donnay
07-13-2013, 06:11 AM
Free Market eh?
One grower’s grapes of wrath
By David A. Fahrenthold
KERMAN, Calif. — In the world of dried fruit, America has no greater outlaw than Marvin Horne, 68.
Horne, a raisin farmer, has been breaking the law for 11 solid years. He now owes the U.S. government at least $650,000 in unpaid fines. And 1.2 million pounds of unpaid raisins, roughly equal to his entire harvest for four years.
His crime? Horne defied one of the strangest arms of the federal bureaucracy — a farm program created to solve a problem during the Truman administration, and never turned off.
He said no to the national raisin reserve.
“I believe in America. And I believe in our Constitution. And I believe that eventually we will be proved right,” Horne said recently, sitting in an office next to 20 acres of ripening Thompson grapes. “They took our raisins and didn’t pay us for them.”
The national raisin reserve might sound like a fever dream of the Pillsbury Doughboy. But it is a real thing — a 64-year-old program that gives the U.S. government a heavy-handed power to interfere with the supply and demand for dried grapes.
It works like this: In a given year, the government may decide that farmers are growing more raisins than Americans will want to eat. That would cause supply to outstrip demand. Raisin prices would drop. And raisin farmers might go out of business.
To prevent that, the government does something drastic. It takes away a percentage of every farmer’s raisins. Often, without paying for them.
These seized raisins are put into a government-controlled “reserve” and kept off U.S. markets. In theory, that lowers the available supply of raisins and thereby increases the price for farmers’ raisin crops. Or, at least, the part of their crops that the government didn’t just take.
For years, Horne handed over his raisins to the reserve. Then, in 2002, he refused.
Since then, his life has now become a case study in one of Washington’s bad habits — a tendency never to reexamine old laws once they’re on the books. Even ones like this.
When Horne’s case reached the Supreme Court this spring, Justice Elena Kagan wondered whether it might be “just the world’s most outdated law.”
“Your raisins or your life, right?” joked Justice Antonin Scalia.
Last month, the high court issued its ruling and gave Horne a partial victory. A lower court had rejected Horne’s challenge of the law. Now, the justices told that court to reconsider it.
Horne does not have the persona of a live-wire revolutionary. He used to be a tax auditor for the state. Now, in his second career, he watches fruit dry.
“If I knew we were going to go through all this, I would have just pulled the grapes out and put in almond” trees, he said.
But get Horne talking about the national raisin reserve, and the spirit stirs. Suddenly he can’t find a metaphor hairy enough to express his contempt. It’s robbery. It’s socialism. It’s communism. It’s feudalism. It’s . . .
“You have heard of the rape of the Sabine women? This is even worse,” Horne said, referencing a legendary mass abduction from Roman mythology. “The rape of the raisin growers.”
Raisin reserve takes root
Horne has now spent a decade trying to do one of the hardest things in American politics. He is trying to kill a law, by breaking it.
Specifically, Horne is trying to kill Marketing Order 989 — a federal regulation meant to solve a problem from the era after World War II. Peace, it turned out, was bad for raisins.
The government stopped buying huge amounts of them to send overseas with GIs, as it had done during wartime. So supply outstripped demand. Prices fell. The industry’s answer was to start a raisin reserve.
It’s not quite what it sounds like. There is no Fort Knox of raisins, no vault buried under Fresno. Instead, the government simply waits for farmers to grow their crops — nine months of growing grapes, then two to three weeks of drying them in the sun.
Then it takes away a part of that crop and stores it in warehouses around California. The government might save some of these “reserve” raisins for later years. It might sell them to foreigners. It might feed them to schoolchildren. Or cows. The point is to get them off the open market in the United States and lower the supply available to commercial buyers.
That, in theory, means greater scarcity and higher prices. The same approach works for oil and diamonds.
