The Meat Racket Book Summary - The Meat Racket Book explained in key points

The Meat Racket summary

Name: The Meat Racket
Rating: 4.3 (15 reviews)
Author: Christopher Leonard

Christopher Leonard

The Secret Takeover of America’s Food Business

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The Meat Racket
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What’s in it for me? Learn the uncomfortable truth behind the meat you eat.

Have you ever eaten meat from Tyson Foods? No? Well, if you’ve ever had a Chicken McNugget, or a hamburger in your staff cafeteria, it turns out you probably have!

Today, Tyson Foods is the biggest meat company in the US; in 2011 they raised 2.1 billion chickens, and slaughtered 7.2 million cows and 20.5 million pigs. They produced about a fifth of all meat consumed in the United States.

So why don’t you know much about them? The company isn’t very vocal about its business practices and, as a result, few know how they have risen to the top of their industry. These blinks change that; they show you the reasons behind the company’s growth, and highlight the fact that while it might have brought cheap prices to consumers, it has spelled disaster for farmers.

In these blinks, you’ll find out

why Tyson foods force their farmers to take part in a tournament;
what chickenization is; and
why Barack Obama’s plans to reform the meat industry have failed.

The secret to Tyson Foods’ huge success was vertical integration.

What’s the best way for a company to increase its profits without actually having to improve its product? One business might start by improving its marketing campaign, while another could streamline processes in order to reduce redundancy.

For a huge company, however, these small-time solutions simply won’t cut it; it would need something much grander.

For Tyson Foods, this grand idea was vertical integration, a process by which a company takes control of all the independent businesses that work with it.

In Tyson’s case, companies from throughout the meat supply chain, such as farmers, feed producers, slaughterhouses and distributors, were placed under the company’s tight grip.

This doesn’t necessarily mean that Tyson owns each of these partners. Rather, they are simply under Tyson’s control by virtue of their contractual relationships: among other things, they have to comply with Tyson’s strategy and prices, as well as work with other Tyson companies.

The big advantages of vertical integration are that it helps mitigate competition and unify strategy.

When a single company controls the entire supply chain, it’s extremely difficult for a competitor to enter the market. Where will competing companies find farmers if Tyson controls them all? Where will they find people to butcher and process the meat? In all likelihood, they won’t.

Furthermore, when you control the entire production process, you can force people to work toward your own strategic goals. With the competition vanquished, farmers, butchers and processors simply have nowhere to go if they oppose Tyson’s practices.

For example, Tyson favors quantity over quality in its production, preferring mass-produced meat over higher quality alternatives. To this end, Tyson has forced its farmers to provide cattle with Zilmax, a drug that makes them grow faster. Farmers either agree to this practice, or get cut out of the business.

For Tyson, this strategy is incredibly profitable – for its suppliers, it isn’t at all. In 2010 alone, Tyson Foods sold $28.43 billion worth of meat, earning $780 million in profits.

Tyson Foods’ success was built upon the insecurity that farmers experienced during the Great Depression.

Until as recently as the first decades of the twentieth century, the basic model for American farming was the small family farm. The huge, centralized industrial farms that dominate the market today were practically unheard of.

When the Great Depression hit, everything changed. Like everyone else, many farmers suffered immensely during the Depression. Markets dried up, and many farmers faced bankruptcy. They needed a savior, but who? Enter Tyson Foods.

Industrialized chicken processing was Tyson’s next big step toward market dominance.

So what was Tyson’s plan after putting their system of vertical integration into place? Would it use its newfound efficiency to refine its product? Or would it go for growth?

It went for the latter, and did so with a passion. The company established a new official policy: expand or expire. But expanding is easier said than done, and Tyson faced many difficulties along the way.

Because Tyson Foods doesn’t own its farms, the individual farmers take all the risks.

So far, we’ve seen how vertical integration allowed Tyson Foods to dominate the chicken market, employing both industrialization and standardization.

But if control over subsidiary businesses was so important to Tyson, why didn’t it simply buy them all? Many Tyson farms are still “owned” by individual farmers. Why?

Tyson uses a “tournament model” to keep competition between farmers high and costs low.

What do you think of when you hear the word “tournament”? Perhaps regally clad knights jousting at a Renaissance fair? Or a giant sporting arena where athletes compete for prizes? Whatever comes to mind, chances are that a tournament is somehow fun or exciting.

For Tyson Foods’ farmers, however, the word “tournament” has a much more ominous meaning.

The chickenization of other meat sectors started with hog farming, although it wasn’t Tyson that benefited.

As you’ve learned, Tyson Foods made great strides in bringing efficiency to the chicken business. In fact, their methods were so effective that they earned their own name: chickenization.

Specifically, chickenization describes how other meat production industries followed the example of the chicken industry: larger production, industrialization, vertical integration and the concentration of power in the hands of a few companies.

With the purchase of Iowa Beef Processors, Tyson Foods finally became the meat king of the world.

With Smithfield’s dominance in the hog industry, Tyson had hit a wall. But there was still one area where they could expand: the beef industry.

In the 1990s, the big player in the US beef market was Iowa Beef Processors (IBP). The company was enormous, much larger and far more profitable than Tyson. Yet, it was also in a period of transition. In an attempt to take the company off the stock market and return it to private ownership, a group of IBP managers had launched an attempt to buy out shareholders.

With large companies now in control of all meat markets, independent farming became more difficult.

Over the course of the previous blinks, you’ve seen how Tyson Foods and its competitors have effectively come to control the entire meat industry. With vertical integration strategies, they can dominate whole markets, forcing their subsidiaries to accept their offers or simply go out of business.

But what about the farmers who refuse to deal with the leviathan of the meat industry? How difficult is it to remain independent?

Amazingly, companies like Tyson haven’t actually violated any antitrust laws.

The last few blinks have outlined nothing short of the takeover of an entire industry by a few companies. Surely it is exactly these sorts of situations that antitrust laws were designed to prevent – so where was the US government during all of this?

Antitrust laws are generally designed to protect producers and customers. Yet, whereas farmers were hurt by turbulent times in the meat industry, customers saw nothing but advantages.

The Obama administration’s attempts to give power back to farmers have proven to be futile.

When President Obama took office in 2009, he brought with him a zeal for reform. He promised to change the way that health care, immigration and even agriculture were run.

As part of this reform, Obama brought in Tom Vilsack as Secretary of Agriculture. Vilsack, an Iowan, took the agreement made in his home state – one that limited the power companies exercised through the tournament system – and hoped to use it as a model for reform throughout the country.

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What is The Meat Racket about?

The Meat Racket (2014) tells the bleak story of how a few giant corporations managed to monopolize the entire meat market in the United States. Through cunning business strategy, massive loans and a fair amount of bullying, companies like Tyson Foods rule the meat industry virtually unchallenged.

Who should read The Meat Racket?

Anyone interested in the state of modern agriculture
Fast food lovers who believe their chicken nuggets come from Old McDonald’s farm
Anyone hoping for a better understanding of where their food originates

About the Author

Christopher Leonard is a fellow at the New America Foundation, a nonpartisan public policy institute, and has worked as an agribusiness reporter for the Associated Press. The Meat Racket is his first best-selling book.

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