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The Rise of the French Fry Cartel
- avhception 2y agoThey got nothing on Microsoft. The complacency of regulators is staggering.
- Onavo 2y agoThe French fryers certainly give a new meaning to embrace, extend, extinguish.
- neuroelectron 2y agoLike the article says, this is happening throughout the food industry. Eggs are a notable example, if you haven't noticed. In December 2023, a jury ordered the largest egg companies to pay $17.7 million in damages, which could triple to approximately $53 million. They've used various methods to limit egg production and it seems the issue is still ongoing...
- tptacek 2y agoYou can use FRED to chart egg prices going back 25 years, and the major price spikes seem to line up with highly-pathogenic avian flu (HPAI) outbreaks.
- deleted 2y ago[deleted]
- adolph 2y agoWhy use correlation to develop a neutral cause hypothesis when there are lawsuit settlements which theorize vast conspiracies of billionaires? That doesn't activate dopaminergic systems at all.
- drawkward 2y agoBecause a settlement is a lot closer to indicating causation than correlation is.
- lotsofpulp 2y agoThis comment would make a lot of lawyers’ heads spin.
- drawkward 2y agoThat's because the legal profession has all kinds of rules about "truth" and what can be admitted in court as "evidence", that differ from true causality. There are whole swaths of things that can be true but inadmissable because they were not discovered the right way. There is a reason we call practitioners of the law lawyers and not scientists
- lotsofpulp 2y agoDecisions to settle are based on money/time/stress cost and probability of favorable judgement from an underqualified judge/jury, rather than the decision just being based on reality, which is often not provable.
- mrguyorama 2y agoIf you as a corporation are unwilling to take the time/effort/resources to prove in a court of law that there is (civil case) not enough evidence to show you most likely did the "wrong" thing, then do not be surprised when the public draws adverse inferences. The expensive nature of the american court system could be improved in a way that you would never be worse off defending yourself, but these companies don't push for that because they LIKE having the power to bully people with stupid expensive lawfare.
- freejazz 2y agoAh yes, because there is a legal document disclaiming any liability, no one would be reasonable when inferring any. Also, lol at the underqualified jury comment. It's a bit telling on your part. Juries are inherently underqualified? No, sounds like a corporation that doesn't want to face the extreme financial risk that occurs when they face judgment for their conduct.
- Scoundreller 2y ago> Lamb Weston and McCain alone control 70 percent of the market; J. R. Simplot controls another 20 percent, and Cavendish Farms accounts for 7 percent, according to court documents Ok, Cavendish is the 4th player, but the article couldn’t even mention their owners: https://en.m.wikipedia.org/wiki/Irving_family_(New_Brunswick) https://en.m.wikipedia.org/wiki/Irving_family_(New_Brunswick... Even the Wikipedia article doesn’t do them justice, but they basically own a province in Canada.
- pbhjpbhj 2y agoThe article suggests the Trump government will continue with regulation and lawsuits for price fixing. Hasn't Trump promised deregulation? Why then would they think the current trajectory of regulation would continue? Won't they just pay Trump to allow the price-fixing, and maybe get some more advertising for fries in the oval office?
- actionfromafar 2y agoI think you answered your own question, right?
- ceejayoz 2y ago> Hasn't Trump promised deregulation? Right alongside with promising to end the Ukraine war within 24 hours of his winning the election, sure. (As far as I can tell, that promise was broken.)
- dh2022 2y agoYou can count on Trump following up on deregulation. This, tax cuts and environmental protections rollback are coming.
- ceejayoz 2y agoI count on Trump doing what's best for big businesses that have his ear. I fully expect tax cuts and environmental fuckery... but I also expect anti-competitive big business cartels to have a freer reign when Lina Khan is no longer FTC chair.
- tptacek 2y agoIt is impossible for me to take this seriously as a social justice issue, but I do want to point out that according to this article, Lamb Weston (the main character in this Jacobin piece) makes some of the best possible fries, and that even high-end places just order them ("you can't make them better yourself"). Which makes some sense, given Dave Arnold and Kenji Lopez-Alt's investigations into optimal fries (the best fries are frozen). Also: you can buy them yourself. You just fry them straight from frozen. I haven't tried; I don't need to know for sure that I can make perfect fries in my house with zero effort. https://www.foodandwine.com/chefs-favorite-frozen-french-fries-6827034 https://www.foodandwine.com/chefs-favorite-frozen-french-fri...
- fencepost 2y agoI have zero difficulty believing this based on my experiences with frozen hash browns for home in the past few years. What I used to get for ~$2.50-3 a bag (occasionally on sale down to $1.67) is now routinely $4 or higher. When I looked a couple years ago it seemed like there was some news about a year or two of crop issues, but plain potato prices haven't seen the same level of sustained rise in my experience (occasional purchaser, and haven't quite made the jump to just shredding my own). Contrary to another comment, I'm not convinced that eggs are quite as bad - prices have gone up a lot, but they're much more cyclical and still regularly down where they've traditionally been. I'd absolutely believe that most of the price variation there has been due to flock destruction due to avian flu.
