Monday, 18 July 2011

Happier Together

John Wayne or Moses Coady. It was always tempting to describe farmers and fishermen as rugged individualists who faced the challenge of weather, highly competitive markets, worked harder and smarter than their neighbours, and enjoyed the benefits of their labour (think John Wayne in the movies anyway). However in a business where middlemen, processors, and retailers have gained enormous economic control over the last twenty years, it always seemed in those moments when primary producers acted (often against their instincts) in a collective way (think Moses Coady), that good things happened.

Potato growers suffered for years from over production and low prices in North America. French fry companies and fast food restaurants were the beneficiaries, but farmers were slowly going broke. In 2004 a large potato grower from Idaho called Albert Wada and some others decided something had to be done:

"To say that the potato production industry has been struggling is not an overstatement. Technological advances and other factors have spurred an increase in the potato grower’s ability to produce more potatoes at a time when consumer demand and industry infrastructure have changed. In addition, the modern grower grapples with increasing production costs and an over-supplied marketplace. Product over-supply makes it impossible for growers to receive a reasonable price."

The United Potato Growers of America was the result. A United Potato Growers of Canada has also been created. The laws are different in both countries, not every farmer has joined,  so there's been varying success, but in the early days it definitely had a positive impact on prices for farmers. So much so that "the trade" (everyone after the farmgate) has launched a lawsuit. (an indication the United movement is working)

Lawsuit Alleges "Potato Cartel" Conspiracy

May 03, 2011
NEW YORK (Milberg LLP) — Milberg LLP has filed a class action lawsuit alleging that consumers were overcharged on their purchases of potatoes dating back to 2004 through the present. The complaint alleges that the defendants, an alleged cartel consisting of among the largest potato growers, cooperatives, processors and licensors, violated federal and state antitrust laws by having entered into an illegal scheme to restrict output and raise prices for potatoes. The suit covers consumers in Arizona, California, the District of Columbia, Florida, Iowa, Kansas, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, South Dakota, Tennessee, Utah, Vermont, West Virginia, and Wisconsin. In December 2010, the Court hearing the case appointed Milberg LLP as interim co-lead counsel.
According to the complaint, defendants, who have been publicly called the "potato cartel" and control 80% of the United States potato supply, conspired to increase prices for fresh and process potatoes in the United States starting in 2004 by reducing the potatoes grown or available for consumer markets. Defendants' actions effectively reduced competition in the markets for fresh and process potatoes throughout North America.
The defendants in the action include: United Potato Growers of America, Inc., United Potato Growers of Idaho, Inc., United II Potato Growers of Idaho, Inc., United Potato Growers of Canada, Wada Farms, Inc., Wada Farms Potatoes, Inc., Wada-Van Orden Potatoes, Inc., Albert Wada, Blaine Larsen Farms, Inc., Blaine Larsen, Potandon Produce LLC, Cornelison Farms, Inc., Keith Cornelison, Michael Cranney d/b/a Cranney Farms, Snake River Plains Potatoes, Inc., Driscoll Potatoes, Inc., Lance Funk d/b/a Lance Funk Farms, Rigby Produce, Inc., Pleasant Valley Potato, Inc., Raybould Brothers Farms LLC, RD Offutt Co., Dole Fresh Vegetables, Inc., Dole Food Company, Inc., and Idahoan Foods LLC.
The action is part of a multi-district litigation captioned In Re Fresh and Process Potatoes Antitrust Litigation pending in the United States District Court for the District of Idaho and is numbered 4:10-md-02186-BLW.

Then there's tuna. PEI fishermen have by far the largest quota of tuna in the Maritimes. Federal Fisheries has some pretty strict rules to ensure there isn't overfishing of this endangered species. (It's hook and line fishing, one fish per boat per day, etc. in North America, while in the Eastern Atlantic, in European waters, nets are used to indiscriminately catch huge numbers of fish.)  The instinct for fishermen is go out and catch fish quickly, because if they don't get them, someone else will. The challenge for fishermen is to resist this.

A couple of times PEI tuna fishermen have agreed to even stricter limits than the use of quota (splitting the season into two for example) and have been rewarded with fatter fish and better prices. Last Fall they couldn't get agreement, and the quota was caught in two days. Prices hit rock bottom, there were stories that some fish ended up dumped in back fields. Today (July 18) we hear that fishermen have once more agreed to stricter catch rules, and I say good work. Canada's position that it harvests tuna in a responsible way will be strengthened (there are still many smart fish biologists calling for a moratorium on all tuna fishing), and fishermen will be rewarded with better prices.

With my comfortable job and regular paycheck at CBC I always felt a little discomfort reporting on (and I know sometimes advocating for) collective action by farmers and fishermen. Who's to say that "dog eat dog"
isn't the way of the business world anyway.  The fact is "cheap food" is a huge benefit to the economy and the vast majority of consumers. No one is going to offer to pay primary producers more voluntarily, and if farmers and fishermen think they need more, then they've got to fight the John Wayne and embrace the Moses Coady.

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