The Justice Department is investigating how poultry companies pay their chicken farmers, the latest move by the government to clamp down on an industry payment system that has been criticized by some farmers, the Wall Street Journal reported. Pilgrim’s Pride Corp., the second-largest U.S. poultry processor by sales volume, said in a regulatory filing on yesterday that it learned earlier this month that the Justice Department had opened a civil probe into chicken-grower contracts and payment practices. The Colorado-based company said it would cooperate with the Justice Department. The Justice Department has similarly notified other poultry companies. Chicken farmers generally work under contracts in which poultry companies own the birds and feed, and instruct farmers how to grow the chicks. About two dozen farmers in a given region are typically compared against one another to determine their payment rates, using a sliding scale analyzing their chicken production, according to farmers and industry officials. It is an arrangement known in the industry as the tournament system. (Subscription required.)
