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Middleman

Schronce memo saga continues. Last week we brought you the latest in the ballooning story about alleged collusion among some of the nation’s largest poultry producers to drive chicken prices up since at least 2008.

“”We’ve used it for 40 years and everybody’s always had a lot of confidence in it.”

The Georgia Dock price index, which U.S. producers use to set prices for wholesalers and retailers, has come under increased scrutiny after Bloomberg and the Washington Post obtained an internal memo written by the report’s director, Arty Schronce, that cited limited resources and dismissive behavior on the part of producers as reasons the report should be handed over to an independent auditor or eliminated entirely.

The development follows a series of antitrust class actions filed since September, the first of which was led by New York food distributor, Maplevale Farms, on behalf of middlemen who buy from producers like Tyson Foods, Inc., Pilgrim’s Pride Corp., and Sanderson Farms.

Now some of the same producers named in the class action are being asked by the Georgia Department of Agriculture to provide affidavits confirming that the price information they provide to the Georgia Dock is accurate. AgWeb reports that the affidavits are due on Tuesday and both Tyson and Sanderson are said to be “considering” signing them.

There is some disagreement among producers about how much they rely on the Georgia Dock for price discovery in the first place. Tyson spokesman Worth Sparkman told Bloomberg the company only uses the index to price “3 to 4 percent of Tyson’s chicken sales,” while Sanderson CFO Mike Cockrell is quoted said in the same Bloomberg story as saying, “We’ve used it for 40 years and everybody’s always had a lot of confidence in it.”

The U.S. Department of Agriculture had been using the Georgia Dock in its own poultry price reporting until earlier this month, when it stopped publishing the estimates because, as an agency spokesperson told the Washington Post, “data from the source report could not be independently verified.” Stay tuned for more poultry collusion confusion.

Kate Cox

Kate Cox covers the secret life of the supply chain as editor for The New Food Economy. In her former life, she was a freelance health reporter for radio and text. Follow her @thekatecox