America’s Top Chicken Producers Investigated for Price-Fixing Scheme
In wake of fowl play, criminal charges could follow.
How much should chicken cost? As a consumer, you probably don’t have an answer off the top of your head. But according to new developments in an ongoing case that now involves the US Justice Department, it sure sounds like America’s leading poultry companies have been working together to determine that themselves.
Late last week, the Justice Department asked the US District Court for Northern Illinois to pause the discovery process in an existing civil suit initiated in 2016 by Maplevale Farms, an upstate New York chicken purchaser. Essentially, that move suggests (but does not guarantee) that the government might bring charges against Tyson, Perdue, and other large poultry producers that control an overwhelming share of the chicken market. If the Justice Department reviews the evidence and thinks there’s enough dirt to build a case, they’ll likely present it in front of a grand jury within the next six months, explained a legal expert who spoke with The New York Times.
So what exactly happened? In the initial civil suit, Maplevale Farms claims the offending firms worked in concert to “fix, raise, maintain, and stabilize” the price of their broiler chickens, which account for roughly 98% of all poultry sold in the US. These companies made what the Times calls “coordinated production cuts” in 2008, 2010, and 2011 by culling flocks of the breeder hens who lay eggs for them, thereby shrinking supply and raising their price.
They didn’t coordinate through clandestine meetings in dark park garages. Instead, they provided an unusual amount of data to Agri Stats, a data service that agribusinesses use to “identify efficiency opportunities on a farm, flock, or plant level.” Though the information about monthly profits and the status of breeder flocks was technically anonymized before others could access it, Maple Farms’ suit claims that this data was specific enough that producers could deduce who was doing what and adjust their own efforts to effectively yield identical prices.
Though the government’s potential case would likely be stronger, circumstantial evidence certainly suggests something was up. Broiler chicken prices increased by 50% from 2008 to 2016, even though corn and soybeans—key inputs that affect poultry production prices—fell quite a bit over this same period of time. Conversely, consumer prices for pork and beef decreased during the Obama presidency.
Of course, Tyson, Pilgrim’s Pride, and Sanderson Farms all issued various denials of wrongdoing in the wake of the Justice Department’s announced involvement. But there’s no denying that when it comes to their alleged fowl play around problematic poultry pricing, the stakes just got higher.