The Meat Racket: The Secret Takeover of America's Food Business

by Christopher Leonard

  In the beginning, Tyson raised hogs only to get rid of its excess chicken feed. Before it had hog barns, Tyson used to cart unused chicken feed from one chicken farm to another. But Tyson’s veterinarians were worried that the feed might be carrying diseases along with it as it got shipped to other farms. The company came up with a novel solution: It decided to feed those leftover chicken rations to hogs. That way it would get the grain off chicken farms but still put it to good use.

  Moeller was hired to work on Tyson’s flagship hog farm. It consisted of a few large sheds that could each hold five hundred pigs. Each day, Moeller fed the animals leftover chicken food, gave them water, and kept the barns clean. And he observed the animals. He learned about them. It quickly became clear that disease was the biggest hurdle to raising hundreds of hogs in confinement. When one pig got sick, the others caught it quickly. They didn’t have space to roam, and they weren’t moving around outside where they could build up natural immunities. The barns were a hothouse for disease. Moeller had an orderly mind and meticulous work habits, attributes he assigned to his German ancestry, so he quickly adopted rigorous hygiene protocols for the farm. Workers scrubbed themselves thoroughly, and the company used different sets of equipment for different barns, even using separate trucking fleets to transport different batches of hogs. Pig waste was another problem. Weighing hundreds of pounds, each animal produced a tremendous amount of feces and urine. On a typical hog farm, this waste was an asset. Farmers spread it on their crop fields and it enriched the soil. But big hog barns had just the most primitive form of sewage systems: open lagoons and pits where the waste built up quickly. At such highly concentrated levels, hog manure became toxic waste. If it leeched into local streams, it could kill fish and other aquatic life. The stench was bad enough to make people want to leave their homes nearby.

  Over the years Moeller and a handful of other workers improvised a new set of rules for raising pigs in a factory environment. They were highly effective at their job, and the hog farms turned a profit. Don Tyson saw the opportunity to expand into hog farming, even though chicken production was his company’s foundation.

  The incentive for doing this was clear for Tyson’s Foods. There were billions of dollars of profit at stake if the company could figure out how to raise pigs in the same way it raised chickens. In 1973 there were about 736,000 hog farms in the United States, which collectively made about $7.7 billion a year. It was a business still characterized by mom-and-pop producers scattered across theAmerican countryside. If Tyson could beat them at their own game by raising pigs more cheaply and voluminously, the company could steal the lucrative market for itself. If Tyson could dominate hog production, it could take on the cattle business after that.

  The task was daunting, and it amounted to nothing less than the fundamental redrawing of the livestock economy. Tyson had created an industrialized chicken business out of whole cloth, but the hog and cattle businesses were different. They were already entrenched, already profitable, and populated by millions of owners and workers who weren’t about to give away their businesses easily.

  Luckily for Tyson’s Foods, the livestock industry was becoming more vulnerable to a takeover in the 1970s and 1980s. This vulnerability was a direct result of Tyson’s growing chicken business. The rise of modern poultry consumption came at the direct expense of the beef and pork industries. When consumers started eating more chicken, they didn’t increase their overall meat consumption. So chicken pushed beef and pork off the dinner plate and the fast-food menu. That meant that cattle and hog producers were watching their markets shrink during the 1980s and 1990s, as their customers were stolen away by cheap chicken.

  To compete with the chicken industry, hog and cattle producers could follow the model that Moeller was slowly building for pig farms. They could chickenize. Tyson’s chicken contracts could come to dominate hog production. Cattle producers could also fall in line, with ranches and feedlots organizing themselves around the principles of coordinated supplies and contracts inspired by chicken farms. The meat from cattle and hogs would become more uniform and cheaper, all the better to compete with chicken. Pork lobbyists would even spend millions trying to convince consumers that pork basically was chicken, or the “other white meat,” as they called it. The sirloin steak and pork loin of years past would be replaced by factory meat, delivered reliably on schedule and with qualities that were the same from restaurant to restaurant, and Wal-Mart to Wal-Mart.

  To make this happen, the livestock industries would have to resemble the chicken business in another, critical way. They would be dominated by a handful of giant corporations that could finance, coordinate, and control complex industrial farms. Shifting power into the hands of a few corporations wouldn’t be an easy task. Regulators were taking notice of the power grab, from farm state attorneys general to USDA antitrust officials in Washington. Federal efforts to curb the power of meat corporations were halting during the 1980s. But a handful of regulators took notice of the big meat companies. The degree to which these regulators fought back would determine who won and lost in the new agricultural order.

  But before Tyson could get to any of that, the company had to overcome one hurdle: the biology of the pig.

  * * *

  Moeller’s business plan was almost thwarted by piglets.

  Chickens procreate through the wonderfully factory-friendly industrial unit of the egg. Eggs can be lined up in crates and stacked in neat rows and heated in hatcheries. When chicks pop out, they’re ready to ship to a waiting farm. Pigs, on the other hand, are born in broods. The babies need to suckle at their mother’s teats. It takes weeks for a wobbly piglet to be strong enough to be shipped anywhere. And like other mammals, pigs evolved over the eons to protect their young. The animals have strong, innately bred social instincts that made it all but impossible to raise them in close quarters. Packing hundreds of female sows into a barn means some of them are going to kill the others. Jealous mothers fiercely protect their young. The male boars fight off competitors and kill the runty weak among them. In short, unattended hog barns easily turn into a big, messy carnival of violence. And that’s not good for business. Stressed-out animals don’t yield good meat.

