A 'potato cartel' is colluding to keep food prices high: report

The high price of eggs has been in the news since bird flu spread across the U.S. However, a new report alleges the potato industry has a stranglehold on the high price of groceries.

Investigative news outlet The Lever discussed a new antitrust battle against the frozen potato market in November.

“The potato cartel moves prices skyward in lockstep — harming all purchasers of potatoes in the process,” attorneys wrote in the court filing.

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Restaurants, grocery stores, and food distributors are reportedly involved in more than a dozen coordinated lawsuits nationwide, claiming that price-fixing by four French fry companies has been harming their profits.

"Around 40 percent of all potatoes grown in the United States are sold to frozen potato companies — 17 billion pounds annually," the lawsuit said. Four firms then buy the potatoes, prepare and freeze them before packaging them.

While there were over a dozen companies 20 years ago, that number has slowly shrunk to just four. They're named: Lamb Weston, Canada-based company McCain Foods, the J.R. Simplot Company, and Cavendish Farms. The first two control about 70% of the market, while J.R. Simplot manages about 20%, the report says.

They've all told restaurants and bars that they'll increase prices by $0.12 per pound in April.

“It was just the most obvious example of collusion I’ve seen in a long time,” said Washington, D.C., bar owner Josh Saltzman. “All of them were raising their prices by virtually the exact same amount within a week of each other.”

“I was just like, ‘Oh, I’m going to fire off a tweet about Big Potato,’” he continued. “Then it somehow took on a life of its own.”

He had no idea how right he was to believe that the companies were operating like a “cartel." The report went on to say that the potato industry isn't unique: "Consolidation has crept into every corner of the food industry."

The spokesperson for Lamb Weston Holdings told The Lever, “We believe the claims are without merit and intend to vigorously defend our position.”

There's already an antitrust suit from the Federal Trade Commission on Kroger grocery store, alleging that it raised its egg and milk prices far above inflation rates. Economists weren't shocked as they've been sounding the alarm in recent years.

Read the full report here.