Odd Lots - Beak Capitalism, Part 2: The Chickenization of Everything

Episode Date: November 16, 2024

The Odd Lots team is analyzing the US economy through the lens of chicken. In this second episode of our special three-part series, we look at the birds themselves and the people who farm them. Because the way we actually get chicken has changed a lot over the years, with the industry evolving from backyard birds to huge poultry companies that outsource chicken growing to independent contractors. Farmers often say they are taking on most of the risk of raising chicks, while the big poultry companies get most of the upside. And this model of farming is becoming more popular in other agricultural areas too. So what does the way chickens are produced say about the labor market, the way it’s structured, and the distribution of risk and profits? We speak with chicken growers, agricultural experts, and more. This episode was updated on November 19th, 2024 to reflect a clarification —it wasn’t until 2013 that Craig Watts sent a film of his barns to his production manager. In 2014 is when he partnered with a human rights activist to produce that exposé on chicken farming. Become a Bloomberg.com subscriber using our special intro offer at bloomberg.com/podcastoffer. You’ll get episodes of this podcast ad-free and exclusive access to our daily Odd Lots newsletter. Already a subscriber? Connect your account on the Bloomberg channel page in Apple Podcasts to listen ad-free.See omnystudio.com/listener for privacy information.

Thanks for listening to Oddlots. Follow the show on Amazon Music for more future episodes, or just ask Alexa, play the podcast, OddLots on Amazon Music. Bloomberg Audio Studios. Podcasts, Radio News. But besides being a good egg layer, the chicken of tomorrow will be an improved meat producer. Here's an example of the progress that's been made already. Notice how breeding has increased the amount of meat on the breast. Look at that drumstick. This bird was fattened in the same length of time, and on the same amount of feed as the other one. Make your own guess as to which is the more profitable to raise.

For much of America's history, chickens look different to the way they do today. They were thin, elegant even. Slim and upright, the average bird weighed about two and a half pounds in the 1920s. And chickens were raised differently, too. On small farms and homesteads, the birds and their eggs provided a valuable source of extra protein and the occasional Sunday roast for millions of Americans. But today, chickens are front-loaded, feathered freaks. After years of commercial breeding, the weight of your run-of-the-mill roaster has more than doubled to a chunky five or six pounds, way more than chickens of the past. 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. And that's almost nothing like the chickens that we eat today. So if you went back to the time of, I guess our great grandparents, let's say at the beginning of the 20th century. People didn't eat chicken that often. And that seems very bizarre to us now in the era when there are a million forms of chicken nuggets in the cold case at the supermarket, and there's a chicken sandwich on every corner, but chicken used to be kind of special. Welcome to the second installment of beat capitalism, our Oddlots special series in which we are examining the U.S. economy through the lens of chicken. If you haven't listened to our first episode where we talked about chicken prices and the consumer experience of eating chickens and eggs, you should definitely go back and do that. In this episode, we're going to focus on the birds themselves and the people that grow them.

Because chicken actually has a lot to say about the structure of the labor market, too, and the relationship between big companies and their workers. And a lot has changed from the backyard birds of yesterday. To understand what's happened to chickens and the people who grow them, it helps to consider where they started from. Marin McKenna is a journalist and author who specializes in public health, And she wrote a book called, appropriately enough, baked chicken. As we said, chickens used to be a lot smaller.

Families might keep a few egg layers in their backyards, and once the birds reach the end of their laying life, they might be put in the proverbial pot. One key thing is that chicken meat for a long time was a tree, not a staple. Now, as a rule, older chickens that have been running around a backyard don't usually taste as good. They're leaner, they're chewier, and there just aren't that many of them compared to today's industrial scale

farming. But things started to change in the 1920s and 1930s. To satisfy increased demand for chicken meat, farmers started scaling up and raising their birds in big chicken houses. We'll talk more about those in just a little bit. Then in the 1940s, after the Second World War, something big happened on the way to big chicken. To understand where the industrialization of chicken comes from, and after that, the industrialization of almost all the other proteins that were. we eat. You really have to go back to the middle to the end of World War II. And a couple of things are happening at the same time. The first is that there's a war on and there's a lot of soldiers and sailors deployed around the globe who need to be fed. So there's a great deal of

pressure on meat producers to increase their production. Pressure that goes away when the war is over, and when that guaranteed market from the military forces suddenly vanishes, leaving them pretty overextended. The second is that immediately after World War II, kind of extraordinarily, there are a number of extreme weather events in growing areas around the globe. There are typhoons and there are storms, and this is added to the destruction of growing areas that occurred during the war and the destruction of naval fleets and of fishing. fishing vessels. So there's both an overextension of meat production and also a sense of fragility of the food system.

