Potato cartel alleged

The harvest at a farm in Idaho, America's leading potato state. Growers say deal ended financial chaos. ROBERT BOWER / Idaho Falls (Idaho) Post-Register
The harvest at a farm in Idaho, America's leading potato state. Growers say deal ended financial chaos. ROBERT BOWER / Idaho Falls (Idaho) Post-Register (ROBERT BOWER / Idaho Falls (Idaho) Post-Register)

Wholesale grocer eyes legal remedy to growers' price control.

Posted: June 15, 2013

BOISE, Idaho - A wholesale grocer says America's potato farmers have run an illegal price-fixing cartel for a decade, driving up prices while spying on farmers with satellites and aircraft flyovers to enforce strict limits on how many tubers they can grow.

Kansas-based Associated Wholesale Grocers' lawsuit against United Potato Growers of America (UPGA) and two dozen other defendants was shifted this week to U.S. District Court in Idaho, America's top potato state, producing 30 percent of the nation's supply.

Associated Wholesale Grocers, a cooperative that supplies more than 2,000 stores, including IGA, Thriftway and Price Chopper, in 24 states, contends that the potato growers banded together in 2004 to inflate prices illegally in a scheme akin to the petroleum-producing OPEC cartel, reducing planting acreages and destroying potatoes, all to restrict what was available for sale.

"UPGA utilized predatory conduct and coercive conduct in ensuring compliance with the price-fixing scheme," says the lawsuit, which alleges use of tactics including "satellite imagery, flyovers, GPS systems, and other methods to enforce its agreement to reduce potato supply."

The grocers' group seeks triple damages, likely in the millions of dollars, and is focusing on growers of fresh potato varieties found in big bags in supermarket produce aisles as well as potatoes processed into products sold in the freezer sections of group members' stores.

United Potato Growers of America has organized growers in 15 states - Alaska, California, Colorado, Florida, Idaho, Kansas, Minnesota, Montana, Nebraska, North Dakota, Oklahoma, Oregon, Texas, Washington and Wisconsin - representing three-quarters of the nation's fresh potato production.

Dell Raybould, who grows Russet Burbanks and Norkotah Russets on 850 acres near Rexburg, Idaho, and has been named in the suit, said Thursday that the founders of the group in 2004 followed federal antitrust laws.

Raybould painted a bleak picture of spud farming prior to 2004: a haphazard industry where farmers inevitably grew too many potatoes, pushing prices into the cellar.

"I can remember when people hauled their potatoes out in the field with the manure spreader, dumped them, and plowed them under," said Raybould, who has been growing potatoes since 1953. "They did try to level out production, so we didn't have the boom-and-bust thing all the time."

United Potato Growers of America's Salt Lake City-based attorney, Randon Wilson, said his group is shielded by the Capper-Volstead Act, the 1922 federal law that under some circumstances exempts agricultural cooperatives from antitrust rules.

But Associated Wholesale Grocers says the growers illegally sought to boost costs of America's most-popular vegetable.

"None of the defendants ... is entitled to the limited protections found in the Capper-Volstead Act for their efforts to restrict potato supply and fix prices," wrote Patrick J. Stueve, the grocer's lawyer in Kansas City.

Stueve's basic contention - that Capper-Volstead is being abused to illegally inflate potato prices - has emerged in numerous commodity-related lawsuits in the last decade, said Peter Carstensen, a University of Wisconsin Law School professor in Madison who focuses on antitrust cases. Similar complaints have been filed against mushroom growers, dairy farmers, and egg producers.

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