2Bits: Tyson just got a bit bigger!
“In the new world, it’s not the big fish that eats the small fish, it’s the fast fish that eats the slow fish.”
Tyson Foods is one big fish. They’re moving like a fast fish too.
Tyson Foods doesn’t want to swim upstream. They want to go with the flow—give consumers what they want.
So, they’ve made two strategic purchases this summer. First in June, Tyson Foods purchased Tecumseh Farms, owner of the trusted Smart Chicken brand because they know customers want increased buying options for fresh and organic foods.
This past week, Tyson Foods also purchased Keystone Foods from another global giant, Marfrig Global Foods SA of Brazil.
Add these purchases to the billions of dollars they’ve spent over the last four years purchasing Hillshire Farms lunch meat and Jimmy Dean sausages–you have one big fish.
They’re swimming in international waters.
With over 36,000 restaurant customers in six countries, the Keystone Foods purchase helps Tyson Foods be a big fish in an increasing small global sea.
Tyson will now supply chicken nuggets, wings, beef patties, and breaded fish fillets to restaurants and food-supply companies including McDonald’s Corporation, ConAgra Foods Inc., Campbell Soup, and Yum Brands Inc.
While other meat producers in the U.S. deal with weakening meat prices, Tyson Foods has gained sales channels in high-growth Asia-Pacific markets, as well as exports to key markets in Europe, the Middle East, and Africa.
So, farmers, food buyers, and custom meat processors, what does this mean to the U.S. rural pond you swim in?
Tyson Foods’ purchases reflect the movement of the entire meat industry. Poultry, pork, beef, and fish are becoming highly centralized, concentrated, and vertically-integrated industries.
These industry players are companies that often focused on profits at the expense of once thriving rural communities they set up shop in.
Prices paid to farmers and fishers for input, such as livestock, grain, and hauling services become depressed because of the vertical integration, or the increased ownership of inputs by these large companies.
As Christopher Leonard states in his book, “The Meat Racket: The Secret Takeover of America’s Food Business,” the best way to visualize Tyson Foods’ vertical integration and how it impacts a U.S. rural community is to “imagine a broad network of small businesses that were once the backbone of a rural community sucked into a single towering silo. That silo is Tyson Foods.”
Big fish swallows all the small fish!
Annual income in U.S. counties where companies like Tyson Foods operate stagnate typically below national averages. Schools and road infrastructure also suffer.
Tyson Foods operates in at least 79 U.S. counties. Federal per capita income level data shows in 68 percent of these counties, per capita income is below the state’s average and has remained that way despite the presence of Tyson Foods.
These large global food companies often seek and obtain tax breaks in return for the promise of job creation and steady incomes.
Data shows the balance between economic gain for these counties and the tax breaks granted is often skewed, favoring the large companies while leaving little to no funds for school and road system improvements.
Opting out of this industry direction is a challenge. It requires making a conscious decision to swim in another pond.
Landowners must be willing not to sell their land when these large corporations come knocking.
Food buyers must understand that locally produced meats can be more expensive. However, the money paid to producers helps them operate a sustainable farming business, stays in the community and provides increased health benefits to the consumers because of how the product is raised.
Purchasing meat from local producers needs to be done on a regular basis. This gives the producer continuous cash flow to operate their farm.
Community banking services must be available to producers that enable them to expand operations.
Communication services, like high speed internet, must be available to help producers market their products and interact online with their customers.
Producers must learn to use the tech tools—social media, e-commerce, online marketplaces—food buyers are using to connect, educate, interact, and buy.
I can honestly say that many local producers and food buyers I talk to as I tell them about 2BuyAg are not fully aware of the increased pace of centralization and concentration occurring in the meat industry.
Nor, do they think about the consequences to their personal livelihoods and health or the impact on U.S. rural communities this has.
Let us not be small fish.
Written by Kim Harrison