Dive Brief:
- Georgia Department of Agriculture (GAD) officials announced Wednesday that they are indefinitely suspending the Georgia Dock poultry pricing index, The Wall Street Journal reported.
- The announcement follows months of debate over the industry's self-reported pricing index, which at times priced poultry 30% to 60% higher than others.
- GAD requested that poultry companies provide legal documentation of the market data used to quote prices for the index, but officials decided to suspend the index after not enough poultry companies signed and returned the documentation.
Dive Insight:
The lack of participation in the GAD's investigation of the pricing index could be troublesome for poultry processors. That's particularly true for those involved in a class action lawsuit filed by a smaller processor in September that claimed several major companies had colluded by sharing insider information and purposely limited their poultry supply to manipulate prices.
However, Tyson, Pilgrim’s Pride and Sanderson Farms, all of whom were named in the lawsuit, all reported in recent weeks that they had returned the requested documentation to the GAD. It's unclear what that documentation said or how the GAD interpreted the market data compared to the pricing index. Either way, the index is indefinitely out of use.
More retailers and processors to turn to other poultry price indexes like the Urner Barry. This index, which foodservice companies regularly reference, tends to report significantly lower prices than the Georgia Dock.
But this revelation could also be troublesome for other price indexes, particularly if they are self-reported by producers. If the impending investigation and lawsuit uncover collusion and price manipulation among these companies, experts may call similar price indexes in other segments into question, especially if they are also experiencing pricing discrepancies. The federal government may also step in to pass laws that more thoroughly regulate pricing indexes going forward.