
U.S. chicken prices may have been artificially inflated for years - endswapper
https://www.washingtonpost.com/news/wonk/wp/2016/11/17/internal-document-supports-argument-that-u-s-chicken-prices-have-been-artificially-inflated-for-years/
======
jackmoore
“We trust the companies we work with,” Alec Asbridge, director of regulatory
compliance at Georgia Department of Agriculture, said earlier this month. “We
don’t see any reason they would submit information that wasn’t truthful.”

I feel like this statement makes Asbridge unsuited for his job as director of
regulatory compliance. Willful obliviousness implies a conflict of interest.

~~~
Spooky23
This is classic red state governance.

Strip the organization of resources over time, put politically appointed
people in charge of work that should be performed by civil servants, and
create a situation where the inmates run the asylum.

Even if nobody applies pressure, there's an implied threat of reprisal when
the an appointed former garden blogger turned director of whatever gives an
undesired answer. That job should be a civil service gig protected from direct
reprisal.

Compare this ridiculous methodology compared to something more robust like the
CPI calculations performed by the US DOL.

~~~
WillPostForFood
From 1872 to 2002 Georgia elected 37 Democrat Governors in a row. The Georgia
dock chicken pricing goes back at least 56 years. So you might as well call it
classic blue state governance.

~~~
Spooky23
Good info, but the article isn't referring to events that took place between
1872-2002. If you look at the details of the article these anomalies in
pricing began in the 2007 timeframe, and the attached chart starts in 2005.

That timeframe coincides with a wave of privatization within the state,
including the divestment of IT from state governance to an outsourcing deal
and broad tax cuts that devastated local government and education.

I'm not engaging in knee-jerk partisanship. The playbook for modern republican
governance calls for contracting services out, diminishing the role of civil
servants, and making tax reduction a cornerstone policy position. When you
replace civil servants with political appointees of any party, this sort of
thing happens. It just so happens that republicans are the offenders in this
story.

~~~
WillPostForFood
You are blaming red state governance for a program that dates back to at least
1966, 36 years before Georgia broke a 130 years streak of consecutive Democrat
governors. The article doesn't say that the program has changed, but that
poultry companies started supplying bad data. You are jumping to the
conclusion that this was affected by outsourcing, tax cuts, or replacing civil
servants with political appointees, none of which is stated in the article.

~~~
debatem1
The article doesn't claim the problem went back to '66, but rather says it's a
more recent problem in a previously successful program. Are you saying the
problem goes back further than the article claims, or was this just a
misunderstanding on your part?

------
reverend_gonzo
And this is precisely why chickens should be traded on an exchange. It becomes
much harder for a person or small group (as in this case) to corner a market
and raise prices.

However, here's a good article about why there is no trading in chickens:
[https://www.washingtonpost.com/news/wonk/wp/2014/01/10/the-c...](https://www.washingtonpost.com/news/wonk/wp/2014/01/10/the-
chicken-market-is-so-hot-right-now-why-cant-i-trade-on-it/)

Looks like the market has been generally fairly stable and dominated by big
players, so there hasn't been a need for producers and consumers to hedge
their prices, and therefore a futures market was never formed.

------
cnnsucks
Tyson again. That name bubbles up to the top of the septic tank every few
years. Tyson was one of several companies that paid millions to settle
antitrust price fixing suits in the late 70's. Bill Clinton suppressed a water
pollution problem for them when he was governor. One of Tyson's lawyers was
the shepherd for Hillary's amazing cattle future windfall.

Our own fault really. We make reams of regulations with no accommodation for
small competitors so being "To Big To Fail" becomes a requirement of doing
business. Not surprisingly the resulting oligopoly quietly colludes amongst
itself.

~~~
honkhonkpants
So funny. The current right wing enthusiasts don't even mention the cattle
futures thing, which is the only outright crooked thing you can really hang
off Hillary Clinton. It's all Benghazi all the time these days but to me the
Clintons have so much of the small-time corruption in their history.

