//Supreme Court Rules Against USDA in Favor of Raisin Farmer and Property Rights

Supreme Court Rules Against USDA in Favor of Raisin Farmer and Property Rights

by Sam Rolley

6-22-2015

The Supreme Court on Monday sided with California raisin growers, reversing a ruling from the 9th U.S. Circuit Court of Appeals that permitted government bureaucrats to fix raisin prices.
The case involves a Depression era regulation known as an agriculture marketing order, which requires that a share of every grower’s crop be placed under the control of a crop-specific committee that sells, exports or donates surplus yields. The rule was created in the late 1930s in an effort to stabilize crop prices under the Agricultural Marketing Agreement Act (AMAA).
Unfortunately for farmers like Marvin and Lena Horne, who are at the center of the recent Supreme Court ruling, the government had declared previously that simply choosing to grow a specific crop agriculturally requires agreement on a farmer’s part to sell only with the government’s blessing.
Bob Livingston wrote about the case last spring following the 9th Circuit ruling:
The case has been kicked around various courts for more than a decade. It began when California raisin growers Marvin and Lena Horne, owners of Raisin Valley Farms, decided they were tired of complying with crop set-asides established arbitrarily by a bunch of paper-shuffling government functionaries, especially once the government went back on its agreement and quit compensating them for what it took. In other words, the USDA quit just strong-arming farmers and resorted to strong-armed robbery — transferring their product to crony capitalist corporations like Minute Maid.

The Raisin Administrative Committee’s job is to fix raisin prices. So once farmers have an idea on the size of the year’s harvest, the Raisin Administrative Committee tells the farmers how much of their product they must place in a reserve pool (i.e., handed over to the king as tribute). That reserve pool cannot be sold in the United States and must be surrendered to raisin packers that then package and sell the raisins to the U.S. government for school lunch programs or at reduced prices overseas.

Farmers were to receive some compensation (though not market prices) for the raisins set aside. But thanks to dwindling profit margins, farmers weren’t compensated in 2003, even though 47 percent of their crop had to be handed over to the government.

Horne decided that if he packaged and sold his own raisins, rather than run them through the cartel, he could circumvent the order. Other raisin producers, sensing an opportunity to benefit from all their labor rather than only that portion the eggheaded bureaucrats thought they should, decided to follow suit.
The USDA set to make an example of the Hornes for opting out of the price-fixing scheme, slapping them with about $1 million in fines and threatening their small farm.
The farmers sued, claiming that packaging and selling their raisins themselves rather than turning them over to the government pool made them “producers,” not “handlers,” and, therefore, not subject to the government rules.
The distinction is important because, by the USDA’s perverse reckoning, if they fall under AMAA rules, a farmer’s crops aren’t his property to do with what he pleases but some collectivist food store to be divvied by the state. The 9th Circuit sided with the government on the matter twice.
Chief Justice John Roberts rejected that notion Monday, writing that the government has clearly violated the 5th Amendment in the case.
“The reserve requirement imposed by the Raisin Committee is a clear physical taking. Actual raisins are transferred from the growers to the government. Title to the raisins passes to the raisin committee. The committee’s raisins must be physically segregated from free-tonnage raisins,” he wrote. “Reserve raisins are sometimes left on the premises of handlers, but they are held ‘for the account’ of the government. The committee disposes of what become its raisins as it wishes, to promote the purposes of the raisin marketing order.”
Roberts also rejected a precedent concerning state permits for oyster harvesters used to justify the 9th Circuit decision.
“Raisins are not like oysters: they are private property — the fruit of the growers’ labor — not ‘public things subject to the absolute control of the state,’” Roberts wrote. “Any physical taking of them for public use must be accompanied by just compensation.”
Roberts further asserted that “voluntary exchange” wasn’t a very appropriate definition of the government’s forcing the Hornes to turn over 47 percent of their raisin crop one year and 30 percent the next.
“Selling produce in interstate commerce, although certainly subject to reasonable government regulation, is similarly not a special governmental benefit that the government may hold hostage, to be ransomed by the waiver of constitutional protection,” he wrote.
Comments