Odd Lots Podcast Summary: "Beak Capitalism, Part 2: The Chickenization of Everything"
Podcast Information:
- Title: Odd Lots
- Host/Author: Bloomberg
- Description: Bloomberg's Joe Weisenthal and Tracy Alloway explore the most interesting topics in finance, markets, and economics. Join the conversation every Monday and Thursday.
- Episode: Beak Capitalism, Part 2: The Chickenization of Everything
- Release Date: November 16, 2024
Introduction
In the second installment of the "Beat Capitalism" series, Bloomberg's Odd Lots delves deep into the transformation of the U.S. economy through the poultry industry's evolution. Hosts Joe Weisenthal and Tracy Alloway, along with guest contributors, explore how chickens have become a cornerstone of modern agriculture, reflecting broader trends in industrialization, labor dynamics, and corporate power.
Historical Evolution of Chicken Farming
Early 20th Century: Small-Scale Farms
Chickens in America have undergone significant changes over the past century. In the 1920s, chickens were modest, weighing about 2.5 pounds, and were primarily raised on small farms and homesteads. They provided essential protein and occasional roasts for families, symbolizing a special food source.
Joe Weisenthal [02:15]: "Chickens, as our great grandparents would have understood them, looked very different from chickens today. They were scrawny, they were rangier, they could move around a barnyard and they could flap up into trees and avoid predators."
Industrialization Post-World War II
Antibiotics and Growth Promotion
The post-World War II era marked a pivotal shift in poultry farming. Faced with increased demand and post-war challenges such as extreme weather events and supply chain disruptions, the industry sought solutions to enhance efficiency and production. Biologist Thomas Jukes played a crucial role by introducing antibiotics as growth promoters, leading to substantial weight gains in chickens.
Joe Weisenthal [06:34]: "Jukes... when he assessed the results of the experiment on Christmas Day 1948, he found that the chicks... had gained more weight than any other set of animals in the experiment."
The Chicken of Tomorrow Contest
In the late 1940s and early 1950s, the U.S. Department of Agriculture sponsored the "Chicken of Tomorrow" contest. The objective was to breed chickens that were meatier, particularly with larger breasts, to meet the growing demand for chicken meat. This initiative led to the standardized, oversized chickens commonly found today.
Joe Weisenthal [08:33]: "The idea of the Chicken of Tomorrow contest was to make chickens meatier, to produce a bird that would have more breast... and after a couple of years... produced the prototype for most of the chickens that are raised today."
The Rise of Chicken Nuggets
Origins and Evolution
The transformation of chicken consumption from whole birds to processed products like nuggets was a deliberate industry strategy. Although McDonald's popularized chicken nuggets in the late 1970s, the concept originated earlier at Cornell University.
Joe Weisenthal [11:02]: "McDonald's didn't actually invent the chicken nugget... Robert Baker... came up in this basement laboratory with... the chicken stick... the predecessor of the McDonald's chicken nugget."
Impact on Consumption
Chicken nuggets revolutionized how consumers interact with chicken, making it more accessible and convenient. This shift not only increased chicken consumption but also solidified industrial poultry farming's dominance.
The Tournament System: Integrators and Independent Growers
Structure and Dynamics
Modern poultry farming operates under a "tournament system," where large integrators like Tyson, Purdue, and Pilgrim's Pride supply baby chicks and feed to independent farmers. These farmers raise the chickens under strict guidelines and return the mature birds to the integrators for processing.
Craig Watts [17:27]: "We supply the buildings and the labor... give them some guidelines... and then we get ready and start all over again."
Power Imbalance and Financial Strain
Farmers often find themselves in a zero-sum game, where bonuses for top performers are funded by the lower earnings of others. This system creates intense competition and financial instability among growers.
Craig Watts [18:31]: "If you have 10 growers, five are above average and get bonuses taken from the five that are below... the pie is finite."
Farmers’ Experiences and Challenges
Craig Watts: Whistleblower and Renegade
Craig Watts, a former contract poultry producer, became disillusioned with the industry's practices. Frustrated by the conditions of the chickens and the unfair system, Watts exposed the realities of factory farming through videos and collaborations with activists.
Tracy Alloway [23:37]: "Frustrated by a particularly feeble flock of floppy chickens, he filmed the conditions... and partnered with a reporter and an animal rights activist."
