Ep #20: What Today’s Farmers Can Learn from Tyson’s Playbook with Brian Kearney
What does it take to turn a single nickel and a truck into one of the biggest food empires in America? In this episode of The Land Ledger, host Brian Kearney explores the rise of Tyson Foods and the visionary leadership of John and Don Tyson. Through their journey, Brian unpacks the strategic power of vertical integration, value-added products, and long-term thinking in agriculture and business. He draws parallels to other industry giants like Swift, Perdue, and ADM, showing how control over inputs, markets, and timing can transform companies.
Listen in to learn how Tyson used acquisitions, lean-year investments, and a relentless focus on people and culture to dominate the poultry industry. Brian also highlights key takeaways for farmers and investors, including the importance of owning your value chain, preparing during good times, and structuring your business wisely.
Listen to the Full Episode:
What You’ll Hear About in This Episode:
The origin of Tyson Foods.
The power of vertical integration.
Don Tyson’s obsession with deals and people-focused approach to business.
The importance of being prepared during downturns.
The benefits of branded, value-added products.
Tyson’s investment in leadership development and employee ownership.
Advice for today’s farmers and investors.
Ideas Worth Sharing:
“In ag and in most industries, you don't win just by grinding through cycles. You win by preparing for the bottom when you're on top.” - Brian Kearney
“In ag, your reputation travels really fast. Your culture is really important. If people don't trust you, you will not succeed.” - Brian Kearney
“If Tyson didn't have that direct line to the consumers, they wouldn't have known how to build those value-added products that gave them all of their margin. We can also learn that, really, you need to use good times to prepare for the bad ones. The best time to stack up your cash is when everyone is spending.” - Brian Kearney
Resources:
The Meat Racket: The Secret Takeover of America's Food Business by Christopher Leonard
Share the Love:
If you like The Land Ledger podcast...
Never miss an episode by subscribing via Apple Podcasts, Spotify, Amazon Music, or by RSS!
Read the Transcript:
Brian Kearney: We need to control your value chain. Whether you're raising chickens or building software, the fewer people between you and the end customer, the more leverage you have and the more you're gonna be learning and iterating that. If Tyson didn't have that direct line to the consumers, they wouldn't have known how to build those value-added products that gave them all of their margin.
Welcome to The Land Ledger podcast, where investing in farmland meets the future of finance. I’m your host, Brian Kearney, here to guide you through the untapped potential of farmland as an asset.
Whether you’re already investing in farmland, want to invest in farmland, or you’re just curious about safe alternatives to stocks and bonds, this is your space to learn, explore, and be inspired.
Your journey to farmland investing starts now.
Brian Kearney: Hey, folks. Welcome back to The Land Ledger. This is Brian Kearney, and today we're gonna be diving into a book again. This is a story about how a trucker with a single nickel built one of the biggest food companies in America. I'm talking about Tyson Foods. But this episode isn't just about chicken, it's about control over your inputs, your markets, and your future.
It's very applicable to farmers, but also to investors or anyone thinking about how to grow in this world of commodity chaos and razor-thin margins. So let's rewind back to 1935. A guy named John Tyson rolls into Springdale, Arkansas. He's got a truck and 5 cents in his pocket. That's it. He walks into a diner, slaps that nickel on the counter, like he's got a full bankroll because he wants a cup of coffee and he can't afford that, and then he goes and looks for freight to haul. At this time, that is truly all he had. He was a freight hauler and a middleman. You buy chickens from producers and then haul them to the end users.
Here's where the story starts to echo something you hear in a lot of ag dynasties and a lot of individual families as well. If you couldn't get what you needed, you just build it yourself. So at one point, he had too many end users asking for chicken, and he was worried that he would start losing his clients.
So he just bought a chicken farm. Producers couldn't keep up, so he bought his own, and then he realized, “Hey, I can make a little extra margin by selling feed.” But when he asked his dealer for 10 carloads, and was told he could only get one. He decided to buy a feed mill. It's this kind of do-it-yourself mentality that you see all across ag and particularly in rural communities.
