth of meat and cleared $780 million in pure profit. And that was during a tough year.

Political Power

Tyson’s power has become entrenched over decades, as Democratic and Republican administrations traded places in Washington. But the economic malaise of rural America caught the attention of a young presidential candidate named Barack Obama as he spent months campaigning in Iowa during 2007 and 2008. When Obama was elected, he named Iowa’s governor, Tom Vilsack, to the post of secretary of agriculture, and he told Vilsack to take action on the concentration of power among a few giant agribusiness companies.

The corporations marshalled millions of dollars and terms of lobbyists to help turn back the biggest effort to reform the meat industry since the 1930s.

The US Department of Agriculture proposed the toughest antitrust rules over meat companies since the Great Depression. The USDA has held a series of workshops with the US Department of Justice, with Vilsack and Attorney General Eric Holder traveling to places like Normal, Alabama, and Ankeny, Iowa, to learn more about Tysons’ power.

The series of workshops were launched with soaring rhetoric about the creation of a new food system and new rural economy. What the administration did not seem to anticipate was the organised resistance it would face from Tyson Foods and other multinational meat corporations. The corporations marshalled millions of dollars and terms of lobbyists to help turn back the biggest effort to reform the meat industry since the 1930s.

In retrospect, the Obama administration seems almost naive in the way it attempted to reform the meat industry.

Source: Various excerpts from Christopher Leonard’s book The Meat Racket, available for purchase via iBooks.

Various undercover investigations have shown the brutality that is Tyson Foods and the billions of animals who suffer and die at their hand every year. Certainly, as change comes, it is the consumers who drive the shift in production focus. Consuming a plant-based diet and adopting vegan ethics means you stop supporting the oppression of non-human animals and the stranglehold that the hand full of corporations has on the American food system, and work towards creating a better world.

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