What's the Matter with Meat? by Katy Keiffer

Author:Katy Keiffer
Language: eng
Format: epub, pdf
Publisher: Reaktion Books

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CONCENTRATION AND CONSOLIDATION IN THE INDUSTRY

Over the last fifty years, the meat industry has reshaped itself from a wide variety of small farms supplying multiple regional processing plants, to a handful of companies operating just a few large packing plants. In many ways this consolidation has been the source of the incredibly cheap meat supply worldwide. It isn’t hard to see how that would come about. Larger plants offer economies of scale impossible for smaller plants to achieve. When the cost per unit comes down, that saving is reflected in prices for the consumer. Consumption patterns have changed too. Poultry, once a Sunday supper ritual, is now the world’s most consumed protein. Consumption of beef has declined and pork has remained fairly flat – no big fluctuations there, despite the unquenchable appetite for bacon. Now that virtually everyone has access to some form of cheap animal protein, it’s worth taking a look at how industry changes have brought us that decadent option at every meal.

Concentration and consolidation are the gospel and creed of the meat industry. Concentration has occurred in the form of one firm gobbling up another, acquiring its processing plants and supply chains. To give an idea of what that means, independent pork producers have diminished by 70 per cent in the last twenty years in the United States. Eighty per cent of all beef slaughtered in the USA is concentrated in four companies.1 The trend towards larger slaughterhouses is being adopted across Europe, albeit at a slower pace than that seen in Australia, South America and the USA. This difference is likely due to regional tastes, and the different ways in which meat is cut and further processed in the member countries of the EU. But as Brazilian and American companies seek to acquire more European companies and facilities, it isn’t hard to anticipate the model changing in the EU.

Around the world, companies are briskly buying and selling different aspects of the meat supply chain. Whether it is expanding from beef into pork and poultry, or expansion into ‘added value’ products such as batter-coated nuggets à la McDonald’s, sausages, beef patties or bacon, no major meat industry player stays in just one category these days. It’s crucial to have ‘horizontal integration’ as a business model. Beef consumption goes down, chicken goes up. Who wants to be stuck with nothing but cattle? Not JBS, Cargill or Tyson. These companies have bought up and down the food chain. It isn’t just about ‘horizontal integration’ either. The real moneymaker is what is called ‘vertical integration’.

To understand what an incredibly smart concept vertical integration is, we must pay homage to the poultry industry, and especially Don Tyson. Though Tyson was by no means the first poultry grower to figure out how profitable a contract model of livestock production would be, he must be credited with the astonishing success in standardizing and expanding it.

Here is how it works. The company – say, Tyson, since they invented this – produces the feed in its own feedmills.

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