Or think about Gustavus Swift. He might not have been a rural community, but he was ag through and through. And when he couldn't get his meat to market fresh, he revolutionized cold storage by building refrigerated rail cars, or Perdue, whose hatcheries really invented the idea of contracts between growers and processors. These all started with the same thing: frustration and the inability to rely on someone else.
Now, Tyson didn't invent vertical integration, but they definitely perfected it in chickens. They saw early on that that boom and bust, grain and poultry market cycle was just eating everyone alive. So what they did is they cut out the middlemen, which is actually kind of funny 'cause that's what they initially were.
They bought feed mills, hatcheries, grow-out farms, processing plants, trucking national sales. It was all under the Tyson brand. And look, this wasn't all roses for the producers. It took some market risk off their plate, sure, but it also locked them into tight contracts with kinda limited upside. You went from being a free agent to kind of being a cog in someone else's system, and that tension between scale and independence, you still see that today in ag. But from a strategy perspective, for Tyson, it was absolutely genius. They used vertical integration the same way Cargill has for grain elevators and shipping fleets. It helps control margin, weather downturns, and squeezed out inefficiencies. Now, let's talk a little bit about Don Tyson, John's son.
This is the guy who brought the company from a true family farm, though a very successful one, to a corporate juggernaut. Now, Don wasn't flashy, and he didn't like complex answers to simple things. He didn't really care for corporate polish. He once said, “People make a business. Not numbers, not chickens. People.” And that truly is how he ran. He operated this business as if each individual person did matter within the company. He was kind of an enigma, but he was also absolutely relentless. When he was trying to buy, one of the other larger producers, called Holly Farms. He literally taped their financials to his ceiling so that he can memorize them in bed.
He was obsessed with deals the way most people are obsessed with sports, and it paid off. From 1972 to 1990, Tyson went on a buying spree. They bought a poultry division of what eventually became Sara Lee Wilson Foods Lane acquisition, and then Holly Farms, which was kind of their large acquisition that vaulted them into owning 25% of the entire chicken market.
Now that's something we can kind of compare to ADM in the eighties. They weren't growing by making better corn syrup either, they're growing by consolidating processors, they're building out logistics, and locking up contracts across the Midwest. A lot of people in ag use the same playbook. You scale to dominate.
But Tyson also played the long game. When times were good, they built cash reserves. When the market turned sour, they bought, not sold. They didn't have to. That's how they jumped from nine to 13 million birds a week. When others were scaling back, they bought producers to meet demand. They didn't just survive these downturns.
They use them to catapult themselves forward. This is kind of the same thing that International Harvester did a generation earlier as well. We've heard a little bit about them in the tractor wars, but they would build machinery, stockpiles, and use their dealer networks in lean years, so they could just blitz the market and take market share. In ag and in most industries, you don't win just by grinding through cycles.
You win by preparing for the bottom when you're on top. It's kinda like that Warren Buffett quote about when the tide goes out, that's when you really start to take market share. Now, let's also hit a key point that's really relevant for farmers: value added. By the 80s, 70% of Tyson's revenue was not from raw birds, it was from processed products. Think chicken nuggets, chicken strips, season cuts, frozen meals. It really wasn't an ag company anymore. It was kind of a consumer goods company, and they were 400% more concentrated in value good, added goods than their next competitor. That margin difference gave them a huge breathing room when grain prices spiked.
When contracts broke or when policies changed, they were okay. This is something that farmers and investors can both learn. Selling a commodity product is tough. Anytime you can find that value-added little addition, that's where you can start to weather out the bad times. And really, that's kinda what Smithfield didn't—they didn't just sell hogs, they also built brands.
Think about their bacon, ham, sausage. These are things we can buy at the store, not just selling hogs. It gave a little bit of a buffer to the CME in Chicago. But if we go back to Tyson, their success did not come without controversy. They had something that was, were called the Chicken Wars in the 1980s with ConAgra, and really, they were kind of taking advantage of a tax loophole.