It's against this backdrop that biologist Thomas Jukes entered the picture. With more and more chickens now being kept in big houses, the birds were no longer able to forage for bugs and grubs and grains on their own. They needed help to survive indoors. And that's where Jukes comes in. Jukes was attached to a team that had produced the first antibiotic of the tetracyclans that we still use today. It was called oreomycin. He also happened to have been given an assignment to address the dietary needs of chickens. Because part of the issue of the meat industry, feeling overextended after the end of World War II, was that they felt they needed to cut costs. This is actually the point at which we start entering into the part of American agricultural history where livestock starts getting fed a lot of grain.

But there was concern that grain didn't have a full nutritional profile. And so they were looking for inexpensive supplements. And in a very famous experiment, Jukes bought a whole bunch of baby chicks, divided them into groups, gave each group some kind of supplement that was available on the market at the time. Cod liver oil, synthesized vitamins, brewer's yeast. And to one group, he gave the ground up, dried remains of the growing medium in which his company's drug had been made, Oreo Mison. and when he assessed the results of the experiment on Christmas Day, 1948, he found that the chicks in his experiment who'd been given the oreomice and leftovers had gained more weight than any other set of animals in the experiment.

And from that recognition, an entire industry of giving antibiotics to animals began. Jukes called that effect growth promotion, and they filed for, for a patent. So the introduction of growth promoters helped the birds survive the great indoors and get bigger, but that wasn't the last of the chicken revolution. One was that chickens themselves changed physically, thanks largely to the U.S. Department of Agriculture, which in the late 1940s and early 1950s sponsored a contest among chicken breeders called The Chicken of Tomorrow. You can't take it for granted that every hen is earning your keep, even though laying an egg ought to be easy for any chicken. That's what you think, big boy.

Well, anyhow. The idea of the Chicken of Tomorrow contest was to make chickens meatier, to produce a bird that would have more breast that would be big enough to feed a family, which was kind of hard at that point for a four or five percent. and family to eat one chicken and be satisfied, and also to be very predictable in a number of ways, to be a single breed. And after a couple of years of competition, the Chicken of Tomorrow Contest produced the prototype for most of the chickens that are raised today. Blocky, muscles, white-feathered, docile, not interested in running around a barnyard and flapping up into a tree, content to sit in one place. So antibiotics and breeding helped turn the chicken of tomorrow into the chicken of today?

Well, that's not quite all. Actually, a lot of things were happening on the chicken innovation front around that time. The second thing that drove the difference between the chicken of yesterday and the chicken of tomorrow is that we changed our orientation to how we eat chicken from buying birds that were whole and had to be roasted or cut up into pieces and had to be pan fried or broil. or broiled into a source of protein that was disassembled at the manufacturing level into things like nuggets so that people could consume chicken without having to deal with the physical reality of a chicken. It's hard to imagine a world without chicken nuggets now, but as Marin lays out, it wasn't until the 1960s that these became a thing.

And it was a very deliberate decision. After all, if you want to sell more chicken, you have to get people to eat more chicken. And one way of doing that is giving them more options to consume it. And then boom, the chicken nugget was born. And these little nuggets of chicken proved to be pure gold for some businesses like... McDonald's. McDonald's. Yes.