  Then there was the waste to deal with. Chicken litter can smell horrible, and it gets noxious when it builds up inside a big barn. But hog manure makes chicken litter smell sweet by comparison. As Moeller worked the barns each day, the smell of pig waste seeped into the very fibers of his clothing and the follicles of his hair. No amount of soapy washing and scrubbing could easily remove the stench. Pig waste is more similar to the excrement of a 350-pound human than it is to chicken litter. It piles up quickly inside hog barns.

  Over the years, Moeller and his team of coworkers solved each of these problems, inventing their own solutions and borrowing others developed by outside companies, farmers, and universities. To house the animals, Tyson stuck with the basic blueprint of a chicken house. But the company subdivided the floor of the houses into smaller pens, keeping the animals segregated so they wouldn’t kill each other. They built a gangway that ran down the center of the barn so workers could walk between the long rows of pens. When it came time to load the pigs onto a truck, the pens were opened up and the pigs were herded into the central gangway and then out the front door.

  To handle the waste, Tyson designed deep pits beneath the hog houses. The floor of the pens was replaced with slats, which let the waste fall through into the pits below. The manure and urine was pumped outside the hog house into a pit resembling a primitive lagoon.

  Perhaps the most important innovation dealt with the suckling pigs. Moeller and his fellow researchers broke hog production into two, distinct stages. In stage one, female pigs give birth to piglets in special barns. In stage two, those piglets are fattened to slaughter weight.

  During stage one, pregnant sows are confined in special pens, called “farrowing crates.”1 These crates are narrow metal cages, no wider than the sow’s body,
which keep the mother pig immobilized, unable to turn right or left. On each side of the sow, there are smaller cages where the piglets reside and where they can suckle from their mother through metal slats. By keeping the mother pigs penned, there is no chance that the piglets might be crushed in the melee of a crowded barn. Workers walk up and down the gangway between rows of crated sows and easily pluck squealing piglets from their pens when they are old enough to be shipped away.

  At this point, the piglets enter phase two of the new hog industry. They are shipped to the “feeder farms,” where their life consists of nothing but eating and getting fat.

  The feeder barns were also modeled on chicken houses, with slatted floors and subdivided pens. They were equipped with big feed bins, automatic water lines, and fan systems to keep the animals cool.

  By the late 1980s, Tyson had built a small network of hog farms based on Moeller’s system. Don Tyson was pleased with the results. He was focused almost entirely on the chicken business at that point, but he couldn’t deny there was money to be made in hogs. Moeller proved it. Moeller attended Tyson’s Monday meetings at headquarters and reported impressive profits from the swine division.

  Don Tyson gave Moeller his marching orders: It was time to grow. Tyson would build a network of hog farms from scratch, expanding Moeller’s operation to an unprecedented size.

  Moeller had the money, the model, the technology, and the workforce he needed to expand. But he needed to find just the right place to do it. Arkansas seemed like an obvious choice. But after some searching, Moeller and his team settled on a remote location in the neighboring state of Oklahoma. It was a trek to get there from Springdale, but the place had everything to offer someone who wanted to launch an industrialized hog industry.

  * * *

  Downtown Holdenville, Oklahoma, is like a ragged grid of inner-city ghetto, inexplicably dropped down into the middle of desolate prairie.

  There is nothing around Holdenville but green hills covered in scrub grasses that stretch out to a lonely horizon. The town is stranded, but it was prosperous once. The brick buildings along Main Street speak to the grandeur of Holdenville’s past, with ornate stonework and cornices adorning the skyline through the middle of town. But the elements have been hard on the buildings, and the economy unable to preserve them. Windows are boarded up, bricks are crumbling, and paint peels off the walls.

  Businesses downtown reflect an economy that long ago quit growing and now exists by cannibalizing itself. An inordinate number of pawn shops dot the strip downtown, while several check-cashing and payday loan shops advertise the opportunity to borrow money against the meager paychecks most residents earn. The unemployment rate is among the highest in Oklahoma, and those citizens lucky enough to have a job earn just a fraction of the average pay of their relatives who left for big-city jobs.

  When Bill Moeller saw Holdenville, he knew it was perfect. The city had a population that was hungry for work and would welcome a new company in town. Perhaps more important, the soil surrounding Holdenville was well suited for hog farming. The contract farmers would need somewhere to spread the waste from the farms when lagoons filled up, and the pastureland of Oklahoma was ideal.

  Bill Moeller drew up plans to make Holdenville the beachhead for Tyson’s expansion into the hog industry. The company recruited local farmers to become contract hog producers. Local banks eagerly jumped into the business, offering loans of hundreds of thousands of dollars to finance new hog buildings. Tyson’s Foods invested millions to build a vertically integrated hog complex outside Holdenville, complete with a feed mill, trucking line, and veterinary services. Perhaps the most important part of the complex was a small building that Moeller affectionately called “the nursery.” Moeller knew that the nursery would be the linchpin of Tyson’s success as it competed for more control of the hog business.

