Are America's Top Chicken Processors Acting as a Cartel?

Is there a shadowy, underground cartel of poultry processors colluding to screw over America's hardworking chicken farmers?

That is the question currently being asked in a federal court in Oklahoma, where just last Friday, a group of chicken farmers filed a civil lawsuit against the top poultry processors in the US, alleging the companies are colluding to depress the pay of their contract farmers.

The lawsuit—which is the latest accusation of collusion among poultry processors in recent years—claims the country's top poultry companies are acting like a "cartel" and have illegally agreed to share extensive data on contract farmer pay with one another in an attempt to artificially lower compensation below competitive levels.

Additionally, the lawsuit claims that the poultry processing companies agreed to not compete for chicken farmers already contracted by one of the other processors in order to guard one another "from normal competitive pressures that could potentially erode the effects of their information sharing agreement."

In addition to Tyson—the largest chicken processor in the US—the group of poultry farmers are seeking monetary damages from the following companies: Sanderson Farms, Perdue Farms, Koch Foods, and Pilgrim's Pride.

In a regulatory filing last Thursday, Sanderson Farms pledged to fight the lawsuit while Tyson called the allegations "false claims." A spokesperson for Tyson provided MUNCHIES with the following statement: "We want our contract farmers to succeed and don't consult competitors about how our farmers are paid. These are false claims. The compensation we provide is set out clearly in contracts the farmers voluntarily enter into. Our contracts with farmers are typically three to seven years or longer. The farmers are free to discuss the terms of their contracts with whomever they want, including other farmers, and are also free to switch to other chicken processors who operate in their area."

A spokesperson for Perdue declined to comment and told MUNCHIES, "it is our policy not to comment on pending litigation." As of publishing, the other defendants in the case have yet to respond to our comment requests.

According to the National Chicken Council, there are roughly 25,000 American farmers who are currently contracted by chicken processors nationwide. America consumes more chicken than any other nation in the world, and the American population annually spends upwards of $90 billion on buying chicken. Almost 95 percent of all broiler chickens sold are sourced from those roughly 25,000 farmers, while only 5 percent is raised on company-owned farms. Tyson told MUNCHIES, "Our average contract farmer has been raising chickens for us for 15 years."

To put the current lawsuit in context, a suit filed last year claimed that Tyson had colluded with other companies selling broiler chickens to reduce production since 2008—an allegation Tyson disputed at the time.

Back in December, the USDA proposed new regulations that would make it easier for for independent chicken producers to sue processors if they feel they are being mistreated, but the Trump administration froze the ruling while officials review regulations proposed towards the end of president Obama's second term.

Are America's largest chicken processors nefariously operating as a poultry cartel? Only time will tell.