This is the Biggest Food Scandal in History

Summary

The video script uncovers a major food industry scandal where Agri Stats, a data company, allegedly facilitated the manipulation of meat prices by sharing sensitive industry data with major meat companies. This collusion is said to have restricted output and artificially inflated prices, costing consumers billions. The Biden administration and state attorneys general are now taking action against Agri Stats for violating antitrust laws, aiming to restore fair competition and affordable food prices.

Takeaways

• 🚨 The alleged meat industry scandal is considered one of the top five food scandals of the 21st century, with potential criminal implications.
• 🏢 Agri Stats, a data company, is at the center of the controversy, accused of organizing and laundering secret data shared among America's largest meat companies.
• 📈 The data shared is used to restrict output and manipulate the market, leading to increased prices and profits for the industry at the expense of consumers.
• 🛡️ Attorney General Keith Ellison is leading a lawsuit against Agri Stats, alleging violations of the Sherman Act due to the sharing of critical information that reduces market competitiveness.
• 📊 Agri Stats provides detailed reports on product prices, costs, wages, and market projections, which major meat companies like Tyson, Hormel, and Cargill use to their advantage.
• 📈 The data incentivizes companies to raise prices and limit supply, which has led to significant profit increases for the industry.
• 💡 Former Whole Foods VP Errol Schweizer describes the situation as a de facto cartel, highlighting the anti-competitive nature of the data sharing.
• 📚 Agri Stats reports provide detailed insights into pricing strategies, including how a company's prices rank nationally and the potential economic impact of price adjustments.
• 📈 Evidence suggests that companies like Cargill and JBS have used Agri Stats data to increase their prices, resulting in industry-wide profit margins soaring by as much as 50%.
• 🤔 Agri Stats claims to only provide anonymized benchmarking data, but the defense is challenged by evidence of the company helping subscribers interpret the data to boost prices.
• 📉 The scandal has had real-world consequences, including reduced food access and affordability for consumers, potentially contributing to food apartheid.
• 🏛️ The lawsuit's goal is to establish fair competitive pricing and more affordable grocery prices, but the outcome is uncertain due to the complexity of the case and the evolution of antitrust laws.

Q & A

What is the alleged role of Agri Stats in the meat industry?

Agri Stats is accused of organizing and laundering secret data shared by America's largest meat companies, which is then used to restrict output, manipulate the market, and ultimately raise prices for profit.

How does the alleged scheme by Agri Stats affect consumers?

The scheme is said to siphon billions from consumers by artificially inflating the prices of meat products, making it harder for them to afford the same amount of food they previously could.

What is the legal basis for the lawsuit against Agri Stats?

The lawsuit is based on the Sherman Act, which prohibits sharing critical information that would reduce competitiveness and engaging in conspiracies, collaboration, and collusion that violate section one of the Act.

Who is leading the lawsuit against Agri Stats?

Attorney General Keith Ellison of Minnesota is leading the lawsuit against Agri Stats.

What kind of information does Agri Stats track and report?

Agri Stats tracks product prices, the cost to raise an animal, worker wages, and market projections, turning this information into reports bought by companies controlling the chicken, turkey, and pork markets.

How did meat companies allegedly use the Agri Stats reports to their advantage?

Meat companies like Tyson, Hormel, and Cargill used the insights from Agri Stats reports to raise prices and limit supply, thereby increasing their profits and driving up costs for everyone else.

What is the difference between syndicated data and the data provided by Agri Stats?

Syndicated data provides boiled-down, top-line reports that help companies see trends, whereas Agri Stats provides detailed, open-book test-like data that essentially gives companies the answers to maximize their profits without risk.

What is the impact of the alleged price manipulation on the food industry?

The price manipulation has led to a food access scandal and a food apartheid scandal, where consumers are forced to buy less food due to increased prices, affecting their access to adequate nutrition.

What was the outcome of the price increases implemented by meat companies using Agri Stats data?

The outcome was a significant increase in profit margins across the industry, with pork profit margins soaring by 50% as companies followed suit in hiking up prices.

Why did Agri Stats pause selling turkey and pork reports in late 2019?

Agri Stats paused selling these reports due to facing private antitrust litigation, indicating that their practices were under scrutiny for potentially illegal activities.

What are the broader implications of this case for antitrust laws and regulations?

The case highlights the need for updated antitrust laws and regulations to handle modern information sharing practices and potentially stop illegal information sharing by companies like Agri Stats.

