Peanut Farmer Antitrust Litigation
On September 5th, 2019, the antitrust team at Lockridge Grindal Nauen filed an antitrust lawsuit on behalf of peanut farmers against the two largest peanut shellers in the country, Golden Peanut and Birdsong. The complaint alleges that Birdsong and Golden Peanut coordinated with one another in violation of antitrust laws to underpay farmers for runner peanuts, the primary type of commercial peanut raised. As a result, peanut farmers have suffered from years of low payments for their crops.
Peanut shelling companies play a crucial role in the peanut production process, as the overwhelming majority of peanuts are sold to shelling plants after harvest to be processed and packaged for food companies or other manufacturers.
Since January 2014, the prices farmers received from shellers for runner peanuts have remained remarkably low and stagnant, despite significant market changes and supply disruptions. The lawsuit alleges Birdsong and Golden Peanut began coordinating after the peanut industry experienced drastic weather-related price changes in 2011-2013 that made it difficult for those shellers to manage risk and plan for production. Among other things, beginning in at least 2014, Birdsong and Golden Peanut over-reported peanut and runner inventory numbers to the USDA to create a false impression of an oversupplied market. The defendants capitalized on the perceived oversupply to offer artificially low runner prices to farmers. The defendants also under-reported peanut and runner prices to the USDA to further suppress prices and keep them low and less volatile. Birdsong and Golden Peanut offer nearly identical shelling contracts to farmers, often within the same day of one another, to limit the negotiating power and pricing options for farmers.
The peanut shelling industry is particularly susceptible to antitrust conspiracies due to high consolidation within the industry and a lack of pricing transparency. Unlike other agricultural commodities, there is no futures market for peanuts. Instead, peanut prices are set through private contracting between shellers and farmers. As the dominant players holding 80-90% of the industry’s market share, Birdsong and Golden Peanut dictate the prices offered to peanut farmers.
Are you a peanut farmer?
If you are a peanut farmer who sold peanuts to Golden Peanut or Birdsong since 2014, please contact us.