“It’s a cartel. Let’s use the power of the government to operate a cartel,” said Daniel Sumner, director of the University of California’s Agricultural Issues Center. Congress had given the USDA the authority to operate reserves during the New Deal: Other reserves existed for almonds, walnuts, tart cherries and other products.
Then, time passed. Wars came and went. The New Deal faded from memory.
The raisin reserve survived.
Today, it is run by the Raisin Administrative Committee, a Fresno-based organization made up of industry representatives, but overseen by the Agriculture Department. The committee is allowed to sell off some of those reserve raisins that it took for free. It can use those proceeds to pay its own expenses and to promote raisins overseas.
And if there’s any money left over, it goes back to the farmers whose raisins were taken.
The committee is not very good at having money left over.
“We generated $65,483,211. And we pretty well spent it all,” said Gary Schulz, the committee’s president and general manager, reviewing the books for one recent year. That year, the committee spent those millions on storage fees. Overseas promotions. Administrative overhead.
So what, precisely, was left for the farmers?
“Zero,” said Schulz. “They received the value of our investment.” A recent study showed that raisin advertising brought in nearly $10 in revenue for every dollar spent; however, U.S. raisin consumption has declined since 2004.
In 2002, Horne decided he wouldn’t give those people his raisins anymore.
“The hell with the whole mess,” he says now. “It’s like being a serf.”
That year, Horne sold all of his raisins. He refused to save any for the reserve. And, pretty soon, he had trouble sitting right across the street.
“We probably worked that case for a couple of months,” said Rocky Pipkin, who runs the leading private-detective agency in California farm country. His people do undercover work inside nut factories. Stakeouts to catch bull rustlers.
In this case, they staked out fruit. They had been hired to videotape Horne, to gather evidence that he was breaking the law. “We wanted to try to record . . . the raisins coming in, or the raisins going out,” Pipkin said.
The investigation finished. After a while, Horne got a list of the charges against him.
“The respondents violated section 989.66 of the Order,” it said, in part. “By failing to hold in reserve . . . approximately 24.7 tons of Natural Sun-dried Seedless raisins.” There were 12 charges in all.
Horne needed a lawyer.
He eventually found the man who had pulled off the greatest coup in the recent history of California farm litigation. The man who beat the California Dancing Raisins.
“We killed that program,” Brian Leighton said, still satisfied 19 years later. The California Raisins were Claymation figures — raisins with arms, legs and sunglasses — who sang “I Heard It Through the Grapevine” in a series of stop-motion TV commercials in the late 1980s and early 1990s. For a brief time, they were huge. Music albums. Lunchboxes. A Christmas special.
But the whole thing was funded by a government levy on raisin farmers and processors. Leighton led a rebellion, and in 1994, the Raisins lost their funding. “The problem was, it wasn’t selling any raisins,” he said. “They sold merchandise.”
‘It’s basically theft’
In Horne’s case, Leighton argued that the raisin reserve was flatly unconstitutional. The Fifth Amendment says that private property may not be taken without just compensation. This, he believed, was not that. “It’s basically theft,” Leighton said.
Horne tried that argument on an Agriculture Department hearing officer. He lost.
He appealed that decision. He lost. He appealed to a U.S. district court judge. And lost. “The Government does not force plaintiffs to grow raisins,” the court ruled. “If they grow and market raisins, then [contributing to the reserve] . . . is the admissions ticket.”
Then he appealed the federal district court’s decision to the U.S. Court of Appeals for the 9th Circuit.
And lost.
Finally, the case reached the U.S. Supreme Court. And things changed. The justices seemed sympathetic to Horne. And mystified by the whole idea of the raisin reserve.
“What it does is it takes raisins that we grow — in effect, throws them in the river,” Justice Stephen G. Breyer said, puzzling it out. Later, he said, “I can’t believe that Congress wanted the taxpayers to pay for a program that’s going to mean they have to pay higher prices” for raisins.
