When you hear the word “antitrust” it’s often associated with large corporations such as airlines, software companies, and financial corporations. Until recently, no one would have thought that antitrust laws would be breached at the agribusiness level.

Yet that’s exactly what one former tomato grower is charged with. Frederick Scott Salyer has pleaded not guilty to charges of conspiracy to inflate the price of tomato products. Of all tomatoes grown in the US, 95 percent is grown by five companies based in California. At the moment, there are no charges brought against Salyer’s alleged co-conspirators.

The U.S. Department of Agriculture’s Grain Inspection, Packers and Stockyards Administration is cooperating with the Justice Department to provide evidence that the alleged monopolistic practices of the businesses in question have harmed market values. They’re also providing information on other alleged monopolies – namely, the meat packing industry. Allegations of price manipulation have been lodged against five of the country’s top meat packing businesses. Antitrust has indeed infiltrated agriculture.

In agribusinesses, much like any other business operation, the same rules apply. Just because the product is food doesn’t negate the need for market protection from price fixing.  For that reason, farmers along the supply chain and beyond need to carry the necessary insurance coverage to protect against any claims of illegal activity.

Ask these questions:

- Does your current general liability insurance policy cover errors and omissions? If so, does that include illegal acts?

- Where in the supply chain does your operation fit? Is there any collaboration among you and key decision makers on the purchasing side?

- What are your contractual obligations to your buyers? Have you assumed any additional liability in your contracts that could leave you on the hook for their misdeeds or errors?

- Has your buyer convinced you to sell only to his or her company or offered you some exclusivity deal?

If you’re not sure how much liability or liability coverage you have currently, contact a farm insurance specialist to review all your contracts and exclusions. Agreements made between you and your buyers could cause unnecessary litigation in the future.

*Department of Justice link relating to Salyer case:  http://www.justice.gov/atr/public/press_releases/2010/258324.htm

Flickr photo credit: Ben McLeod

Filed under: Agribusiness by afis blogger