Why The Government Condemns Raisins

by Timothy Sandefur

You might think it a little strange that every year the federal government seizes up to a quarter of the entire raisin crop in California. But it's called "agricultural adjustment," and it's done by a government-run cartel that has operated since the New Deal on the theory that making raisins and other goods more expensive for the consumer is somehow good economic policy.

Federal law creates the "raisin administrative committee," which every year decides on a quota of raisins that are to be taken off of the market so as to "stabilize" (i.e., increase) the price of raisins in the grocery store. These seized raisins are sold under a government brand to public schools and other entities, and the proceeds from these sales are used to subsidize American farmers who sell raisins overseas. This lets them charge below-market costs for such raisins, thereby making it harder for raisin producers in those countries to make a living. What's left over after these subsidies are doled out is then given back to the farmers whose raisins were stolen in the first place. Obviously this is less than the actual value of the raisins in the first place.

A group of California raisin growers have filed a lawsuit seeking just compensation for the taking of their raisins. The Pacific Legal Foundation filed a friend of the court brief supporting them, but the court ruled against them, holding that these raisin growers had chosen to enter the interstate commerce market, and they could be required to pay a "toll" for the privilege of selling their raisins!

The case has now been appealed, and this week, PLF filed this brief, arguing that selling raisins that one grows is a natural right, not a government-created privilege, and that while that right can be regulated to protect the public, it cannot be conditioned on the payment of a "toll."

For more on the absurdity of agricultural adjustment, check out the great classic, Economics in One Lesson by Henry Hazlitt. Hazlitt explains the simple lesson that you cannot get rich by throwing food away, no matter how much such a policy might increase the price of whatever food remains.