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  • Obama Demands Free Raisins

    July 17th, 2013
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    I have an alert set up for "free raisins", which means that if anyone posts about us online I can read about it. Lately, however, I've been getting some unusual alerts: What's going on, and why are we in such demand? In 1937 congress passed a law which let agricultural producers collectively create marketing orders. The idea is that if the price of a perishable commodity were determined entirely by supply and demand then in good years with high production there would be an oversupply and low prices. This would be bad for the farmers, and marketing orders allowed a kind of cartel where farmers would agree to limit supply to get higher profits. (This would normally be seen as a bad thing and violate antitrust law, but this is an exception for some reason.)

    In 1949 raisin producers in California got a federal marketing order that would let them get together to: "stabilize producer returns by limiting the quantity of raisins sold by handlers in the domestic competitive market". Every year the Raisin Administrative Committee would estimate how many raisins there was demand for, how many raisins were likely to be produced, and figure out what percentage of raisins were likely to be excess. In order to keep the price from falling, the committee would collect a percentage of the raisin crop which would then be kept off of the open market.

    In 2002 Marvin and Laura Horne, who run Raisin Valley Farms, were processing their own raisins and those of about 60 other raisin producers, and they decided they didn't want to participate in this system. They stopped setting aside raisins, stopped paying dues to the RAC, and stopped filing reports. They claimed this was permissible under the "takings clause" of the 5th Amendment: "nor shall private property be taken for public use, without just compensation".

    Their case has been in the legal system for a decade now, and has gotten to the Supreme Court, who've made a ruling. Unfortunately the ruling doesn't address whether the system of market orders is legal, instead saying that the lower court was wrong to decide that it wasn't in a position to handle the case. So now the case goes back down to the ninth circuit court, who should rule on the 5th Amendment claim. No resolution yet.

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