EAT YOUR VEGGIES - THE RONALD REAGAN CONNECTION

EAT YOUR VEGGIES

THE RONALD REAGAN CONNECTION

A DREAM AND THE REALITY

INSTEAD OF FEEDING STARVING PEOPLE, FARMERS ARE FORCED TO LET CROPS ROT IN THE FIELDS

U.S. POLICIES ON AGRICULTURE ARE CRIMINAL!!!!
THERE HAS TO BE A BETER WAY!!!!

10-6-00 - DREAM - I was in a house somewhere that was really messy. Toys were everywhere on the floors and things were just bascially strewn around. I decided I would clean the house inch by inch starting at the front door in case visitors came.
However, I got interupted by a phone call. A woman started a conversation like I was a search service. She needed the phone number of two other people. I went to the pile where the phone books were supposed to be and they weren't there. So, I put the phone down and went looking for a phone book. I looked and looked and couldn't find one. Finally, I gave up and went back to the phone to tell the woman I couldn't find the phone book. The woman was gone. I didn't blame her. I was gone quite some time.
I don't recall any other people there, but I was presented with a paper plate which had some corn on it, cut from the cob. I was supposed to look at it and see how the quality was. It looked pretty good to me.
On the same paper plate, where the corn was on the upper half of the plate, a black box appeared which had the word 'BLASTCHIDITIS' or something like that. I wasn't quite certain of the word.
Below the black box was a selection of peas which were arranged in size with the largest towards the black box and the corn with the smallest towards the bottom edge of the plate. I was told that the peas had some kind of disease in the shell.
I was then shown the shell which when popped open, the peas in the pod had some kind of slimy clear substance around them. The peas themselves looked okay, but the slimy stuff was not good for us. I looked at a bunch of these pea pods and they were all similar with the slimy sutff inside. We were not supposed to eat these.
NOTE: At this point I woke up because the alarm went off and Joe got up to go to work. I forgot the dream basically, but was trying to remember what the word in the black box was and what it meant.
After Joe left the room and turned off the light, the dream started to come back into my memory rather like a long vision. I again saw the plate with the corn and peas on it, but the box was missing. It was the word I was trying to think of.
Suddenly, I was looking at a computer screen, and an invoice popped up from below like it had been a page that was minimized and went down to the bottom of the screen. Here again was the word, which I think was spelled 'BLASTCHIDITIS'.
Then a movie screen popped up on top of the computer screen and Nancy Reagan and Ronald Reagan were standing there. Ronald Reagan had a long pointer stick in his hand and was pointing to a chart on the wall behind them like he was demonstrating something for the world to look at.
Then in front of the movie screen appeared a clear portrait picture of Nancy Reagan ... which was wider than high, like a wide movie screen picture ... underneath her face was the word 'HUNGRIER'.
The end.

TEDIOUS FRAUD: REAGAN'S FARM POLICY AND THE POLITICS OF AGRICULTURAL MARKETING ORDERS

by Michael McMenamin

Michael McMenamin, a contributing editor of Inquiry, is the coauthor (with Walter McNamara) of Milking the Public: Po-litical Scandals of the Dairy Lobby from LBJ to Jimmy Carter (Chicago: Nelson-Hall, 1980). He is a partner in the Cleveland law firm of Walter, Haverfield, Buescher & Chockley.

