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Honored Advisor

How long before they start to out right steal corn, beans, wheat, and milk?

UPREME COURT

Raisin farmer challenging USDA’s $700G fine before Supreme Court

supremecourt.jpg

March 2, 2015: The U.S. Supreme Court in Washington, D.C. (Reuters)

A California farmer is fighting the government to keep the fruits of his labor. 

Raisin farmer Marvin Horne is heading to the Supreme Court on Wednesday in a bid to stop the federal government from demanding he hand over his dried fruit crop -- almost half of it -- without “just compensation.” He plans to argue that the government is violating his 5th Amendment rights, under a decades-old policy. 

According to the U.S. Department of Agriculture, “handlers” of raisins, who package the crop, must hand over a portion of their yield each year. But “producers,” who actually grow the raisins, get to keep all the fruits of their labor.

In 2000, Horne was a “handler” and then tried to become a “producer.” Several years later, the USDA told Horne he still needed to hand over 47 percent of his sun-kissed grapes to the government. Horne refused — and the agency hit him with $700,000 in fines and penalties.

The law requiring all raisin growers to give the government a certain amount of their crop each year is part of the 1937 Agricultural Marketing Agreement Act, which was created during the Great Depression and designed to keep prices steady.

 

Raisin growers aren’t the only ones giving their goods to what some challengers of the law call “the nanny state.” According to the USDA, their“Marketing Order Commodity Index” requires about 20 different growers to give a certain percentage of their crop to the powers that be -- almonds, plums, and spearmint oil included.

Reached for comment, a USDA spokesperson told FoxNews.com the current law "provides the industry in California with the ability to establish and modify handling regulations in order to improve global marketing opportunities for producers and handlers." 

The official added: "The USDA is continuing to review the proposed rule-making actions. We will wait to hear the Supreme Court's decision on Horne v. USDA before publishing any proposed or final rule-making actions." 

Opponents of the law believe this is an antiquated system with little to no economic benefit.

“The Raisin Marketing Order does not benefit the growers, but rather places a substantial and disproportionate burden on them,” said attorney Jessica Ring Amunson in a written brief representing more than 30 independent raisin growers.

“This case presents the important question of whether the federal government can seize ownership, each year, of a large portion of a farmer’s raisin crop without paying the just compensation required by the Takings Clause of the Fifth Amendment,” Horne’s attorney, Michael McConnell, wrote in anothercourt brief.

McConnell argued the USDA paid farmers — like Horne — “nothing at all” for some of their raisins.

This isn’t Horne’s first raisin-related appearance at the high court. Justice Elena Kagan jokingly referred to the law as “the world’s most out-of-date law” two years ago after his case was tossed back to the 9th Circuit Court of Appeals.

“It’s such a bizarre situation,” said CATO Institute’s Editor-In-Chief Ilya Shapiro. “Whether you’re liberal, conservative, libertarian, it just sounds like a backward way of accomplishing whatever your goal might be.”

The U.S. produced more than 370,000 tons of raisins last year, but “the crop has struggled with the lack of water” in California, where U.S. production is forecast to drop 14 percent this year, according to the 2014 California Raisin Grape Objective Measurement Report.

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6 Replies
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Honored Advisor

Re: How long before they start to out right steal corn, beans, wheat, and milk?

The government reports that "sometimes" overstate the yields, acres, and supplies already do that by sending the markets lower. 

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Advisor

Re: How long before they start to out right steal corn, beans, wheat, and milk?

Raisin growers voluntarily entered a USDA marketing order agreement.

 

You can argue that those agreements are unnecessary intervention into the free market, or can also argue that they are an unfair tax on consumers of raisins. But they voted that way, I gather the raisin growers voted overwhemingly for the government to bring "order" to that market.

 

I'm guessing that if this crop comes in big and corn is under $3, corn farmers would do the same if they were offered the chance and it promised a $5 floor (which would of course just keep rent and input costs high and amount to little in the long term, other than make balance sheets safer for bankers).

 

But anyway, as Franklin is overly quoted, trade freedom for a little security, you bet!

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Senior Contributor

Re: How long before they start to out right steal corn, beans, wheat, and milk?

