This year, however, those live and fresh crabs weren’t available, because fishermen weren’t allowed on the water in time to deliver them for the holidays. While the delay happened in part for some legitimate ecological reasons, including the size of the crabs and the presence of water-borne toxins, the environmental issues might be masking something else. Small crab fishermen who make a living catching and selling live crabs say that one corporation’s outsized power is also to blame. And not just for the weeks-late start.

After a blockbuster 2022 crabbing season that saw an on-time, December 1 start date and record prices for fishermen, this year’s crab season didn’t kick off until mid-January after three regulatory delays. When the season did begin, crabbers were offered as little as $2 per pound for their catch, a price that left many struggling to pay staff and buy fuel and bait. Those conditions have squeezed the small businesses that make up the West Coast crabbing industry and act as the backbone for small towns up and down the shoreline.

But this year appears to have brought boom times for one company in particular—Pacific Seafood. In court and before regulators, critics, and advocates say Pacific Seafood abuses its power as the overwhelmingly dominant West Coast crab processor to rip off fishermen and bend the industry in its favor. Crabbers say they have been fighting against Pacific Seafood’s control of the seafood industry for more than a decade, with little to show for it. But now, in the midst of one of the worst starts to the crabbing season in memory, the push to break up the company and reduce the sway powerful fishing companies have over industry regulation has risen again.

In a lawsuit filed in California in March, small fishermen accuse Pacific Seafood of abusing the power it has amassed throughout the industry, as both the dominant processor of Dungeness crabs, and as an increasingly powerful presence in crab fishing. The lawsuit claims Pacific Seafood buys at least half of all Dungeness crab sold in the Pacific Northwest and says the company has gained its outsized power in the West Coast crabbing industry by buying nearly all of its processing rivals and conspiring with other crab buyers to fix the price paid to fishermen for their catch, “dramatically reducing the amounts received by crabbers for their labors and preventing consumers from receiving reasonably priced fresh Dungeness crab.”

What’s more, some smaller crabbers in Oregon have complained to the state’s Department of Fish and Wildlife that powerful processors and larger boat operators—a group that undoubtedly includes Pacific Seafood and crabbers that contract with the company—have used their outsized influence to delay when the crabbing season can officially begin.

By doing so, those small Oregon crabbers say, the most powerful companies in the industry can undermine small fishermen’s ability to take advantage of the high-demand holiday season for live crabs, instead forcing them to accept the low prices Pacific Seafood offers. Meanwhile, holiday shoppers are left to pay inflated prices for last season’s frozen crabs, often from Pacific Seafood’s overstocked freezers, critics say.

“We need to avoid the consolidation of this industry in the hands of a few very powerful players,” Eric Brickenstein, a lawyer advising the fishermen, told Oregon officials in January. “We need to democratize the fishery so that markets are competitive, and a range of business interests are able to participate, from California to the Washington border.”

In response to an inquiry, the Oregon Department of Justice says it is aware of the allegations in the new class action lawsuit. While it declined to comment on any specific ongoing investigation, “Attorney General [Ellen] Rosenblum does have concerns about the issue of consolidation in all industries, including the seafood industry,” the office said.

Pacific Seafood has long denied allegations that it abuses its power in the West Coast seafood industry. Dan Occhipinti, chief legal officer for the company, told industry publication Seafood Source the litigation was “a baseless lawsuit filed by one fisherman who doesn’t do business with us and doesn’t know our company at all. We are confident it will be dismissed quickly.”

But in lawsuits and interviews, smaller crabbers say the company wields the power to dictate prices to crabbers on the West Coast, leaving those small businesses with only bad options—either accept a low price for expensive and often risky work, or stay on the dock and forgo the most productive weeks of the crab season.

Inside the West Coast Crab Monopoly Lawsuit

Pacific Seafood has been a key part of—and critics say the driver of—the West Coast crab industry’s consolidation. From its humble beginnings as a fish market in Portland in 1941, Pacific has grown into one of the largest seafood companies in the country, with 3,000 employees and more than $1 billion in annual sales. It operates 41 facilities across 11 states and exerts control over every part of the supply chain, from fleets of boats and aquaculture farms, to export shipping and distribution. Where it has truly thrived, however, is in fish, shrimp, and crab processing, and its facilities dominate along the West Coast.