From: http://www.cato.org/pubs/pas/pa030.html

Footnotes and purchase of this report is on this page

~~~~~~~~~~~~

Executive Summary

U.S. farm policy is a boring subject. Expensive--increasingly so--but boring nonetheless. The only people who find it even mildly interesting are those whose livelihoods directly depend upon it--farm-state politicians, bureaucrats in the U.S. Department of Agriculture, and farmers--particularly those who have large farms.

Who Benefits?

The rest of the country, when it bothers to think about farm policy and the estimated $35 billion in corporate welfare that the federal government will give to farmers this year, [1] probably agrees with H. L. Mencken. Writing in 1924, when the farm population still made up more than 25 percent of gainfully employed persons in the country, Mencken made the following observation:

Let the farmer, so far as I am concerned, be damned forevermore. To Hell with him, and bad luck to him. He is a tedious fraud and ignoramus, a cheap rogue and hypocrite, the eternal Jack of the human pack. He deserves all that he ever suffers under our economic system, and more. Any city man, not insane, who sheds tears for him is shedding tears of the crocodile.

No more grasping, selfish and dishonest mammal, indeed, is known to students of the Anthropoidea. When the going is good for him he robs the rest of us up to the extreme limit of our endurance; when the going is bad he comes bawling for help out of the public till. Has anyone ever heard of a farmer making any sacrifice of his own interests, however slight, to the common good? Has any one ever heard of a farmer practicing or advocating any political idea that was not absolutely self-seeking--that was not, in fact, deliberately designed to loot the rest of us to his gain? [2]

Some 60 years later, Mencken's comments have lost none of their relevance. There are fewer farmers now, but collectively they are wealthier; they continue to produce far more food than the nation can consume; and they continue to find ever more inventive ways to compel consumers to pay more for food than they would pay voluntarily.

Farmers have always been politically powerful in the United States. They have managed to maintain their political power despite the great changes in farming. From a broad-based constituency that found its public voice in the populist revolt of the late 19th century, farming has come in the present day to a norm of giant agricultural cooperatives, a farm population less than 5 percent of the U.S. total, and "family" farms that are capital-intensive and many times the size of the farms of earlier generations.

Because of the political clout of farmers, the Reagan administration's farm policy is no better than any that came before it. From the presidency of Calvin Coolidge in Mencken's time to that of Jimmy Carter, nothing improved. In one sense the present case is far worse: Reagan came to power pledging to restore a free market in farming, yet less than three years later, his secretary of agriculture, John Block, has been effectively co-opted by organized farm interests and the bureaucracy of the Department of Agriculture. Now Block presides over price-support programs expected to cost more than $21 billion this year. Such programs only cost $3.5 billion during the last year of the Carter administration.[3] Secretary Block would strongly deny that this situation is all his fault; in all fairness, Congress does bear much of the responsibility.

It is undeniable, however, that in a highly visible area of farm policy where a president could take direct action (without the approval of Congress) to restore free-market conditions, Block, as the head of USDA, has consistently (and usually successfully) opposed free-market solutions proposed by the Office of Management and Budget (OMB). The specific area is that of agricultural marketing orders. By his actions, Block has effectively communicated to congressional allies and adversaries alike that he is not serious about the free-market rhetoric he occasionally uses. Agricultural marketing orders are the federal government's most blatant interference with a free market in farming. Yet Congress and the entire country see Block and the Reagan administration opting for business and politics as usual.

Marketing Orders and Competition

The Agricultural Marketing Agreement Act of 1937 authorizes the secretary of agriculture to establish "marketing orders" for milk, fruits, vegetables, and specialty crops (such as almonds, walnuts, and filberts). Such marketing orders amount to government-enforced cartels. In their most anticompetitive, anticonsumer form, they establish production quotas, allocate the quotas among producers, forbid producers to sell more than the amounts allocated, and use the power of the federal government to fine producers who attempt to sell more than their quota.

Even academic apologists for marketing orders acknowledge their anticompetitiveness. James E. Anderson, a professor of political science at the University of Houston, has admitted:

Marketing orders combine the regulatory power of the national government with the initiative of and self-administration by producer groups (and sometimes handlers) in an effort to improve the economic situation of producers. Authorized to engage in various activities to manipulate market supply, demand, or both, producers under an order generally retain full control over their decisions to produce. Some freedom of control is given up in marketing decisions. Although marketing orders may provide some benefits for consumers and handlers, they appear to provide the most benefits to producers. This should not be surprising, given their origin. . . .[4]

The origin of marketing orders lies in the 1920s. Farmers then were trying to decide guidelines voluntarily. Now the marketing orders, through government power, impose compulsory direction from without. During World War I, producers of certain specialty crops in California organized themselves into marketing associations on a crop-by-crop basis, mostly in specialty crops grown in limited areas (citrus fruits, raisins, and nuts.)

These groups were successful for a while, and their popularity spread. One of the leaders in organizing the marketing associations was Aaron Sapiro, an attorney for the State Marketing Bureau in California. He tried energetically to spread the California concept to other areas of the country. In an address to Virginia tobacco growers in 1920, Sapiro described the principles of California cooperatives as follows:

I am going to give you in a few words the principles of the California Cooperative. . . . somebody is going to say . . . "That about raisins . . . not a word of it applies to tobacco." Now I know the difference between raisins and tobacco . . . these things are different, but we happen to be in touch with 26 different commodity associations, and we learned that the principles that apply to one apply to others . . . . if you apply [these principles] to the tobacco association . . . your chance for success is excellent. . . . incorporate. . ., but . . . without capital stock. . . .no fly-by-night stuff, no one-year contracts; . . . five years or nothing. . .

We do not tie up growers with a rope of sand; we tie them up with a rope of steel. When they sign the contracts we never hesitate to go into court if [a grower] tries to "welsh." . . . we never organize unless we . . . are big enough to hire the biggest [growers] in the country. Three-fourths of all the growers signed up for raisins; three-fourths for prunes. We did not start up our egg association until we had signed up the owners of a million hens . . . . Several of our associations in California have 92% of the products of the State. . . .

Ninety-seven per cent of all the berries in central California move through an organization . . . .if the world consumes one hundred and fifty million pounds of prunes a year and we have a crop of one hundred and eighty million pounds . . ., we [carry over] thirty million pounds of prunes. . . . We don't let one man's prunes break the market against other prunes.[5]

The concept of voluntarily establishing, allocating, and enforcing limits on production was not successful. Too many farmers were unwilling to bind themselves with "a rope of steel" and instead wanted the freedom to market their products in their own way. It is generally acknowledged that by 1926, most of the cooperative associations that were based on the California model had collapsed. They were defeated by the free-market forces of farmers seeking better prices than the associations offered.

During the same period, farm interests were using their political power to foster marketing associations . In the early 1920s, the Capper-Volstead Act was passed by Congress. This act was designed to make sure that it would not constitute a violation of the antitrust laws for a cooperative association of farmers to market their products. In 1926, the Division of Cooperative Marketing was created within the U.S. Department of Agriculture, with a mandate to give technical advice and assistance to cooperative associations or to farmers interested in forming such an association. In 1929, Congress passed the Agricultural Marketing Act, under which Congress established a revolving fund of $500 million to be lent to marketing cooperatives to assist them in their operations. These developments consolidated bureaucracy and funds backing cooperatives on a national scale.

The Great Depression and the Roosevelt administration brought about even more comprehensive changes. The concept of government compulsion was introduced. During the thirties, there was conflict over the extent of the government's authority to regulate agriculture. The Agricultural Adjustment Act of 1933 not only provided for price supports and production controls but also authorized the secretary of agriculture to enter into marketing agreements as an alternative to imposing production controls. In the next two years, however, the authority of the Agricultural Adjustment Administration to enforce the agreements was called into question. Because of this, Congress passed legislation in 1935 to provide for compulsory marketing orders to be issued by the secretary of agriculture. In 1936, the Supreme Court declared the Agricultural Adjustment Act unconstitutional. But Congress rescued its provisions for marketing orders and incorporated them into the Agricultural Marketing Agreement Act of 1937. That stands as the basic legislation under which marketing orders continue to operate.

