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

by Christopher Leonard

  As he took on the role of CEO at Tyson Foods: Background interviews by author; Nat Ives, “Tyson Is Counting on Protein to Bulk Up Its Image in a Campaign to Push Its Chicken, Beef and Pork,” New York Times, August 4, 2004.

  Don Tyson was in England when he got a phone call: Two sources interviewed on background by author, one having direct knowledge of events and the other a participant in the events.

  “Tyson’s board of directors gathered for their regular meeting in May 2006: “Tyson Names New CEO and Declares Quarterly Dividend,” http://www.tysonfoods.com/Media-Room/News-Releases/2006/05/Tyson-Names-New-CEO-and-Declares-Quarterly-Dividend.aspx, May 19, 2006; background interviews by author.

  CHAPTER 8: SQUEAL

  In 1996, an Iowa farmer named Chuck Wirtz: Chuck Wirtz, interviews by author, 2010, 2011; rotes and reporting from Iowa, 2010, 2011.

  That’s why Iowa has historically been the epicenter of pork production: Iowa Pork Producers Association; Mark Drabenstott, “This Little Piggy Went to Market: Will the New Pork Industry Call the Heartland Home?,” Economic Review, Federal Reserve Bank of Kansas City, Third Quarter, 1998.

  By the time he was in his early twenties: Chuck Wirtz, interview by author.

  In the early 1990s, Bob Allen saw an advertisement: Bob Allen, interview by author, 2011; Leroy Phillips, interview by author, 2011; reporting notes from Holdenville, 2011.

  Chuck Wirtz had a simple theory: Chuck Wirtz, interview by author.

  By the mid-1990s, Bob Allen and his neighbors were getting better at their jobs: Bob Allen, interview by author; Leroy Phillips, interview by author, 2011.

  The hogs that were born in Oklahoma: GIPSA Livestock and Meat Marketing Study, Volume 1: Executive Summary and Overview, Final Report, Prepared for Grain Inspection, Packers and Stockyards Administration by RTI International, January 2007, ES-10.

  Bob Allen’s education in hog farming came fast: Bob Allen, interview by author; background interviews by author.

  When his first three-year contract with Tyson expired, Bob Allen drove: Bob Allen, interview by author.

  By the late 1990s, it was impossible for smaller hog farms to survive: James M. MacDonald and William D. McBride, “The Transformation of U.S. Livestock Agriculture; Scale, Efficiency, and Risks,” U.S. Department of Agriculture Economic Information Bulletin Number 43 (January 2009), 17.

  Smaller, independent farms reaped only the losses, and it drove them out of business: John D. Lawrence and Glenn Grimes, “Production and Marketing Characteristics of U.S. Pork Producers,” U.S. Department of Agriculture Economic Information Bulletin Number 43 (January 2009), 17.

  Bob Allen was on his knees: Bob Allen, interview by author.

  Chuck Wirtz often drove his farm truck: Chuck Wirtz, interview by author; notes from reporting in West Bend, Iowa, 2011; population data from U.S. Census Bureau.

  Bob Allen lost the fight: Bob Allen, interview by author.

  Just west of Whittemore, Iowa: Chuck Wirtz, interview by author; notes from reporting in Whittemore, Iowa, 2011.

  By 2011, far less than 10 percent of all hogs were sold on the open market: 2011 P&SP Annual Report, Packers and Stockyards Program, U.S. Department of Agriculture Grain Inspection, Packers and Stockyards Administration (March 2012), 47; Chuck Wirtz, interview by author.

  Wirtz was being boxed in: Chuck Wirtz, interview by author.

  In 2011, price discovery was happening in a different way: Chuck Wirtz, interview by author; notes from tour of Tyson Foods hog-processing plant in Storm Lake, Iowa, 2011; background interviews by author.

  Back in 1980, hog farmers earned about 50 cents for every dollar a consumer spent on pork: “USDA Announces Proposed Rule to Increase Fairness in the Marketing of Livestock and Poultry,” U.S. Department of Agriculture press release, June 18, 2010.

  At the same time, pork has become more expensive at the grocery store: Data provided by Food and Agricultural Policy Research Institute, University of Missouri.

  Chuck Wirtz came to an inescapable conclusion: Chuck Wirtz, interview by author.

  CHAPTER 9: PULLING THE NOOSE

  The cowboys were saddled up just after dawn: Notes from reporting outside Dodge City, Kansas, 2011; Gene Carson, interview by author, 2011.

  The modern U.S. cattle business itself is also increasingly confined: R-CALF USA analysis of data from U.S. Department of Agriculture, provided by Bill Bullard.

  On the meatpacking side, there are now just four companies that buy 85 percent of the cattle: 2011 P&SP Annual Report, Packers and Stockyards Program, U.S. Department of Agriculture Grain Inspection, Packers and Stockyards Administration (March 2012), 31.

