The USDA Is Operating a Raisin Cartel

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“Don’t worry, bro, this is totally legal!”

While we’ve been busy watching the court drama and congressional debate over the PATRIOT Act, another important issue has been making its way to the Supreme Court.  At issue is whether or not the government has the authority to tell a raisin farmer how many grapes he can grow.

Perhaps stranger than classifying someone as a “raisin farmer” is the fact that there is a National Raisin Reserve established by the United States Department of Agriculture.  Strange too that this cartel seized $65 million worth of raisins in a single year, and managed to spend ALL of the money from their sale operating the reserve, leaving nothing (let alone “just compensation”) for all of those farmers whose property was taken.

Horne v. Department of Agriculture centers around a farmer and his wife who decided to disobey the edict of the USDA and not give his justly-grown raisins to the Reserve.  Since first refusing over a decade ago, they have been assessed taxes and penalties totaling approximately 1.2 million pounds of raisins (not grapes) and $650,000.

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“Guarding this poppy field is pretty cool, I guess, but I’d rather be stealing raisins.”

One might wonder how this all came to be.  As part of the New Deal, the Federal government had already logged quite a history of meddling with specific aspects of the economy.  After all, central planning was being used by other major economies at the time (Stalin’s Russia and Hitler’s Germany, for example), so it seemed prudent for the United States to follow suit.  By 1937, the government had already exerted control over most other crops and turned its attention to raisins.

The Raisin Administrative Committee (rightly called a cartel, since it is run by industry representatives) was formed in response to the fear that farmers might grow too many grapes.  If that happened, central planners reasoned, prices would drop and farmers would go out of business.  When those farmers quit buying things in their communities, other businesses on frail economic footing would collapse in an ever-widening economic wake.  Thus would the country fall into permanent depression because the government failed to protect raisin farmers against themselves.

Aside from the fact that central planners never bothered to study history, they apparently did not bother to question whether or not it was right.  The seizure of these raisins is without compensation to the farmers.  In the United States, the Fifth Amendment to the Constitution prevents taking of private property “for public use, without just compensation.”  Horne’s argument hinges on the argument that the government is taking the raisins for public use.  Specifically, the RAC exports large amounts of raisins for free to other countries.  Presumably at least this food aid constitutes public use.  Whether or not the raisin cartel constitutes public use is an interesting question; It’s certainly not in the public interest to have food cost more.

It will be interesting to see how the case turns out for Horne, since his alleged debts amount to 4 years’ total production.  Coincidentally, the Raisin Administrative Committee has not maintained a reserve pool for years 2010 through 2014.  Horne’s defiance has stirred quite a bit of controversy in the raisin industry.  Is it possible the RAC’s moratorium is related to his legal challenge?

A ruling against the cartel would have far-reaching implications, since milk, sugar and other goods and services are also made into a cartel by the United States government.  Either way, this unwanted attention does not appear to be good for the RAC.  They’ve even seen attempts in the U.S. Congress to legislate them out of existence.  Perhaps Marvin Horne will get the last laugh either way.

Andrew Slanker is an engineer, classical liberal, and amateur debater. He is a founding member of the social commentary website Evading Justice.