The rest of the groceries in your cart might be unnecessarily cheap, but that “value pack” of breast fillets? It may be purposefully overpriced by 50 percent, according to a new lawsuit. A federal class action brought this month by a group of distributors accuses the billion-dollar poultry industry of conspiring to limit production in order to drive up the price of chicken. It argues producers have been culling their birds, buying each other’s products, and even reducing breeder flocks for years to keep supplies artificially low.
The idea that Big Chicken is running a pricing racket isn’t new, but, as Bloomberg notes, this lawsuit may be “the largest effort yet to bring such practices to light.” The 113-page complaint claims the price of broilers started climbing in 2008, right after consultants from Mitt Romney’s old Bain & Company told Pilgrim’s Pride, which was on the verge of bankruptcy, to cut supplies. Preposterous as it may sound, since mass-produced chicken in one place is mass-produced chicken everyplace, that plan hinged on industry-wide participation, and the plaintiffs argue “an uncanny amount of coordination and communication between supposed competitors” followed — layoffs, plant closings, and other reductions in output from Simmons Foods, Koch Foods, Cagle’s, Wayne Farms, and others.
The purported scheme worked for everybody, though, and producers allegedly started getting even bolder: They cut breeder stocks to limit eggs — which the suit calls an “unprecedented” move that curtailed supplies “for years into the future” — and big companies like Tyson began pointlessly purchasing competitors’ chickens, exporting eggs to Mexico, and even using a data service called Agri Stats that let them monitor each other’s chick breeds, average bird sizes, and production numbers.
In the past, producers have blamed the cost hikes on corn prices and the demand for ethanol. Tyson, Pilgrim’s Pride, and Simmons deny any intentional collusion ever took place and have promised to fight the plaintiffs, who are demanding triple damages and an immediate end to the alleged price rigging.