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 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 President Harry Truman’s administration and never turned off.
Horne 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 is a 64-year-old program that gives the U.S. government 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 can take 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 become a case study in one of Washington’s bad habits - a tendency never to re-examine 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case reached the Supreme Court this spring, Justice Elena Kagan wondered whether it might be “just the world’s most outdated law.”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.
But get Horne talking about the national raisin reserve, and suddenly he can’t find a metaphor to express his contempt.
“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.”
Horne has spent a decade trying to do one of the hardest things in American politics: killing 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.
The government stopped buying huge amounts of raisins 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. 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 U.S. Agriculture Department the authority to operate reserves during the New Deal: Other reserves existed for almonds, walnuts, tart cherries and more.
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.
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.
Horne’s attorney, Brian 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 - repeatedly, until the case was heard by the Supreme Court, where justices seemed sympathetic to Horne. And mystified by the whole idea of the raisin reserve.
Horne’s fight has divided the world of raisin growers. At least a few dozen are hardcore 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.”
The Agriculture Department has the power to abolish the raisin reserve. But it hasn’t. There is no provision in Marketing Order 989 for today’s raisin growers to go around the committee and vote out the program that growers in 1949 approved.
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.”
Business, Pages 61 on 07/14/2013