The company’s power in the West Coast seafood market has come under fire before. In 2011, a group of fishermen sued Pacific Seafood for allegedly abusing its monopoly as a processor, including for shrimp and Dungeness crab. Father and son fishermen Lloyd and Todd Whaley asked a court for more than $500 million in damages, and to break the company apart to return competition to the industry. The Oregon Department of Justice launched an antitrust investigation of the company and backed the fishermen in their private lawsuit.

Both sides eventually settled that lawsuit without Pacific paying out damages or divesting lines of business, and the settlement terms both sides agreed to, which required Pacific to undertake efforts that made seafood prices fairer, sunset last year. There have been other attempts to break Pacific’s power in the industry and prevent its growth, but its dominance in crab processing persists.

Pacific acquired its market power in commercial crab processing in part by buying out rivals and their equipment. That included Washington Crab Processors in 1993 and Eureka Fisheries in 2001. It also continues to own a major stake in Ocean Gold Seafood, the owner of the largest single crab processing plant on the coast, even after antitrust action scuttled its plans for a complete takeover. In recent years, the company has bought out at least two other processors, North Coast Fisheries and Pezzolo Seafood, both in California.

Not every crab pulled from the ocean is destined for a processor, of course; if and when the season opens, those restaurants, retailers, and exporters who buy live and fresh crab to sell to customers for the holiday season queue up first, and often pay top dollar for that fresh catch.

After the winter holidays, however, the demand for live crabs dips substantially. Most caught crabs then go to processors that cook and either can or freeze them. The price of cooked and processed crabs is settled in negotiations between groups of fishermen and the processors before the season starts. Yet for years, the only company at the bargaining table has been Pacific Seafood. That means the company almost always dictates the price of processed crab, or close to it.

It’s here that Pacific Seafood’s power in the industry comes into focus. Small crabbers say Pacific uses a web of power and influence in the industry to ensure it can buy crabs cheap and sell one season’s frozen catch at big markups the following year. Since live crab buyers are both Pacific’s competitors and its customers, the company appears bent on doing all it can to undermine the fresh crab market so it can control both price and supply, the lawsuit and crabbers allege.

As described in the lawsuit, it starts in these pre-season negotiations, which in past years have dragged on well beyond the start of the season and often keep crabbers off the water, unwilling to fish for the prices Pacific Seafood offers and without a per-pound price in hand. The longer the season is delayed, the more the demand for live crabs dries up, meaning less price competition for Pacific.

When crabbers and Pacific finally do agree on a price, the concessions Pacific has extracted from crabbers typically includes guarantees that it gets first dibs on the first two hauls. While Pacific sometimes offers slightly higher prices for crabbers’ first catch, it ensures that those plentiful hauls don’t go to live crab buyers willing to pay far more per pound. Pacific gets the most crab at its low prices, while allowing the demand for live and fresh crabs to dwindle.

Pacific has other ways of ensuring live crab buyers don’t step out of line on price, according to the lawsuit. The company relies on its leverage as the dominant crab processor to force those live buyers to pay fishermen the same price Pacific pushes on crabbers in pre-season negotiations. Live buyers almost always buy more crabs than they can sell to restaurants and retailers; those crabs must then be cooked and processed. “Pacific Seafood’s control over the processing and freezing portion of the supply chain gives the company substantial leverage over other buyers, who now depend on Pacific Seafood to purchase their excess Dungeness crab,” the lawsuit reads.

If those live buyers agree to the same price Pacific offers fishermen for their catch, the lawsuit alleges, they are ensured of a slim but important profit when they sell those crabs on to Pacific for processing. If those competing crab buyers offer fishermen a higher price for their catch, critics allege, Pacific either offers those buyers far less than what they paid to fishermen or refuses to buy their crabs at all. This deal, the lawsuit says, ensures that “many buyers sell most or all of the crab that they purchase ex vessel to Pacific Seafood.”