It was perfectly legal because they were a family farm, but they were bigger than the law was created for. So they had a $133 million a year tax loophole where they deferred those taxes because they could take deductions immediately. This wasn't really just about birds, but ConAgra knew that this structure was something that was putting them at a strategic disadvantage, so they lobbied Congress and had it shut down.
It's an interesting thing to remember that the ag lobby has always been pretty powerful and it still is today. So through it all, Tyson, he also really invested in people. He created a leadership development center that really looked more like a resort than a training facility. He matched employee stock purchases so that people were owners of the company. They weren't just employees, and he saw that as a really tactical advantage. He did that on purpose, and it's because he wanted to push young people into leadership roles before they got jaded and knew what couldn't be done. He actually has a quote that says that exactly. He said, “Young, aggressive people built companies because they haven't learned what can't be done yet.”
That's kind of true. If you look at a lot of the game-changing companies in different industries, it's people who either just didn't believe they couldn't get something done if they came from the industry, and they said, “Well, maybe no one else can, but I can.” Or it's someone who didn't even know that what they were doing shouldn't be done.
Think Boom Supersonic or Southwest Airlines; both of those things should not have happened. So if you've ever built something from scratch, you do get that. All of this starts to resonate a little bit to you, but what should we take away from this? Well, one is we need to control your value chain. Whether you're raising chickens or building software.
The fewer people between you and the end customer, the more leverage you have and the more you're gonna be learning and iterating that. If Tyson didn't have that direct line to the consumers, they wouldn't have known how to build those value-added products that gave them all of their margin. We can also learn that really, you need to use good times to prepare for the bad ones.
The best time to stack up your cash is when everyone is spending. That's how you're gonna be able to make the bold moves and acquisitions when things turn. You also need to buy smart. Tyson got to where it was through acquisitions. It was not through growth of their own brands. Those finance the acquisitions, but acquisitions gave them the market share.
And Don Tyson once said that acquisitions are kind of like fishing, and our hooks are in the water all the time. He also invested in people. In ag, your reputation travels really fast. Your culture is really important. If people don't trust you, you will not succeed. I was recently talking to a farmer who did a huge deal completely on a handshake. This was something that could have really turned against him. He put his own money in before any papers were signed, and it was because he trusted the other party. You don't get that in many industries. You do get it in ag. The other thing is you really have to think about the structure of your business entity, tax treatment, contracts, they do matter, maybe more than some of your yields.
Your tax treatment can be really huge on whether you're successful or not. So I wanna wrap up with one of my favorite Don Tyson lines, and he said, “Business is like planning a trip to Los Angeles. Doesn't matter if you take the northern route or the southern route. The fun isn't how you get there, but you've gotta be damn sure you know where you're going.”
That's true in farming, it's true in investing, and it's true in building a legacy. So, alright, that's the episode. This one's a little shorter than normal. Let me know what you think. But if you're building something on your own, just keep going. If you've been thinking about that vertical integration aspect or value-added aspect, I would take a lesson from the past, look at what the behemoths in ag have done, and put more thought into that.
But that's the show for today. Excited to see you next week. Thank you.
And that’s a wrap on this episode of The Land Ledger.
Your path to smarter, more diversified investments is just beginning, so keep that curiosity alive and subscribe to the show.
If you’re ready to take the next steps and reshape your financial future, visit our website at farmlandstocks.com and book a call or sign up for our email list to get tips, updates, and opportunities to join our community.
Thanks for listening, and remember: our goal is to invest in Main Street, not Wall Street.
Disclaimer: Brian Kearney is the CEO of the Farmland Stock Exchange. All opinions expressed by Brian and podcast guests are their own and do not necessarily reflect the views of Farmland Stock Exchange.
This podcast is for informational purposes, and should not be construed as investment, legal, or tax advice.