For additional coverage, please see "Potato growers, groups maintain innocence in antitrust cases"
(UPDATED COVERAGE, April 24, 4:10 p.m.) In a recently-filed lawsuit, Associated Wholesale Grocers claims that the United Potato Growers of America, United Potato state groups and many potato grower-shippers are illegally setting potato prices.
AWG specifically mentions Albert Wada of Wada Farms, who traveled extensively in the mid-2000s to convince potato growers in other states to follow Idaho growers’ leads in establishing United Potato groups. A number of other founding members of the groups are also named in the complaint.
Despite forming under the Capper-Volstead Act, which allows growers to meet and set goals to stabilize markets without fear of antitrust laws, the United Potato groups are operating outside the Act because growers have affiliations to marketing/processing/and other non-grower entities, according to the lawsuit, filed April 17 in Kansas City, Kan.
The Kansas City, Kan.-based wholesaler filed suit against Wada, his Idaho companies, the Salt Lake City-based United Potato Growers of America and 20 other potato companies, organizations and individuals. The case is in U.S. District Court in Kansas.
“United Potato Grower’s goal has been to help growers provide quality potatoes at reasonable prices to American consumers," said Jerry Wright, president and chief executive officer of UPGA
"We have always acted openly and within the bounds of the law. We are confident in our legal position and look forward to a favorable outcome in court.”
A statement issued by Wada Farms on April 24 said the company operates within the law.
“Since 1943 our goal has always been to put quality potatoes on the American table with integrity and respect," the Wada statemt said. "We have consistently worked within the boundaries of the law to keep farming healthy and Americans happy for 70 years. That’s a real success story, and one we always look forward to telling.”
AWG requested a jury trial in the case and is seeking a permanent injunction to stop the defendants from meeting through the United Potato groups.
“As a direct and proximate result of defendants’ conduct, plaintiff directly purchased potatoes at prices higher than it would have paid and on terms that are less favorable than would have been available in a competitive market,” according to the lawsuit.
AWG supplies more than 2,000 retailers according to the complaint, and contends the defendants violated the federal Sherman Act (antitrust) and the Kansas Restraint of Trade Act.
In the complaint, AWG states that beginning in 2004, defendants conspired to reduce plantings and supplies of potatoes to increase prices.
“Defendants analogized their potato cartel to the Organization of Petroleum Exporting Countries (OPEC) — the notorious petroleum supply-reduction and price-fixing cartel composed of various foreign nations. Defendants suggested that they should ‘study’ the OPEC model and their organization was referred to as the ‘OPEC of Potatoes,’ ” the AWG complaint states.
The wholesaler contends the defendants also destroyed surplus inventory and disposed of additional potatoes by giving them to food pantries.
After organizing the original United Potato group in Idaho in 2004, the defendants decreased fresh potato plantings by 70,000 acres in 2005, according to the lawsuit. The complaint states that the defendants’ actions by 2005-06 had increased the price of fresh potatoes by 48%.
The complaint quotes the 2011 annual report from United Potato Growers of America as stating the “total shipments of fresh potatoes had fallen from 107.37 million cwt. in 2004-05 to 95.36 million cwt. in 2010-11. Correspondingly, the growers’ average return had more than tripled, rising from $3.11 per cwt. in 2004-05 to $11.42 per cwt. in 2010-11.”
The wholesaler contends the defendants are not protected by the Capper-Volstead Act because it does not apply to processors or others that do not actually produce agricultural products.
“As an initial matter, Capper-Volstead does not protect pre-planting acreage reductions — one of the central agreements at issue in this case,” the complaint also states.
The defendants named in the case are:
- United Potato Growers of America Inc.
- United Potato Growers of Idaho Inc.
- United II Potato Growers of Idaho Inc.
- Wada Farms Inc.
- Cedar Farms Inc.
- Wada Family Farming LLC
- Wada Farms Potatoes Inc.
- Wada Farms Marketing Group LLC
- Pro Fresh LLC
- Albert Wada
- Blaine Larsen Farms Inc.
- Potandon Produce LLC
- Michael Cranney
- Cornelison Farms Inc.
- Snake River Plains Potatoes Inc.
- Driscoll Potatoes Inc.
- Lance Funk
- Rigby Produce Inc.
- Pleasant Valley Potato Inc.
- KCW FAarms Inc.
- Kim Wahlen Farms
- Raybould Brothers Farms LLC
- R.D. Offutt Co.
- Ronald D. Offutt Jr.
- Idahoan Foods LLC