The court’s ruling, however, didn’t settle the question of whether Horne is right about the law being unconstitutional. Instead, it told the 9th Circuit to settle that question now (the lower court had rejected Horne’s case, saying that a quirk of the raisin law meant it did not have jurisdiction).
So now Horne will have to wait to find out whether the courts see him as a conscientious objector to a bad law. Or as a guy who owes the government enough raisins to fill 3.8 million boxes of Raisin Bran.
“If we lose, we’re bankrupt. We won’t have a pot to piss in,” Horne said. He thinks he would be liable for about $3 million, including fines and the cash value of those raisins. “No. I don’t want to even think about it. Would you?”
Colleagues are divided
In the meantime, his case has divided the world of raisin growers. At least a few dozen are hard-core supporters, contributing 2 cents per pound of raisins to Horne’s legal defense fund.
But he is also hated, by the people who followed the rules and handed over their raisins when the government asked.
“I lost a lot of my land, following the rules,” said Eddie Wayne Albrecht, a raisin grower in nearby Del Rey, Calif. He handed over 47 percent of his crop to the reserve in 2003. And 30 percent in 2004. He lost so much money that his holdings shrank from 1,700 acres to 100.
“He got 100 percent, while I was getting 53 percent,” Albrecht said. “The criminal is winning right now.”
Through it all, the raisin reserve lives. In legal terms, it is close to immortal.
The Agriculture Department has the power to abolish it. But it hasn’t. And if a farmer wants to abolish it, he’ll have a hard time. There is no provision in Marketing Order 989 for today’s raisin growers to go around the committee and vote out the program that 1949’s growers voted in.
But Horne has still won a kind of victory. For the past three years, the Agriculture Department and the Raisin Administrative Committee have agreed that no new raisins should be put into the reserve.
Will the reserve really never be used again?
“Never,” said Schulz, the keeper of the raisin reserve, “is an awfully long time.”
Source:
http://www.washingtonpost.com/lifestyle/style/one-growers-grapes-of-wrath/2013/07/07/ebebcfd8-e380-11e2-80eb-3145e2994a55_story.html
One grower’s grapes of wrath
By David A. Fahrenthold
KERMAN, Calif. — In the world of dried fruit, America has no greater outlaw than Marvin Horne, 68.
Horne, a raisin farmer, has been breaking the law for 11 solid years. He now owes the U.S. government at least $650,000 in unpaid fines. And 1.2 million pounds of unpaid raisins, roughly equal to his entire harvest for four years.
His crime? Horne defied one of the strangest arms of the federal bureaucracy — a farm program created to solve a problem during the Truman administration, and never turned off.
He said no to the national raisin reserve.
“I believe in America. And I believe in our Constitution. And I believe that eventually we will be proved right,” Horne said recently, sitting in an office next to 20 acres of ripening Thompson grapes. “They took our raisins and didn’t pay us for them.”
The national raisin reserve might sound like a fever dream of the Pillsbury Doughboy. But it is a real thing — a 64-year-old program that gives the U.S. government a heavy-handed power to interfere with the supply and demand for dried grapes.
It works like this: In a given year, the government may decide that farmers are growing more raisins than Americans will want to eat. That would cause supply to outstrip demand. Raisin prices would drop. And raisin farmers might go out of business.
To prevent that, the government does something drastic. It takes away a percentage of every farmer’s raisins. Often, without paying for them.
These seized raisins are put into a government-controlled “reserve” and kept off U.S. markets. In theory, that lowers the available supply of raisins and thereby increases the price for farmers’ raisin crops. Or, at least, the part of their crops that the government didn’t just take.
For years, Horne handed over his raisins to the reserve. Then, in 2002, he refused.
Since then, his life has now become a case study in one of Washington’s bad habits — a tendency never to reexamine old laws once they’re on the books. Even ones like this.
When Horne’s case reached the Supreme Court this spring, Justice Elena Kagan wondered whether it might be “just the world’s most outdated law.”
“Your raisins or your life, right?” joked Justice Antonin Scalia.
