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.