Consequences of Marketing Orders

Today, the legacy left to us by that depression-era legislation includes tons of oranges rotting in the sun under a mandate from the USDA. That is a well-publicized national scandal; more damaging but less visible is how the USDA drains billions of dollars each year from taxpayers to transfer to farmers. As New York Times reporter Ann Crittenden wrote:

From afar, it looks like a red haze on the horizon. But . . . it [later] becomes clear that what lies in the distance is actually mounds of oranges.

Stretching in all directions are millions and millions of navel oranges . . . all abandoned to rot under the California sun. The oranges have been dumped under what is known as a Federal marketing order.[6]

Oranges are left rotting so as to keep prices high for farmers and to keep consumers from buying oranges at lower prices. Does the government know what it is doing? Does it care? The response of USDA bureaucrat Ben Darling is "Oranges are not an essential food. People don't need oranges. They can take vitamins."[7] There is a striking similarity between conditions of today and those of California in the 1930s, the time and place where it all began. Agricultural writer Doug Foster drew an apt analogy with the following passage from John Steinbeck's book, The Grapes of Wrath:

"Men who have created new fruits in the world cannot
create a system whereby their fruits may be eaten.
And the failure hangs over the State like a great sorrow.

"The works of the roots of the vines, of the trees,
must be destroyed to keep up the price,
and this is the saddest, bitterest thing of all.
Carloads of oranges dumped on the ground. . . .
A million people hungry, needing the fruit--
and kerosene sprayed over the golden mountains.

"There is a crime here that goes beyond denunciation.
There is a sorrow here that weeping cannot symbolize.
There is a failure here that topples all our success."[8]

How Marketing Orders Function

According to the statutory language, the purpose of marketing orders established by the Secretary of Agriculture includes establishing "orderly marketing conditions" as well as "minimum standards of quality and maturity," always, of course, in the "public interest." And, if pressed, Secretary of Agriculture John Block could undoubtedly come up with a rationale to explain how those billions of rotting oranges serve some higher purpose than the greed of the citrus farmers.

Such marketing orders are established for commodities by a vote of the producers in the geographic area for which the order is proposed. Once the marketing order is established, the details of enforcement are developed by committees of producers.

The details cover items such as standards of quality and size (which seldom change) as well as controls on the volume of produce to be sent to market (a determination that can change each week). These detailed regulations are forwarded to the secretary of agriculture. At the USDA the producers' decisions are rubber-stamped; then they are published in the Federal Register, whereupon they have the force of law.

There are now 47 marketing orders in effect for fruits, vegetables, and nuts. In 1980 the value of all produce sent to market under these orders was $4.7 billion. Of these 47 marketing orders, 11 include controls limiting the amount of produce that may be marketed. Commodities produced under these 11 orders alone were worth $1.7 billion in 1980. These marketing orders include detailed regulations on such matters as "shipping holidays" that legally prohibit crop shipments on Christmas and other holidays, minimum grades and sizes, standardization of container sizes, and assessments for research and advertising. On the surface, such provisions may seem neutral. However, standardized container sizes and especially quality standards have been established and enforced by American producers to discriminate against imported produce.

Controlling Volume

The most pernicious and arbitrary aspects of marketing orders involve volume controls. In various ways these limit the amount of a commodity that is allowed to reach the market. Marketing orders use four methods to control how much of a commodity reaches the market.

Allotments

Each producer is assigned a maximum amount that he is allowed to sell each season. That is determined by his assigned base allotment. The maximum he is allowed to sell each year is calculated as a percentage of his base. This practice not only restricts the supply of a product but it also limits entry: Under the law, a producer cannot sell anything without a base. The two marketing orders that prescribe such allotments are for hops and spearmint oil.

Allocations

A second way to control volume is to allocate marketing of crops between primary markets (for fresh produce) and secondary markets (such as processed foods, produce for nonfood uses, and exports). Because demand is less elastic in primary markets, producers can increase their average revenues by restricting sales to those markets. Such allocations are used in marketing orders for almonds, filberts, walnuts, and raisins.

Prorates