------
forrestbrazeal
In fact, U.S. chickens themselves have been artificially inflated for years.
Yum.

[http://www.foxnews.com/story/2009/06/10/artificially-
fattene...](http://www.foxnews.com/story/2009/06/10/artificially-fattened-
chickens-new-strains-e-coli-film-seeks-to-expose-us-food.html)

~~~
neffy
You had to quote fox news for that didn't you?! You just had to...

~~~
emodendroket
If anything, I'd say a report from Fox News about a business doing something
questionable is _more_ reliable.

~~~
neffy
Well, it's certainly putting the fox in amongst the chickens...

------
klodolph
I also find it interesting how much of a premium white meat commands at the
grocery store. $10 might get me 1 lb (450 g) boneless chicken breast, or 3 lb
(1400 g) boneless chicken thigh. Since one chicken produces slightly _less_
thigh meat than breast meat, I can only assume that there is a huge disparity
in demand.

I'm not complaining—I get the meat I prefer for a good price that way.

(Edit: To be clear, U.S.)

(Edit 2: I think I misremembered the prices: might have been 3 lb / 9 lb
instead of 1 lb / 3 lb.)

~~~
fencepost
This does vary somewhat - when chicken thighs became a more trendy ingredient
a few years ago prices for chicken thighs rose pretty dramatically. I mostly
noticed because I was semi-regularly making a very simple slow-cooker chicken
chili that used boneless skinless chicken thighs.

Also, where in the US are you paying $10/pound for chicken breast? In the
Chicago area even "boutique" organic boneless/skinless chicken breast is
seldom above $6/pound, regular full-price conventional chicken breast is
typically $3-4 depending on where you shop, and B/S breast is often on sale
for at or below $2/pound (rarely below $1.49/pound).

~~~
DaveInTucson
Perhaps OP was referring to the pre-cooked chicken available at the deli
counter? That's typically a lot more expensive than buying it raw.

------
pessimizer
Another LIBOR-style scandal. This asking for an unverifiable number from
people with an interest in that number being high is an ideal vehicle for
collusion. If yesterday's average turned out to be higher than the number you
reported yesterday, just up your number to the average. If you feel the market
can bear a price rise, just up your number well above the average for a time
and see if everyone follows, then lower your number the closer the average
gets to your ideal number. The only risk you take is that to push the average
up enough that others adjust, you take the risk of reporting a price high
enough to attract attention - but if companies trade off on leading the
charge, it just looks like a high variance. Each supplier has a different set
of contract relationships, so any short-term variance could be rationalized.

In the end, it works out like a perfect continuous democratic system for
price-fixing.

~~~
Scoundreller
LIBOR-style indeed.

What's wrong with market based prices?

The other issue with LIBOR is that it fails to take into account the volume
that a supplier can move. Taking the average/median of a number of suppliers
that are willing to sell one chicken doesn't say much.

~~~
bboreham
> What's wrong with market based prices?

Both LIBOR and this chicken price are _supposed_ to be market-based; however
the price negotiations are all confidential. An alternative is to mandate
total visibility of all bids and offers, as is generally done in equity
markets. This brings its own distortions: you have to pay people to operate
the public venue; it enforces a bid-offer spread. And many people don't like
regulations forcing them to do business a certain way.

------
sorenjan
Isn't American chickens treated horribly and living in awful conditions to
drive the price down? If the price is inflated there should be economic room
for better conditions instead.

~~~
coldtea
It's the same with GMO food. It's advertised as a way for cheaper food (that
will "feed the world"), but instead it's mostly a way for higher margins (more
profit) for the same inflated prices (besides the DRM/IP-like control on the
seeds).

~~~
randomdata
How do you figure? We farmers spend most of our time not producing food, but
sharpening our pencils. If the higher cost of the seed wasn't offset in other
ways, we wouldn't consider using it in the first place. It has to pay. The
grain business, where I operate, is so competitive that even a small amount of
overspending will result in losing money. Do that too many times and you'll be
out of business completely.

To add to that, the market requires quite a bit more for non-GMO food. Right
now I can tell you that non-GMO soybeans carry a $2.50/bu. premium. That gives
you a pretty good idea of how much more it costs to grow non-GMO food, at
least as far as soybeans go, as that is what it is taking to attract farmers
to consider growing those varieties. That is after factoring in DRM/IP-like
costs.

