In Meat We Trust (25 page)

He was right. The moment, and the future, belonged to Monfort and his fellow rebels, whose numbers multiplied as more upstarts, many of them former employees of IBP, opened their doors, most of them in plains states where they enjoyed close proximity to big cattle feedlots. Their relentless pursuit of efficiency smashed unions and dealt fatal blows to conventional packers, but it also enabled them to survive the catastrophes of the 1970s. During that decade, a combination of inflation, high grain prices, a global famine, and changing consumer tastes roiled the meatpacking and livestock industries. Many packers, large and small, shut their doors, and a new kind of factory farmer altered the nature of livestock production as well.

It’s nice to think of the 1970s as the decade of disco, bad TV, and cringe-inducing clothing, but those who lived through it are more likely to remember the misery. Energy prices soared, thanks to a short-lived but gut-punching embargo on the part of oil-producing nations. Motorists lined up at gas stations, but the more significant impact was less obvious: rising energy expenditures increased the cost of doing business—whether as higher heating bills at an insurance company or soaring electricity costs at an automobile plant—and that, in turn, drove up the tab for all goods and services. At the same time, the United States was losing its dominance as manufacturer for the world. The project to rebuild war-torn Europe and Asia had succeeded, and workers in western Europe and Japan were cranking out an array of goods—steel, clothing, radios, toasters, and automobiles—that were cheaper than those made in the United States. For the first time in eighty years, the United States recorded a trade deficit. The deluge of inexpensive manufactured goods battered the foundations of the American manufacturing economy; factories closed their doors, many never to reopen, and unemployment soared. The dollar declined and consumer prices marched up, as did inflation—about 5 percent a year in the early 1970s—and interest rates. Unemployment doubled during 1970, topped 9 percent five years later, and bounced up and down, mostly up, during the decade. Any one of these factors would have affected the making, selling, and eating of meat—farmers passed rising fuel costs on to packers who handed them off to consumers—but the event that whipped all of it into a perfect storm and fundamentally altered the business of meat was a global famine whose economic and political consequences played out for the next two decades.

The famine took shape in the late sixties and early seventies when drought in some parts of the world and monsoons in others destroyed crops, and people living in those areas experienced food shortages. Historians and economists still argue about the extent of those scarcities, and scholars disagree about the severity of the famine and even whether a true famine occurred. But whether the famine was “real” or not is irrelevant; at the time, world leaders believed it was and acted accordingly. In the early seventies, officials with the United Nations’ Food and Agriculture Organization (FAO) announced that global food supplies were at their lowest levels in twenty years. Economists predicted that unless world leaders responded immediately, food shortages would result in mass starvation and political turmoil. Rising affluence aggravated the situation: the same Asians and Europeans who were turning out cheaper cars, radios, and steel also enjoyed higher incomes that enabled them to eat more. At a moment when the world’s poorest needed food, the world’s wealthiest were demanding more of it. Because postwar global trade and political networks were more intertwined than ever, the consequences of Indian monsoons or Russian drought inevitably played out on American soil. Indeed, after Russian wheat crops failed, Soviet leaders staved off potential unrest by buying billions of bushels of grain, a purchase that nearly wiped out American stockpiles. The “grain grab,” as many called it at the time, unfolded entirely in secret, conducted by a handful of powerful grain dealers and unbeknownst to most American officials. But anything and everything connected to agriculture and food was complicated by the fact that since the 1940s, global politics and American foreign policy had become inextricably chained to food largess, and the famine provoked tension between the United States and some of its allies.

