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U.S. chicken prices may have been artificially inflated for years
- angersock 10y agoAuthorities suspect fowl play in the bookkeeping, but companies refuse to apollogize.
- nanodeath 10y agoWell I appreciated the puns...
- tim333 10y agoThe regulators are probably just chicken.
- AnimalMuppet 10y agoEggsactly.
- AlexB138 10y agoSeriously? We're getting the reddit-level pun threads now?
- et-al 10y agoYes. 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.
- forrestbrazeal 10y agoIn fact, U.S. chickens themselves have been artificially inflated for years. Yum. http://www.foxnews.com/story/2009/06/10/artificially-fattened-chickens-new-strains-e-coli-film-seeks-to-expose-us-food.html http://www.foxnews.com/story/2009/06/10/artificially-fattene...
- neffy 10y agoYou had to quote fox news for that didn't you?! You just had to...
- emodendroket 10y agoIf anything, I'd say a report from Fox News about a business doing something questionable is more reliable.
- neffy 10y agoWell, it's certainly putting the fox in amongst the chickens...
- bexp 10y agosimilar to healthcare and education
- klodolph 10y agoI 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.)
- maxerickson 10y agoBreasts go below $3 here. Boneless thighs below $2. That's at Walmart, but that's where an awful lot of Americans are buying some of their chicken.
- sethd 10y agoThe inverse is true in Vietnam (not sure about elsewhere in SE Asia), where they consider the breasts to be the most undesirable part of the chicken.
- jandrese 10y agoIt's a health thing. People have been taught that the dark meat is full of fat and the light meat is healthier. It's kind of like choosing a Coke instead of a Mountain Dew for health reasons.
- goda90 10y agoExcept a moderate amount of protein and fat is good for you while highly processed sugar with little to no other nutrients in the mix is not.
- emodendroket 10y agoI think the point of the parent comment is that choosing to eat white meat instead of dark meat for health reasons is nonsensical.
- feld 10y agoI get chicken (leg quarters) for .39 a pound regularly. Normal grocery store prices are insane.
- knieveltech 10y agoThis implies you do not buy your chicken from a "normal" grocery store. If that is the case, where are you buying your chicken?
- fencepost 10y agoThe 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 10y agoGordon 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/.
- selimthegrim 10y agoIn New Orleans, one sees these prices at local chain supermarkets (i.e., not Winn-Dixie or Whole Foods but Dorignac's or Canseco's) as well as what could be politely termed bodegas in the middle of urban food deserts with crime challenges (one local chain of which has the incredibly apt moniker Chicken Mart)
- ska 10y agoWhat's wrong with "Trust, but verify" ?
- deleted 10y ago[deleted]
- desireco42 10y agoLike chicken meat is not cheap already.
- maxerickson 10y agoThere are an awful lot of people that would love to eat 20% more chicken.
- knieveltech 10y agoMeat 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 10y agoI 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-chicken-market-is-so-hot-right-now-why-cant-i-trade-on-it/ https://www.washingtonpost.com/news/wonk/wp/2014/01/10/the-c...
- knieveltech 10y agoIsn't that what I said? That's what I meant to say.
- thesimpsons1022 10y agothink he was responding to: >> Meat in general is expensive these days not the other part
- desireco42 10y agoI see. What I was saying, that overall price of meat is really low and accessible and this stimulates overconsumption.
- reverend_gonzo 10y agoAnd 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-chicken-market-is-so-hot-right-now-why-cant-i-trade-on-it/ https://www.washingtonpost.com/news/wonk/wp/2014/01/10/the-c... 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.
- ethagknight 10y agoSo what, then, has prevented new startup chicken ranchers from popping up all over the US to capitalize on the overpricing?
- TheSockStealer 10y agoI 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 10y agoExcept you would sell more if you were undercutting the competition pricewise.
- Guest98123 10y agoYou'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.