Last month, the high court issued its ruling and gave Horne a partial victory. A lower court had rejected Horne’s challenge of the law. Now, the justices told that court to reconsider it.
Horne does not have the persona of a live-wire revolutionary. He used to be a tax auditor for the state. Now, in his second career, he watches fruit dry.
“If I knew we were going to go through all this, I would have just pulled the grapes out and put in almond” trees, he said.
But get Horne talking about the national raisin reserve, and the spirit stirs. Suddenly he can’t find a metaphor hairy enough to express his contempt. It’s robbery. It’s socialism. It’s communism. It’s feudalism. It’s . . .
“You have heard of the rape of the Sabine women? This is even worse,” Horne said, referencing a legendary mass abduction from Roman mythology. “The rape of the raisin growers.”
Raisin reserve takes root
Horne has now spent a decade trying to do one of the hardest things in American politics. He is trying to kill a law, by breaking it.
Specifically, Horne is trying to kill Marketing Order 989 — a federal regulation meant to solve a problem from the era after World War II. Peace, it turned out, was bad for raisins.
The government stopped buying huge amounts of them to send overseas with GIs, as it had done during wartime. So supply outstripped demand. Prices fell. The industry’s answer was to start a raisin reserve.
It’s not quite what it sounds like. There is no Fort Knox of raisins, no vault buried under Fresno. Instead, the government simply waits for farmers to grow their crops — nine months of growing grapes, then two to three weeks of drying them in the sun.
Then it takes away a part of that crop and stores it in warehouses around California. The government might save some of these “reserve” raisins for later years. It might sell them to foreigners. It might feed them to schoolchildren. Or cows. The point is to get them off the open market in the United States and lower the supply available to commercial buyers.
That, in theory, means greater scarcity and higher prices. The same approach works for oil and diamonds.
“It’s a cartel. Let’s use the power of the government to operate a cartel,” said Daniel Sumner, director of the University of California’s Agricultural Issues Center. Congress had given the USDA the authority to operate reserves during the New Deal: Other reserves existed for almonds, walnuts, tart cherries and other products.
Then, time passed. Wars came and went. The New Deal faded from memory.
The raisin reserve survived.
Today, it is run by the Raisin Administrative Committee, a Fresno-based organization made up of industry representatives, but overseen by the Agriculture Department. The committee is allowed to sell off some of those reserve raisins that it took for free. It can use those proceeds to pay its own expenses and to promote raisins overseas.
And if there’s any money left over, it goes back to the farmers whose raisins were taken.
The committee is not very good at having money left over.
“We generated $65,483,211. And we pretty well spent it all,” said Gary Schulz, the committee’s president and general manager, reviewing the books for one recent year. That year, the committee spent those millions on storage fees. Overseas promotions. Administrative overhead.
So what, precisely, was left for the farmers?
“Zero,” said Schulz. “They received the value of our investment.” A recent study showed that raisin advertising brought in nearly $10 in revenue for every dollar spent; however, U.S. raisin consumption has declined since 2004.
In 2002, Horne decided he wouldn’t give those people his raisins anymore.
“The hell with the whole mess,” he says now. “It’s like being a serf.”
That year, Horne sold all of his raisins. He refused to save any for the reserve. And, pretty soon, he had trouble sitting right across the street.
“We probably worked that case for a couple of months,” said Rocky Pipkin, who runs the leading private-detective agency in California farm country. His people do undercover work inside nut factories. Stakeouts to catch bull rustlers.
In this case, they staked out fruit. They had been hired to videotape Horne, to gather evidence that he was breaking the law. “We wanted to try to record . . . the raisins coming in, or the raisins going out,” Pipkin said.
The investigation finished. After a while, Horne got a list of the charges against him.
“The respondents violated section 989.66 of the Order,” it said, in part. “By failing to hold in reserve . . . approximately 24.7 tons of Natural Sun-dried Seedless raisins.” There were 12 charges in all.
