March 14, 2014

‘The Meat Racket’ details Tyson’s stranglehold on the poultry business

The farmer supplying that drumstick has been beaten down, according to this investigative book. Tyson controls nearly every step of production at the expense of once-independent chicken producers.

In late January, I was flying home from San Diego. I was ravenous and quite grateful for my chicken salad. That is, until I began reading “The Meat Racket.”

The first chapter, titled “How Jerry Yandell Lost the Farm,” is about a couple trying to make a living farming chickens. The baby chicks delivered to them by the giant Tyson Foods began dying in bulk.

“Their bodies were like soft, purple balloons by the time (Kanita Yandell) gathered them,” Christopher Leonard writes. “They fell apart to the touch, legs sloughing off the body. It was like they were unraveling from the inside at a heated speed.”

Leonard is an evocative writer, and if disintegrating chickens don’t do you in, learning about a growth hormone called Zilmax, which Tyson used until about a year ago to make cattle “blow up like muscled balloons,” just might turn you vegetarian.

According to a letter that Tyson wrote to its suppliers and that Leonard obtained, Tyson finally banned the drug’s use because “Zilmax might be causing paralysis in some cattle, and rendering others unable to walk.”

But the book isn’t an animal welfare or dietary screed. These incidents are just part of Leonard’s deeply reported narrative about how big business has come to rule the production of meat. Buy Bonici brand pepperoni, Lady Aster brand chicken cordon bleu or Wright Brand bacon — it doesn’t matter. They all come from the same company: Tyson.

Leonard reports that about 95 percent of Americans eat chicken, which “means they almost certainly eat chicken produced by Tyson,” which means that this story affects us all. And as the title indicates, Leonard is a harsh critic of the system as it now operates, not so much because of what it might do to our health, but because of what he believes it does to farmers.

Only a very good writer could turn a story that’s about chickens, hogs and cattle into a thriller, and Leonard is that. He brings his characters to life. At the center of the book, of course, is the Tyson family. It all began with the indomitable John, who came of age at the start of the Depression, had nothing, and created what is now Tyson Foods.

“He was a man who never forgot the dark cloud of poverty from which he ran until the day he died,” Leonard writes. John’s equally driven son Don worked for 14 years to get chicken on the menu at McDonald’s (hence the McNugget) and turned Tyson into a giant.

The arc of the story is the process of what farmers call being “chickenized.”

But, wanting desperately to cast Tyson as his villain, Leonard overreaches in a way that mars his credibility. While the book provides a scary portrait of capitalism run amok, Leonard has an almost overwhelming and credibility-stretching nostalgia for the small farms of yesteryear.

In his vision, the small farming towns of America have been turned from “an archipelago of clean, prosperous towns with busy town squares, bustling department stores and a thriving middle class” into a meth-ridden wasteland.

And so the farmers are always the good guys: hard-bitten but hard-working, honest, family-oriented. The Tyson workers, on the other hand, are always either hopelessly conflicted (“at least he didn’t hate himself every morning as he headed into work,” Leonard writes about one who was fired) or just plain mean. About a Tyson’s lawyer, Leonard writes that he “had intelligence that wasn’t just impressive; it was weaponlike. It hurt people.”

Setting that aside, the book is an unsettling look at the new, increasingly bruising economics of farm country.

Tyson and its like have consolidated the industry not only by buying up competitors, but also by expanding vertically in an effort to control every step of production. That control has come at the expense of once-independent chicken farmers, who now mainly sell their birds to Tyson under contracts, the terms of which are tough, tough, tough. (Hint: The Yandells aren’t the only ones who lose their farm.)

“During their entire lifespan the animals will never brush up against an open, competitive market,” he writes. Tyson pays farmers via a “tournament,” in which they compete against one another to get paid based on their relative performance, measured by things like pounds of chicken delivered per week.

The tournament is always a zero-sum game where those at the top earn at the expense of those at the bottom, who earn so little that they will soon be driven into bankruptcy if their rankings don’t improve. This “helps push the financial risks of farming from Tyson to its farmers,” Leonard writes. Why not sell to someone other than Tyson? Well, there isn’t anyone.

The contracts are dangerous for farmers not just because one of them has to lose for another one to win, but also because so little is under their control. Success in chicken farming, Leonard asserts, depends on the health of the chicks and the food they are fed and the technology of the farms. Tyson delivers the chicks and the feed.

As for the farms, newer ones can produce more chicken at lower cost than older ones; Leonard tells of families who have sunk their savings into farms only to find themselves outgunned in the tournament by a newcomer just when they thought they were getting clear of their debt.

Why would a bank lend money to finance a chicken farmer who stands a decent chance of going bankrupt? In one of the more shocking facts in the book, Leonard says that the loans are guaranteed by an “obscure federal organization” called the Farm Service Agency, meaning that banks never lose money even as the farmers default.

Yet, Leonard seems to miss a chunk of the economic story. His argument, in essence, is that Tyson and the other meat companies are making so much money that some of it should go to the farmers. “The critical question isn’t whether there is money in agriculture, but rather where the money goes,” he writes.

But at various points he undercuts his own arguments, writing, for instance, that competitors don’t challenge Tyson because its profit margins are too slim to tempt them and that a big rival, Pilgrim’s Pride, went bankrupt after the financial crisis.

This made me wonder, so I pulled up Tyson’s most recent financial report. A quick skim revealed that Tyson earned pre-tax profits of $848 million last year on sales of $34.4 billion — which, indeed, translates to a super-skinny 2.5 percent profit margin.

What’s more, Tyson’s operating income in 2013 was less than it was in 2010, and a stunning 13 percent of its sales went to Wal-Mart — which itself is merciless to suppliers like Tyson in its pursuit of lower costs.

That doesn’t take away from the ugly results that Leonard so effectively documents. But pretending that the problem is simpler than it is won’t help us find a real solution.

The Meat Racket: The Secret Takeover of America’s Food Business,

by Christopher Leonard (370 pages; Simon Schuster; $28)

Bethany McLean, a member of the Washington Post Writers Group, is a contributing editor at Vanity Fair and the co-author of “All the Devils Are Here: The Hidden History of the Financial Crisis.”

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