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A Raisin in the Courts
August 13, 2013
In early June the Supreme Court issued a unanimous decision allowing a Constitutional challenge to a New Deal agriculture law go forward. The Washington Post tells the story of embattled raisin farmer, Marvin Horne, who is fighting for the right to keep what he grows:
Horne, a raisin farmer, has been breaking the law for 11 solid years. He now owes the U.S. government at least $650,000 in unpaid fines. And 1.2 million pounds of unpaid raisins, roughly equal to his entire harvest for four years.
His crime? Horne defied one of the strangest arms of the federal bureaucracy — a farm program created to solve a problem during the Truman administration, and never turned off.
He said no to the national raisin reserve.
The whole article is well worth your read.
What could compel growers to hand over the goods they have produced for little or no compensation?
The Raisin Marketing Order.
One of 27 Marketing Orders enshrined in the Agricultural Marketing Agreement of 1937, this Depression-era law created a government-sponsored cartel that authorizes the “Raisin Administrative Committee” to seize a portion of the annual raisin crop in order to collectively influence supply, demand, and ultimately price. The Post goes on to offer a sanitized explanation:
It works like this: In a given year, the government may decide that farmers are growing more raisins than Americans will want to eat. That would cause supply to outstrip demand. Raisin prices would drop. And raisin farmers might go out of business.
To prevent that, the government does something drastic. It takes away a percentage of every farmer’s raisins. Often, without paying for them.
These seized raisins are put into a government-controlled “reserve” and kept off U.S. markets. In theory, that lowers the available supply of raisins and thereby increases the price for farmers’ raisin crops. Or, at least, the part of their crops that the government didn’t just take.
Where do those raisins go? The Raisin Administrative Committee stores them until such a time as it deems it permissible to let more raisins go on the market. Some are distributed for free to the School Lunch and other government programs, others are auctioned off. Profits are used to pay for storage and “raisin promotion.” Farmers, who have been forced to turn over up to 47 percent of their crop in the past, get nothing or next to nothing in return. Nothing, that is, except the “privilege” to pursue their chosen vocation.
Adding insult to injury, because the Raisin Administrative Committee is enforced by the Department of Agriculture, ultimately taxpayers are paying for a program that increases prices for consumers and robs farmers.
Raisins are only one of many products that must adhere to the government’s price-fixing schemes. Marketing Orders are also in place for almonds, apricots, avocados, cherries, citrus fruits, cranberries, dates, grapes, hazelnuts, kiwifruit, nectarines, olives, onions, peaches, pears, pistachios, plums, potatoes, spearmint oil, tomatoes, and walnuts. And, lest we soon forget, dairy has its very own onerous marketing order that restricts supply and hikes prices for consumers.
While Mr. Horne’s case still has a long way to go as it once again wends its way through the lower courts, in the eyes of most taxpayers the outdated Marketing Orders should be a clear violation of the Takings Clause (the Fifth Amendment of the Bill of Rights). Rather than wait for the courts to unravel the red tape, Representative Trey Radel (R-FL) has introduced H.R. 2840, the Raisin Farmer Freedom Act, a bill that would exempt raisins from Agricultural Marketing Orders.
This is a good first step for raisin farmers eager to get out from under the oppressive Raisin Marketing Order. However, the bill falls short of what the agriculture industry needs to thrive in the 21st century. Instead of exempting only one crop, Congress should be working hard to dismantle the entire regime of Marketing Orders, a relic of outdated agriculture policies more akin to the U.S.S. R.’s top-down central planning.
The “invisible hand” described by Adam Smith is no less present in agriculture than it is in any other sector of the economy. Simply put, the government doesn’t have and never will have the information necessary to efficiently manage a market from on high. The fact that a “national raisin reserve” exists is proof positive of that fact.
Exempting raisin farmers from Marketing Orders would help Mr. Horne and his friends today. But Congress should go farther and level the playing field by completely eliminating these types of “admission fees” to the marketplace. Doing so would be a boon to both producers and consumers alike.
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