The most restrictive controls are prorating provisions. They limit the quantity of produce a producer may ship to primary markets during a given time, which can be as short as a week or as long as an entire season. Quantities above the prorated limits must be held for later shipment or sold into secondary markets. There, because supply is not artificially limited, the prices are much lower. Marketing orders that have prorating restrictions include the navel oranges, Valencia oranges, and lemons of California and Arizona.

Reserve Pools

A "reserve pool" is a method of volume control that requires producers to withhold a portion of their products from the primary market. The specified portion is to be held in "reserve" to be released into a secondary market (which by definition does not compete with the primary market). Reserve-pool requirements are contained in marketing orders for tart cherries, almonds, walnuts, raisins, prunes, hops, and spearmint oil.

By issuing new guidelines for marketing orders in January 1982, Secretary Block attempted to justify the existence of volume controls. He called the controls a valuable tool for effective marketing, "serving the interests of both producers and consumers through market stabilization." "Market stabilization," as any antitrust lawyer or economist will tell you, is simply another phrase for price fixing, in this case by growers who allow only enough products to reach the market to fix prices at the level they want. As a case in point, the March 1983 packinghouse price of fresh lemons (as reported by the USDA) was $5.90 per box. The price of the same lemons when sold for processing was 24 cents per box.[9]

The effect of volume controls in marketing orders is to make it illegal to sell crops beyond the quotas and allotments established by the orders. This tight grip leads to otherwise inexplicable anomalies:

1. It is illegal to market California oranges and lemons in excess of the established quotas. But there are no volume controls on grapefruit, limes, Temple oranges, and Florida citrus.

2. It is illegal to market tart cherries in excess of quotas. But there are no such controls on sweet cherries.

3. It is illegal to market almonds, walnuts, and filberts in excess of marketing-order restrictions. No such restrictions apply to pecans, pistachios, and macadamia nuts.

The Need for Marketing Orders

Are these marketing orders necessary? Do they accomplish anything more than unfairly enriching the growers operating within those orders? Why are weekly production prorates claimed to be essential to the orderly marketing of oranges from California and Arizona, when Florida oranges are successfully marketed without any production controls? Why are production controls essential for tart cherries but not for sweet cherries? Why do growers of almonds, walnuts, and filberts need production controls whereas growers of pecans, macadamia nuts, and pistachios get along without them?

All these restrictions are unnecessary. Eleven crops have production controls, but the production conditions for these crops are not significantly different from the conditions for other crops, whose growers manage to grow and market their products without governmental controls.

As for Secretary Block's January 1982 marketing-order guidelines, which claim that volume controls can serve the interests of both users and consumers through "market stabilization," the guidelines are false. And the USDA knows they are false.

A 1981 USDA study examined the hypothesis that the marketing orders that control the output of the entire U.S. crop should stabilize prices more effectively than marketing orders without such controls. [10] The investigators found no relationship between type of marketing order and the degree of price stability.

Prices of Crops

Moreover, as the USDA is well aware, a 1982 analysis by the OMB compared the variation in prices of crops under production controls and crops without controls, only to find that prices for controlled crops were 3.3 percent more variable on average than prices for uncontrolled crops (coefficients of variation for production-controlled crops average .411, and for uncontrolled crops coefficients averaged .398). Another OMB analysis compared prices for California citrus (production controlled) and Texas citrus (uncontrolled) for the market years 1978/79, 1979/80, and 1980/81. This study showed that the price variations for the California crops (subject to weekly prorates) were not statistically different from the price changes in Texas oranges and grapefruit, which were uncontrolled.

As David Stockman noted this past spring, in a memorandum to members of the Cabinet Council on Food and Agriculture:

The empirical evidence is precisely what economic theory predicts: the production restraints artificially but temporarily increase growers' average returns, which attracts excessive new investment in the production for future years, which in turn leads to higher production in later years and demands for even tighter production controls. and so on.

Stockman went on to note that the customary economic devices for smoothing natural variations in output are Private Storage and Futures Markets. Because these devices are voluntary and decentralized, they are bound to be more accurate and responsive than federal regulations in balancing present against anticipated future demand. [Emphasis in original.]

