Archive for chicken producers

Washington State Attorney General Bob Ferguson at War with Corrupt Chicken Producers, Files Mega Lawsuit

If you’ve ever gone into a grocery store and were shocked at the high prices of chicken, it wasn’t just your imagination or inflation changing the prices. Washington State Attorney General Bob Ferguson alleges in a new lawsuit that chicken producers purposefully engaged in illegal tactics to raise chicken prices- and their profits.

Who is involved in the lawsuit?

The lawsuit, filed on October 25, alleges that some of the most recognized chicken producers, such as Tyson Foods, Sanderson Farms, Foster Farms, Peco Foods, and 15 other household name brands have been slowly raising chicken prices for years. These companies allegedly engaged in tactics to lower supply, therefore increasing demand and raising prices at the expense of millions of Americans.

Specific tactics these companies allegedly used include restraining production, manipulating price indices, rigging bids, and exchanging highly sensitive competitive information with one another. They even engaged in culling breeder flocks. The term “culling” means removing animals, in this case chickens, purposefully from a flock because they are no longer needed. However, chicken meat and groceries were desperately needed during the first instance these chicken producers decided to increase costs- during the 2008 market crash.

Who was affected?

While the country was reeling in the effects of the 2008 economic meltdown, Ferguson alleges these 19 companies continued their shady business practices to cut down on supply and increase costs, violating the Washingtons state consumer protection and anti-trust laws (Relating to legislation preventing or controlling trusts or other monopolies, with the intention of promoting competition in business.)

It isn’t just Washington families that suffered from this so-called chicken conspiracy. These companies have already had to pay settlements to other states nationwide. However, Washington was not eligible to receive payments, hence Ferguson’s lawsuit being filed that now seeks restitution for millions of Washington families. In addition, businesses such as schools, private pre-schools, and nearly everyone who ever bought broiler chicken and chicken products within Washington were all victims of the price hikes.

Ferguson said, “This conspiracy cost middle-class and low-income Washington families more money to put food on their table. I will hold these companies accountable for the profits they illegally made off the backs of hardworking Washington families.”

Lawsuit Alleges Chicken Producers Colluded to Raise Prices

According to a recent piece published in the Denver Post, a group of food distribution companies is filing an anti-trust suit against a number of chicken producers alleging collusion to drive up prices. Some of the actions that have been alleged include slaughtering chickens before they were grown enough to be sold, selling or breaking eggs before they could hatch, and even buying one another’s product. The chicken producers, which include such companies such as Pilgrim’s Pride and Tyson, have even been accused of keeping their breeding stock low to limit supplies and therefore keep prices inflated for the foreseeable future.

The alleged collusion may have exacted a 50 percent premium in chicken prices at the grocery store. As the Huffington Post reported in 2014, chicken has become more popular than beef in the United States, due to higher beef prices and health-conscious consumers, so many were affected,

maplevale-farms-quoteThe chicken producers deny any collusion. National Chicken Council President Mike Brown suggested in an October 2014 article that the underlying reason for higher chicken prices has been an increase in the price of feed caused by the diversion of corn to produce ethanol. An article in the Financial Times reports that the price of corn spiked in both 2008 and 2012, ascribed to drought effects, but corn had declined in price so that it is currently at levels last seen before the ethanol mandate was enacted in 2007.

The litigants, led by New York food distributor Maplevale Farms, believe that they have connected the dots to indicate price collusion in the chicken-producing industry. Lawyers for the plaintiffs believe that they can show communication between various chicken producers that led to cutbacks in production throughout the sector in 2007 and 2008, leading to price spikes starting in 2009.

However, prices began to fall again in 2010 and 2011. The suit alleges that the chicken producers colluded again, even going so far as selling eggs to Mexico rather than building up stock. Currently, with the avian flu export ban lifted and feed prices declining, profit margins are rising for chicken producers.

Now the task for the litigants is to prove collusion by inference, which may be easier said than done.