July 28, 2021

The US National Raisin Reserve

For 70 years, the US government maintained a National Raisin Reserve. It was only ended by Supreme Court intervention.

Sign for Kerman, California
Small town USA: Kerman, California

Marvin Horne was a California raisin farmer.

On his property outside Kerman, in Fresno County, Horne and his wife, Laura, grew Thompson Seedless Grapes. Dried, these were sold as raisins.

Most years, along with every other American raisin farmer, Horne was required to surrender some of his crop to the government. These went into the ‘National Raisin Reserve’, a publicly run stockpile. From here, they were either used in school lunches, as feed for livestock, or sometimes just destroyed.

The mandate for the government to claim Horne’s raisins was a Depression era law, that allowed intervention in farming to control prices. Participation in the scheme was mandatory, farmers were not compensated for the claimed produce.

In 2003, Horne decided he had had enough.

Fighting the National Raisin Reserve: farmer Marvin Horne
Raisin farmer Marvin Horne

That year, the Raisin Reserve claimed 47% of his crop.

Outraged, Horne refused to surrender his raisins. He restructured his business, claiming that he was now exempt from participation in the scheme. The government disagreed, and placed his farm under surveillance.

They sent trucks to demand their portion of Horne’s crop. He barred his gate, and refused them entry. Later, he would successfully sell all of his raisins on the open market.

The United States Department of Agriculture (USDA) responded with a fine of $500 000, the estimated value of the un-surrendered raisins, plus an additional $200 000 for breaking the law.

Believing his constitutional rights were being violated, Horne hired a lawyer. He would fight the Raisin Reserve in court.

Franklin Delano Roosevelt
FDR

In January 1932, Franklin Delano Roosevelt took office as US President.

He faced an unprecedented series of challenges. The Wall Street Crash of 1929 had triggered The Great Depression, plunging America, and most of the developed world, into economic crisis.

People lost their jobs, their life savings, and their homes. Banks and other financial institutions became insolvent, as public confidence disappeared. Unemployment soared to 25%, a record high.

'The Dustbowl' decimated US farming
‘The Dustbowl’ decimated US farming

Exacerbating the problem, a prolonged drought in America’s rural heartland.

Farmers, buffeted by the same economic problems as everyone else, now faced the failure of their crops. Many lost their properties, and then headed west, hoping for better opportunities in California.

Wind whipped the topsoil from dried out, abandoned farms, stirring up ominous dust clouds over small town America: the famous ‘dust bowl’ of the 1930s.

The WPA: a key 'New Deal' public works program
The WPA: a key ‘New Deal’ public works program

The new President tackled these problems with a wide-ranging program of reform.

Pledging a ‘New Deal for the American people’, Roosevelt used his majority in both houses of Congress to enact sweeping legislation, designed to stabilise the economy.

Banks were secured with a federal insurance scheme, guaranteeing every deposit. Large scale public works put millions of unemployed back to work. Prohibition was repealed, turning an underground criminal enterprise into a revenue generating industry.

There were many other programs.

Roosevelt’s New Deal was criticised in some quarters as thinly disguised socialism. But many of its policies were broadly popular, and helped kickstart the US economy.

The Tennessee Valley Authority logo
The Tennessee Valley Authority logo

A top priority for Roosevelt’s administration was the farm sector.

His agriculture secretary, Henry A. Wallace, would oversee an ambitious agenda to not only aid farmers, but reduced poverty across rural America. Their primary project was the Tennessee Valley Authority, an enormous public works program across rural Tennessee, that built a series of dams to help combat flooding, and generate hydroelectric power.

But Wallace would also intervene more directly, in farm policy.

Henry A. Wallace, US Agriculture Secretary
Henry A. Wallace

In May 1933, Congress authorised the creation of the Agriculture Adjustment Administration (AAA).

During the Great Depression, one of the major problems farmers faced was low prices; as the economy contracted, money was scarce; demand, and the value of produce, had fallen dramatically. The AAA sought to rectify this by controlling supply.

Caps were applied to the production of a number of agricultural items, which reduced supply and so increased prices. Corn, cotton, dairy, pork, tobacco, and wheat were among the items the AAA regulated, creating an ‘artificial scarcity’ to drive demand.

To meet the caps, some farmers had to reduce production. They received a government subsidy for surplus items they were not allowed to sell, or for leaving land fallow.

