BOISE, Idaho — A U.S. wholesale grocer says America’s potato farmers have run an illegal price-fixing cartel for a decade, driving up spud 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-producing state at 30 percent of the nation’s supply.
The grocery group, a cooperative that supplies more than 2,000 stores including IGA, Thriftway and Price Chopper in 24 states, contends the potato growers banded together in 2004 to illegally inflate prices 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,” according to the lawsuit, which charges tactics including use of “satellite imagery, flyovers, GPS systems, and other methods to enforce its agreement to reduce potato supply.”
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The grocers are asking for triple damages, likely in the millions, and are focusing on growers of fresh potato varieties found in big bags in supermarket produce aisles, as well as potatoes that are processed into golden fries, tater-tots and other products and sold in freezer sections of the group’s stores.
United Potato Growers of America has organized growers in Alaska, California, Colorado, Florida, Idaho, Kansas, Minnesota, Montana, Nebraska, North Dakota, Oklahoma, Oregon, Texas, Washington and Wisconsin. They represent 75 percent of the nation’s fresh-potato production.
Dell Raybould, an Idaho state representative, is a member of the co-op and has been named in the lawsuit. He insisted Thursday that those who set up the group in 2004 followed federal antitrust laws.
Raybould, who grows Russet Burbanks and Norkotah Russets on 850 acres near Rexburg, Idaho, paints a bleak picture of spud farming before 2004 — a haphazard industry where farmers inevitably grew too many tubers, 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. And when they did the co-op, they went about this the right way. They got the best co-op attorney in the nation, and they did it right,” Raybould said.
Randon Wilson, United Potato Growers of America’s attorney, contends his group is shielded by the Capper-Volstead Act, the 1922 federal law that under some circumstances exempts agricultural cooperatives from antitrust regulations.
“Right from the beginning we did everything right, to qualify for Capper-Volstead,” Wilson said. “We know what you have to do to qualify for that limited exemption and we followed all those rules.”
However, Associated Wholesale Grocers says the growers illegally sought to boost costs of America’s most-popular vegetable.