  Gene Carson owns Maverick Feeders, LLC: Gene Carson, interview by author, 2011.

  The main strip in Dodge City is called Wyatt Earp Boulevard: Notes from reporting, Dodge City, Kansas, 2011.

  Gene Carson used to go out into the cattle pens: Gene Carson, interview by author.

  Carson was too much of a cowboy to fit with National’s buying program: Gene Carson, interview by author; Tim Klein, e-mail correspondence with author, 2013.

  National had evidence to back up the claim: Tim Klein, e-mail correspondence with author, 2013.

  On Monday and Tuesday mornings, the cattle buyers fan out: Gene Carson, interview by author; Ken Winter, interview by author, 2011; Bob Sears, interview by author, 2010.

  But buyers seldom enter the Winter Feed Yard office: Ken Winter, interviews by author.

  What makes Cargill’s dominance even more curious is the fact that this pattern plays out across the nation: Christopher Leonard, “AP IMPACT: Beef Industry Woes May Mean Poorer Meat,” Associated Press, October 19, 2010.

  This picture is clear to Bruce Cobb, general manager of a company that sells cattle to meatpackers on behalf of feedlots: Bruce Cobb, transcript of testimony, U.S. Departments of Justice and Agriculture, Public Workshops Exploring Competition Issues in Agriculture; Livestock Workshop, August 27, 2010, 214, http://www.justice.gov/atr/public/workshops/ag2010/colorado-agworkshop-transcript.txt.

  When asked why this happens, feedlot owners like Ken Winter just shrug: Ken Winter, interview by author.

  Ward Feed Yard does not employ cowboys: Chris Burris, interview by author, 2011; notes from reporting at Ward Feed Yard.

  The idea was hatched by the company’s manager: Lee Borck, interview by author, 2011.

  One of those arrangements involves Tyson’s little-known use of a growth hormone called Zilmax: Christopher Leonard, “Why Beef Is Becoming More Like Chicken: Cheap, Uniform and Bland,” Slate Magazine, February 14, 2013.

  Tyson has quietly encouraged the feedlots aligned with it to use Zilmax on their cattle: Background interview by author, 2011.

  The grids encourage high yields and maximize the amount of beef: Copy of Tyson Foods grid contract for cattle purchases, obtained by author.

  CHAPTER 10: THE FOOD DICTATORSHIP

  Heffernan’s research was based in the rural area of Union Parish in Louisiana: William D. Heffernan and David H. Lind, “Union Parish, Louisiana: The Third Phase of a Thirty Year Longitudinal Study,” 2000. Report at http://www.justice.gov/atr/public/workshops/ag2010/001/AGW-00067-a.pdf.

  There was one reason that Heffernan asked these questions: Harold F. Breimyer, interviews by author, circa 1999 and 2000; William Heffernan, interviews by author, 2010, 2011, 2012; Breimyer, Individual Freedom and the Economic Organization of Agriculture.

  Tabor knew as well as anyone what farming meant to Iowans: Eric Tabor, interviews by author, 2010, 2011.

  In 1980, only about 2 percent of Iowa’s hogs were raised under contract: Contract Feeding Facility Operators Lien, Background Paper on Proposed Legislation, by the Attorney General’s Farm Division, Tuesday, December 8, 1998, Iowa Attorney General Tom Miller’s Office, 1998; Starmer and Wise, “Living High on the Hog: Factory Farms, Federal Policy, and the Structural Transformation of Swine Production.”

  Bad stories were starting to spread from farm to farm: Eric T
abor, Steve Moline, interviews by author, 2010, 2011.

  When Tabor looked for someone to investigate contract farming, his staff attorney Steve Moline was an obvious choice: Steve Moline, Eric Tabor interviews by author.

  Smithfield Foods, the nation’s biggest hog producer, had just purchased Murphy Farms: “Smithfield Foods Reaches Agreement in Principle to Acquire Murphy Family Farms,” http://investors.smithfieldfoods.com/releasedetail.cfm?releaseid=297154, September 2, 1999.

  Moline couldn’t believe what he’d heard: Steve Moline, interview by author.

  The matter seemed clear-cut to Iowa Attorney General Tom Miller: Eric Tabor, Steve Moline, interviews by author.

  They sued Smithfield for violating Iowa’s packer ban: “Miller Sues Smithfield Foods to Block Acquisition of Murphy Farms in Iowa,” http://www.state.ia.us/government/ag/consumer/press_releases/smithfield.html, January 24, 2000.

  Joe Luter, the Smithfield Foods CEO, walked down the narrow path: Eric Tabor, Steve Moline, interviews by author.

  The lawsuit against Smithfield turned out to be far more complicated: State of Iowa, ex re Miller v. Smithfield; Eric Tabor, Steve Moline, interviews by author.

