Happy Thanksgiving!

The other day I sent an email with the subject line, "Chicken S**t Price-Fixing," with a WSJ article attached about the way that chicken prices are set.  Below is a follow-up article from the WSJ, which, like the first article, is a turkey of an article.  It is so poorly written that it makes a convoluted process even more difficult to understand.  Maybe the reporter was hired for diversity instead of competence, or maybe journalism schools are teaching something other than clear writing.

Reader comments are posted below the article.

I hope that turkeys aren't priced this way.  Unfortunately, the pricing of medical care in the USA is even more convoluted and opaque.  For instance, I got an ultrasound yesterday and have no idea what it cost.  (The ultrasound confirmed what many people have been saying:  that my head is up my ass.)  Meanwhile, the geniuses who run the country are puzzled as to why medical care/insurance is so expensive. 

Regards,
Craig Cantoni

Flawed Chicken Index Could Mean Dark Times for White Meat

Troubles with the Georgia Dock, a price index for chickens, could prove costly for poultry producers

By 

SPENCER JAKAB

The Wall Street Journal, Updated Nov. 23, 2016 6:37 p.m. ET

"Just keep 'em the same" sounds like wishful thinking on prices from a business savoring fat profits.

Instead, it is what some chicken processors allegedly told an employee of the Georgia Department of Agriculture who used their weekly responses to price billions of dollars a year in supermarket chicken sales. Now that questions have emerged about the reliability of the Georgia Dock, a price index for chickens, things may never be the same again for companies like Sanderson Farms, Pilgrim's Pride and Tyson Foods.

If evidence were to emerge of actual price manipulation along the lines of similarly self-reported indexes such as the London interbank offered rate then fines could follow. But, even if the index was just unintentionally overstated, it could have a serious financial impact.

Sanderson's exposure is particularly high. Last fiscal year, a little under half of its processing capacity by weight was set up for the smaller birds sold to supermarkets. In 2015, when suspicions first emerged, the Georgia Dock index averaged about 24 cents a pound higher than the competing Urner-Barry index, calculated using verified sales to a different type of customer. From 2002 to 2014, the Georgia Dock index averaged 6 cents more than Urner-Barry, with a range from 12 cents less to 24 cents more.

If about 30% of overall sales were based on the Georgia Dock, then the impact of a 20-cent-a-pound difference in 2015 might have cut Sanderson's $216 million net profit by about two-thirds, according to Wall Street Journal estimates. Individual contracts can be complex, and the company itself hasn't broken out its exposure.

Whether the uproar over pricing turns out to be a matter of sloppy calculations or something more serious, the financial implications for meat companies may be more than just chicken feed.

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Maybe this article should have been published by The Onion.

Or, maybe The Onion will publish it.

Or, maybe The Onion has published it.

Or, . . .

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Let them eat pork, the other white meat.

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This article is devoid of any information that allows ready comprehension of the issues tangentially referenced.  Very poorly written and apparently no editorial review.

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Yes, the article presupposes that the reader knows something about this index (how is it constructed, anyway?) and how it relates to either (a) the pricing of slaughtered fowl delivered to market or (b) the values assigned to inventory.  As it is written, it is utterly mystifying what this index should have to do with the profits of chicken producers.