  The nursery was basically a large holding pen for piglets, which were brought to the building from farms all around Holdenville. The building let Tyson control which pigs were delivered to which contract farms, and on what schedule. Tyson’s trucks visited special sow farms where piglets were born, gathering up the young animals and bringing them to the nursery, where they were mingled with piglets from other farms. It was critical to do this in a sterile, controlled environment to ensure that disease didn’t break out when the piglets were most vulnerable. While the company depended on outside farmers to raise its animals, the nursery kept Tyson squarely in the center of the production chain. Being in the center meant that Tyson was in charge.

  Tyson hired some of the best geneticists in the field to breed its pigs. The company was pushing ahead of the industry, breeding pigs that were far leaner than their ancestors, with thicker legs that could support their fast-growing haunches. The animal’s skeleton was bred to be a sturdy meat rack, ideal for an animal meant to grow as large as possible while never leaving a pen more than a few square feet wide. The sows were engineered to be superior breeding machines, big, fat mother pigs that could give birth to, and suckle, huge litters.

  Moeller read the pork industry trade magazines, and he laughed. They contained stories about world-record-holding boars that had the leanest meat and the widest body. Moeller knew that Tyson was beating those records, secretly, inside the company’s swine nursery. Tyson chose to keep its records and its breeding secrets to itself. As more farms were put into production, Moeller and his team grew even more adept at breeding and raising the animals, building a herd that was superior to any family farmer’s.

  In 1992 Don Tyson called Bill Moeller. Tyson had orders for him. He wanted Moeller to buy one of the nation’s biggest hog slaughterhouses, which was located in Marshall, Missouri. Moeller helped push the deal through, and with it he closed the final link in Tyson’s production chain. The company now controlled its hog business just as tightly as its chicken farms, from the genes of the pigs to the farms where they were raised and the factory where they were slaughtered and butchered for sale. And just like in the chicken industry, Tyson collected a profit at each link in the chain, money that it would pour into expansion.

  Throughout the 1990s, industrial hog farms began sprouting up across rural America. More farmers signed contracts to grow for Tyson Foods, outside the company’s complex in Holdenville and even farther away in states like Arkansas and Missouri. The meat produced on these farms began taking up more shelf space in grocery stores around the country, squeezing out pricier pork produced by independent farmers and expensive beef raised by ranchers. The tide of chickenization was well under way. And it was about to accelerate.

  * * *

  1. “Farrowing” is the term for giving birth to piglets, and the big sow houses soon became known as “farrowing barns.”

  CHAPTER 7

  * * *

  The Next Generation

  (1995–2006)

  THERE WAS a sense of grandeur, by the mid-1990s, at the Tyson Foods complex in Springdale. New office buildings had been erected of black steel and glass. The buildings housed several floors of workers, who labored in cubicles and helped direct the new age of centrally controlled agriculture. From these offices, it was determined how many chickens would be raised in a network of farms that stretched from Missouri to Georgia. It was determined what breed of chicken would be raised to provide Americans their poultry. Workers directed a growing number of hog farmers where pigs were raised under contract, controlling the size of the herds with a few strokes on their computer keyboards.

  If there was anything close to a broad vision that drove Tyson during the 1990s, it was the belief that Tyson could control anything it wanted and crush any competitor. The company dominated the chicken market and supplied all the major food companies, from McDonald’s to the corner grocery store. It was one of the largest hog producers in the United States and was toying with the idea of cattle production. Tyson Foods even made a $243 million bet that it could control the seafood industry with its purchase of Arctic Alaska Fisheries. There was no corner
of the meat industry that Tyson was not set to conquer.

  The 1990s was the age of dominance for corporate agribusiness. Tyson Foods alone earned $86.9 million in profits in 1996 and $219.2 million the year before. The company’s assets were worth about $4.5 billion, and sales were growing 17 percent a year.

  Having built this empire, Don Tyson finally decided it was time to step aside in 1991. He spent more and more time on his personal yacht, having developed an affinity for fishing the deep seas or Caribbean waters. It was time to let someone else deal with the day-to-day headaches of running his company.

  Don Tyson’s lieutenants had vied for decades to take his spot at the top of the company. Many of them seemed to have already earned the right to take it. Men like Buddy Wray and Leland Tollett had decades of experience, and they had helped make Tyson a multibillion-dollar corporation. But ultimately, none of these men would be the leader who ushered Tyson Foods to its ultimate destination as the undisputed king of U.S. meat production. That task would fall on the shoulders of a younger man, whose last name happened to be on the marquee sign outside company headquarters.

  * * *

  He was always “Johnny.” Even when he took over the corporate suite, the oval office with the brass eggs for door handles and the big desk where he called all the shots, even then, he was still “Johnny.” He was “Johnny” to his dad, and” Johnny” to the cadre of old men who surrounded his dad. He was even “Johnny” to the secretaries and farmers and lowly office workers who would never possess a fraction of his fortune.