  In September 2000, Miller unveiled a new law called the Producer Protection Act: “Iowa Leads States Pushing ‘Producer Protection Act,’ ” http://www.state.ia.us/government/ag/latest_news/releases/producer_act.html, September 13, 2000; Eric Tabor, Steve Moline, interviews by author.

  Eric Tabor took the stage at a Marriott hotel in suburban Kansas City: Eric Tabor, interview by author; speech notes and event agenda, obtained by author.

  Not everyone who heard Tabor’s speech was moved: James Baker, interview by author, 2011; Greg Page, interview by author, 2013.

  This is the rationale that James Baker deployed: James Baker, interview by author.

  Meat industry lobbyists aren’t brash: Steve Moline, interview by author; background interviews by author.

  Then, quietly, the legislation started to die the slow death that visits most bills: Background interviews by author.

  A similar story unfolded in Washington, D.C.: “Bill Summary & Status, 106th Congress (1999 - 2000), S.2411,” Thomas, Library of Congress, accessed April 2013, http://thomas.loc.gov/cgi-bin/bdquery/z?d106:s.02411.

  On March 8, 2000, as Daschle’s bill was still being drafted: E-mail from Sara Lilygren, “Update on Signatures to Senate Letter on Daschle Antitrust Bills,” March 8, 2000, obtained by author.

  Daschle eventually introduced the bill: “Bill Summary & Status, 106th Congress (1999 - 2000), S.2411,” Thomas, Library of Congress, accessed April 2013, http://thomas.loc.gov/cgi-bin/bdquery/z?d106:s.02411.

  The same fate awaited a federal producer protection act: “Bill Summary & Status, 106th Congress (1999 - 2000), S.3243,” Thomas, Library of Congress, accessed April 2013, http://thomas.loc.gov/cgi-bin/bdquery/z?d106:s.03243.

  In Oklahoma, the bill was pushed by state senator Paul Muegge: John Greiner, “Bill Meant to Protect Farmers Sidelined,” Daily Oklahoman, March 29, 2001; Paul Muegge, interview by author, 2012.

  CHAPTER 11: THE TRANSITION TEAM

  On the morning of November 10, 2007: Dave Murphy, interview by author, 2011.

  “When I’m president, you’ll have a partner in the White House”: Speech transcript, provided to author by Dave Murphy.

  When Donnie Smith arrived for work at Tyson Foods headquarters: Donnie Smith, interview by author, 2009; personal reporting and notes from Tyson Foods headquarters, 2008, 2009.

  Around that time, Barack Obama was in Chicago: Tom Vilsack, interviews by author, 2010, 2011; background interviews by author and personal reporting.

  Between 2000 and 2010, the meat industry gave Democratic candidates: Meat & Poultry Industry PAC Contributions to U.S. House of Representatives 2000 – 2010 Election Cycles. Food & Water Watch analysis of Center for Responsive Politics Data.

  In Oklahoma, two Tyson Foods chicken farmers secretly taped a Tyson Foods employee: “Plaintiffs Present Admissions of a Tyson ‘Insider,’ ” McCurtain Daily Gazette, March 17, 2010.

  In the cattle industry, a federal lawsuit, Pickett v. Tyson Foods: C. Robert Taylor, “Buyer Power Litigation in Agriculture: Pickett v. Tyson Fresh Meats Inc.,” Antitrust Bulletin Vol. 53, No. 2/Summer (2008).

  In the winter of 2008, Tyson executives hatched a plan: Donnie Smith, Donnie King, interviews by author, 2009.

  A similar set of orders from Pilgrim’s Pride achieved production cuts: Greg Hilburn, “Pilgrim’s Pride May Appeal Court Ruling” News-Star, October 5, 2011; personal reporting by author.

  Tyson cut its production by 5 percent in December: Tyson Foods, Earnings Call Transcript discussing Q1 2009 results, January 27, 2009.

  Pilgrim’s Pride entered the crisis of 2008 saddled with heavy debt: Emily Fredrix, “Pilgrim’s Pride Loses Nearly $1 Billion in Fiscal 2008,” Associated Press, December 11, 2008.

  Around the country, some poultry producers were experimenting: Sonny Meyerhoeffer, interview by author, 2011.

  Meyerhoeffer arrived in Famerville, Louisiana, in March 2009 to tell his story: Sonny Meyerhoeffer, interview by author.

  The farmers took over the turkey plant in Hinton and they rewrote the rules: Sonny Meyerhoeffer, interview by author.

  Vilsack inherited a regulatory system that was riven by bureaucratic divisions, miscommunication, and a lack of focus: Background interviews by author.

