In Meat We Trust (27 page)

Harper wasn’t finished. Four years later, he flew to Greeley, Colorado, and persuaded Ken Monfort to sell him the feedlots, the packing plants, and the brand. Monfort needed little persuasion. He had never recovered from the bloodbath of the 1970s, and by the end of that decade, production costs at his Greeley plant were 50 percent higher than those at IBP, thanks to Monfort’s desire to play fair with unions. When he finally asked his employees for concessions, workers struck. The confrontation was ugly and painful for both sides. Monfort argued that in the age of IBP, union work rules and high wages were driving the company toward ruin. Nonsense, replied union leaders. “Monfort wants to return
to the industrial dark ages of starvation wages and destructive working conditions.” Employees vowed they would “not surrender to Monfort’s selfish demands.” The strike ended after seventy-three days, but the plant did not reopen. Ken Monfort closed it and one of his feedlots and began carving the fat from his operations, laying off management, dumping assets, and revamping the packing plant. In 1982, he reopened the slaughterhouse, minus a union contract, but he never caught up with his competitors. So when Mike Harper presented his offer, Ken grabbed the lifeline. Harper, he said, was “the ‘big friend’
I was looking for.” Monfort of Colorado, Inc., would remain a separate entity within ConAgra, and Ken would stay on as its head.

Monfort’s fellow meatpacking pioneer, IBP, also changed hands, not because it was struggling but because that company wanted to move into hog slaughter and pork processing. “Pork has been there
for 25 years waiting for someone to automate and upgrade,” said IBP’s president, Robert Peterson, in 1980, and grocery chain executives were pressuring him to give them an IBP version of pork. If anyone could reinvent hog slaughter, it was Peterson, an Andy Anderson protégé, but he, too, needed a big friend to foot the bill. Peterson found his partner in Occidental Petroleum Corp., a global behemoth with holdings in, among other things, oil, ammonia, pesticides, fertilizer, and cattle. Oxy’s chair, Armand Hammer, explained that his corporate strategy for the 1980s was to “increase world food production
‘to see that all people are fed.’” Or, as an Oxy vice president put it, “We think food
will be in the 1990’s what energy has been to the 1970’s and 1980’s.” What better way to pursue that strategy than by owning the biggest beef processor in the world? The folks at IBP wasted no time marching into the disarray that was hog slaughtering in the early 1980s. The plan was to produce boxed pork and sell it to the IBP customers who relied on its boxed beef. IBP executives outfitted the venture with pork-related expertise by wooing top managers from Wilson and Oscar Mayer. As for packing plants, those were (almost) a dime a dozen, thanks to the turmoil of the previous decade; Iowa, still the national leader in hog production, boasted a bouquet of idle slaughterhouses. IBP bought a shuttered Hygrade plant in northern Iowa, gutted it, and renovated it into a marvel of streamlined efficiency. Capacity: 3.5 million hogs a year. Within months, IBP announced plans to build the world’s largest hog slaughter plant in either western Illinois or eastern Iowa. (Two small towns—one with a population of 1,100 and the other 600—duked it out for the honor. Stanwood, Iowa, won.)

IBP’s invasion of the pork industry pushed the remaining member of the old Beef Trust, Wilson Foods, as it was then called, over the edge. In the late 1960s, a corporate conglomerate with holdings in electronics had bought Wilson, but no good had come of it, and a decade later, the meatpacker was gasping for air. The firm’s president placed the company’s last bet on pork and “branded” fresh pork cuts, but that plan unraveled once IBP entered the pork market. In 1983, bleeding a million dollars a week, Wilson’s executives filed for bankruptcy and used that protection to cancel its labor contracts. (The union sued, but the Supreme Court sided with Wilson.) Wilson unloaded plants, laid off workers, and dumped its employee retirement plan. It wasn’t enough. “I just don’t see
how they can stay in business,” said one analyst. They couldn’t. In 1985, Wilson put itself up for sale. Tyson, ConAgra, Cargill, and Swift all looked—and passed. IBP wanted it, but the bankruptcy judge refused that offer. In the end, Wilson found a buyer in Doskocil, a Kansas sausage manufacturer whose major customer was Pizza Hut.

