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Are Close Competitors ‘Playing Chicken’ With the Food Supply Chain? (All Things Supply Chain)

Posted on All Things Supply Chain on February 19, 2018

The expression ‘supply chain’ usually implies a string of single business ‘nodes’, one after the other, that extends from the end consumer all the way back to the raw or source materials. In the case of the chicken supply chain, however, there seems to be a ladder effect taking shape as multiple parties at each tier come into close contact while they strive to deal with the same competitive pressures.

This story recently started to gain increased attention when distributors Sysco and US Foods sued Tyson and other chicken producers, alleging over a decade of collusion and price fixing. These lawsuits are in addition to similar ones brought by fellow distributor Maplevale Farms and supermarket chains Bi-Lo and Winn-Dixie (now a subsidiary of Bi-Lo).

The suits accuse chicken producers of increasing prices by constraining supply and inflating market rates through the manipulation of industry benchmarks – leading to the dissolution of the Georgia Bench pricing system in 2017 amid transparency concerns. Producers defend their actions, saying that they are just responding to competitive pressures. They have vowed to fight the suits in court.

These cases will work their way through the legal system, but in the meantime, there are multiple tiers of observations we can make about the dynamics in this supply chain.

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