And Joe, you might be surprised to find out that McDonald's didn't actually invent the chicken nugget. Here's Marin again. So we all think of the chicken nugget as a creation. of McDonald's. And certainly McDonald's would claim that the chicken nugget is their thing. Introduced in the late 70s by 1980, they were blowing the doors off in the McDonald's restaurants where they were sort of secretly introduced. But it's pretty widely understood in the poultry industry that McDonald's shouldn't get all the credit because the prototype, the predecessor of the McDonald's chicken nugget, was actually invented by a kind of tinkerer,

scientist in a basement laboratory at Cornell University, a guy named Robert Baker, who was not primarily interested in chicken, but rather was interested in essentially how to avoid food waste. And he was very troubled by how much of the carcass of a chicken goes to waste. And he wanted to find ways to use as much of the carcass as possible, as much of the meat on the carcass as possible. And he came up in this basement laboratory with a bunch of graduate students with things that we now take for granted in supermarkets. Chicken bacon, chicken cold cuts, chicken, sausages. But his signature contribution to the future of chicken was a thing that he called the chicken stick, modeled some degree on fish sticks, which had been introduced about

10 years earlier. The chicken stick was chopped, formed, pressed chicken meat, sucked off the bones, covered with a breaded coating, frozen, and frozen in such a way that when you took it out of the freezer and fried it or baked it, the coating wouldn't disassemble from the rest of the meat. That was a kind of secret process that Baker invented, but it didn't stay a secret. It was released in an agricultural extension bulletin that Cornell published and sent all over the country. They didn't in any way attempt to keep any IP in this. And as a result, the idea of something that looked like a chicken nugget was out there in the world. And 17 years later, out came the McDonald's nugget. Suddenly, a lot more of a chicken could be used. And thanks to antibiotics

and breeding, there was more chicken around to sell. One way to think about it is that that raising chickens went from being a really small-scale agriculture process to more of an industrial thing. There's a reason it's called factory farming, after all. The idea is to produce as much meat as you can at the lowest possible cost and then use it as efficiently as possible. And to do that, you need standardization, new technology in the form of growth promoters, and scale. I really think we can say that it's because of antibiotic use that we have the modern industrial scale meat production that we have today. Without that early use of antibiotics as growth promoters, no one would have understood that you could actually produce animals almost like widgets in a kind of Henry Ford model. And so once people moved to doing that, then it made sense for farms to get larger and for profit to increase.

And for farms to get larger, you had to protect animals against being held in more crowded conditions than they traditionally would have been in smaller, open farms. The upside of all of this is that we get plentiful white meat, all the stuff that goes into delicious sandwiches and convenient chicken nuggets. The downside is a lot of that comes at the expense of the animals themselves and, as we're about to see, also the farmers who grow them. Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value in fixed income is not easy. Bond markets are massive, murky, and let's be real. Lots of firms throw a couple flashy funds your way and call it a day. But not Vanguard. At Vanguard, institutional quality isn't a tagline. It's a commitment to your clients.

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The news doesn't stop on the weekends. Context changes constantly. And now Bloomberg is the place to stay on top of it all. Hi, I'm David Gurra. Join us every Saturday and Sunday for the new Bloomberg this weekend. I'm Christina Ruffini.

We'll bring you the latest headlines, in-depth analysis, and big interviews. All the stories that hit home on your days off. And I'm Lisa Matan. Watch and listen to Bloomberg this weekend for thoughtful, enlightening conversations about business, lifestyle, people, and culture. On Saturday mornings, we put the past week's events into context, examining what happened in the markets and the world. That on Sundays we speak with journalists, columnists, and key political figures to prepare you for the week ahead.

Join us as soon as you wake up and bring us with you wherever your weekend plans take you. Watch us on Bloomberg Television. Listen on Bloomberg Radio, stream the show live on the Bloomberg business app, or, listen to the podcast. That's Bloomberg this weekend. Saturdays and Sundays starting at 7 a.m. Eastern. Make us part of your weekend routine on Bloomberg television, radio, and wherever you get your podcasts. There's another seminal moment in the transformation of America's chicken industry, one that has more to do with where they're grown and by whom. In 1923, a Delaware housewife by the name of Cecile Longsteele. By the way, great name. Got a surprise in the mail.

She had ordered 50 baby chicks, but the mailman came to her door with 500 chicks instead. Instead of sending the hundreds of extra chicks back in the mail, Cecil decided to make do. She kept them in a cardboard box and set about building a shed to house them. Over the next five months or so, she raised the chicks to adulthood, fattening them up and eventually selling them to local hotels and restaurants as a delicious meal. Then she decided to do it all over again. Soon she was ordering a thousand chicks, then 10,000, and then she just kept going. So what Cecil pioneered is the first broiler house, a big step in the history of poultry farming.