It was inevitable that the new titans would test their prowess and collide in the process. In 1988, ConAgra and Tyson Foods battled for ownership of Holly Farms, one of the oldest and most solid of the broiler companies. Tyson made the first move, announcing it planned to spend $900 million in stocks and cash to acquire Holly. Most analysts assumed that Tyson was after the chickens. Those were attractive, but they weren’t Tyson’s primary target. A few years earlier, the Arkansas giant had moved into processed pork products, a natural move given its investment in hog farming, and Holly owned a subsidiary that manufactured hot dogs, ham, and other pork-based foods. “We are confident
that this proposal will be extremely attractive to your stockholders,” Don Tyson wrote in a letter to R. Lee Taylor, Holly’s president. Nothing doing, replied Taylor. According to analysts who knew both men, the refusal stemmed from personal relations or, more accurately, lack of them: Taylor did not like Tyson and had rejected a similar offer three years earlier. Don Tyson wanted what he wanted, however, and he marched forward; indeed, Taylor’s recalcitrance likely whetted his appetite for battle. (A year earlier, he’d introduced a meeting with a poster of Rambo-chicken, a bird outfitted with “battle helmet,
grenades and machine gun.”) After weeks of Tyson’s pestering, Holly’s board informed Don that it had agreed to a “friendly” takeover by Mike Harper and ConAgra. Tyson responded with a sweeter deal. Months of warfare ensued, but in the end, Tyson, the nation’s biggest poultry processor, snatched Holly, the number-three, away from Harper, the number-two man on the chicken totem pole, for a final price of $1.29 billion, well above his original offer of $900 million. “This is a very tasty morsel
for us,” cackled Tyson’s general counsel.

By the late 1980s, the new food powerhouses dominated meatpacking, but their gigantic operations required massive quantities of raw materials: cattle and hogs. The beef packers formed partnerships with big cattle feedlots or bought them outright because those feeders could provide not just large quantities of cattle, but, as custom feeders, the precise kinds of livestock that ConAgra or IBP wanted. Paul Engler, the man who’d opened a feedlot near Amarillo, Texas, back in the early 1960s, enjoyed personal connections to IBP’s leaders and those links led to profit. Cargill owned Excel as well as a collection of feedlots.

Hogs, however, posed a more complicated problem because companies like ConAgra, IBP, and Tyson had to satisfy two different markets. First were the global buyers, especially in Asia, where pork was the most popular meat and where local farmers couldn’t supply enough to feed rapidly growing urban populations. American hog producers dominated that export market, but there was a catch. “[I]nternational customers,”
explained an agricultural economist at Oklahoma State University, “don’t buy and view meat the same way we do domestically. It’s not a commodity to them. It’s a very specific quality, value-added product to them and they will force us to market it that way.” Japanese customers, for example, demanded marbled pork that oozed flavor and fat. But Tyson and other hog growers also supplied the U.S. market, and Americans wanted lean, fat-free, low-cholesterol pork. If Tyson, for example, hoped to sell ham to McDonald’s for its McMuffins, it had to give the fast-food chain precisely the lean meat it wanted. Food processors and grocery chains also demanded low-everything pork that could be used to manufacture low-fat, microwaveable, processed pork products, whether sausage, bacon, or frozen, low-calorie entrées.

As a result food processors, meatpackers, and farmers—and by the 1980s, these were often one and the same—could no longer afford to think of hogs (or cattle or chickens) as basic commodities whose price depended on supply, demand, and the cost of corn. Those traditional “fuzzy”
price signals, explained two economists, had been supplanted by ones transmitted by consumers who made purchases based on calorie and cholesterol count and a product’s “convenience” quotient. Put another way, packers and processors didn’t want hogs. They wanted four-legged sources of specific types of pork: low-fat, low-cholesterol for diet-crazy Americans; fattier cuts for the Asian market. The most cost-effective way to lay their hands on such animals in the huge quantities needed was by demanding that farmers add value to a hog from the moment of its inception. By the late eighties, “value-added” referred not to, say, boxed pork or microwaveable sausage, but to a hog bred with specific genetic traits and raised on a combination of computer-designed rations and biotechnologies, such as porcine somatotropin (pST), a drug that increased weight gain per pound of feed and reduced fat accumulation by as much as 80 percent. But all those hogs also had to be identical. Said one packer: “I can do well
with lean hogs. If I have to, I can get along with fat hogs. What I can’t stand is two fat hogs, then a lean hog and then another fat one coming down the chain. It’s impossible to merchandise the mixed shipments we get today.” Small wonder, then, that the new food-and-meat giants constructed their own hog-and-pork supply chains. It was the only way to guarantee a consistent product, volume, and price. Nor was it any wonder that in the world of meat, wrote two analysts, “product development”
now began “on the farm, rather than in the processing plant.” When packer-processors had to buy hogs outside their own supply lines, they replaced fuzzy signals with contractual detail, telling farmers, “We will buy X number of hogs with X amount of fat and at X weight, and we want uniformity, not just sometimes but always.” But because most conventional in/out farmers could not meet those demands, processors and packers relied on corporate farmers who understood the rules of the game, new-style farmers like Premium Standard Farms. “We want everything
to be consistent,” explained an official with PSF, “and that’s part of our name.”

