Bought Tyson Chicken? You May Have Paid Too Much For It

Tyson Foods is getting a lot of heat right now over allegedly fixing prices in order to increase profits. The U.S. Securities and Exchange Commission subpoenaed Tyson Foods to investigate these allegations.

Grubstreet reports that a lawsuit was filed in September 2016 by distributors accusing the chicken producer of participating in this price-fix scheme for eight years. Other brands are also being accused, such as Pilgrim's Pride, Perdue Farms, Koch Foods, Sanderson Farms and Simmons. Broiler prices were allegedly driven up by 50% by limiting production.

All companies deny any wrongdoing, but the allegations have reached enough ears that the feds are now looking into the case. According to Fox News, Tyson's new CEO Tom Hayes declined to comment on the whole thing in a recent conference call with reporters. Also, stock prices are taking a hit as a result of the litigation. Tyson's stock has fallen 5% already and Pilgrim's Pride's stocks are also falling.

With chicken consumption on the rise, this type of case can cause Tyson and fellow producers (if found guilty) to take a major hit in sales. Today's health trends have many of us consumers turning to chicken for a lean alternative to pork or beef. In fact, chicken consumption has more than doubled over the last 40 years. That means the market is going to get pretty competitive, and not even Tyson can afford to have this kind of negativity associated with its name … Even if it is America's largest chicken producer.

Some believe that this pricing issue may stem from Tyson's working with the Georgia Dock, according to Forbes. The Georgia Dock is a pricing index (one of three) that was taken offline after being accused of not sufficiently analyzing the data it was receiving. However, Tyson's CEO claims that the Georgia Dock is not something that should be getting attention in this matter. He says that only 3.5 percent to 4 percent of Tyson's total sales were even tied to the pricing index.

Tyson has released its earnings results, which reflect a strong quarter and plenty of industry growth. Hopefully, the company is not guilty, and can continue to thrive.