Even absent price competition from other buyers, there’s the expectation that Pacific would have to pay enough to get crabbers out on the water—if it didn’t, it wouldn’t have crabs to cook, process and sell. But that’s the rub, critics say: Pacific Seafood also owns and contracts with a fleet of fishing boats. They’re able to catch and freeze crabs in volume, and, if necessary, dump those crabs into the market.

Pacific’s crab fishing fleet—both its own boats and the ones it contracts with—stands as a constant threat to smaller crabbers, particularly at the start of a season. Pacific Seafood and other operators of enormous, 90- and 100-foot crab boats can catch the volume of crab needed to make money selling at low per-pound prices. For independent crabbers, the presence of Pacific Seafood’s own fishing operation is all the more reason to get out on the water early, before the holiday season demand for fresh crabs falters. It’s also why the occasional strike by small crabbers rarely lasts long or results in major wins in price negotiations. The longer the season is delayed, the more the economics tilts in favor of Pacific Seafood.

A Lack of Regulatory Action to Protect Small Crabbers

When the start of this past crab season was delayed for two weeks, it was far from unusual. Over the past decade, the waters north of the San Francisco Bay Area have only opened on time once, in 2021.

But delays into January are less common. So when the season was pushed until after the New Year, some smaller crabbers sent an open letter to the Oregon Department of Fish and Wildlife, detailing what they saw as an unfair process that tilted the industry in favor of Pacific Seafood.

Cherry and other critics say Pacific has an outsized influence on the direction of the Oregon Dungeness Crab Advisory Committee, which advises the state government on when to open the season, in part because its presence shapes so much of what else happens in the industry.

The crabbers pointed to the environmental data regulators in Oregon, Washington, and California, operating jointly under an agreement called the Tri-State Protocol, used to justify keeping the coast closed beyond the holidays.

The ODFW reported in late December that it would keep the waters closed due to low crab meat and some high levels of a toxin called domoic acid, a delay it said was needed to ensure “consumers get a high-quality product and crabs are not wasted.” But according to regulatory data, the crabs along two-thirds of the Oregon coast were mature and healthy enough to fish by mid-December—an outcome that should have allowed state officials to open at least part of the waters to crabbers in time for the holiday rush, smaller crabbers argued.

That didn’t ultimately happen, and the decision to keep the entire coast closed into January pushed small crabbers to fish increasingly dangerous waters only to sell their catch to the processors, likely Pacific Seafood, at paltry prices. “This will inevitably lead to further consolidation of crab to the dominant processors that consistently offer the lowest ex vessel prices,” the crabbers say in the open letter.

Still, small crabbers know that if they don’t fish when the season opens, the bigger boats will beat them to the catch.

At a January 13 meeting of the Oregon Department of Fish and Wildlife commission, Brickenstein, the lawyer advising small crabbers, told officials to ensure that the perspectives of the full crabbing fleet is represented when deciding when to open the season. Sustainability for crab fishing in Oregon is both environmental and economic, Brickenstein told the commission, and the health of both is crucial for the industry.

“We have to make sure the economics of the fishery represent the mom-and-pop operations that have kept it running for many generations,” he said, “and ensure that new generations of fishers are going to have the incentives and the opportunity to continue that tradition that is really central to our way of life here in Oregon.”

Kelly Corbett, who oversees the crab fishery for ODFW, says the agency aims to have membership of the advisory committee “represent the diversity of the ocean commercial industry,” and that it occasionally reviews and revises the committee membership, including most recently in 2019.

Tony Pettis, a crab fisherman based in Toledo, Oregon, sits on the Dungeness crab advisory committee, and says the decision about when to open the coast to fishing is rarely straightforward and without conflicting views, and that was certainly the case this year. There’s always a balance to be struck between crabbers who need to fish to survive, and the health and viability of the fishery itself, he says. “ODFW tried to balance that as best they can,” Pettis says. “A lot of people who like to make a lot of noise don’t understand the entire situation. Maybe myself included.”

