US chicken producers accused of market manipulation

31 Jan 2018 0

Two US food distributors have filed suit against major chicken producers for alleged manipulation and artificially inflating prices in a market worth almost $30 billion a year.

Sysco and US Foods say that the producers faced low prices and anemic profits in 2008 when they began voluntarily and in a concerted manner limiting their hen supplies to lower their production levels, according to court documents seen by AFP.

The “joint efforts to impose supply-side ‘discipline’,” included public statements by their executives and marked a significant departure from industry practice, according to the two separate lawsuits filed Tuesday by Sysco and US Foods before a federal court in the state of Illinois.

They are further alleged to have manipulated an indicator called the Georgia Dock which determined the price of chickens but was calculated with information provided by the producers themselves.

That indicator was eliminated at the end of 2016. Florida state prosecutors in May 2017 opened an investigation into possible manipulations linked to the pricing indicator.

The US produced $26 billion worth of chicken meat in 2016, according to the Department of Agriculture.

Reached by AFP, one of the two largest American chicken producers, Pilgrim’s Pride, said the case is completely without merit.

“We look forward to defending our interests through the appropriate legal process,” a spokesman said.

Tyson Foods, the other giant of American chicken production, also dismissed the lawsuits and vowed “to vigorously defend” the company.

“Follow-on complaints like these are common in antitrust litigation,” the company said through a spokesman.

In its lawsuit, Sysco said that a small producer in Georgia, Fieldale Farms, has already agreed to pay $2.25 million dollars in an out-of-court settlement.

Sysco and US Foods have not said how much financial compensation they are seeking. DM


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