Chicken

Tyson Meats and the great chicken pricing debacle of 2019

Tuesday, August 6, 2019 by Snacks

Meat sweats... Planet Earth's 2nd biggest "processor of chicken, pork, and beef" (not a fun term here) enjoyed a healthy quarter — Tyson's sales rose 8% and profits surged 25%, so the stock jumped 5%. One issue: Tyson was also accused of a giant meat price conspiracy that may have affected your summer BBQ game.

1 serving of subpoena from the Justice Department... Apparently some of Tyson's biggest clients have had some concerns about chicken prices — they rose 11% from 2012 to 2018. Walmart makes up 17% of Tyson's revenues and bolognese legend Olive Garden is another big buyer — but they (and others) got skeptical.

  • The accusation: Tyson and other chicken producers colluded (which is illegal) to prop up prices by limiting chicken breeding (which is strange). Tyson denies it.
  • The culprits: Tyson, Perdue, Pilgrim's Pride, and other chicken producers.
  • The subpoena: The Justice Department is forcing Tyson to hand over any “documents and information related to the chicken industry.” Sounds official.
THE TAKEAWAY

Cartels are hard... That's when companies get together, wink a few times, and make moves that keep prices artificially high. It's anti-competitive, anti-consumer, and simply illegal. But it's also challenging to pull off, since it requires the backdoor coordination of a few major players. That's why the most famous cartel isn't even in the US — it's OPEC, the international organization of 14 oil countries that control oil supplies so they can control oil prices.

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