Outlines

00:00

🚨 Meat Industry Price-Fixing Scandal Exposed 🚨

This paragraph delves into a major food scandal of the 21st century, suggesting illegal activities within the meat industry that could lead to imprisonment. It introduces Agri Stats, a data company that allegedly facilitates information sharing among meat industry giants, leading to market manipulation and price inflation for profit. The script outlines a lawsuit led by Minnesota's Attorney General Keith Ellison against Agri Stats for violating the Sherman Act by sharing sensitive information that reduces market competitiveness. The data shared includes product prices, costs, wages, and market forecasts, used by companies like Tyson, Hormel, and Cargill to maximize profits at the expense of consumers. The video also features an interview with Errol Schweizer, a former Whole Foods executive, who describes the industry's practices as a de facto cartel, highlighting the risk-free profit maximization enabled by the data reports.

05:01

📊 The Impact of Agri Stats' Data on Meat Pricing 📈

This paragraph continues the exposé on Agri Stats, detailing how the company's reports enable meat processors to compare their prices with national averages and competitors, potentially leading to coordinated price increases. It describes how companies like Cargill and JBS used this data to adjust their pricing strategies, resulting in significant profit margin increases for the industry. The paragraph also discusses the broader implications of these practices, including reduced food affordability and accessibility for consumers, framing it as a 'food access scandal' and 'food apartheid scandal.' It notes the challenges of pursuing legal action against such practices due to outdated antitrust laws and a history of lax enforcement. The paragraph concludes with a discussion on the necessity of updating antitrust regulations and the current efforts by the Biden-Harris administration and attorneys general to strengthen antitrust enforcement, with a focus on achieving fair competition and affordable grocery prices.

Keywords

💡Food scandal

A food scandal refers to a significant event or series of events that involve unethical or illegal practices within the food industry, often resulting in public health risks or economic fraud. In the video, it is mentioned as one of the top five food scandals of the 21st century, indicating the severity and impact of the alleged actions by Agri Stats and the meat industry.

💡Agri Stats

Agri Stats is a data company mentioned in the script that has allegedly built a network used by the nation's largest meat companies to share secret data. The company is central to the video's theme as it is accused of organizing and laundering information that meat companies use to manipulate the market, which is a key aspect of the scandal discussed.

💡Market manipulation

Market manipulation refers to the act of artificially inflating or deflating the price of a security or commodity. In the context of the video, it is suggested that meat companies used data from Agri Stats to restrict output and manipulate meat prices, thereby increasing their profits at the expense of consumers.

💡Sherman Act

The Sherman Act is a landmark U.S. antitrust law that prohibits certain business activities that federal government regulators deem to be anti-competitive. In the video, it is mentioned that the complaint against Agri Stats alleges violations of the Sherman Act by sharing critical information that reduces competitiveness.

💡Benchmarking data

Benchmarking data is information that is used to compare a company's processes and performance against industry standards or best practices. Agri Stats is accused of providing anonymized benchmarking data that meat companies allegedly used to coordinate their pricing strategies, which is a central issue in the scandal.

💡Monopoly

A monopoly exists when a single company or entity dominates a market to the point where there is little or no competition. The video discusses how the actions of Agri Stats and the meat companies have contributed to a de facto monopoly in the meat industry, leading to inflated prices and reduced food availability.

💡Antitrust enforcement

Antitrust enforcement refers to the actions taken by regulatory bodies to prevent and address anti-competitive practices. The video highlights the Biden-Harris administration's and Attorney General Ellison's efforts to fight back against the alleged collusion and market manipulation by enforcing antitrust laws.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. The script suggests that the monopoly problem and market concentration in the meat industry are driving inflation, as prices are artificially inflated.

💡Competitive pricing

Competitive pricing refers to the strategy of setting prices for goods or services based on market conditions and competitor pricing. The goal of the lawsuit mentioned in the video is to restore fair competitive pricing in the meat industry, which would result in lower and more affordable grocery prices for consumers.

💡Syndicated data

Syndicated data is aggregated data that is sold to multiple clients, often used for market research and analysis. In the context of the video, it is contrasted with the more detailed and potentially manipulative data provided by Agri Stats, which is likened to an 'open-book test' for the meat companies.

💡Racket

A racket refers to an illegal activity, often involving some form of extortion or fraud, that is carried out systematically or as part of an organized crime. In the video, the use of the term 'racket' by Errol Schweizer, a former Whole Foods executive, underscores the severity of the alleged collusion and market manipulation by the meat industry.

