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,
The 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.