By the early 1990s, corporate hog farms had become the norm: operations defined by large scale (not hundreds of hogs, but hundreds of thousands), extensive automation, confinement, antibiotics and other drugs, and contract growers. Among the companies that jumped into the business was Seaboard Corporation, another mongrel conglomerate: it was born in 1918 as a flour miller and followed a meandering path in and out of related areas. In the early eighties, the company shifted its focus to building a global empire based on grain and food, including chickens and hogs, the latter an effort to conquer Asian markets. (The shift from flour mills to chickens and hogs fit Seaboard’s mission as an “entrepreneurial organization”:
“We could produce chairs for conference rooms,” a company vice president said, as long as those chairs made money.) Seaboard built one hog facility in Colorado, already home to fellow hog producers Tyson and National, and hunted for a second location where it would build another hog farm and a slaughterhouse. Oklahoma fit the bill. Tyson operated a breeding facility in that state and contracted with local farmers to raise the resulting pigs. More important, in 1991, the Oklahoma legislature nourished the state’s nascent hog industry (Oklahomans typically raised cattle, not hogs) with a bill that allowed corporations to operate breeding facilities, feed mills, and processing plants, and to provide “technical . . . assistance”
to farmers—a euphemism for contract farming of the sort introduced by the broiler industry.

City leaders and business owners in Guymon, Oklahoma, a small town (population about ten thousand), wanted in on the action. In recent years, that town and surrounding county had suffered a string of economic hits, including the 1987 closure of a Swift packing plant. Local movers and shakers wanted to replace lost industries before the area’s economy spiraled down the path of decline. Guymon wooed Seaboard and won, thanks in part to a package of incentives that totaled more than $30 million. The project was spearheaded by townspeople, to the dismay of many farmers and other residents of nearby rural areas. “Now why do the poor people
of Guymon Oklahoma . . . have to subsidize a corporation of that size and magnitude[?]” asked one farmer. Another found the situation both frustrating and comical. “I’m sure those executives were saying—What? They want to do what? Oh, boy. Just so we’ll locate there?” From Seaboard’s perspective, Oklahoma made good sense, so off to Guymon went Seaboard, another factor that turned an unlikely location—Oklahoma?—into a new hog powerhouse.

Seaboard’s arrival created hundreds of jobs and attracted other hog-related, job-producing companies, but the ensuing stench—giant hog farms generated as much odor as they did pork—turned neighbor against neighbor, and locals engaged in that oldest of American activities: defining the distinction between personal liberty and community well-being. “The trouble is
that the odor goes across the fence and that doesn’t seem right at all,” mused a local cattle rancher. “That can ruin somebody’s property values and make it so they can’t enjoy their own property. It seems like a real infringement to me.” But a cattle feeder who’d seized Seaboard’s arrival as an opportunity to diversify into hogs scoffed at that view. The “pigs came
and you don’t like it,” he said. “My attitude is—leave!” As far as he was concerned, “you control
your own life, you can live anywhere you want, you can do anything you want. You can use your property in any fashion you feel proper. And the government should stay the hell out of it.” Others weren’t so sure. “I’m an advocate
of individual rights, but there’s a limit,” said an Oklahoma state legislator. “You can’t just let mass pollution happen. And in some cases you are going to be stepping on individual rights when you regulate.” Another man marveled at the way Seaboard’s arrival had turned his worldview upside down, to the extent that “a group like the Sierra Club”
had become “popular with conservative Republicans.” “I thought I was a conservative Republican,” he mused. “I’m not sure what I am now. I thought conservative Republicans were pro-growth, pro-business” and “wanted to build things and sell them. Instead they are hugging trees.” In 1993, the Oklahoma legislature decided that the well-being of the state’s economy trumped individuals’ rights to odor-free air. It approved a measure that allowed corporate farmers like Seaboard to operate without a permit. But if the company opted to apply for a permit, it gained permanent protection from nuisance suits.