Karen "Suzy" Crutchfield: Debt and Dependency
Karen Crutchfield, another contract grower, highlighted the lack of autonomy and escalating costs imposed by integrators. Mandatory upgrades and financial pressures left her and others indebted, limiting their ability to negotiate or exit contracts.
Karen Crutchfield [25:19]: "With chickens, you have no control over any of the inputs... you are only a serf, more or less."
Michael Diaz: Lost Savings and Legal Battles
Michael Diaz invested his life savings into a poultry farm, only to face insurmountable debt due to unexpected upgrades and rigid contract terms. His subsequent legal actions argue for the reclassification of farmers as employees to balance the power dynamics.
Michael Diaz [31:07]: "I'm not doing it... This dream... is not going to exist."
Structural Issues and Industry Concentration
Debt and Lack of Control
The tournament system places the financial burden and operational control squarely on farmers, who must adhere to stringent guidelines or risk losing contracts. This lack of autonomy stifles innovation and places farmers in precarious financial positions.
Karen Crutchfield [26:34]: "If they ask for upgrades, it keeps growers in debt... As long as the grower is in debt, they're going to do exactly what Tyson tells them."
Market Concentration
The poultry industry is dominated by a few large companies, controlling approximately 60% of the U.S. chicken market. This concentration extends vertically across the supply chain, from breeding to processing, limiting competition and increasing reliance on integrators.
Tracy Alloway [36:57]: "The whole supply chain... has been highly vertically integrated."
Broader Implications: Chickenization Beyond Poultry
Pig Farming Parallel
The industrialization model seen in poultry farming is now permeating other sectors, such as pig farming in Iowa. Similar power structures and risk distributions are emerging, exacerbating issues of concentration and farmer vulnerability.
Tracy Alloway [35:12]: "Modern pig producers took a lot of inspiration from chickens... chickenization, Everything is being chickenized..."
Shift to Independent Contractors
The trend towards treating farmers as independent contractors, rather than employees, mirrors broader shifts in various industries. This model emphasizes cost efficiency and control, often at the expense of workers' and farmers' financial stability and autonomy.
Tracy Alloway [37:32]: "The rise of independent contractors with more risk being foisted on people who resemble employees is a large and growing phenomenon."
Conclusion: Power Shifts and Future Directions
The "Chickenization of Everything" symbolizes a broader economic trend where large corporations centralize control, shifting risks and costs to individual workers and farmers. This model prioritizes efficiency and profit over quality of life and ethical considerations, prompting calls for systemic reforms to rebalance power towards consumers and workers.
Tracy Alloway [37:59]: "Next up on Beat Capitalism, what can be done to tip the balance of power back towards consumers and workers? It's time to talk about unclucking the system."
Final Thoughts
The episode underscores the intricate connections between agricultural practices, economic structures, and labor dynamics. By examining the poultry industry's transformation, Odd Lots highlights the need for more equitable systems that protect both producers and consumers in an increasingly industrialized economy.
Notable Quotes with Timestamps:
- Joe Weisenthal [02:15]: "Chickens, as our great grandparents would have understood them, looked very different from chickens today..."
- Joe Weisenthal [06:34]: "Jukes... when he assessed the results of the experiment on Christmas Day 1948..."
- Craig Watts [17:27]: "We supply the buildings and the labor... give them some guidelines..."
- Craig Watts [18:31]: "If you have 10 growers, five are above average..."
- Karen Crutchfield [25:19]: "With chickens, you have no control over any of the inputs..."
- Michael Diaz [31:07]: "I'm not doing it... This dream... is not going to exist."
- Tracy Alloway [36:57]: "The whole supply chain... has been highly vertically integrated."
- Tracy Alloway [37:32]: "The rise of independent contractors with more risk..."
- Tracy Alloway [37:59]: "Next up on Beat Capitalism, what can be done to tip the balance..."
Attributions:
- Hosts: Joe Weisenthal and Tracy Alloway
- Contributors: Craig Watts, Karen "Suzy" Crutchfield, Michael Diaz, Austin Ferc
- Produced by: Carmen Rodriguez, Kale Brooks, Dashiell Bennett
For more insights into finance, markets, and economics, subscribe to Bloomberg's Odd Lots on your preferred podcast platform.