United Potato Cooperative: Flawed from the beginning? - The Packer

United Potato Cooperative: Flawed from the beginning?

12/13/2011 04:28:00 PM
Tom Karst

Still, Defendants argue that because Capper-Volstead cooperatives are allowed to fix prices, they must also be allowed to restrict production. This argument is unpersuasive. The reason an agricultural cooperative can fix the price at which their good is sold is because if the price rises, farmers will produce more and consumers will not be overcharged. Individual freedom to produce more in times of high prices is a quintessential safeguard against Capper-Volstead abuse, which Congress recognized in
enacting the statute.

For these reasons, the Court concludes that acreage reductions, production restrictions, and collusive crop planning are not activities protected by the Capper- Volstead Act.

TK: Though the court's ruling seems ominous indeed for the cooperative, we will continue to watch the case play out. To give you a sense of the absolute confidence that the potato  industry had in their efforts to improve grower returns, story below explains the view in October 2006:

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