The U.S. Supreme Court agreed recently to hear a case involving California raisin growers that may end or substantially alter Depression-era agricultural marketing rules that critics complain reduce competition and raise the cost of food to consumers. Such a review is long overdue.
Agricultural marketing orders allow the government to restrict the flow of agricultural products to market. A New Deal regulatory scheme first introduced in 1937, these government controls are intended to prevent unreasonable fluctuations in supply and prices.
But dissident farmers and consumer advocates complain that marketing orders merely hurt competition and inflate prices for fresh fruit and vegetables at the grocery store.
Marvin and Laura Horne, who grow raisins in Fresno and Madera counties, have launched the latest high-profile legal assault on the marketing orders. The Hornes were required to transfer 47 percent of their 2002-03 harvest and 30 percent of their 2003-04 crop to the federal government. When the Hornes failed to do so, selling their raisins on the open market instead, they were hit with civil fines and penalties of more than $650,000.
Rather than pay, the Hornes sued the U.S. Department of Agriculture, arguing that the raisin marketing order's set-aside program constitutes a violation of the Fifth Amendment of the U.S. Constitution, which bars the government from taking private property "for public use without just compensation."
During one of the two years in question, the marketing order paid raisin farmers nothing for the raisins they were forced to transfer to the government. In the second year, farmers were paid far less than the cost of production.
The Supreme Court is being asked to decide whether the Hornes can raise the constitutional "takings" issue without first adjudicating their case before a federal claims court. The procedural issue is a waste of limited court resources and an unnecessary burden on the Hornes. The justices can and should address the important constitutional issue.
In addition, Congress needs to re-examine the economic justification for marketing orders. Supply restrictions may have made sense as a temporary means for propping up prices for beleaguered farmers during the Great Depression.
But today's global economy is far different from what farmers faced in 1937. If the federal government decides to hold a portion of American-grown raisins or oranges or plums off the market, farmers from other countries will happily fill the void. This hurts American farmers and consumers and benefits foreign farmers.
The Hornes are not the first farmers to challenge marketing orders. Others object to the forced joint generic advertising campaigns, and quality and size controls that really seek to restrict supply. These farmers prefer to take their chances in the free market, believing they can compete and win, and shouldn't be forced to subsidize less able competitors or cede market share to foreign growers.
Agricultural marketing orders need a fresh look from the Supreme Court and from Congress. Marvin and Laura Horne's lawsuit offers the perfect opportunity for that.