The Raisin Cartel – The Supreme Court Case You Probably Haven’t Heard About



The top story this week is the gay marriage case before the Supreme Court. Pick up any newspaper, open any website, or turn on the television and you’ll hear all about that. What you probably aren’t hearing about is the case of Horne vs. USDA. It’s one of those cases that will make your blood boil.

It all goes back to the Great Depression when FDR instituted all of his central planning and price controls. Essentially, the government set up a “raisin cartel” that took raisins from farmers to sell at under-market prices.  For some reason, this thing is still in existence, and the government is going after small raising farmers for packing and selling all of the raisins they harvested.

Thanks to The Wall Street Journal for pointing it out.

Horne v. USDA turns on a Great Depression “price stabilization” program that established a Raisin Administrative Committee to control raisin supply. The committee acts as a cartel, setting raisin prices and recommending through “marketing orders” how many tons of raisins must be sold to the feds at a steep discount. The Department of Agriculture enforces the orders.

Marvin and Laura Horne organized their business to process and pack the raisins themselves, mistakenly reasoning that their raisins would then not pass through the middleman “sellers” who must forfeit a share of the crop to the government. In 2002-2003, the first year the Hornes didn’t turn over their raisins to the government, the Raisin Administrative Committee required producers to forfeit 47% of their crop while paying them less than the cost of production. In 2003-2004, raisin farmers had to hand over 30% for nothing.

The USDA came after the Hornes and ordered them to pay both the $483,843 cash value of the raisins the government said they should have turned over plus $202,600 in fines. The Hornes appealed on ground that the seizure violates the Constitution’s Takings Clause.

A District Court in California ruled against the Hornes and the Ninth Circuit Court of Appeals agreed, claiming the Takings Clause doesn’t apply to the federal regulatory program. When the court reheard the case en banc, the government shifted its argument and asked the court to rule that the takings claim had to be separately handled in the Court of Federal Claims.

The Ninth Circuit fell for that bait and switch, but last week the Justices were skeptical of both the raisin program and the government’s procedural run-around.

Read the whole thing. Basically, the government lawyers shifted their argument to give the Court an out. It doesn’t sound like the Justices were buying it, but you never know which way these things will go.

Oh, and raisin farmers aren’t the only ones this is happening to, they’re doing it to growers of apricots, avocados, kiwis and olives, too. How do these farmers even stay in business under such conditions? Are we paying for it on the other end through farm subsidies? Either way, subsidies won’t help the farmers pay the hundreds of thousands in fines. Let’s hope the Court does the right thing and finds in favor of the Hornes and puts an end to this horrible, unconstitutional policy.


Update: Linked by Conservative Hideout – thanks!