Rotten Eggs, Rotten Tomatoes

September 23rd, 2008 | Sources: Wall Street Journal

Subjects:

When food prices surged this year, experts attributed the run up to increasing demand, higher energy costs and drought. It turns out there may be another explanation as well-rampant price fixing and collusion in the food industry.

Federal prosecutors announced yesterday that they have started separate criminal investigations of large egg producers and California tomato processors to determine whether such activities have occurred. The Feds recently also opened similar price fixing investigations in the dairy, fertilizer and citrus fruit industry.

The price of tomatoes rose 16% this year, nearly three times more than the overall rise in food prices. Domestic egg prices rose by 40% earlier this year after the 3 largest domestic egg producers began exporting small amounts of eggs to the Middle East and Europe.

It will be awhile if ever, before the Feds are ready to make their case. Even now though, analysts are predicting that the food industry will not deny allegations of price fixing but argue instead that their behavior is legal under obscure antitrust exemptions like the Capper-Volstead Act, which was promulgated in 1922 to help small farms negotiate with large food processors.


 

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