Blame the hated government without researching the history behind it.  The same folks blame the government for the Cliven Bundy's episode. instead of taking sides against the deadbeat tenent.

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Advisor

Re: How long before they start to out right steal corn, beans, wheat, and milk?

Not to say that the marketing order system isn't antiquated and should probably go by the wayside but there should be some sort of phase-out, buy out or alternative so as to not leave growers high and dry. There are several other minor crops and products under marketing order systems as well.

 

BTW, one of the elements of those arrangements is to dump surpluses onto the global market in order to keep the domestic market tight. Probably illegal under WTO but I'm not aware of any major actions involving those crops. We lost to Brazil over cotton and probably could have to Canada or Australia on grains under our old system had they chosen to press the point.

 

FWIW, one of the cleverest pieces of the 2104 Land Baron and BTO Permanent Incumbency Act was to essentially privatize the LDP system by subsidies laundered through private ins, by which time we'll have moved on to something else.urance corportions. It'll take the international trade lawyers at least five years to unravel and litigate that one.

 

 

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Veteran Advisor

Re: How long before they start to out right steal corn, beans, wheat, and milk?

cant understand why market orders on almonds.  Maybe they should price them in the store.

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Honored Advisor

Re: How long before they start to out right steal corn, beans, wheat, and milk?

Supreme Court justices question gov't program forcing raisin growers to turn over crop

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Raisin farmer taking USDA to high court over regs

 

A post-World War II-era program that forces raisin producers to give part of their annual crop to the government could soon be a relic of history. 

Several Supreme Court justices expressed doubts Wednesday that federal officials can legally take raisins away from farmers without full payment even if the goal is to help boost overall market prices. 

Two California farmers claim the program is prohibited by the Constitution, which forbids the taking of private property without "just compensation." 

During a one-hour argument, most of the justices seemed to agree. Justice Antonin Scalia compared it to old-style Russian central planning, while Justice Elena Kagan called it a "weird historical anomaly." 

Chief Justice John Roberts noted that most other farm regulatory programs try to limit how much of a crop farmers can grow, as opposed to taking away produce already harvested. 

 

"This is different because you come up with the truck and you get the shovels and you take their raisins, probably in the dark of night," Roberts said to laughter. 

The seeds of the case were sown in 2001 when Marvin and Laura Horne, raisin farmers in Fresno, California, decided they had had enough of a program they viewed as outdated and ineffective. The U.S. Department of Agriculture had been authorized by law in 1937 to keep commodity prices, including those for raisins, steady by managing supply. 

A marketing order issued in 1949 allows a Raisin Administrative Committee to decide how much of the crop raisin handlers must turn over each year. What the government takes, called reserves, are sold outside the open market or donated to federal agencies, charities or foreign governments. 

Profits from reserve sales are used to fund the costs of running the committee, and any excess goes back to the producers. 

The Hornes tried to evade the regulations by setting up their own packing program instead of selling their crop to a middleman. But the department said they violated the rules and fined them $695,000. 

The 9th U.S. Circuit Court of Appeals sided with the government, finding that the farmers benefited from the stabilization of market prices and did not lose the entire value of their crop. 

But the Hornes' lawyer, Michael McConnell, argued that the program was unconstitutional because "the government literally takes possession of the raisins." 

"My clients are certainly not better off," he said. "They lose money." 

Deputy Solicitor General Edwin Kneedler, arguing for the government, stressed that the Hornes benefit from increased raisin prices. He said they voluntarily put their crops into the stream of commerce, so authorities can subject them to market regulations. 

But Roberts called it a "classical, physical taking." 

In the two years at issue in the case, raisin handlers were required to give up 47 percent of their crop in in 2002-2003 season, but received far less than their costs of production. The committee demanded 30 percent of the crop in 2003-2004 and paid nothing. 

Kneedler said the last time the marketing order was used to take raisins away from farmers was in 2009. He estimated that eight to 10 other commodities are regulated in the same way, though the vast majority are not. 

The Hornes have won support from conservatives and business groups that say the program amounts to needless government meddling in the free market. 

A ruling is expected by June.

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