I also heard the pig farmer story from our Keys the the Kingdom tour guide *many* years ago. An additional part of the story he included was that the farmer signed the contract back when WDW first opened, and the language said food waste from "Walt Disney World", not specifically the Magic Kingdom or the two hotels that existed at that point. Fast-forward 30 years and he now gets a MUCH larger supply...
Edit to add: Did a search and found this (poorly scanned) article mentioning the pig farmer, though it also mentions that the pig feed program didn't start until 1992, so the CM's story was a slight embellishment, but not too badly.
http://infohouse.p2ric.org/ref/06/05430.pdf
-Rob