Praisin’ the Raisin Decision

Marvin Horne’s marathon battle against the U.S. Government and the Raisin Administrative Committee (R.A.C.) was vindicated when eight U.S. Supreme Court justices (Justice Sotomayor was the lone dissenter) agreed that the confiscation of Mr. Horne’s raisins was a violation of the Takings Clause of the Fifth Amendment, private property shall not be taken without just compensation.  Why is the government in the business of confiscating raisins, one might ask?  If this sounds oddly akin to a lunchroom bully from the third grade, there is more to the story:

The seizing of the raisins and the consequential fines from refusing to surrender his yields are a product of one of Roosevelt’s New Deal-era schemes. The Agricultural Marketing Agreement Act of 1937 (AMAA) cartelized many areas of the agricultural sector, with the full backing of the U.S. Department of Agriculture (USDA).  The AMAA laid the groundwork for the inclusion of raisins under this Act in 1949, resulting in the creation of the Raisin Administrative Committee.   What exactly is the R.A.C.? It is a group of 46 raisin growers and packers, and one member of the public, that meet to determine how the supply of raisins should be manipulated to keep the price artificially high.  Without the sanctioning by the federal government these meetings would, without question, be an illegal collusion to fix prices under the Sherman Antitrust Act.

Horne vs. the U.S. Dept. of Agriculture stems from Mr. Horne’s refusal to relinquish 47 percent of his raisins in 2002 – 2003 and 30 percent of his raisins in 2003 – 2004, without compensation, to the government. The refusal to relinquish his crops saw Mr. Horne facing $650,000 in fines.

Yesterday’s 8-1 striking down of uncompensated USDA seizures of California raisins is an important victory on two fronts. The first, in the protection of private property rights by way of the Takings Clause; and second, by thwarting the enforcement mechanism by which these government sponsored cartels collude.

From the April 13, 2012 decision of Hein HETTINGA, et al., Appellants v. UNITED STATES of America, Appellee:

“[T]he latest iteration of the venerable AMAA — reveals an ugly truth: America’s cowboy capitalism was long ago disarmed by a democratic process increasingly dominated by powerful groups with economic interests antithetical to competitors and consumers. And the courts, from which the victims of burdensome regulation sought protection, have been negotiating the terms of surrender since the 1930s.”

Yesterday the courts unwound a portion of that negotiated surrender to crony capitalism.

Comments (1)

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  1. Josh says:

    So the easier to answer questions are the last two. Yes they will be forced to provide just compensation to the producers, and the raisins were placed into the raisin reserve. From there the raisins general are sold off in foreign market or given to school lunch programs. The RAC keeps the profits from the sales.

    What will happen? That’s a good question. I suspect in the mid to long run being forced to provide market-value compensation to the producers will prove unprofitable for the cartel as a whole. That should lead them to stop seizing raisins, the enforcement mechanism holding the cartel together, which in turn should lead to an ineffective and insignificant committee. Perhaps, and I suppose I mean hopefully, this should lead to an elimination of the RAC.

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