In the United States, all these factors, from famine to oil embargo to inflation, wreaked havoc on the business of making meat. In 1972, Colorado cattle feeders paid $50 for a ton of corn. A year later, the price had more than doubled, and it rose again in 1974, including a 40 percent increase during the summer alone. Cattle and hog feeders alike responded by cutting back on the number of animals they fed. Those decisions, in turn, influenced the calculations of western ranchers: fearing they would not find buyers for their cattle, grazers culled their herds, sending cattle to market whether the animals were ready or not. For a brief moment, feedlots ran thick with a glut of exceptionally cheap, young, underfed stock, but their low price wasn’t enough to balance feed costs. “A year ago
we bought two-thirds of [cattle] weight and added one-third,” said Ken Monfort in the summer of 1973. “Today we’re buying 58 per cent and adding 42,” and he paid exorbitant prices to add that 42 percent. Monfort slashed his cattle numbers by twenty thousand, a stunning turnaround for the nation’s biggest feeder, but it wasn’t enough to stem the tide. By early 1974, he was losing as much as $125 a head on each animal he sent to the packing plant, where his overhead costs climbed as the oil embargo sent fuel prices soaring. When he tallied the numbers, Ken Monfort calculated that he had lost $2 million. “We’ve taken beatings
before,” he mused, “but this is the biggest loss in my experience.” That $2 million, however, was a mere drop compared to the $50 million he’d lost on paper: In 1970, he’d taken the company public. Initial shares sold for $16. By early 1974, they were worth $4. “It seemed like a good idea
at the time,” he said of the decision, and he still believed it was. “We’re not going to back down now.” IBP emerged from the chaos in better shape, in part because company executives established partnerships with a number of western cattle feeders, contracting in advance to buy a feedlot’s entire output. And, too, IBP’s size—by the mid-1970s, it was the largest cattle slaughter operation in the world, and three times bigger than its nearest American competitor—gave it economies of scale that outstripped those of the smaller Monfort operation.

But even IBP could not escape the turmoil of the seventies. The Nixon administration responded to soaring food prices by imposing ceilings and freezes, but those did little to ease the pain, and as the impact of the Russian grain deal rippled through the economy, outraged consumers staged protests and organized boycotts. As had been the case during World Wars I and II, high meat prices drew most of their fire. An organization called Fight Inflation Together organized a “housewives” boycott and urged shoppers to leave beef and pork at the store and eat poultry instead. “I’ll boycott
until I grow feathers from eating so much chicken,” vowed one woman. Another told a reporter that her entire family had voted to join the boycott, although given that her household included “two men with good appetites,”
she added, “it won’t be easy.” “Don’t Eat Beef!”
read newspaper advertisements paid for by a group of New York City restaurateurs. “Join us to fight against those ridiculous beef prices.” The lure? A 10 percent discount when diners ordered something other than beef. The boycotts and consumer fury aggravated Ken Monfort, who was “appalled by how little
consumers know about the real world.” Why, he asked, were shoppers willing to “pay $2 a pound for certain fluff like Sara Lee cakes, and argue about paying $1 a pound for chuck roast?” They didn’t understand that food came attached to “basic costs,” he complained, and “the more they want us to do for them, the less value they’re getting.” Meanwhile, butchers blamed high meat prices on packers; packers blamed grocers; and everyone else was convinced that the culprit was either farmers, the Russians, mysterious middlemen, or the equally mysterious “them” in Washington, DC, who seemed not to care about average, hard-working Americans. “We’ve got a worldwide food panic
on our hands, and unless something is done we’re going to have shortages in this country,” insisted an executive with a Kansas City grain mill.

But deciding what that something should be was not easy. The United States could not afford to appear indifferent to global starvation, but the State Department was more accustomed to wielding food aid as a diplomatic cudgel than to giving it away for free. And suppose farmers gassed up their tractors and cranked out bigger grain surpluses than usual, but the predicted demand failed to materialize? Grocery store prices would drop, but farmers would be furious and taxpayers would be stuck paying more for agricultural subsidies. If economists were correct about global demand, however, domestic food prices would rise even higher and citizen-consumers would be out for blood, which, of course, they would extract on election day. At the White House, in Congress, in offices strung along the corridors of the Departments of Agriculture, State, and Treasury, the debate raged: Should the United States stockpile food to protect Americans from future shortages? Should it do as some poor nations demanded and give it away? Should Congress reduce tariffs on imports? Raise them? And what to do about rising food costs? Stick with price ceilings? Freeze wages? Expand and extend unemployment payouts? “Let’s just say
we’re, well, a little befuddled,” an employee at the Treasury Department confided to a reporter.

