The Business of Raising Chickens

The Lempert Report
May 12, 2014

Vertical Integration: What sounds like a marketing strategy for a corporation, is also a system of farming.

Vertical Integration: What sounds like a marketing strategy for a corporation, is also a system of farming. One that's placing companies like Tyson, under the microscope, and not in a good way. A recent book, The Meat Racket: The Secret Takeover of America’s Food Business,  by Christopher Leonard, takes a closer look at corporations, like Tyson, that are behind America's meat industry and how Vertical Integration has become a power system that Leonard compares to  "the kind of power that feudal lords once held."

How vertical integration works is - farmers for companies like Tyson own their land, but not the chickens they raise. Tyson also owns the feed that's given to the birds, which is specially designed at a Tyson plant, and the cost of the feed is deducted from the farmers profits. The company also controls if and when sick chickens are given medicine, based on the recommendations of veterinarians employed by the company. But if something goes wrong, it's the farmers who are stuck with the financial burden. An example given in Leonard's book is that of Jerry and Kanita Yandell. The couple raised chickens for years until inexplicably they started to get sick and were wiped out. Tyson officials dressed in biohazard suits went out to the farm to collect the carcasses and left without informing the Yandells what had caused the die-off. Instead the family, who took on $260,000 in debt to set up their chicken-raising operation, were left in financial ruin.  

Companies like Tyson adopted this method because the riskiest part of the business it outsources, while they still maintain control.  Farmers like the Yandells generally have to take out bank loans which inevitably become a struggle to pay back. Why?  Farmers are paid based on relative performance, so those at the top earn at the expense of those at the bottom.

Vertical integration is unfortunately a system that gives way too much power to the big companies with little support and protection to the farmers who end up struggling to make ends meet.