~~~
coldtea
> _How do you figure?_

Well, e.g:

"Farmers are reconsidering the use of biotech seeds as it becomes harder to
justify their high prices amid the measly returns of the current farm economy"
[http://www.wsj.com/articles/behind-the-monsanto-deal-
doubts-...](http://www.wsj.com/articles/behind-the-monsanto-deal-doubts-about-
the-gmo-revolution-1473880429)

"The introduction of genetically engineered (GE) crops has corresponded with
increasing monopolization of seed by biotechnology companies and higher seed
costs. This has led to tragedies in some countries, while pushing out
conventional, non-GE seeds and reducing farmer seed choices."
[http://www.fooddemocracynow.org/blog/2013/oct/4/the_gmo_seed...](http://www.fooddemocracynow.org/blog/2013/oct/4/the_gmo_seed_monopoly_fewer_choices_higher_prices)

"Angelika Hilbeck, senior scientist at the Institute of Integrative Biology at
ETH Zurich (Swiss Federal Institute of Technology), and several other
researchers analyzed seed catalogs in Spain, Germany, Austria, and
Switzerland. They found that in Spain—the largest European country to adopt GM
corn—farmers’ seed choices declined overall and increasingly became a choice
among GM varieties.

“Non-GM cultivars of maize were replaced with fewer GM cultivars,” Hilbeck
said. But, in three EU countries that ban plantings of GM corn—Germany,
Austria, and Switzerland—farmers have either many more corn seed varieties
available to them now than in the 1990s (Germany and Austria) or at least the
same number (Switzerland). Hilbeck presented their findings at a conference on
GM crop cultivation in Bremen, Germany in June 2012." [http://non-
gmoreport.com/articles/march2013/farmers-seed-opt...](http://non-
gmoreport.com/articles/march2013/farmers-seed-options-GMO-producing-
countries.php)

~~~
randomdata
I mean, I agree that we are backing away from GMOs to some extent. That
$2.50/bu premium is worth it. On my farm, we haven't grown GMO soybeans in
almost 10 years because of it.

But the fact remains that it takes that additional $2.50+ to cover the costs
of non-GMOs. If you took that away, it'd be pretty difficult to not return
back to growing GMOs. The costs are lower, and the savings really are being
passed on to the customer, in this case – to the tune of $2.50/bu.

I'm still interested in your analysis of how it directly applies to our farms,
rather than a bunch of random links. We don't need third-party media to have a
discussion with each other. I'm sure you have some good points of your own.

~~~
scythe
I have some bad recollections of some criticisms of GMO optimism I've heard:

* Current GMOs do not increase yields so significantly as to be considered a necessity for competitive efficiency

* Generally fewer GMO strains are available than non-GMO strains, lowering biodiversity on GMO fields, and some GMO plants (such as Roundup Ready) don't make sense to plant on mixed GMO/non-GMO fields, lowering biodiversity

* GMOs cost extra money (for research, production, quality control, profits)

