- Corn and soybean surpluses have driven down retail prices for many meat types, but chicken prices have not fallen. Industry experts are now scrutinizing poultry processors and the Georgia Dock, an industry self-reported chicken pricing index, The New York Times reported.
- Last week, the Georgia Dock priced 2 1/2 to 3 1/2-pound chickens at $1.10 per pound, a 5% decrease from 18 months ago. For the same time period, the Urner Barry index, which restaurants and foodservice companies use, priced the same chicken at $0.72 per pound, a 33% decline from 18 months prior.
- After The New York Times' story broke last week, stock prices for several major meat producers dipped the next trading day, according to Seeking Alpha.
This isn't the only time poultry stocks have taken a hit in the past month. Equity research firm Pivotal Research released a report in October that downgraded Tyson's stock to "sell" from "hold" and slashed its price target from $100 to $40. This was in response to a class action lawsuit filed by poultry company Maplevale Farms in September.
Maplevale Farms filed its lawsuit against 14 poultry businesses, including Tyson, Perdue Farms, Foster Farms, Sanderson Farms and Koch Foods. The lawsuit claims these companies conspired for years to artificially raise chicken prices by sharing supply information via data company Agri-Stats. With that information, the lawsuit claims the companies colluded to cut their supplies and manage production to manipulate prices.
Using Agri-Stats to share data doesn't break any laws, and short-term culling measures are also acceptable within the poultry industry to an extent. Prosecutors will have to prove that these poultry companies conspired to purposely harness overall production in a way that would keep chicken prices artificially high, boosting the companies' profitability.
Poultry companies and industry experts aren't the only entities questioning the Georgia Dock and major poultry processors. The U.S. Department of Agriculture also began tracking chicken prices in October, and its market price last week was $0.71 per pound.
That price mirrored the Urner Barry index while further questioning the Georgia Dock's market price. USDA dropped the Georgia Dock index from its weekly meat pricing report in August and now only includes a link to the index's website.