- jasdi 2y agoThis is the Store of Value model. All centralized data platforms (like PotatoTrac mentioned here) enable it. In an ideal world they should enable Flow of Value models. If you are building data platforms, think about features that enable Flow. eg ONDC
- noduerme 2y agoIt's been a bad time for Lamb Weston. The stock is down over 41% since a year ago. I know this because it's been part of the most unsuccessful algorithmic trading strategy I've ever run. That company has a CEO who's been using the private jet to party all over the place; had to throw out [edit: $120M] of raw potatoes they overbought; and sent $80M of flawed french fries to a major customer (probably McDonald's) which they had to eat back in the last year. I think something fairly major is going to happen soon to change that company's leadership. Cartels may work for luxury items like diamonds and cocaine, but they're inefficient. A lot more people notice flaws in their fries than in their diamonds and blow. https://www.businesswire.com/news/home/20241216832356/en/JANA-Partners-Sends-Letter-Board-Directors-Lamb https://www.businesswire.com/news/home/20241216832356/en/JAN...
- masklinn 2y agoCartels don’t mean low quality though, that’s a completely separate and largely orthogonal issue. You don’t even remotely need a cartel for leadership to focus on value extraction and tank the products.
- lazide 2y agoCartels are a simple type of monopoly. It’s a lot easier to be shitty when customers don’t have other options.
- boringg 2y agoActually it does mean lower quality --> Lack of competition means that the product quality typically suffers as a result of rent seeking behavior.
- poulsbohemian 2y agoThis is a key point: historically, Burger King, McDonalds, Wendy's, etc often sourced their fries out of the same factory, but to different standards. Think starches, batters, fry dimensions, even type of potato in some cases. These companies competed not only on price but also in product consistency.
- 2y ago
- sixthDot 2y agoOn the trivial point of view, I've never get why don't people just buy cheap potatoes, peals them, slice them, and finally fry them. If you're not clever enough to do that be not surprised to be abused by a cartel.
- seszett 2y agoIt takes time and it smells.
- sethammons 2y agoSmells due to the fry oil. If you have a range vent, frying under it helps significantly. Related: why is it so hard finding a house with a range hood (and not the useless recirculator with carbon filter)?
- seszett 2y agoActual range hoods mess with ventilation, so it's easier for builders to stick a recirculating one and not have to worry about ventilation imbalance. There's also the belief that it will somehow break the main ventilation motor because of the large volume of air forced through it. But it shouldn't actually be a problem.
- AngryData 2y agoWell it does require a vented pipe through your roof, and the people subcontracted for installing kitchen cabinetry and appliances are often coming in long after all the plumbing, HVAC, and roofing guys are gone who are going to have the ladders, be in the ceiling, and have the tar or vent pipe on hand needed to install a roof vent, and it is more of a pain if the stove isn't centered between joists and rafter beams. Now none of that is a great excuse, it isn't that hard to do, but with how most buildings are subcontracted out piece by piece for every little part, and how some things like the kitchen appliance location is not super well finalized until cabinetry is actually installed, nobody before the cabinetry wants to take the responsibility of is positioning and the cabinetry guys are not expected or expecting to install such features. It is time, expense, and the liability of punching a hole in the roof before someone decides they want the stove on the other side of the room, or coming in months afterwards and punching a hole in a brand new roof as someone not the roofer. If everything is well established in the blueprints and nobody is going to be changing their mind, or if one guy/company is doing 90% of the work themselves its not a problem. But often things are changed kitchen wise after most of the house is built or is done by 10+ different contractors, none of which want to be held responsible later on for it. Often one company does the structure, another the roof, another the siding, another the drywall, another the plumbing, another the electrical, another hvac, another cabinetry, etc, and only the plumbing and furnace vents are going to be putting holes in the roof which happens long before any finished features like the cabinetry is put in.
- cdcox 2y agoWhile this seems true and I hope these companies get a large fine and some regulatory action takes place to wipe out these third party apps, I'm kind of surprised at the corporate learned helplessness here. Back in the day McDonald's or one of their fast food competitors would have built their own frozen potato pipeline, made a massive marketing gimmick about cheapest fries and shattered this cartel quickly. It sounds like the companies are taking a high margin and the farmers would love to sell to anyone else. But it feels like the current managers at these fast food companies have gotten so used to outsourcing every part of production they lack the knowledge/remit to even try to set up a competing supply line. It feels like only it's only efficient to focus core competencies if the people in charge of those stay smaller. Given how big companies can squeeze suppliers I see how they would end up consolidated. But if everyone is doing one thing and consolidating horizontally to negotiate better it becomes kind of red queen race. Maybe when you have a multi-billion dollar supply chain and complex contract structure you can't just learn to do something new to solve a problem anymore. The small players can't do much. As mentioned in the article, either potatoes and DIYing are cheaper or they aren't, but medium to large firms presumably could/should do something.
- noduerme 2y agoI believe McDonald's does have their own pipelines for various ingredients, including beef, in countries where it's necessary for uniformity, outside the US. I'd have to assume they've looked at the numbers and determined that having their own potato to french fry pipeline would not shave enough cost off a happy meal to lure enough customers from their competitors to make it worthwhile. Shattering the cartel might not be in their interest.