Today, chickens are raised in huge barns that cost large amounts of money to build. And in order to keep these big barns filled with chickens, farmers have to participate in something called the tournament system. In fact, everything about modern chicken is big. In the tournament system, farmers get baby chicks from large chicken breeders. They're called integrators, companies like Tyson, Purdue, or Pilgrim's Pride, and then they raise them using feed and growth promoters sent to them by those same companies. Eventually, the mature birds are handed back to the chicken company that sold them as babies, and they fulfill their chicken destiny of becoming sandwiches, nuggets, or other snacks.

Basically, what we do is we supply the buildings and the labor and all the stuff needed to actually raise birds for these big what they call integrators or chicken companies like a Tyson or Purdue. Tyson or Purdue actually owns the chicks and they actually own the feed and vaccinations and that sort of thing. Meet Craig Watts. He's a former contract poultry producer who raised chickens in North Carolina as part of the tournament system. We just basically get them on, for lack of better terms, consignment.

There's just a few hours old when we get them. And we raised them up to market aid. they give us some guidelines on doing that, and then they come pick them up, and then we get ready and start all over again. It all sounds pretty simple and efficient. And the integrators themselves argue that they're basically taking on the messier, more difficult, and more capital-intensive parts of the chicken business, like hatching chicks, transporting them back and forth to farmers, and then processing them into chicken nuggets and so on. So that's the tournament system. But Craig, Craig calls it something different.

Basically, what it boils down to is who can get the chicken. to the plant the quickest. You can get that chicken the fattest on the least amount of feed. Least amount of feed, meaning least amount of cost. And that sounds perfect. I mean, you figure things out, you grasp concepts, you tweet things, do what you have to do. And if you work smarter and you work harder than the next guy,

you're going to get compensated a little more. Perfect, right? The only problem is there's the flaw in this whole tournament system scenario. I call it Thunderdome. It's 10 men enter and five men leave. Because every week, if you have 10 growers go out, you're going to have some that make at or above the base pay, which my base pay I think was around five cents a pound at that time. And then you're going to have five or so out of the 10 that are at base or below, right? So they take the bonuses to the five growers that are above average is taking the pay of the growers that are below average. So for the company, it's a

zero-sum game. They're only going to have a nickel invested in a pound, the pie, so to speak, is finite. The size of the pie is finite. The farmer is fighting for the slice. So in the tournament system, you're basically graded on a curve. If you're a chicken farmer who does well relative to other growers in the area, you'll get more money from the pot, and the ones who do badly get less money from the same pot.

So you want to be ranked higher relative to other growers. When Craig decided to become a farmer competing against his fellow chicken growers for pay wasn't quite what he had in mind. In fact, let's go back to how Craig got into the chicken business in the first place. Back when he saw a big opportunity when Purdue started building a processing plant just seven miles south of his home. They were looking for farmers to contract with to build buildings to raise their birds. I saw an advertisement in the paper.

I called the representative. We had a meeting. He gave me an income and expense kind of pro forma sheet. it wasn't get rich quick. I took it to my accountant. He cash flowed it. There again, it was steady, but it wasn't get rich, but it was enough. And the guy at Farm Credit was excited about the possibility of poultry moving the entire area.

He told me it was the best thing that might be the best thing that ever happened to farm in the Robson County. Things went okay at first. Craig spent his days monitoring his birds, making sure they weren't overheating or getting sick, or eating too much or too little, basically following the instructions and the chicken growers. rules sent by Purdue. Well, the first thing I would do, I would wake up and I would go and I would open all the houses up and I would just basically stick my head in and look and then I would, and then we had a control room that they monitor things from and I would make sure that the controller

was set properly. They call it a computer, but it's basically a glorified thermostat, basically where you can control all the temperature settings, fan settings, that kind of stuff from a central location. So I would look at all that. to make sure everything was right, you know, take a sniff test, you know, is the ammonia up? Is it good? You know, is the house too humid? You know, and what did the birds look like? Are they spread out, comfortable? Are they active? Or are they just hodeled up? Or are they panting? I mean, it was just a lot of observations initially. I would have to run the kids to school,

but then when I'd come back, the next thing I would do, I'd actually physically walk through the houses. And I would look for birds that had died or maybe were deformed or just maybe weren't performing as they should. and either I pick up the dead or we would have to call out and just a nice word for kill birds that weren't going to make it the entire six weeks, you know, for whatever reason. But there was a limit to what Craig could do for his flock. After all, the integrators are the ones sending him the baby birds themselves. They own the chickens, and they're the ones making decisions about what they eat, what medicines they get, what conditions they're kept in, and how much room they have to grow up in.