Overall it is possible that the downsides may outweigh the benefits, and
particularly since the benefits (of increased yields/decreased pest issues)
are uncertain it is possible for farmers to make "losing bets" which is
unfortunate particularly given the use of the "banner of science" to advertise
the hypothetical promise of GMOs. While there are still significant advantages
to many GMOs, the popular-among-nerds meta-contrarian position that GMOs
represent a new lease on the Green Revolution and a necessity for the survival
of human life has rather shaky epistemic footing.

~~~
randomdata
_> Current GMOs do not increase yields so significantly as to be considered a
necessity for competitive efficiency_

I think that's mostly a fair assertion. The traits that are on the market are
focused more on reducing operational costs (fewer trips over the field) and
opening new opportunities for management practices (cover crops are all the
rage these days). While those practices might help introduce a small yield
bump, the biggest gains are on the reduction of costs. Again, about $2.50/bu
when we're talking about soybeans.

Having said that, there is an element of competition at play. Yields of all
types, GMO and not, are up significantly. It may be that GMOs did introduce
the yield bumps first, forcing those producing non-GMO varieties to up their
game. I don't follow that end of the business close enough to say for certain.
_Something_ is driving significant increases in yield though.

 _> Generally fewer GMO strains are available than non-GMO strains, lowering
biodiversity on GMO fields, and some GMO plants (such as Roundup Ready) don't
make sense to plant on mixed GMO/non-GMO fields, lowering biodiversity_

You mean planting many different varieties all in the same field? We actually
do that on our corn ground, where we still use GMO varieties. In soybeans,
where we haven't used GMOs in years, that would be a big no-no. The market
wants to buy soy on specific varieties. The wheat market, where there is no
such thing as GMOs, is starting to go in this direction as well.

So, if I understand you correctly, the reality is actually reversed. At least
on my farm and many of the farms near mine.

 _> GMOs cost extra money_

Often true, but I don't see how this is much of a criticism? They cost extra
money because they are worth more. A business charges what someone is willing
to pay, and farmers are willing to pay it because they've done the math.

 _> Overall it is possible that the downsides may outweigh the benefits_

We've touched on some of the upsides: Lower market price, ability to improve
soil health through no-till and cover crop practices, reduced use of fossil
fuels by reducing the number of trips over the field. I don't know what
downsides you are referring to?

------
toomanybeersies
I'm always amazed at how cheap meat (especially chicken) is in the USA. Here
in New Zealand we pay over NZ$10 per kg (US$3 per lb).

And unlike our beef, which would understandably command a premium being grass
fed (like they're supposed to), our chicken is made the same way as the USA,
in cages.

At least we can get reasonably cheap pork shoulder, sometimes it's as low as
$7 per kg (US$2.25 per lb). I can also get lamb chops for less than NZ$10 per
kg (US$3 per lb).

~~~
moron4hire
These prices are actually in line with what we spend in the US

~~~
scythe
His prices for pounds are off because his math is wrong. $10/kg is actually
$4.53/lb, not $3.

~~~
moron4hire
You missed the currency conversion. 10 NZD ~= 7 USD.

------
ethagknight
So what, then, has prevented new startup chicken ranchers from popping up all
over the US to capitalize on the overpricing?

~~~
TheSockStealer
I assume (not knowing anything about the industry), is that there is a ton of
capital required to enter the market. Combine that with a substantial amount
of regulation and it is a difficult market to get into. Besides, even if you
did join, you are better off selling at the "monopoly" price even if you don't
sell all of your product.

~~~
d0lph
Except you would sell more if you were undercutting the competition pricewise.

~~~
Guest98123
You'd sell more, until the competition lowered their prices to compete. At
that point, everyone in the industry (including yourself) would be making less
profits. Great for consumers, bad for your business.

------
korethr
So unless I am misunderstanding the article, the prices on the Georgia Dock
are based on the prices reported by the chicken companies. The prices on the
Georgia Dock are then used by the grocery stores to negotiate their prices
with the chicken companies.

Would not those negotiated prices then affect the prices that get reported to
the Georgia Dock? Am I missing something that prevents this from becoming a
circular dependency?

------
PretzelPirate
With government subsidies, you might say that the cost of chicken has been
artificially kept low.

~~~
lallysingh
Or the subsidy's been applied to the vendor as pure profit, instead of
reducing the market rate.

------
feld
I get chicken (leg quarters) for .39 a pound regularly.

