A grocers' group has brought a lawsuit against the United Potato Growers of America (UPGA) and 24 potato growers charging the association and growers with participating in a scheme to control potato production and, in doing so, fix potato prices.
In its lawsuit, Associated Wholesale Grocers alleges that the association and its growers have been using a century-old antitrust exemption -- the Capper-Volstead Act -- for more than 10 years to illegally inflate potato prices by establishing production targets for its members, including acreage restrictions, post-harvest destruction of potatoes and otherwise restricting how many potatoes can be taken to market.
The grocers say UPGA has used "coercive conduct," including aircraft flyovers, satellite imagery and other practices, to enforce its production targets and growers' agreements to comply with those targets.
The grocers are asking for damages that could total in the millions of dollars, according to court observers. The suit covers fresh potatoes sold in stores' produce sections, as well as French fries, tator tots and other potato products sold in freezer sections.
UPGA attorney Randon Wilson contended that the association and growers are protected by the 1922 Capper-Volstead Act, a federal law that provides agricultural cooperatives and their members with limited exemptions from antitrust laws to prevent disruptions in markets. He said the growers have followed the law.
Prior to UPGA's implementation of production targets, farmers tended to grow more potatoes than there was a market for and ended up dumping and plowing them under in a boom-and-bust scenario.
Associated Wholesale Grocers is a Kansas-based cooperative supplying food products to more than 2,000 supermarkets, including IGA and Thriftway, in 24 states.
UPGA has potato-grower members in 15 states.
The suit will be handled in the U.S. District Court for the District of Idaho in Boise, Ida. A similar suit targeting potato growers that was brought by the U.S. Department of Justice in 2010 and filed in the Boise court may be combined with the grocers' suit.
The outcome of the suit could have implications for other Capper-Volstead cooperatives, including the United Egg Producers, which also is represented by UPGA's Wilson.