The deal was, each of my houses were 20,000 square feet. Well, they put 30,000 birds in every house. So when those chickens, they had this same amount of space all the time, but when they got market age, I mean, it was wall to wall, end to end, just a sea of white chickens. So if you do the math, 30,000 chickens and 20,000 square feet is 0.67 square foot per bird. So there's issues within the structure of the system that I had no control over that it's not cruel. But it's not about quality of life or an animal by any means. It's about homogenizing a widget and getting it to the plant. These chickens' traits have been selected over the years.

The word that what they are, the Americans desire for white meat is what drove what we call the Franken chicken. The breast is very large. It's oversized compared the rest of its body. They do have trouble standing, and they're very docile. They're not a hearty breed. I mean, they're bred to just barely stay alive long enough to get to the plant. what they do is they take a bite of feed, they take a drink of water, they sit down. I call it three steps and flop.

Boom, boom, boom, boom, sit down. That's what they do all day. In 2008, Craig reached a tipping point, frustrated by a particularly feeble flock of floppy chickens. Say that ten times fast, Joe. Frustrated by a particularly feeble flock of floppy chickens, he filmed the conditions in his own chicken house and uploaded them to YouTube to send to his production manager at Purdue. Soon after, he partnered with a reporter and an animal rights activist to produce an expose on chicken farming. Craig has no control over the health or genetics of the chicks that are delivered to him by Purdue.

Bound by contract, Craig is not even allowed to give them sunshine or fresh air. Just 37 days later, they are a sea of panting birds. Panting indicates birds are overheated. these birds find it too painful to bear the weight of their unnaturally large breasts on their legs. Craig Watts ultimately proved to be something of a renegade. For its part, a Purdue spokeswoman said it works with over 1,800 poultry farmers, and the retention rate with those contracts is around 98%. In a statement to Odd Lots, they also said it's been nearly 10 years since Watts was a farmer for Purdue,

and in that time, it has established farmer advisory councils. To gather important feedback and insights from them on how much. how the company can improve. But Craig's complaints about the imbalance of power in the poultry industry and the health of the birds are things that come up again and again in our conversations with chicken farmers. For instance, Karen Crutchfield, she goes by Susie, was a contract grower for Tyson for many years, but she started out raising cows. We already had a cattle farm, and so we wanted to kind of expand out.

and add something else, some more income coming in. The difference in farming cattle and farming chickens is farming cattle, you own all the inputs. You own the cattle, you own the feed, you decide what type of cattle you're going to buy, you decide what time they leave your farm, you decide the breeding periods. All of it is decided by you, and you are a truly independent cattle. farmer. You're independent. You don't have nobody giving you orders or telling you what you need, what size, what kind of feed. With chickens, it's totally different. With chickens, you have no control over any of the inputs. They deliver the chickens at their time. They give them the feed that they want

them to have. They pick them up on their time. They tell you what to do in controlling the inputs in the house, what temperature it needs to be, what size you need to let them out into full house. they control all of the inputs. You are only a serf, more or less. You just have to do what they tell you. And actually, it's more like you're an employee of those. So for Susie, following the instructions of the chicken integrator was a must. Because if you don't, you risk losing out on that contract.

And you might not have any other companies to sell chickens too. For poultry growers, there is no option of going independent. Because there's nothing you can do with your barns except for it. chickens for Tyson or whatever integrator. As the occasion had to be in my area, Tyson was the only company in the area that we could go to. So if your houses was shut down, they were just shut down. You had nowhere else to go or anything else you could do with your barns other than maybe put hay in them. That was the only other option you had. You could not grow chickens in them. Again, the barns are really expensive. And the farmers are often on their own when it comes to building them.

even though the integrators may be the ones asking for improvements, which is exactly what happened to Susie. Tyson Food started doing upgrades probably in the mid-90s, and each time they decided to do an upgrade, it kept costing more money. It was bigger upgrades than before. And so the last upgrade that they called for us to do was in 2010.