Normal grocery store prices are insane.

~~~
knieveltech
This implies you do not buy your chicken from a "normal" grocery store. If
that is the case, where are you buying your chicken?

~~~
fencepost
The two places that jump out at me as possibilities would be restaurant supply
places (for example, Gordon Food Service has storefronts in my area though I
don't believe they actually sell to the general public) or "ethnic" markets -
often small-chain grocers often listed as "produce" or "carniceria" though
they are often full service groceries.

~~~
LeifCarrotson
Gordon Food Service storefronts all sell to the general public as of a recent
rebranding. They're actually very accessible - though like Costco or Sams
Club, more applicable to feeding a large group. Some prices are up at
[https://ads.gfsstore.com/](https://ads.gfsstore.com/).

------
h4nkoslo
There is an immensely profitable niche finding regulatorily dictated pricing
schemes like this, or LIBOR, or various other "one true commodity price"
setups, and mercilessly arbitraging them.

------
Hondor
Americans should love this. Artificially inflated food prices are what tariffs
and a lack of trade agreements are for. That causes local consumers to pay
more to support local producers rather than paying a fair international price.
How can someone complain about this article's kind of cheating and at the same
time want to restrict cheap imports - which has the same effect of
artificially inflating prices?

------
MrQuincle
The prices are artificially set anyway.

I don't think animal friendly practices, environmental issues, waste, health-
care (antibiotics), etc. is factored in.

------
matthewmcg
At least superficially, this seems to be "LIBOR fixing, but for chicken."

There's a price index that was created for informational purposes but
gradually becomes more financially consequential as it is written into big
commercial contracts. Finally, it's revealed that one or more players are
submitted self-serving information.

------
jpindar
Meanwhile, the high beef prices of the last few years, which as far as I know
were due to an actual shortage, have gone back down. I'm glad, I was expecting
they were going to stay at the higher prices forever.

------
tunap
An article on artificially inflated chicken prices and no mention of the water
scams? Perhaps the purpose of the article has a political objective besides
commodity prices.

------
desireco42
Like chicken meat is not cheap already.

~~~
knieveltech
Meat in general is expensive these days. Chicken has traditionally been a low-
cost alternative to beef but in recent years the price has come closer to
parity with ground beef.

~~~
jonathankoren
I don't know where you get that idea. The prices of turkey and pork have
remained stable, while the price of beef has declined . It's chicken that has
raised in price.

[https://www.washingtonpost.com/news/wonk/wp/2014/01/10/the-c...](https://www.washingtonpost.com/news/wonk/wp/2014/01/10/the-
chicken-market-is-so-hot-right-now-why-cant-i-trade-on-it/)

~~~
knieveltech
Isn't that what I said? That's what I meant to say.

~~~
thesimpsons1022
think he was responding to:

>> Meat in general is expensive these days

not the other part

------
novalis78
...that will be a day when we see this headline regarding health care prices
:-)

------
disposablezero
So has the prices of cane sugar, but not corn and soybeans.

------
seesomesense
Multi-billion dollar class action suits, incoming...

------
paulus_magnus2
Aren't all prices "inflated"?? Therefore inflated = market price = fair price.
Capitalism

------
tripzilch
how is this relevant to HN?

------
sammcgrail
Just like the chickens...

------
einrealist
Hacker News and chicken problems.... ;)

------
ska
What's wrong with "Trust, but verify" ?

------
bexp
similar to healthcare and education

------
jscipione
"may"

------
m23khan
I also find prices of gasoline highly inflated as well as price of dry fruits
and beef.

------
angersock
Authorities suspect fowl play in the bookkeeping, but companies refuse to
apollogize.

~~~
AlexB138
Seriously? We're getting the reddit-level pun threads now?

~~~
et-al
Yes. Let's refrain from one-line puns.

I'd hate to open a HN thread in the near-future only to have the top-rated
comments be puns. Good, on-topic forums are as rare as hens teeth these days.

