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and animal feed industries.
Industry News & Trends
on December 22, 2016

Sanderson Farms comments on suspension of Georgia Dock price

The Georgia Department of Agriculture has suspended the Georgia Dock weekly chicken-price index

Sanderson Farms, Inc., provided the following comments, on Dec. 21, related to the Georgia Department of Agriculture's announcement in the morning that it will indefinitely suspend the Georgia Dock weekly chicken-price index, an industry benchmark since 1972.

Sanderson Farms has priced a portion of the Company's production from its tray pack plants based on formulas that used the Georgia Dock Whole Bird price as its base. For fiscal 2016, 10.15 percent of the Company's overall product mix was priced using these formulas. For the past 40 years and until recently, the Georgia Dock price was seen as a fair reflection of the dynamics of the retail grocery store market for chicken.

The Company promptly notified its customers who are affected by this change, and the Company is committed to determining an appropriate pricing formula as quickly as possible. For the interim period until a new benchmark is established, Sanderson Farms and its customers have agreed on a pricing formula that is similar to what is already in place. As in the past, pricing formulas will be negotiated based on a customer's mix, location, volume and needs.

Commenting on the announcement, Joe F. Sanderson, Jr., chairman and chief executive officer stated, "Retail grocery tray pack products are important to our overall business, and we value our customer relationships in this market segment. With the suspension of the Georgia Dock, we are committed to working with these customers to find a new benchmark to use in beginning negotiations with our customers. It is important to note that regardless of the benchmark used, our negotiations with customers ultimately determine the price, and we believe our prices fairly and accurately reflect supply and demand dynamics. We have had positive conversations with our customers and do not expect this recent action to affect our business.

"We understand the Georgia Department of Agriculture will introduce a new index the week of January 4, 2017, with official reporting for the index expected to begin February 1, 2017. We believe they are going about determining the new system in the right way; being deliberate and getting input from every constituency group who is affected by the benchmark, including buyers, sellers, distributors, regulators and other interested parties," added Sanderson.

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