- lupusreal 2y agoMcDonalds doing those things in other countries doesn't necessarily show that the parts of their organization responsible for their US operations are competent enough to do the same. Assuming that whatever the corporation is doing presently must be the result of careful rational economic analysis seems like a fallacy of some sort. Just world fallacy? Optimally Run Corporation fallacy.
- fcantournet 2y agoI think the most interesting part of this article is that this "collusion" is enabled via 3rd party data provider. This is a massive issue, that enables this sort of "uncoordinated" price fixing exercises, via 3rd parties, similar to what happening on the rental market in the U.S. I'm very surprised that there is not more work in Econ literature studying this. This is essentially breaking the efficient market hypothesis at scale, and is generalizable to every industry.
- realusername 2y agoPrice fixing by algorithm is still price fixing. Especially here that it's painfully obvious, there's not enough actors to justify this third party anyways.
- fcantournet 2y agoYes, the point I'm trying to make is that via 3rd party aggregator you can have massive price-fixing collusion without coordination, even with many actors (as long as those actors have converging interests)
- realusername 2y agoThat can be possible in theory yeah but in order for these aggregators to work well, the participants usually also send their own data and this makes it clear price fixing. If you send your own prices and then you get other prices back in return, it's 100% price fixing without any doubt. That what's making it different from a market study.
- maxwellg 2y agoTons of companies use shared 3rd party data providers like Pave to set comp bands for employees too. Your compensation is very likely determined algorithmically as well. I know mine is. I wonder how long it will last.
- knallfrosch 2y agoWhat's the reason given for using PotatoTrac anyway? Telling your competition how your own business works sounds like a bad idea.
- shakna 2y agoI really don't like how they repeatedly try to merge the numbers of Lamb Weston with McCain here. Especially as McCain is a private family-run business, and Lamb Weston is a publicly traded company. They are not remotely the same entity. "Lamb Weston and McCain alone control 70 percent of the market" hides that McCain holds about 30% of the US market. McCain treat Simplot as their main rival in most jurisdictions, and have been involved in multiple legal fights with them - one of which is a patent issue that started in 2002 (no. 6,821,540), and is still ongoing. (Currently favouring Simplot). There's a lot here that feels like... Bad statistics. Not to say that there's no truth in the accusations - but they don't seem to be acting in good faith, and that will wreck them when it comes to the court.
- zeroonetwothree 2y agoWell, look at the source. It’s not surprising.
- nuforia 2y ago[dead]
- empathy_m 2y ago> There's a lot here that feels like... Bad statistics. Not to say that there's no truth in the accusations - but they don't seem to be acting in good faith, and that will wreck them when it comes to the court. Well… There are a couple of cases here: * 1:24-cv-11801, Northern District of Illinois (class action with Radner's Markets as lead plaintiff) * 1:24-cv-11816, Northern District of Illinois (class action with Alexander Govea as lead plaintiff - a person who bought frozen potato products at supermarkets) The complaints were filed only two days apart, by different lawyers; I wonder whether a lot of firms were looking into frozen potatoes and these two ended up first to file? I hope one or both of these lawsuits goes far enough that we can get to discover and will get to see some emails. That's always the fun part.
- psunavy03 2y agoJacobin's entire raison d'etre is looking at the world from a certain very left-wing point of view, and every article of theirs I've ever read slants things as badly as their right-wing counterparts.
- financetechbro 2y agoNot the most important takeaway from the article but I’m personally a bit surprised that frozen potatoes are distributed by just 4 companies. Given the vast difference in French fries taste and quality across establishments I would’ve guessed that there were dozens of various vendors
- criddell 2y ago> "We believe the claims are without merit and intend to vigorously defend our position." What makes a defence vigorous?
- nsxwolf 2y agoLamb Weston's frozen fries are amazing though.
- sema4hacker 2y agoI air-fry frozen Ore-Ida fries a lot. All of them have added sugar EXCEPT for curly fries (for some unknown reason). So I only buy curly fries because they have 18.5% fewer calories.
- poulsbohemian 2y agoI'm not completely sure the author is making the case they intend... growing up, my uncle spent decades in the fry business - if you ate a french fry in a QSR anywhere west of the Mississippi anywhere from the mid-1980s through the early 2000s, there's a strong likelihood he was responsible for growing the potatoes. There was far more technology, competition, and corporate espionage than one might expect for such a seemingly dull product. And, historically there was market segmentation too - QSR vs consumer, fries vs hash browns vs tots, things like sweet potato fries were an altogether different deal. Has there been consolidation in agriculture? Of course - but that's been going on for decades, and there's a reason one of the biggest players is named Con[solidated]Agra[culture]. Industry (QSRs, for example) expect consistency and timeliness, where the companies that could grow and consolidate the fastest beat out the regional players - decades ago. So while the author makes many factual observations, it's not clear why this article is timely for today rather than a couple decades ago when the war was actually being fought.