JBSS3 Jbs Sa

Chicken companies aren't meeting more stringent requirements to guarantee price information they supply to a weekly poultry index, heightening skepticism over the accuracy of a key benchmark for grocery stores.

Georgia's Agriculture Department on Wednesday suspended the index for the first time in years. This week was the first that companies such as Tyson Foods Inc., Pilgrims Pride Corp. and Sanderson Farms Inc. were obliged to submit affidavits swearing by the accuracy of the price data they provide the department to calculate the "Georgia Dock" index. Department spokeswoman Julie McPeake said not enough companies did so. She said at least half of the nine companies that supply data to the report needed to do so before it would resume.

"We did not feel that the number was sufficient to meet minimum statistical reporting standards," she said. "We understand that companies may need more time to review the requirements and it is possible to resume publishing the Georgia Dock Price in the future."

That leaves major supermarket chains and fast food companies with fewer tools to price the large quantities of meat they often purchase months in advance.

The Wall Street Journal earlier this year raised questions about how it is calculated. The main Georgia price has hovered up to 60% higher this year than comparable prices on other major indexes, and held far steadier week to week.

"There's been a historical divergence we just cannot account for absent some proof that it's real," said Tom Elam, president of FarmEcon LLC, an agricultural consultancy.

The Georgia Dock index's price for a whole-bird equivalent last week was $1.0975 per pound. That day, private market reporting firm Urner Barry quoted the price at 82 cents a pound, in line with the most recent price from the U.S. Department of Agriculture.

The Georgia index includes prices for chicken parts provided by nine companies with processing plants in the state. Pilgrim's Pride and Tyson control about half of the 18 plants that feed price data to the benchmark, which excludes outlier prices more than a cent above or below the average. There is no independent verification.

This week's new reporting rules, the first major change to how the index is calculated in 40 years, still leave companies to vouch for themselves with added legal affidavits assuring the validity of those prices.

Tyson and Pilgrim's Pride say are still sending poultry market information to Georgia officials.

"We continue to provide pricing data to the Georgia Department of Agriculture and we're comfortable attesting to its accuracy," said Bill Lovette, chief executive of Pilgrim's Pride, the second-largest U.S. chicken processor in terms of volume. Mr. Lovette said scrutiny of the Georgia index was overblown, but welcomed any measures to improve its transparency.

Tyson and Sanderson Farms, another major poultry processor, also said they were still evaluating the Georgia department's requests. Mike Cockrell, chief financial officer for Sanderson Farms, said his company was reviewing the legal implications of the new requirements before signing the new documents.

Meat companies in recent days have played down the Georgia Dock index's prominence in the industry. Tyson executives last week estimated that about 4% of the company's chicken was priced in relation to the index; Pilgrim's Pride estimated about 5% of its chicken used the Georgia Dock.

Still, investors' concerns over the impact of big changes to the index have weighed on meat company stocks. Tyson shares fell 1.5% early Wednesday after the Georgia Agriculture Department said the index wouldn't be published. Pilgrim's shares fell 1.6% and Sanderson declined 0.4%.

Write to Kelsey Gee at kelsey.gee@wsj.com and Jacob Bunge at jacob.bunge@wsj.com

(END) Dow Jones Newswires

November 30, 2016 13:45 ET (18:45 GMT)

JBS ON (BOV:JBSS3)
Gráfico Histórico do Ativo
De Mar 2024 até Abr 2024

JBS ON (BOV:JBSS3)
Gráfico Histórico do Ativo
De Abr 2023 até Abr 2024