Justice Department Launches Probe Into Poultry Companies' Payment Practices: Report

  • The U.S. Justice Department has launched an investigation into the method of payments made to chicken farmers by poultry companies.
  • Pilgrim’s Pride Corp PPC disclosed in a regulatory filing that it learned on October 6, 2022, that DOJ opened a civil investigation into grower contracts and payment practices.
  • PPC said it would cooperate with the DOJ in its investigations.
  • The Justice Department has notified other poultry companies as well, the WSJ reported, citing people familiar with the matter.
  • The report noted that the poultry companies follow the tournament system in which two dozen farmers in a given region are typically compared against one another to determine their payment rates.
  • The chicken farmers have criticized the system saying the variables involved in chicken rearing make it difficult to determine income.
  • The method thus has drawn scrutiny from the Agriculture Department.
  • The move comes after the Biden administration’s push to curtail the power of large agriculture companies regarding underpaying the farmers and raising consumer costs.
  • Price Action: PPC shares closed higher by 2.92% at $23.26 on Thursday.
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