Oligonomy: Powered by Tyson
We've profiled Tyson Foods previously but we were interested to read a Business Week article called "The Wal-Mart of Meat" (9/20/2004) which supports and extends our argument.
Tyson by this time has managed to digest its $4.6 billion acquisition of beef and pork packer IBP in 2001. That took several rocky years, but Tyson is now steady and more aggressive than ever. The company now produces one out of every four pounds of meat consumed in the United States. Tyson's oligonomy power, the article sees, is being used as a stick:
What price will the new Tyson exact from meat workers, ranchers, and consumers? Tyson is now a kind of Wal-Mart of beef, seeking to control every step of production from farm to supermarket…. The bottom line, some contend, is a strategy that squeezes workers on one side and farmers on the other.
The article quotes Auburn University agriculture professor C. Robert Taylor as saying about meat industry that "The mergers and acquisitions are more about economic power than economic efficiency." That's most clearly shown in the context of a lawsuit from cattle ranchers who claim that Tyson and other meat giants are rigging (cost-fixing) the prices that ranchers get for their cattle. While a jury gave the ranchers $1.28 billion in damages, but were overturned by a judge. The suit continues in appeal, with the ranchers' lawyer claiming that "if Tyson wins, the meat companies will have near-total control of the beef business, while ranchers are left with 'the risk and the manure.'"
This handing over risk is combined with other oligonomy practices: horrible labor relations and safety records underlined by illegal immigration, a revolving-door relationship with regulators combined with a massive lobbying effort, and encroachment on retailers' territory by shifting from bulk meat to pre-packed meat and prepared meals. The most obvious next step is expansion of these principles abroad. According to one source, "It is the ambition of TYSON FOODS to have in ten years' time 40 % of its turnover accountable by sale and production abroad."
It's another example of how the values of the new oligopoly/oligonomy, nurtured in America, are becoming one of its biggest exports (along with its jobs and dollars).