Highlights

The scandal is considered one of the top five food scandals of the 21st century, with serious implications for those involved.

Agri Stats, a data company, is at the center of allegations for organizing and laundering secret data shared by America's largest meat companies.

It is alleged that the shared data is used to restrict output, manipulate the market, and raise prices for profit.

The Biden administration and four attorneys general are taking action against Agri Stats for its potential role in a market manipulation scheme.

Attorney General Keith Ellison is leading a lawsuit against Agri Stats for violating the Sherman Act by sharing critical information that reduces competitiveness.

Agri Stats tracks product prices, costs, wages, and market projections, which are then used by major meat companies to maximize profits.

Errol Schweizer, former Whole Foods VP, describes the situation as a de facto cartel and a racket, indicating a significant market manipulation.

Agri Stats reports detail price rankings and economic impacts, incentivizing companies to raise prices.

The data provided by Agri Stats is likened to an open-book test, offering answers that facilitate collusion.

Cargill and JBS are examples of companies that allegedly used Agri Stats data to increase their prices and profits.

The scandal has led to a significant increase in food prices, affecting consumers' ability to afford food.

Agri Stats ceased selling turkey and pork reports in 2019 due to facing private antitrust litigation.

The lawsuit's goal is to establish fair competitive pricing and lower grocery prices for consumers.

Existing antitrust laws, such as the Sherman Act of 1890, may be sufficient to address the issue, but updates may be necessary.

The case could mark a reinvigoration of antitrust enforcement after a period of lax regulation.

Attorney General Ellison is eager to bring the case to trial, believing in the strength of the case and the importance of a fair economy.

Transcripts

This is probably one of the

top five food scandals of the 21st century.

And we can't underplay it.

People f*cking need to go to jail.

People need to go to jail for this sh*t.

(Host) Hold on.

Let's start at the beginning.

Right here, tucked away

in a nondescript office building,

right across from a doctor's office, lies

the heart of

what could be

It's home to Agri Stats, a data company

that built a network used by the nation's

largest meat companies.

And inside that

network, America's meat barons share secret data.

It's alleged that Agri Stats organizes

and then launders that information across the industry.

Companies weaponize it,

restricting output, manipulating the market,

ultimately raising your prices.

All for profit.

This video is about that scheme —

how something as mundane as data

reshaped the American food landscape,

siphoning billions from consumers,

and how the Biden administration

and four attorneys general

are finally fighting back.

We’re at the state

capitol of Minnesota,

where Attorney General Keith Ellison has his offices.

He's leading the lawsuit against Agri Stats.

Attorney General Ellison, thanks for joining us today.

Really good to be with you. Thank you.

What does this complaint allege?

It alleges

that under the Sherman Act,

you can't share critical information

that would have a tendency to reduce competitiveness

in competition.

They're essentially sharing information

in a way

that violates section one of the Sherman Act,

which prohibits things like conspiracies, collaboration,

collusion, things like that.

Agri Stats is the heartbeat of the meat industry.

It tracks everything — product prices, the cost to raise

an animal, worker wages, and market projections.

This info is

then turned into reports

bought by companies that effectively control

all of the chicken, turkey and pork markets.

Tyson, Hormel and Cargill,

they use these insights to raise prices and limit supply,

driving up costs for everyone else.

But profits for the industry? They go up.

You get information that'll allow you to figure out

how to maximize your profit

without having to take any chances.

Last time I heard, capitalism and free

markets were all about risk taking, right?

This is a risk-free endeavor because you know what

your competitors are paying for labor inputs,

how many chicks they got,

because you have the report right in front of you.

So, those are the allegations.

And admittedly, the whole thing is kind of boring.

It's data.

How bad can it be?

To find out, we talked to someone who would know.

He's Errol Schweizer ,

a former vice president of Whole Foods

who helped lead the firm's rise.

This is a de facto cartel.

I mean, this is a racket.

(Eric) Here's how it worked.

So for each item in the grocery store,

whether it be

chicken thighs or chicken

wings, Agri Stats, they create a report.

The report outlines the price the company charged,

the national average of what its competitors charged,

and the top quartile.

In fact, it goes deeper than that.

It tells meat processors where their price ranks nationally.

Then, the gap between what they’re charging

and the national average.

And the gap between that and the top 25%.

But I

think most

importantly, you can actually see

the economic impact dollars,

or how much money the company is leaving behind.