Pettis said that, hindsight being what it is, maybe the state should have opened part of the coast on January 1, in time for Chinese New Year. The environmental factors were significant, he says, but commission members and regulators also had “processors telling [them] that the freezers are already full, they need more time to empty their freezers.”

It’s unclear to what extent concerns about processors’ overfull freezers affected the advice the commission gave to ODFW. But to smaller crabbers and advocates, the size and influence of Pacific Seafood is worrisome, and often at odds with the interests of smaller boats and operations in the fleet.

Cherry, the Garibaldi-based crabber, says the state could have simply drawn lines marking the waters where the crabs were big and healthy enough to fish. The decision to keep the waters closed beyond the holiday season, he says, was “just so Pacific Seafood, Trident, Costco, Safeway can take all of the crab they bought the previous year and sell them at exorbitant prices, when we could be selling them fresh crabs in December.”

Efforts to Break Up Pacific Seafood’s Power

The kind of power Pacific Seafood wields in the seafood industry is all too common within the food chain. Processing bottlenecks, and the harm they inflict on food producers, are far from rare.

For example, just a handful of meatpacking companies dominate chicken, pork and beef processing and packaging, robbing ranchers and farmers of a fair price for their livestock. And just two companies collectively monopolize peanut processing. Dean Foods controls a third of the dairy processing industry. The list goes on.

In some places, regulators are taking action.

The Biden administration’s executive order on competition centers farmers and other producers in the food system. In particular, the Biden Administration has dedicated $1 billion to fostering competition in the meat processing industry.

Meanwhile, on the East Coast, the Justice Department has launched an antitrust investigation of consolidation in the fishing industry there. Although the bottleneck there is different—the monopoly power lies in fisheries, rather than processing—it shows that antitrust enforcers’ are willing to take action in the industry.

In the Pacific Northwest, small crabbers worry that Pacific Seafood is trying to turn them into the seafaring equivalent of poultry contract farmers, who are often forced to sell their product at the price the buyer dictates.

Rob Seitz has been a commercial fisherman his whole life, and he was involved in the last monopoly lawsuit against Pacific Seafood, back when he used to sell his catch to the company. Today, he sells to the second largest crab processor, Bornstein, but he says he still gets the price that Pacific negotiates for the most part. “Pacific is the big dog,” he says.

The options to counteract Pacific’s overarching power in the industry are few, and difficult to achieve, Seitz says. You can either open a processing facility yourself—something he does on a small scale for his restaurant, South Bay Wild Fish House, in Astoria, Oregon. But processing, he says, “is complicated, and it’s a lot of work.” A co-op could help tilt power in the industry back toward fishermen as well, he says, but that would require a dock to unload at, a place to process crabs and the property to set it all up. “If everyone’s broke all the time,” Seitz says, it’s all folks can do to keep their boats on the water and their crew paid.

The lawsuit has another solution to rebalancing power in the industry: Break up Pacific Seafood. Small fishermen have asked the court to force the company “to divest from and/or sell a number of Dungeness crab processing facilities” in the region “sufficient to reestablish competition.”

As for the tri-state regulatory regime, Levi Cherry says he hopes for more standardized testing and season-opening criteria that are followed to the T, without consideration of anyone’s full freezers. “If you hit quality, you open up,” Cherry says, adding “It can’t be kumbaya, we’re all in the same boat here—just so the 90-foot boats can fish the whole state.”

The post Op-ed: Pacific Seafood Controls the Dungeness Crab Market, but Small Fishermen Are Fighting Back appeared first on Civil Eats.