They sent a letter out saying that we had to. to do all of these upgrades. One of the upgrades that they requested us to do at the time was add two extra rural lights, just one massive upgrade, and it was going to end up costing us over $300,000 to upgrade. And it would actually cost on the two older houses that would build in 87. It was going to cost us more than we had originally built the houses for them for. and so at that point we said no we're not going to do any more upgrades. The incentive for Tyson to ask for upgrades is keep the grower in debt.

As long as the growers in debt, they're going to do exactly what Tyson tells them. If they get out of debt, then they have more freedom to say, no, I don't want to do that. And I'm not going to do that. And if they catch you off, then you've got everything paid for. But if you're a million dollars in debt and going to lose your home, you're more than you're more than, likely to do what they say. A Tyson spokesperson did respond for comment when we reached out, they said, and I quote, Tyson Foods contracts with a network of thousands of independent growers across the country,

and we value the contributions that these growers make to our business. We depend on growers, and the contracts we have in place incentivize growers to raise high-quality birds. One contract grower who did lose it all is Michael Diaz. The Diaz's used their life savings to put down a department. on 50 acres of land back in 2018. With a home and four chicken houses, it was supposed to be agricultural bliss. Farming was something that I had always dreamed of doing, but it wasn't something that I saw as being very feasible to do, given the monetary constraints.

I mean, you need a large piece of property, you need to make a lot of capital investments to get into any kind of farming. The magnitude of what we had bought didn't sink in, but there were other farmers in the area. They weren't poultry farmers, but some of them knew of some poultry farms. They were friends with some of these guys, and there was always this kind of, this thought process that these guys that own these poultry farms, that, you know, these barns are 50 by 500 feet long, and some of them bigger than that, you know, you always felt like they were because they had a lot of capital investments. You thought they were, they must have had good cash flow. They must have been living good lives. They were in contract with some of these household brands that you see on every grocery store shelf that you tend to start trusting, right?

You see these names, you know, I'll pick on others. You know, you see a name like Heinz ketchup or you see a name like Hormel or whatever. What I'm trying to allude to is you see these brands that have been in your face year after year from childhood to adulthood, a staple in our food system. So you tend to trust these brands or doing the right thing. But Michael's integrator kept asking for more investments and he struggled to keep up on his loan payments. Michael thinks he spent something like $100,000 on unexpected upgrade. in just two years.

I kept thinking that this is just going to sink me deeper and deeper and deeper and deeper and deeper into debt. This dream of me being able to pay this place off and eventually build something that's generational for my family is not going to exist. I said, I'm not doing it. Michael Diaz ended up selling the farm, losing his life savings in the process. He later sued his integrator, arguing that chicken farmers in the tournament system should be classified as employees of integrators instead of independent contractors. That litigation is still pending.

Susie Crutchfield filed for bankruptcy and is still paying off her debt. Interestingly, Craig Watts didn't lose his chicken farming contract with Purdue after filming his barns, but the relationship obviously soured. Craig filed a whistleblower complaint. Purdue countersued. That's pending too. All three of them are now part of the socially responsible agriculture project, SRAP, where they work on a contract grower transition program which aims to help poultry farmers navigate the thunderdome and the pile of manure, both figurative and literal, that comes with it.

Here's Michael Diaz again. The person that has all the risk, all the liability is the farmer. He's the one that's in debt for these barns. He's the one that's in debt for all the facilities, the upgrades, the equipment. He's the one that's in debt that he's got to figure out what in the world do I do with all this manure that I have here on this site. I've got to get rid of it. Half of them have nothing that they can do with it. Everything that is a liability, the farmer has. The integrator is the only one that's got anything that's able to build a profit.

I'm Francine Lacqua, an award-winning journalist, and I've got a new podcast, leaders with Francine Lacqua from Bloomberg Podcasts. I've interviewed everyone from heads of state to fashion icons about the news of the moment. But I've always been curious who are these people as leaders. I don't think there's one right way to be a leader. Make decisions. A poor decision is always better than no decision. Listen to new episodes every other Monday. Follow leaders with Francine Lacroix wherever you get your podcasts. What separates good leaders from transformational ones?