  Christine Varney looked out over the crowed as she prepared to make her first speech: Remarks by Christine Varney to the Center for American Progress, Washington, D.C., May 11, 2009, video available at http://www.youtube.com/watch?v=Ig2U9oYX2To.

  CHAPTER 12: STREET FIGHT

  Inside the big auditorium, the crowd settled into their seats: Personal reporting, notes from event, 2010; “Agriculture and Antitrust Enforcement Issues in Our 21st Century Economy,” http://www.justice.gov/atr/public/workshops/ag2010/ (transcript at “Public Workshops Exploring Competition Issues in Agriculture, A Dialogue on Competition Issues Facing Farmers in Today’s Agricultural Marketplace,” http://www.justice.gov/atr/public/workshops/ag2010/iowa-agworkshop-transcript.pdf, March 12, 2010; video at http://www.justice.gov/atr/video/iowa-agworkshop-video.php).

  In the months leading up to the hearing: “Press Release, Agriculture Secretary Vilsack Names John Ferrell as Deputy Under Secretary for Marketing and Regulatory Programs,” http://www.usda.gov/wps/portal/usda/usdamediafb?contentid=2009/06/0209.xml&printable=true&contentidonly=true, accessed April 19, 2013.

  a gray-bearded trial attorney named J. Dudley Butler: “Press Release, Agriculture Secretary Vilsack Names J. Dudley Butler to Serve as Administrator of Grain Inspection, Packers and Stockyards Administration,” http://www.gipsa.usda.gov/Newrelease/2009/05-06-09.pdf, accessed April 19, 2013.

  Ferrell and Butler were the consummate odd couple: J. Dudley Butler, interview by author, 2012; background interviews by author.

  While the Packers and Stockyards Act was a tough law: “Packers and Stockyards Programs: Actions Needed to Improve Investigations of Competitive Practices,” http://www.gao.gov/new.items/rc00242.pdf. September 2000.

  For several months during 2010, the policy makers inside GIPSA drafted a new rule: “USDA Announces Proposed Rule to Increase Fairness in the Marketing of Livestock and Poultry,” http://www.usda.gov/wps/portal/usda/usdamediafb?contentid=2010/06/0326.xml&printable=true&contentidonly=true, accessed June 18, 2010.

  Policy makers inside GIPSA also considered more drastic measures: Background interviews by author.

  The proposed GIPSA rule was released in June 2010: Christopher Leonard, “USDA Touts Tighter Meat Industry Antitrust Rules,” Associated Press, June 18, 2010.

  Inside the American Meat Institute, there was shock: Mark Dopp, Janet Riley, interviews by author, 2010.

  The meat lobbying groups began to gather their wits: Personal reporting, background interviews by author.

  The meat companies themselves had tremendous resources at thei
r disposal: Lobbying disclosure reports obtained by author from the Office of the Clerk, U.S. House of Representatives.

  Together, the trade groups and companies spent $7.79 million on lobbying in 2010: Lobbying disclosure reports obtained by author from the Office of the Clerk, U.S. House of Representatives.

  Officials inside GIPSA heard about lobbyists working the halls of Congress: Background interviews by author.

  Through the spring and summer of 2010, the U.S. Departments of Agriculture and Justice held their series of five public workshops: Reporting and author’s notes from USDA/DOJ workshops in Ankeny, Iowa, and Normal, Alabama.

  During the series of workshops, Obama administration officials saw just how powerful, and how difficult to change, the meat industry had become: Background interviews by author.

  Secretary Vilsack called a meeting: Background interviews with author. Accounts of this meeting are based on two individuals who attended the meeting, both interviewed on background. Secretary Vilsack refused several requests to comment on the meeting.

  After the hearing, the public narrative about the GIPSA rule: “Hearing to Review Livestock and Related Programs at USDA in Advance of the 2012 Farm Bill,” http://agriculture.house.gov/sites/republicans.agriculture.house.gov/files/testimony/111/111-56.pdf, accessed July 20, 2010

  To appease GIPSA’s critics, Vilsack extended the public comment period: “Proposed Rules,” Federal Register, Vol. 75, No. 144 (July 28, 2010), 44163, http://www.gpo.gov/fdsys/pkg/FR-2010-07-28/pdf/2010-18458.pdf; background interviews by author.

  To shape the debate, meat company lobbyists used an increasingly common tactic: Stewart Doan, “National Chicken Council Organizing Campaign against USDA’s GIPSA Proposal,” Agri-Pulse, August 12, 2010, at http://www.agri-pulse.com/20100812D_NCC_Anti_GIPSA_Campaign.asp.

  On October 21, GIPSA got an angry letter from Eunice Richardson: Letter from Richardson obtained by author from U.S. Department of Agriculture archive of public comment on GIPSA rules.

  Richardson said she sent the letter to GIPSA: Eunice Richardson, interview by author, 2011.