Earlier this month the Ninth U.S. Circuit Court of Appeals ruled that the U.S. Department of Agriculture taking 47% of a farmer's harvest does not violate the Fifth Amendment's takings clause as long as the government aims to drive up crop prices. The May 9 decision was the latest absurdity in a decade-long legal battle pitting California raisin growers Marvin and Lena Horne against the USDA's outmoded raisin regulatory regime.
Under current law, the 1930s-era federally authorized Raisin Administrative Committee can commandeer up to half of a farmer's harvest as a "reserve"—to purportedly stabilize markets and prevent gluts. The Hornes were fined almost $700,000 for refusing to surrender control of 47% of their 2002 harvest to the government committee and 30% of the harvest the following year. After judges declared that the Hornes could not sue in federal court for unjust takings—i.e., government confiscation without just compensation—the case landed in the Supreme Court.
Last June the Supreme Court unanimously ruled that California raisin growers have standing to file a takings claim in federal court. Even liberal justices were amazed at the heavy-handed, archaic nature of the regulatory regime. During oral arguments, Justice Stephen Breyer declared: "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 as consumers." Justice Elena Kagan suggested that the statute authorizing the raisin cartel could be "the world's most outdated law."
Writing as if they were inspired by Justice Kagan's quip, the Ninth Circuit panel reached back a hundred years to justify perpetuating federal control of the raisin business. The decision declared, "Raisin prices rose rapidly between 1914 and 1920, peaking in 1921 at $235 per ton.
This surge in prices spurred increased production, which in turn caused prices to plummet back down to between $40 and $60 per ton." Crop prices skyrocketed during those years in large part because the World War I-era U.S. Food Administration cornered markets and vastly inflated demand by providing cheap credit to European allies to purchase boatloads of harvests. Federal intervention spurred a boom and bust that ravaged American farmers in the early 1920s.
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