Tyson Foods

Topics: United States, Vertical integration, Monopoly Pages: 2 (674 words) Published: March 8, 2013
Tyson Foods

A company operates as a pure monopoly when they are the only competitive supplier of a product on a national level; these companies are subject to the scrutiny and regulation by the Fair Trade Commission (FTC), the United States Department of Agriculture (USDA), and the Department of Justice of the United States of America. The Tyson Food Company segments its business, allowing them the advantage of becoming a monopsony, where the company controls the market price for chicken and the overall integrated production in Arkansas. The entire company exists as an oligopoly.

The production of chicken from Tyson Foods accounts for 35% of all their production segments, approximating $28.4 billion in sales during 2010. Additionally, Tyson accounts for 20% of all chicken production in the United States. Recently, chicken production and consumption per capita (retail weight) has experienced rapid trending; overall, chicken production is growing substantially each year and projected to continue in the future, versus other meat protein sources, according to the USDA (Tyson Foods). Because chicken is the most efficient feed animal in conversion to meat protein, it is dominating as the primary meat protein source. Tyson Foods utilizes full, vertical integration through an entire seven stages of production, from inception to slaughter, and operates feed mills to produce the chicken ration. Corn and soybean meal are other additional purchases that are influenced by the market price as feed costs are half of chicken production costs. Tyson Foods has an advantage of operating in a vertically integrated business, dominating the regional areas of the United States as a monopsony. Arkansas has experienced Tyson’s domineering market control since the establishment of Tyson Foods in Springdale, Arkansas in 1935. Nationally and internationally, Tyson employs 5,835 contract farmers and operates 62 chicken plants in total. Their weekly production of chicken...
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