- ethagknight 10y agoWell of course you sell at the monopoly price, thats why you entered the market in the first place. I would not think the capital would be particularly outsized compared to similar venture.
- bduerst 10y agoCan confirm on the regulatory aspect - factory farms are terribly difficult to get cities to approve zoning for.
- jlarocco 10y agoEasier said than done. If a group of big players are keeping the price high artificially then it will be easy for them to drop the price until the "startup chicken ranchers" go out of business. I'm sure there are economies of scale involved, and they can probably drop to the true market price while still keeping a better profit margin than the startup chicken farmers.
- jackmoore 10y ago“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.
- vermontdevil 10y agoHe must think everyone else is an idiot when he talks like this.
- deleted 10y ago[deleted]
- oxide 10y agoIf it isn't willful obliviousness, at the very least, it is blatant incompetence.
- philipodonnell 10y agoI don't think you have to call it willful. By his own hand he wrote: > “My training was inadequate, inconsistent and sometimes in error,” Schronce wrote of his preparation for calculating the Georgia Dock.
- lsaferite 10y agoThat quote is not from the same person.
- squozzer 10y agoMr. Asbridge, have you ever heard of money? If not, do you know what the numbers on your paycheck mean?
- ak4g 10y agoUh, this makes no sesne to me. He's speaking specifically about the numbers reported for the Georgia Dock, which, from the reporting in this article, could very easily be completely legitimate. You seem to be interpreting his statement as applying to everything under his job description as director of regulatory compliance. I did not read his statement as a blanket statement; it hadn't occurred to me that anyone would until I saw your comment. As a matter of fact, the 2nd sentence seems to explicitly preclude that interpretation.
- einrealist 10y agoHacker News and chicken problems.... ;)
- jscipione 10y ago"may"
- korethr 10y agoSo 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?
- pessimizer 10y agoAnother 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 10y agoLIBOR-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 10y ago> 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.
- PretzelPirate 10y agoWith government subsidies, you might say that the cost of chicken has been artificially kept low.
- lallysingh 10y agoOr the subsidy's been applied to the vendor as pure profit, instead of reducing the market rate.
- m23khan 10y agoI also find prices of gasoline highly inflated as well as price of dry fruits and beef.
- sorenjan 10y agoIsn'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.
- grzm 10y agoIt drives cost down. price − cost = profit
- xherberta 10y agoRight. I'm willing to PAY for better conditions for chicken. Who's with me?!
- st3v3r 10y agoShould be, but then shareholders wouldn't get as fat of a dividend, and the board members might have to live with a 20' yacht instead of a 27' one.
- coldtea 10y agoIt'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 10y agoHow 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.
- novalis78 10y ago...that will be a day when we see this headline regarding health care prices :-)
- cnnsucks 10y agoTyson 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 10y agoSo 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.
- h4nkoslo 10y agoThere 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.
- sammcgrail 10y agoJust like the chickens...
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- toomanybeersies 10y agoI'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 10y agoThese prices are actually in line with what we spend in the US
- scythe 10y agoHis prices for pounds are off because his math is wrong. $10/kg is actually $4.53/lb, not $3.
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- moron4hire 10y agoYou missed the currency conversion. 10 NZD ~= 7 USD.
- jpindar 10y agoMeanwhile, 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.
- seesomesense 10y agoMulti-billion dollar class action suits, incoming...
- Hondor 10y agoAmericans 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?
- disposablezero 10y agoSo has the prices of cane sugar, but not corn and soybeans.
- MrQuincle 10y agoThe prices are artificially set anyway. I don't think animal friendly practices, environmental issues, waste, health-care (antibiotics), etc. is factored in.
- paulus_magnus2 10y agoAren't all prices "inflated"?? Therefore inflated = market price = fair price. Capitalism
- tunap 10y agoAn 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.
- matthewmcg 10y agoAt 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.
- tripzilch 10y agohow is this relevant to HN?