The way the data was set up

was an incentive for them to raise prices.

Like, you have to catch up to the market here.

Why are you underselling?

You're making us all look bad.

Once all these suppliers knew

what they were each selling

and what they were selling for, it's really just a matter

of determining what they wanted to be selling it for.

It's important to note

that the reports

that Agri Stats produces,

they aren't your typical grocery data.

The industry calls that syndicated data.

So syndicated data is like a really good test

preparation service, it helps you see what trends are.

You're getting boiled down, top-line reports.

Agri Stats is just an open-book test.

It's like you're

just essentially giving them the answers.

It’s night and day.

They stole money from the public

and they took food off people's tables.

(Eric) Just 20 miles from here,

Cargill was leveraging Agri Stats data.

In 2013,

they charged

slightly less than the Agri Stats average for turkey.

When they found out, they started charging more.

By 2016, they had surged above it.

It's alleged that Agri Stats

didn't just provide the information,

they actively helped their subscribers interpret it.

According to discovered emails, in 2016,

Agri Stats consultants told Cargill that at Walmart,

it was charging

20 cents more for ground turkey

than its primary competitor,

but could presumably charge more

because it was 11 cents less than another.

At one big distributor,

the same consultant told Cargill

they were 45 cents cheaper than two rivals.

Cargill even had a presentation

showing the goal of the whole thing —

boosting industry wide prices.

JBS did the same thing.

Agri Stats

reports showed they were charging

less than their competitors for pork.

What do they do?

They hike up prices on at least ten products.

Everyone followed suit.

The outcome?

Pork profit margins soared 50% across the industry.

There's more. Tyson, Sanderson Farms, Hormel,

think of a meat company.

They're probably one of the 40 listed as a co-conspirator.

Coincidentally,

Agri Stats paused selling turkey and pork reports in late 2019.

Why?

Well, they were faced with private antitrust litigation.

This is among the most widespread scandals

in not only food pricing,

but food availability, that I've actually ever heard of.

The reason why I say this is, these price increases

forced consumers to buy less food

because they couldn't afford the same amount of calories

that they had before these increases came through.

This is a food access scandal,

and this is a food apartheid scandal.

(Eric) Agri Stats claims it merely provides anonymized

benchmarking data,

and the company ignored our request for an interview.

But the defense seems to fall apart.

Not only evidence like that previous email,

but meat companies have boasted that Agri

Stats reports

can identify their competitors with 100% certainty.

So what's next?

Honestly, it's not clear. We're in uncharted waters.

Regulators ignored antitrust laws for a generation,

and technology, it advanced rapidly.

You know, a lot of the practices now, either in

packaged food CPG, probably wouldn't be legal

if they actually enforced and updated antitrust laws.

(Eric) And now we're left with the consequences.

I think that, you know, this monopoly problem,

this market concentration problem is driving inflation.

The goal of the lawsuit is to have fair competitive pricing.

It's lower grocery prices.

It's grocery prices that people can afford.

That's the goal.

But again, it's tricky.

Last year, a federal judge ruled in favor of meat

companies and Agri Stats in a civil antitrust case.

He wrote:

Just because Agri Stats

provided a convenient form to transmit the information,

did not mean that Agri Stats itself joined the conspiracy.

So what's different with this one?

Well, the facts are different.

Here in Minnesota,

the court has already found

that there is a cognizable legal interest.

There is a claim to be made.

It's hopeful, but it's also not guaranteed.

Most of our antitrust laws

were written before mass electricity,

let alone streamlined information sharing.

In fact,

most laws were passed before the monopoly man

even made his debut.

So, are existing antitrust laws enough to handle this,

or do we need additional regulations?

The answer is yes,

they are enough to handle this.

And, the answer is, we also need to do some updating.

But the Sherman Act, passed in 1890,

is enough to stop Agri Stats

from this illegal information sharing that it's doing.

But this case could be a start.

After 40 years in the wilderness,

the Biden-Harris administration and AGs like

Ellison have reinvigorated antitrust enforcement.

The attorneys general of D.C.

and Arizona are fighting

alleged collusion in the rental market.

The DOJ has active suits against alleged monopolies —

Ticketmaster, Apple, Google.

All this is happening

just six years after

federal enforcement was at a generational low.

(AG Ellison) I want to get to trial on this fast,

because I believe we've got a great case,

and I believe that what we're fighting for

is a fair economy

so that all Americans can aspire to prosperity.