ADM to Pay $45 Million to Settle Peanut Farmers’ Price-Fixing Claims

ADM denies any wrongdoing in the case, a spokeswoman said, and settled the lawsuit rather than spending more time and money fighting it. “ADM has been building strong relationships with farmers since the company’s inception in 1902, and we continue to make farmers the center of our business,” she said.

The U.S. peanut sector generally has been enjoying a boom period. More peanut butter spread on sandwiches during at-home lunches helped drive peanut consumption in 2020 to a record 7.6 pounds per capita, according to the National Peanut Board, an industry group.

Peanut farmers alleged in the lawsuit that the same industry that pumps the legumes into candy and jars is working against them. Their dispute over the $1.3 billion U.S. peanut-growing industry is one of several legal battles and investigations centered on big agricultural companies’ influence over the U.S. food system.

The two largest U.S. peanut processors, Birdsong Peanuts and ADM’s Golden Peanut unit, together handle 80% to 90% of the country’s peanuts, and a third company, Olam International, handles about 10%, according to the farmers’ lawsuit, filed in federal court in Virginia. Birdsong and Olam struck separate settlement deals in the civil litigation in late 2020, agreeing to pay a combined $58 million. Neither company admitted wrongdoing in the matter.

Golden Peanut, Birdsong and Olam denied in court filings last year that they reported inaccurate pricing and inventory data or quoted unfair prices for farmers’ peanuts. The companies rejected the collusion allegations, saying that market forces drove peanut prices.

An Olam spokeswoman said the company is committed to doing business with transparency and integrity. Birdsong representatives didn’t respond to requests for comment.

“I’m glad that somebody had to take some responsibility,” said Jason Autry, a plaintiff in the lawsuit who started farming peanuts in Georgia in 2010. Mr. Autry said he filed for bankruptcy in 2016 after losing about $300,000 on his last peanut crop and gave up farming after that. He said persistently low prices were a big factor.

Unlike corn or wheat, there is no futures market for setting U.S. peanut prices. Farmers alleged that the big processors’ control over peanut inventories and prices paid to farmers have wide-ranging influence on the growers’ livelihoods. ADM, Birdsong and Olam offer prices to farmers via growing contracts that differ little among the companies, according to the farmers’ lawsuit, which farmers alleged left them with few choices.

Antitrust pressure is growing on companies that dominate the U.S. agriculture industry. Supermarket and restaurant chains have sued meatpackers, accusing them of colluding to push up prices for billions of dollars worth of chicken purchases. Poultry companies have fought those allegations, though some, including Tyson Foods Inc. and Pilgrim’s Pride Corp. , have recently sought to settle some of the cases. Pork processors are contesting similar civil allegations.

The U.S. Justice Department indicted 10 chicken industry executives last year on bid-rigging charges, which the defendants are contesting. The department is also looking into beef processors’ cattle-buying activities. Authorities haven’t alleged wrongdoing in that market.

Since mid-2014, per-ton prices for runner peanuts, the most commonly raised U.S. variety, have hovered around 21 cents a pound, according to U.S. Department of Agriculture data. Attorneys for the farmers argued those prices stayed unusually low and stable while hurricane and drought damage hit peanut production in the U.S. South, where the bulk of the nation’s crop grows. Lawyers representing peanut farmers said that ADM, Birdsong and Olam overreported peanut inventory totals to make the market appear oversupplied, allowing them to quote low prices to farmers.

In court documents, the farmers’ lawyers cited private discussions between rival processors that the farmers said showed coordination. In one email, according to a December court filing, an employee at ADM’s Golden Peanut asked an employee at rival Birdsong, “[w]hat are you paying for Seg 2 & 3?”, referring to quality levels of peanuts. The Birdsong employee responded, “175.”

The companies said those discussions didn’t violate U.S. antitrust law and resulted from legitimate business relationships, according to the December filing.

Jered Mathis, a plaintiff in the peanut farmers’ lawsuit, said prospects in peanuts looked good in 2012, when he took over his grandfather’s farm in Alabama. A drought had sent peanut prices soaring, but after a couple of years they dropped, and Mr. Mathis said the only explanation was that processors’ warehouses were full.

His crops were good, but without government support programs, Mr. Mathis said he would’ve lost money. He said he quit raising peanuts in 2018.

Mr. Mathis said he is now planning to grow peanuts again, after he and other farmers invested in their own peanut-processing plant, which he said should provide more competitive prices. “It takes away the middleman,” Mr. Mathis said.

Write to Jacob Bunge at [email protected]