]]> https://civileats.com/2021/01/15/op-ed-the-peanut-industry-has-a-monopoly-problem-but-farmers-are-pushing-back/ https://civileats.com/2021/01/15/op-ed-the-peanut-industry-has-a-monopoly-problem-but-farmers-are-pushing-back/#comments Fri, 15 Jan 2021 09:00:52 +0000 http://civileats.com/?p=40084 March 12, 2020 update: Archer Daniels Midland today announced that it would pay $45 million to settle peanut farmers’ price-fixing claims. And it’s not just a pandemic-fueled phenomenon. U.S. peanut consumption has grown just about every year for the past two decades, from around 1.5 billion pounds in 1999 to more than 2.3 billion pounds […]

The post Op-ed: The Peanut Industry Has a Monopoly Problem—but Farmers Are Pushing Back appeared first on Civil Eats.

]]> March 12, 2020 update: Archer Daniels Midland today announced that it would pay $45 million to settle peanut farmers’ price-fixing claims.

And it’s not just a pandemic-fueled phenomenon. U.S. peanut consumption has grown just about every year for the past two decades, from around 1.5 billion pounds in 1999 to more than 2.3 billion pounds in 2018. Even the low-fat craze and the rise of peanut allergies couldn’t curb its rise. Demand for peanuts outside of the U.S. has grown even faster. Peanut butter, it seems, is a hit everywhere.

But this rising demand hasn’t trickled down to the thousands of small family farmers in the peanut belt—the vast swath of farmland stretching from the hills of Virginia through Georgia, Alabama, Arkansas, and beyond. Prices for raw peanuts have remained nearly flat year over year. And even with increasing consumption, peanut prices have sometimes fallen.

This may sound like a good thing for consumers, but it’s not that simple. You see, we’re also spending millions to prop up the industry with our tax dollars.

After decades in which peanut prices and production were governed by federal quotas, a free market system introduced in 2002 was supposed to allow the forces of supply and demand to work. The open market would see peanut shellers—processors who turn raw, in-shell peanuts into products like Skippy and Reese’s—compete hard for the annual peanut crop, pushing prices higher. Or that was the plan.

Instead, peanut farmers in Georgia and elsewhere have spent the last 20 years teetering on the edge of solvency, often relying on federal subsidies to survive. We’ve gotten here in large part because the free and competitive market that would have supported a fair price for farmers doesn’t exist.

Instead, the peanut shelling industry is dominated by two powerful companies that together buy 80 percent of all peanuts grown in the U.S. The two companies, Golden Peanut and Birdsong, operate massive shelling facilities throughout the peanut belt, and together control or outright own nearly 200 buying points, where farmers must go to sell their raw peanuts.

The system isn’t just unfair—it’s wildly expensive. Subsidizing the peanut industry cost U.S. taxpayers more than $2 billion from 2014 through 2018. It’ s the most costly per-acre crop to taxpayers in America, in large part because monopoly power controls pricing in the industry.

Federal price supports help farmers cover costs when an unexpected bumper crop or another shift in the market occurs. But when policymakers allow unchecked consolidation among buyers to drive down the prices farmers get for their crops and livestock, it leaves taxpayers to pick up the tab for monopolists’ outsized profits.

Last year, a group of peanut farmers sued the big shelling companies, alleging that they took advantage of the concentrated market and a deeply opaque system of pricing peanuts to rip off family farms by coordinating on lowball prices for their crops. Birdsong and a smaller sheller, Olam, together paid the farmers $57 million to settle their part in the lawsuit; Golden Peanut opted not to settle. That case heads to trial this month.

The allegations in the lawsuit are significant— the kind of conduct the Justice Department can pursue as a criminal offense. But what the lawsuit exposed was perhaps one of the more egregious yet little-known instances of monopoly control over the food we eat.

The Rise of Big Peanut

But in nearly every other way, peanuts are unique in the broader world of American agriculture.

For most of the 20th century, growing and selling peanuts fell under strict government control, with a quota system dictating how much crop could be grown and a high, subsidized minimum price that established a fair market for farmers. If you owned peanut quota farmland, prices were good, particularly in years with any kind of peanut shortfall.

Production was limited but steady; if shellers wanted the crops to sell on to the big retail brands, they had to pay for it. And if all else failed, the government would ensure that farmers were paid more than $600 per ton for their peanuts, a price the U.S. Department of Agriculture (USDA) believed was needed to cover production costs.

