Dive Brief:
- Several major poultry processors are currently facing a class action lawsuit because of claims that the companies are manipulating the chicken supply to maintain higher prices — and profits — for their birds and related products, according to mutliple reports.
- Maplevale Farms named 14 poultry businesses in the lawsuit, including Tyson, Perdue Farms, Foster Farms, Sanderson Farms and Koch Foods.
- The lawsuit claims manipulation happened twice: once in 2008 and then over 2011 and 2012. That has meant a nearly 50% increase in broiler wholesale prices since 2008, the suit says.
Dive Insight:
Poultry companies have profited from lower input costs recently, particularly the less expensive prices for soybeans and corn used for animal feed. As long as sales and pricing remained steady or improved, poultry processors were at an advantage.
The Georgia Dock Index, which is used to set chicken prices, is what the lawsuit examines. Experts have already been questioning it because this index was calculating a much higher price for chicken than similar methods. Experts' main issue is that this particular benchmark is determined by companies — including those named in the lawsuit — which self-report costs without independent third-party verification. This could inflate chicken prices.
The lawsuit also claims that the processors used the private publication Agri-Stats to share information among themselves. If such a conspiracy existed, it could be part of the reason companies like Tyson have reported profits for their chicken business recently.