US House of Representatives, 1937
US House of Representatives, 1937

In 1937, Congress went a step further.

That year they legislated the Agricultural Marketing Agreement Act (AMAA), which provided even tighter control over select agricultural produce. Under the AMAA, the government could control not just quantities, but price and terms of sale.

To its authors, this legislation was a simpler way to do what the caps on production had set out to achieve; increase the price. To its critics, the US government had set up a state sponsored cartel, prohibited by Federal law.

Several products were subject to the controls of the AMAA, most notably milk.

US troops in the field, WWII
US troops in the field, WWII

During World War II, America deployed millions of troops in Europe and the Pacific.

One of the things that distinguished American soldiers from the troops of other nations, was how well equipped they were. With the continental US largely untouched by the war, American industry boomed; American soldiers had first rate equipment, and plenty of it.

The US also supplied their allies with a wide range of goods, everything from war materials, to boots, trucks, and food. Industries that supported the war effort saw greatly increased demand for their products, and production increased to cope.

One of the many items that went into war with US soldiers was the humble raisin.

'C' rations from World War II
‘C’ rations from World War II

This simple, healthy snack was popular in America, easy to mass produce, small, durable and easy to transport. Packets of raisins went into ration packs, or were added to fruit bars, and then into the field.

Raisin production increased dramatically.

But when the war ended in 1945, US raisin farmers now had an enormous surplus of their crop. As the army de-mobilised, there was no longer an automatic market for their product.

National Raisin Reserve: Logo for the Raisin Administrative Committee
Logo for the Raisin Administrative Committee

Faced with collapsing raisin prices, the US government intervened.

Using the AMAA legislation, in 1949 they stipulated regulations on raisin production and price. Only a set amount of raisins were allowed to be sold each year.

Production above the mandated figure would be compulsorily acquired, these raisins stored in a ‘National Raisin Reserve’. A new government agency, the Raisin Administrative Committee, would be established to oversee their disposal.

Reasoning that all raisin farmers would benefit from increased prices, the government decided they would not be compensated for the surplus raisins that were claimed.

Marvin Horne outside the Supreme Court
Marvin Horne outside the Supreme Court

Horne initially took his case to the Fresno District Court. It was the beginning of litigation that would last 10 years.

The local court found against Horne, as did the Ninth District Court of Appeal. Determined, Horne now took his case to the Supreme Court.

‘I believe in our Constitution. And I believe that eventually we will be proved right. They took our raisins and didn’t pay us for them.’

 

– Marvin Horne, quoted in ‘The Washington Post’

While legal proceedings continued, Horne continued farming, and continued to refuse to surrender any raisins. By 2006, the Raisin Administrative Committee claimed he owed them 1.2 million pounds of dried fruit.

Stanford law professor Michael McConnell
Stanford law professor Michael McConnell

The legal stoush was not resolved until 2015.

Opinion was divided as to the merits of the case. Other raisin farmers, including Horne’s neighbours, were satisfied with the Raisin Reserve’s operation, enjoying the high prices that resulted. Another argument was that Horne was free to sell his surplus grapes for other purposes, like wine production.

But conservative politicians and legal experts rallied to Horne’s cause. They claimed a violation of the the ‘Takings Clause’ of the Fifth Amendment to the United States Constitution, which read:

‘Nor shall private property be taken for public use, without just compensation.’

 

– Fifth Amendment to the Constitution

Stanford law professor Michael McConnell argued Horne’s case at the Supreme Court.

Raisins drying in the sun
Raisins drying in the sun

In June 2015, Horne won the case, with an 8-1 majority. Justice Sonia Sotomayor was the only dissenting vote.

Writing the majority opinion, Chief Justice John Roberts went back even further than the US Constitution, citing the protections of private property contained in the Magna Carta. Fellow jurist Elena Kagan quipped that the Raisin Reserve was, a ‘weird historical anomaly.’

Marvin Horne was exultant.

‘It’s an affirmation in our Constitution and the American way of life.’

 

– Marvin Horne, quoted by NPR

Other commentators worried about the long term effect on raisin prices, and other government regulated industry. The Raisin Reserve was formally closed later in 2015, although the Raisin Administration Committee continues as an industry lobby group.

Other US crops that had been subject to National Reserves include almonds, walnuts and cherries.

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