The shelling industry was fragmented and competitive for decades; 92 shellers competed for farmers’ sales around the southeast in 1970. But by the 1980s, Reagan-era consolidation reached the peanut industry, and real corporate power began to emerge.

Early that decade, Golden Peanut’s predecessor, Gold Kist, had sued its closest peanut shelling rival, the global peanut titan Alimenta, claiming it had used monopoly tactics to try to force Gold Kist out of business. By 1986, Gold Kist had struck a deal with agriculture conglomerate Archer Daniels Midland to create Golden Peanut; the sheller turned a modest profit, a couple hundred thousand dollars, by 1988.

A year later, Golden Peanut welcomed Alimenta into the venture. With the alleged monopoly power on board, the company’s profits jumped 10,000 percent in one year. By 1990, it cleared more than $56 million.

The same year, a family peanut farmer named Charles Hunt was struggling to strike a deal with Golden for that year’s crop. It was a drought year, and a ton of peanuts could fetch $1,300—more than twice the statutory minimum. Golden had a contract with Hunt, but under terms of the deal, Hunt could try to find a better price, so long as Golden had first refusal to match it.

Golden refused, but when Hunt found a new buyer for the peanuts, Golden sued. The company claimed that the new buyer was not a “qualified handler” and the sale should be voided. Hunt counter-sued, accusing Golden of using its power to suppress the price it paid thousands of peanut farmers, in part by discouraging competing bids. A jury took two and a half hours to rule in favor of Hunt, and another four minutes of deliberations to award punitive damages.

Hunt didn’t file the case under the antitrust laws, but, according to a paper by University of Georgia professor David Kamerschen, the facts in the case suggest Golden had perhaps abused its power as the largest sheller in the country. “By all of the critical measures, this is a concentrated market and Golden is a dominant firm,” wrote Kamerschen, who testified for Hunt at the trial.

At the time, Kamerschen figured Golden bought around 31 percent of all peanuts grown in the U.S. Two years later, Golden grew again, when federal antitrust enforcers allowed it to buy a sheller called Dothan Oil, then the third-largest peanut buyer in the country. By 2011, when Archer Daniels Midland bought out its partners in the Golden Peanut venture, the sheller controlled around half of the shelling industry.

Today, just 14 shellers operate in the peanut belt, and most are too small to really vie for farmers’ crops. For many growers, Birdsong and Golden are the only options, so they take whatever price the big shellers offer. Before 2002, growers received a more than $600-per-ton price guarantee; now that’s been replaced with a marketing loan system that guarantees just half that.

And that costs all of us.

A Cooperative Solution to the Peanut Monopoly

Under the federal quota system, the potential harms of monopoly power had been insulated. Limited production typically kept prices above the cost of production, and if not, taxpayers came to the rescue. But the passage of the 2002 Farm Bill would transform the way the industry was structured, and hand far more power to the shellers to dictate peanut prices.

After heavy lobbying by the shellers, the 2002 bill replaced the quota system with a market-based system that let demand dictate how many peanuts farmers could and should plant. Gone was the more than $600 per ton price guarantee, replaced with a marketing loan system that guaranteed just half that. If farmers wanted fair prices for their nuts, they’d have to negotiate contracts with shellers that were quickly coming to dominate buying points and processing in the south.

While monopoly power touches nearly every crop grown in America, the rise of corporate concentration among shellers left the peanut farmers particularly exposed to the pricing power of those big shellers.

In peanuts, there’s no cash market and no futures—meaning there is very little transparency as to why the price of raw peanuts is what it is. While competition among shellers was robust in the 1970s, today there are just a few shelling companies that buy raw peanuts, led by the dominant the Golden Peanut/Birdsong duopoly, meaning buyers have near-total control over pricing with scant oversight.

In a report, the USDA made the distinction between prices for peanuts and other cash crops, like corn, clear. The difference is market power, and the ability for outsiders to glean some information about what the price of a crop should be. In corn, the report showed, crop sales are “transacted by many buyers and sellers at observable prices in a multitude of active cash markets,” and corn growers “are assured of price competition over their crop.”

