THE Supreme Court has frequently handed down judgments that have shaken America to its core. Now, it has turned its attention to the raisin. A group of farmers has brought a complaint about the Agricultural Marketing Agreement Act of 1937, under which the government confiscates part of the annual national raisin crop. The Court is considering whether the arrangement is constitutional. But why is a country that generally celebrates red-blooded capitalism regulating the raisin trade in the first place?
Since the 1940s a government agency called the Raisin Administrative Committee has confiscated a portion of the annual raisin crop: 47% in 2003 and 30% in 2004, for example. Farmers who fail to surrender their raisins are fined. The committee, which is made up of 47 farmers and packers, plus one member of the public, does not pay farmers for the raisins it expropriates—indeed, it gives many away and sells others for export at low prices. After covering its costs it gives farmers the remaining profits if there are any.
The stated aim of this bizarre system is to preserve an “orderly” market, by determining how many raisins the domestic market can bear and then getting rid of the rest. It is unclear why raisins need this sort of central planning when the supply and demand of most products are left to market forces. Though the majority of raisin farmers were in favour of the plan when it started 65 years ago, these days many of them are unhappy about having to give away a big chunk of their crop. Nor does the system represent a good deal for consumers: the artificial raisin-scarcity created by the expropriations drives up prices, which means that Californian raisins are sometimes cheaper abroad than they are in California itself.
The raisin is not the only federally regulated fruit. In all, 30 products are bound by such “marketing orders”, which are overseen by the Department of Agriculture. The Court is to rule on the narrow question of whether the government should at least pay for the raisins it snatches, but its decision could open the way to a wider overhaul of the system. The evidence is that unregulated trade in fruits can prosper without the need for federal involvement. Citrus farmers, for instance, recently scrapped a similar system and seem to be coping inside the free market. There seems little reason not to do the same for the raisin.