Horne needed a lawyer.
He eventually found the man who had pulled off the greatest coup in the recent history of California farm litigation. The man who beat the California Dancing Raisins.
“We killed that program,” Brian Leighton said, still satisfied 19 years later. The California Raisins were Claymation figures — raisins with arms, legs and sunglasses — who sang “I Heard It Through the Grapevine” in a series of stop-motion TV commercials in the late 1980s and early 1990s. For a brief time, they were huge. Music albums. Lunchboxes. A Christmas special.
But the whole thing was funded by a government levy on raisin farmers and processors. Leighton led a rebellion, and in 1994, the Raisins lost their funding. “The problem was, it wasn’t selling any raisins,” he said. “They sold merchandise.”
‘It’s basically theft’
In Horne’s case, Leighton argued that the raisin reserve was flatly unconstitutional. The Fifth Amendment says that private property may not be taken without just compensation. This, he believed, was not that. “It’s basically theft,” Leighton said.
Horne tried that argument on an Agriculture Department hearing officer. He lost.
He appealed that decision. He lost. He appealed to a U.S. district court judge. And lost. “The Government does not force plaintiffs to grow raisins,” the court ruled. “If they grow and market raisins, then [contributing to the reserve] . . . is the admissions ticket.”
Then he appealed the federal district court’s decision to the U.S. Court of Appeals for the 9th Circuit.
And lost.
Finally, the case reached the U.S. Supreme Court. And things changed. The justices seemed sympathetic to Horne. And mystified by the whole idea of the raisin reserve.
“What it does is it takes raisins that we grow — in effect, throws them in the river,” Justice Stephen G. Breyer said, puzzling it out. Later, he said, “I can’t believe that Congress wanted the taxpayers to pay for a program that’s going to mean they have to pay higher prices” for raisins.
The court’s ruling, however, didn’t settle the question of whether Horne is right about the law being unconstitutional. Instead, it told the 9th Circuit to settle that question now (the lower court had rejected Horne’s case, saying that a quirk of the raisin law meant it did not have jurisdiction).
So now Horne will have to wait to find out whether the courts see him as a conscientious objector to a bad law. Or as a guy who owes the government enough raisins to fill 3.8 million boxes of Raisin Bran.
“If we lose, we’re bankrupt. We won’t have a pot to piss in,” Horne said. He thinks he would be liable for about $3 million, including fines and the cash value of those raisins. “No. I don’t want to even think about it. Would you?”
Colleagues are divided
In the meantime, his case has divided the world of raisin growers. At least a few dozen are hard-core supporters, contributing 2 cents per pound of raisins to Horne’s legal defense fund.
But he is also hated, by the people who followed the rules and handed over their raisins when the government asked.
“I lost a lot of my land, following the rules,” said Eddie Wayne Albrecht, a raisin grower in nearby Del Rey, Calif. He handed over 47 percent of his crop to the reserve in 2003. And 30 percent in 2004. He lost so much money that his holdings shrank from 1,700 acres to 100.
“He got 100 percent, while I was getting 53 percent,” Albrecht said. “The criminal is winning right now.”
Through it all, the raisin reserve lives. In legal terms, it is close to immortal.
The Agriculture Department has the power to abolish it. But it hasn’t. And if a farmer wants to abolish it, he’ll have a hard time. There is no provision in Marketing Order 989 for today’s raisin growers to go around the committee and vote out the program that 1949’s growers voted in.
But Horne has still won a kind of victory. For the past three years, the Agriculture Department and the Raisin Administrative Committee have agreed that no new raisins should be put into the reserve.
Will the reserve really never be used again?
“Never,” said Schulz, the keeper of the raisin reserve, “is an awfully long time.”
Source:
http://www.washingtonpost.com/lifestyle/style/one-growers-grapes-of-wrath/2013/07/07/ebebcfd8-e380-11e2-80eb-3145e2994a55_story.html