In the end, befuddled bureaucrats agreed on two points. First, the food famine was real and action must be taken. Economists calculated that over the next decade, American farmers needed to increase production of food and fiber by a third. Second, Nixon’s advisers concluded that agriculture “had become far too important
to be left to the agriculturists.” As long as the crisis persisted, agricultural policy would come not from the USDA but from the White House or State Department. Earl Butz, secretary of agriculture under Presidents Richard Nixon and Gerald Ford, was not persuaded that the world’s billions would starve to death anytime soon, but his opinion didn’t matter. The State Department and White House ordered him to board the famine express, and so Butz urged farmers to get busy making food.

“We’re on the threshold
of the greatest age of agriculture that this country has ever known,” crowed the president of the American National Cattlemen’s Association. In an echo of the 1950s, many farmers unloaded their cattle and hogs, in part because of soaring feed costs but also because they believed that grain, especially wheat, would return higher profits. In Iowa alone, two thousand cattle feeders called it quits in 1973 and 1974; nationally, the number of cattle feeders fell 11 percent between 1975 and 1981. But farmers weren’t the only ones hoping to cash in on the famine. One of the most significant consequences of that moment, one that would play out for decades to come and reshape agriculture in general and livestock production in particular, was that, as one analyst put it, the “farm belt”
became the “new IBM.” Deep-pocketed investors and corporations prowled the countryside looking for land with which to reap the profits of the greatest age. Insurance giant John Hancock bought thousands of acres of farmland in Nebraska and in North Carolina. The cheap land and temperate climate of that eastern state attracted a number of profit seekers, including chemical manufacturer American Cyanamid as well as investors from Japan, Australia, and Italy.

The belief that the world was about to starve was so widespread, and the potential profits of alleged starvation so attractive, that it inspired a modern version of the Marquis de Morès. In late 1973, one Charles McQuoid showed up in Kahoka, Missouri, a dot of a burg in the northeast corner of the state, announcing plans to spend at least $300 million to build a vertically integrated hog and pork production complex. He told townspeople that his would be the largest such facility in the United States, cover nearly seven thousand acres of land, include a slaughterhouse capacity of 2.5 million hogs a year, and employ two thousand people. McQuoid promised big money all around: An annual donation to the University of Missouri, half for swine research, half to the football team. A million dollars to the local school district and an area hospital. An eighteen-hole golf course, a swimming pool and country club, and an airstrip to accommodate the “foreign dignitaries”
who would visit the area. That was enough to convince the Missouri commissioner of agriculture, who approved the project in early 1974. He waved aside objections from farmers and Missouri Senator Thomas Eagleton, who persuaded a Senate committee to investigate the project’s potential for antitrust violations. The naysayers were outnumbered, or at least outvoted. “I don’t think,
as I view the situation today, that this will be the demise of the small hog farmer,” said the commissioner. Businessmen in Kahoka praised McQuoid’s vision, and the town’s mayor dismissed fears that the facilities would generate pollution, arguing that McQuoid’s backers would ensure that he complied with any and all environmental legislation. The farmers had the last laugh. McQuoid, a former insurance salesman (and occasional visitor to a Chicago bankruptcy court), was fake from start to finish. His alleged backers were nonexistent, his collateral bogus. After borrowing $155,000 from two local bankers, he skipped town.

McQuoid was a fake; Don Tyson was not. In 1977, Tyson, who headed what was at the time one of the nation’s biggest broiler companies, made an investment that transformed him into the biggest hog farmer. A reporter who visited Tyson’s eastern North Carolina hog operation found a ten-thousand-acre facility that included farrowing, breeding, and feeding operations and a half-million porcines housed in a “glimmering row
of buildings that . . . seem[ed] to stretch forever,” each building overseen by a professional manager. “It’s got all the advantages
of working in a factory right here on the farm,” explained one of the barn managers, the barn in this case being a temperature-and-humidity-controlled structure where odor, waste, disease, and farrowing were managed like so many factors in an equation. “Those aren’t just hog buildings up there in those hills,” said another employee. “They’re Cadillacs.” The editor of a national farm magazine was blunt about the implications: Tyson’s move, he wrote, “ought to scare the hell
out of every hog farmer in the country.”