I'm Jessica Chen and in season two of Leading By Example, we'll sit down with executives like Grace Chen of Bertie Gray to find out. It's important to understand where you spike but also really acknowledge where you don't and find people who can fill those gaps. Listen to Leading By Example, Executives making an impact on the IHeart Radio app, Apple Podcast, or wherever you get your podcasts. That is not the sound of chickens, clearly, but I promise it. will be relevant in a second. Contract growers in the poultry world carry most of the potential downside risks of chicken farming, while big chicken, the integrators, enjoy most of the upside. They hog the benefits and pass on the risks, and that model is becoming more common, as the state of pig farming in Iowa shows. At any given time, there are some 28 million hogs being raised in Iowa

making it America's biggest pig farming state. Iowa now produces nearly a third of America's total hog supply. And speaking of manure, Iowa's pig population and what it produces has become a big debate. People generally don't want to live next to big pig farms for obvious reasons, and huge lagoons of manure can get into the water supply. One analysis of USDA data shows that the manure produced by Iowa's pigs has grown by almost 80 percent between 2002 and 2020. Austin Ferrick is also a member of the SRAP. He's an agricultural and antitrust expert who grew up in Iowa and had a front row seat to the state's transformation into prime pig territory.

As Austin points out, Iowa's pork industry didn't always look like this. Modern pig producers took a lot of inspiration from, you guessed it, chickens. What you saw happen in the 80s is a state senator deregulated the pork industry in North Carolina to allow the industrialization of pork production copying that model of chickenization, where he owned the animal, he had other people in these metal sheds. You'd give them his pigs. They would grow them out, and then he would sell them, butcher them, what have you. The business elite in Iowa saw what was happening in North Carolina,

and they saw the massive amount of production increases going on there, and they were like, we're not going to lose our number one status. We're going to gauge in this race to the bottom. And actually there's a name for this trend, chickenization. We are going to chickenize the pork industry in Iowa, and if we have to kill the family farm, so be it. Because it's all about selling more corn seed, the whole supply chain around it, maintaining that dominance. Instead of having chicken behave like the other industries, it became a race to the bottom. Chickenization. Everything is being chickenized, where you just apply this really abusive power structure to different modes of commodity production.

because it shifts the riskiest part to the worker and the corporate shareholders get the upside of it. And that's arguably helped big chicken just get bigger. Chicken is now dominated by large commercial breeders and processors with a handful of companies commanding 60% of the U.S. chicken market. The chicken industry is pretty concentrated. It's not even just the concentration of slaughtering the animal. It's the whole supply chain.

The whole goal of the company is from the genetic, mix of the thing that hatches to the chicken tenders you eat in the store. That whole thing has been highly vertically integrated. So chickens have grown fatter, more horizontal. At the same time, the chicken industry as a whole has become more concentrated, more top down, more vertical, more powerful in terms of what they can extract from farmers and their birds. And that business model is spreading across agriculture and even beyond. Right. You know, people think of companies like Uber is pioneering some novel business model. But the rise of independent contractors with more risk being foisted on people who resemble employees is a large and growing phenomenon.

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. Beat capitalism is written by Tracy Alloway, Carmen Rodriguez, and Joe Weisenthel. This short series was produced and edited by Carmen with the help of Cale Brooks and Dashel Bennett. The fact-checking of industry puns and other information was brought to you by Dash and Cale. The chickenization of our regular All Thoughts theme song, and the mixing is done by our sound engineer, Blake Maples. Brendan Newnum is our executive producer, and Sage Bauman is Bloomberg's head of podcasts. Special thanks to Compassion in World Farming.

And if you enjoyed this deep dive into the chicken industry, please consider leaving a positive review on your favorite podcast platform. Thanks for listening. This episode has been updated to reflect a clarification. It wasn't until 2013 that Craig Watts sent a film of his barns to his production manager. In 2014, he partnered with a human rights activist and journalist to produce a documentary on chicken farming. You can get the news whenever you want it with Bloomberg News Now. I'm Amy Morris. And I'm Karen Moscow here to tell you about our new on-demand news report delivered right to your podcast feed.

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