With no futures market, there’s no price transparency or decent way for farmers to manage risk other than relying on taxpayer bailouts. There’s no market to determine what the crop is worth. The shellers get to decide what they feel like paying. The market power of peanut shellers “constrains farm choices and potentially impacts commodity prices and producer welfare,” the USDA found. In such a market, the report asks, “How can peanut producers be sure they are receiving a fair price?”

As the facts in the lawsuit suggest, they can’t.

Without a futures market, prices aren’t set until long after a crop is planted, often leaving farmers to negotiate prices with just one or two nearby buying points that are either owned or leased by one sheller. The lawsuit alleges that the two big shellers have conspired to push those prices down, endangering family farmers and leaving taxpayers on the hook.

After concern that low prices from the shellers and inadequate federal support were putting peanut farmers at risk, the 2014 Farm Bill introduced a new, bigger federal subsidy for peanut farmers. The program, “price loss coverage,” provided an additional direct payment to farmers to cover the difference between the federal minimum per-ton price, and whatever rate shellers offer that year.

Under the current bill, the minimum payment for a pound of peanuts is just less than $.27 a pound, while the 2019-2020 market average price was around 20 cents. That means taxpayers were on the hook for more than six cents a pound. The first year of the “price loss coverage” program, taxpayers shelled out more than $323 million to make up for low prices.

Small farmers have fought hard to keep the price loss coverage program in place. Michael Davis, a sixth generation peanut farmer in Florida, said during a 2017 campaign to save the program that it was the only thing keeping many of his neighbors operational.

“Without the Peanut Program, I believe that one-third of the farmers I know would go out of business, which would dramatically impact our communities,” Davis told the industry publication AgFax.

While the federal payment support program does in some ways incentivize farmers to plant more peanuts, increasing the potential cost to taxpayers, a higher market price—set by shellers who face real competition—would drastically reduce what taxpayers must pay to keep peanut farmers afloat.

Now, farmers and buying point owners are moving to break the control of the big shellers. In addition to the antitrust lawsuits, over the past five years at least five significant farmer-owned cooperatives have organized in the peanut belt. The largest, Premium Peanut, includes farmer members and buying points throughout south Georgia, who all sell their crops into the group’s massive, sophisticated shelling plant.

Locked into buying points that were in turn locked into contracts, and prices, with big shellers, farmers started the cooperative in 2014 while hunting for an alternative, where they could be guaranteed a buyer for a set quantity of crops and, in good years, make more money for their work.

“With us, they know that if they bought a thousand shares of the company, they have a home for a thousand tons of farmers’ stock peanuts every year. We will buy them, we will warehouse them,” Karl Zimmer, CEO of Premium Peanut, told The Counter in 2017, a year after the cooperative’s shelling plant opened.

Bob Parker, president of the National Peanut Board and a former executive at Golden Peanut, told me the rise of peanut farmer cooperatives is the most significant change he’s seen in any cash crop in America over the past decade or so. Parker likens the cooperatives to community banks, which are often supported by the deposits of local businesses and, in turn, operate to the benefit of small and local businesses in the community. He estimates that cooperatives from Georgia to Texas could soon account for a quarter of the peanut shelling market.

“I think it’s a unique thing in the peanut industry. No other industry has gone through the kind of deconsolidation that peanut has,” Parker said.

Tyron Spearman, head of the National Peanut Buying Points Association, said he’s seen farmers leave their longtime, big sheller-controlled buying points for those operated by Premium and other cooperatives. Premium now has more than 200 farmer members. “The co-op movement is really getting to these big shellers, and they’re not going to have the power they used to,” Spearman said

The real impact of the cooperatives remains to be seen. The massive market share of Golden Peanut and Birdsong won’t evaporate overnight. But the push for peanut farmers to harness their collective power against the control of the big shellers may just bring brighter days ahead for an industry that has long been under the thumb of monopoly power.

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