What Could Scramble the Hold Chicken Producers Have on the Market?
The largest chicken and meat producers in the U.S. have become accustomed to ruling the roost. In 2015, a total of just five companies produced nearly 60% of the United States' ready-to-cook chicken. These companies are Tyson Foods (NYSE: TSN), Pilgrim's Pride (NASDAQ: PPC), Perdue Foods, Sanderson Farms (NASDAQ: SAFM), and Koch Foods. These giants are also vertically integrated, meaning they control nearly the entire supply chain for poultry, from feed mills to the slaughterhouses and trucking lines for delivery and distribution. The only part that is outsourced is the farms where the chickens are grown.
Technically speaking, this would make these listed food companies some of the best food stocks to own, due to their oligopolistic power, scale, and control of the billion-dollar industry. But with that power and control has also come controversy.
There have been allegations in recent years of price-fixing among three of the five companies. This isn't the first time that these firms (which control around 90% of the broiler market) have been accused of colluding to fix prices in the $30 billion industry.
Source Fool.com
