WASHINGTON, April 29, 2015 – On the day the Supreme Court heard oral arguments in a challenge to the California raisin marketing order, business and consumer groups renewed long-standing criticism of federal milk marketing orders. A coincidence? Perhaps, but the two are episodes in the “free market” assault on collective marketing in agriculture over nearly 80 years.
The raisin challenge is only the latest involving marketing orders, which can collectively influence the supply, demand and pricing of a particular commodity, to appear before the high court. In the past, justices disposed of controversies involving plums and nectarines, mushrooms and promotion orders. In another coincidence, the raisin arguments came on the eve of the 10th anniversary of the court’s decision upholding the constitutionality of the beef checkoff.
In the raisin case, news reports suggest that a majority of the justices sympathized with raisin grower-packer Marvin Horne’s challenge to the Raisin Bargaining Association’s marketing limitations. Justice Antonin Scalia said at one point during the oral argument, “Central planning was thought to work very well in 1937, and Russia tried it for a long time.” (The raisin order is a feature of the Agricultural Marketing Agreement Act of 1937, enacted during the New Deal. It requires, among other things, the maintenance of a raisin reserve as a way of affecting prices.)
Lyle Denniston, dean of reporters who cover the court, wrote on Scotusblog.com that the justices were “emotionally drawn toward ending an old New Deal program of propping up farm prices, but unsure about how to contain the result so as not to scuttle more than that one scheme.”
A ruling may come before the end of the court’s term in June. Its scope could be narrowly targeted to raisins or broad enough to affect several other USDA-chartered marketing orders under the 1937 law. Among them are orders for marketing almonds, apricots, avocados, cherries, citrus fruit, cranberries, dates, grapes, olives, onions, pears, plums, potatoes and tomatoes. The case will not affect research and promotion orders, authorized under more recent legislation.
The decision also will have no bearing on federal milk marketing orders (FMMOs), which have roots in the same wave of New Deal legislation aimed at helping producers market their products. However, milk orders came under fire recently from a group of consumer, taxpayer and small business groups allied with the International Dairy Foods Association.
In response to a USDA Agricultural Marketing Service request for comments, the groups questioned the “continued need for the depression era” orders that, they said, raise the price of milk and “have a negative effect on the income and food benefits of federal food program recipients and raise taxpayer costs of government feeding programs that include milk.” Among the critics are long-time critics of farm programs including Citizens Against Government Waste and Taxpayers for Common Sense. The Consumer Federation of America also joined the letter.
“The FMMO system puts a premium on fluid milk prices, which, as shown by academic studies, contributes to higher business costs and declining milk consumption,” says a separate letter filed by the Food Marketing Institute and a number of state grocers associations.
Only two days later, Trevor Burrus, a research fellow at the Cato Institute’s Center for Constitutional Studies, added an even more caustic critique of both the raisin and milk marketing orders. Of the order before the Supreme Court, he wrote, “Think of it as a raisin cartel, a raisin OPEC.” Milk marketing orders, Burrus argued, are “a convoluted system of managed competition, a tangled web of subsidies and regulations where playing politics can be more important than being a good businessman who serves his customers well.”
USDA is currently weighing the petition of a group of milk producers in California to create a marketing order within the state. Dairy processors are opposing the petition.
The current legal challenge to marketing orders may be the most significant since the Reagan Administration, when California fruit and vegetable grower interests rallied political allies to squelch an effort by David Stockman, then director of the Office of Management and Budget, to do away with such orders. Stockman recounts in his memoir, “The Triumph of Politics,” how the late Richard E. Lyng, then deputy secretary of agriculture, and James Lake, then a lobbyist but also a former Reagan campaign press secretary, persuaded Reagan to overrule his OMB director.
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