Last July, I told you about a case involving California raisin growers and their battle with the U.S. Department of Agriculture’s Depression-era Raisin Administrative Committee. That case is now back in the news — and likely headed back to the Supreme Court — after the 9th U.S. Circuit Court of Appeals again ruled in favor of the raisin cartel by upholding its authority to fix prices and steal half of a farmer’s raisin crop without compensation.
The case has been kicked around various courts for more than a decade. It began when California raisin growers Marvin and Lena Horne, owners of Raisin Valley Farms, decided they were tired of complying with crop set-asides established arbitrarily by a bunch of paper-shuffling government functionaries, especially once the government went back on its agreement and quit compensating them for what it took. In other words, the USDA quit just strong-arming farmers and resorted to strong-armed robbery — transferring their product to crony capitalist corporations like Minute Maid.
The Raisin Administrative Committee’s job is to fix raisin prices. So once farmers have an idea on the size of the year’s harvest, the Raisin Administrative Committee tells the farmers how much of their product they must place in a reserve pool (i.e., handed over to the king as tribute). That reserve pool cannot be sold in the United States and must be surrendered to raisin packers that then package and sell the raisins to the U.S. government for school lunch programs or at reduced prices overseas.
Farmers were to receive some compensation (though not market prices) for the raisins set aside. But thanks to dwindling profit margins, farmers weren’t compensated in 2003, even though 47 percent of their crop had to be handed over to the government.
Horne decided that if he packaged and sold his own raisins, rather than run them through the cartel, he could circumvent the order. Other raisin producers, sensing an opportunity to benefit from all their labor rather than only that portion the eggheaded bureaucrats thought they should, decided to follow suit.
The raisin cartel wasn’t happy with this tactic. The USDA promptly slapped the Hornes with fines and demanded payment for the raisins they didn’t surrender. Horne said the fines and payment totaled about $1 million — much more than he and his small farm could muster. So he sued.
The USDA, joined by crony corporations benefiting directly from the theft, argued the case had nothing to do with taking but was a case about the Hornes violating farming regulations. The 9th Circuit Court of Appeals, unsurprisingly, agreed with the USDA.
The Supreme Court, in a 9-0 decision, sent the case back to the 9th Circuit with orders to hear the case on its merits. It did; then it ruled against the Hornes again, claiming that “the Marketing Order (that sets the amount confiscated) ensures ‘orderly’ market conditions by regulating raisin supply.” Evidence that this has never been so, but that — like the Federal Reserve’s money printing — it has only produced price bubbles and bursts, was ignored. The ruling essentially means that government taking is not a taking if the government intends to compensate the victim, even if the victim is ultimately not compensated at all.
The 9th Circuit ruled the property taken was not “real property” such as land, but only involved the Horne’s “personal property.” The judges noted the Hornes could “avoid the reserve requirement… by planting different crops.”
If the Hornes take the case back to the Supreme Court as expected, it is one that is well worth watching. Government price fixing has historically benefited corporatocracy to the detriment of the American consumer by creating artificially high prices and food shortages. Recall that during the Depression, marketing orders under the New Deal philosophy of “managed abundance” and prosperity through “universal monopoly” and “universal scarcity” led to the destruction of crops and livestock while Americans were standing in food lines begging for food.
Even now, Americans pay artificially high prices on food because of regulations setting quotas on food production and because of subsidies to paid to farmers to grow (or not grow) one crop at the expense of another.