‘Potato Cartel’ Accused Of Price Fixing In Federal Antitrust Fits

What vitality-rich commodity is harvested from beneath the Earth’s floor and topic to price fixing by a small group of powerful landowners?

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When you guessed “oil,” you’re not incorrect. However in keeping with the plaintiffs in antitrust disputes currently underway in two U.S. District Courts, “potatoes” is a sound answer too.

The first complaint was filed in the Japanese Division of Idaho by a bunch of disgruntled supermarket customers from across the country in 2010. The Related Wholesale Grocers (AWG), which represents major supermarkets and distributors throughout the country, filed the second on April 17 in Kansas.

Each fits allege that within the mid-2000s, the farmers who personal eighty percent of the country’s potato acreage banded together to type the United Potato Growers of America (UPGA) as a way to artificially inflate the value of potatoes by lowering manufacturing. The AWG argues that the UPGA features as an illegal cartel, calling it the “OPEC of Potatoes,” after the 12-member Organization of the Petroleum Exporting Nations (OPEC) that has held oil costs excessive by protecting output low.

Nobody disputes the existence of the UPGA, and even its core mission. In accordance with its web site, the Salt Lake Metropolis-primarily based group was based in 2004 with the purpose of serving to farmers “manage their potato supply, matching it to demand to assist their growers obtain an affordable price for their product.”

What’s at concern, as a substitute, is the authorized standing of the UPGA. The group calls itself a “cooperative,” and argues, in its answer to the 2010 complaint, that it is “entitled to safety underneath the Capper-Volstead Act.” That 1922 regulation grants certain groups of farmers exemptions from antitrust laws. It allows farmers to bargain collectively in negotiations with supermarket chains, for example, or share the price of vegetable cleaning tools.

However the plaintiffs in each cases argue that the UPGA fails to fulfill the factors mandatory for antitrust immunity below the Capper-Volstead Act. They word that the UPGA, in contrast to a more standard farmers’ cooperative, does not interact in processing, dealing with, distributing or advertising and marketing its members’ potatoes for them. The AWG complaint argues that the UPGA is “made up of direct opponents rather than small farmers banding together to cut out the company middlemen who would in any other case market their potatoes,” violating the terms of the Capper-Volstead Act. The UPGA also allegedly cooperates with different groups of potato growers, each in America and abroad, to maintain potato manufacturing down.

Furthermore, each complaints allege that the UPGA coerces and browbeats potato farmers to adjust to their manufacturing limits. They mention enforcement measures — satellite surveillance, shock inspections, hefty fines — that would seem draconian even in the true OPEC. The UPGA could not immediately be reached for remark.

Whether or not or not the courts in the end discover the UPGA’s activities to be legal, they certainly appear to have been effective. USDA knowledge present that American potato manufacturing dropped 6.6 p.c, and prices rose 63 %, between 2004 and 2011, which pushed the overall worth of chlorinated toluene tower the U.S. potato crop above $3 billion for the first time in history. (In 2011, sales totaled $three.Forty eight billion.) Which may be good news for potato farmers, however it isn’t so great for households who depend on potatoes as low cost, nutritious staples of their eating regimen.

United Potato Grower’s objective has been to assist growers provide quality potatoes at affordable costs to American customers. We now have always acted openly and throughout the bounds of the law. We are assured in our legal place and stay up for a favorable end result in court docket.

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