Dirty Spuds? Alleged Potato Cartel Accused Of Price Fixing : The Salt A civil lawsuit that shifted into U.S. district court in Idaho last week alleges that the United Potato Growers of America has become a veritable OPEC of spuds. The group is accused of using high-tech, strong-arm tactics to inflate potato prices.
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Dirty Spuds? Alleged Potato Cartel Accused Of Price Fixing

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Dirty Spuds? Alleged Potato Cartel Accused Of Price Fixing

Dirty Spuds? Alleged Potato Cartel Accused Of Price Fixing

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From a big, wholesale grocer come allegations of price fixing on the part of big potato. Associated Wholesale Grocers is based in Kansas. They're doing the accusing. The United Potato Growers of America, the UPGA, denies it all. This is a lawsuit. And the question is: Are the big potato growers engaging in predatory conduct, or are they running a smart co-op - smart enough to avoid a cycle of boom and bust when they overproduce?

Well, for these and other questions related to the price of potatoes, John Miller of The Associated Press joins us now from Boise, Idaho. Welcome to the program.

JOHN MILLER: Yeah. Thanks very much.

SIEGEL: And first, what does Associated Wholesale Grocers charge here?

MILLER: Well, the Associated Wholesale Grocers charges that about 75 percent of the fresh potato growers in the country have gotten together - as part of the United Potato Growers of America - and have run a price-fixing scheme, according to the lawsuit, not unsimilar to the OPEC cartel; in order to boost the prices of potatoes illegally, and charge consumers more at the supermarket aisle.

SIEGEL: And they actually alleged that to make sure that producers aren't producing any more potatoes that might reduce the price, they're going high tech, even, according to this suit.

MILLER: Well, according to the lawsuit, in order to enforce elements of the production plan, that they've been using GPS systems, satellite imagery, flyovers and other methods to enforce its agreement to reduce potato supply - using Spudnik, if you will, from the skies.


SIEGEL: And according to the plaintiff here, what kind of a premium are we paying because of what they allege is a potato cartel and what it's doing?

MILLER: Well, a 10-pound bag of potatoes, you know, might previously have gone for 8 or $9. And, you know, after that - and this is 2006 figures, this is two years after the United Potato Growers of America organized, that perhaps folks were paying about $15 for a bag of 10-pound potatoes. [POST-BROADCAST CORRECTION: After this story aired, Miller contacted NPR to say he misstated the years referred to in the example from the lawsuit. The suit alleges that the price of a 10-pound bag of potatoes rose from about $9 in 2007 - not 2004, as implied - to $15 in 2008 - not 2006.]

SIEGEL: And the United Potato Growers of America, how do they respond to this?

MILLER: Well, they clearly say that the lawsuit is not accurate; that they have organized their co-op according to a 1922 federal law called Capper-Volstead, that allows agricultural producers to form cooperatives to more efficiently market their products. They say they've done everything properly. They've had the advice of excellent antitrust attorneys when they set this up, and they're clearly saying that the allegations are without merit.

SIEGEL: Now, this is a civil lawsuit. The Justice Department isn't claiming an antitrust violation here, are they?

MILLER: No. This one is a civil lawsuit, and it's similar to another civil lawsuit filed in federal court in Idaho, back in 2010. And this particular case by the Wholesale Grocers was moved out to Idaho from Kansas this last week. And it's pretty likely, according to the attorneys, that the two cases are going to be combined because really, what's at stake - or what's at issue is similar, or nearly identical.

SIEGEL: I assume that in Idaho, where you are, the price of potatoes is pretty important.

MILLER: Oh, the price of potatoes in Idaho is very important. We're a very important potato-growing state. We produce about 30 percent of the nation's Russet-style potatoes. So we have a potato on our license plate. This is potato country.

SIEGEL: Now, all of us consumers of potatoes would probably prefer to pay less for potatoes rather than more. On the other hand, when growers get together and they try to keep prices up, what they say is if you overproduce, the price of potatoes can go down so fast that people are driven out of business.

MILLER: Well, and I think that that, back in 2004, was the impetus for the United Potato Growers of America getting together and talking about how they could get away from these boom-and-bust cycles that according to some of the farmers that I spoke with, left them with so many potatoes that they just put them in the manure spreader, and dumped them back in the field and used them as fertilizer. It's certainly not the way any self-respecting Idaho potato farmer would like to deal with his crop.

SIEGEL: Well, John Miller, thanks for talking with us about it.

MILLER: All right. Thank you very much, Robert.

SIEGEL: That's reporter John Miller of the Associated Press, speaking to us from Boise in Idaho.



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