Misallocation of Resources

Marketing orders with production controls present an inviting target for an administration ostensibly devoted to free-market principles. Early in the Reagan administration, Vice President Bush's Task Force on Regulatory Relief specifically identified volume controls in seven marketing orders as having contributed to resource misallocation. (The crops so controlled were hops, spearmint oil, California-Arizona navel oranges, California-Arizona Valencia oranges, and California- Arizona lemons, walnuts, and filberts.) Despite the efforts of proponents of free-market policies at OMB, almost three years into the Reagan administration nothing much has been done about the problems caused by marketing orders.

Recent Investigation by the Administration

The issue came to a head during the spring of 1983. Over USDA opposition, the OMB managed to bring the question of production controls in marketing orders before the President's Cabinet Council on Food and Agriculture. The politicking was reported in the Washington Post as follows:

The White House is considering a sharp break from 45 years of U.S. agriculture policy by curtailing farm "marketing orders" that allow growers to restrict the flow of certain . . . crops. .

Advocates of such a move say it would mean lower consumer prices and demonstrate President Reagan's commitment to free-market principles he has long espoused. But [the move] is strongly opposed by Agriculture Secretary John R. Block and some of the nation's most powerful farm cooperatives and agricultural blocs. . . . One of the leading critics [of marketing orders] has been David A. Stockman, director of the Office of Management and Budget, whose staff sought unsuccessfully in the last two years to challenge marketing orders for specific crops. However, OMB has lost most of those internal battles to the Agriculture Department, which oversees the orders.[11]

Danny Boggs, executive secretary of the Cabinet Council, presented the issue to the Council in the following way:

How should the Administration deal with agricultural marketing order provisions, imposed by vote of existing producers, that regulate the flow of produce sold or allocated to particular markets?

The free-market option endorsed by the OMB was a mild one:

Issue an Administration policy statement that season-long marketing volume restrictions will no longer be approved by either USDA or OMB.

The memo outlined the following points as "arguments for" curtailing marketing orders:

[Curtailing marketing orders] [w]ould establish the marketplace--rather than a producer committee backed by the Federal government--as the instrument for resource allocation and price setting and thus would be consistent with the Administration's commitment to economic liberty and efforts to dismantle entry and marketing restrictions for oil, gas, air and surface transportation.

Would not lead to major economic dislocations inasmuch as there is little difference between the production characteristics of the 11 market volume control crops and those of the majority of fruits, vegetables, and specialty crops that are not subject to market volume controls (while California/Arizona orange growers claim weekly marketing prorates are essential, Florida orange growers manage without them).

Would avoid subjecting consumers to higher costs generated by the operation of market volume controls.

Would be one of the few decisive administrative actions that the Administration could take to further its policy of free markets as a key to economic productivity.

Would minimize ambiguities of current policy on agricultural marketing orders. The "do nothing" approach urged by the USDA was presented as follows in the Boggs memo:

Endorse the Secretary of Agriculture's authority to continuing [sic] to apply current administration policies as outlined in the marketing order guidelines, which permit approval of season-long controls on market volume.

The arguments cited in favor of the "do nothing" approach were minimal. It was claimed that that approach

Would permit the Secretary of Agriculture to carry out his statutory responsibilities in a timely manner, thereby eliminating economic and political damage in the agricultural sector from delay in program administration.

Would continue to give producers an opportunity to maintain stability in their markets without imposing costs on the Federal Treasury.

Would create a more cooperative environment in which the Secretary could work with producers to remove the more onerous marketing order restrictions.

Presidential Actions and Inaction

The outcome? The OMB's already mild option of eliminating season-long restrictions on marketing volume at a stroke of the presidential pen was turned down. Instead, the president ordered without fanfare that within five years allotments be eliminated from only two minor marketing orders, those governing hops and spearmint. Without publicity, the president also mildly limited the use of reserve requirements in marketing orders for such items as tart cherries and raisins, and ruled to stop growers from using marketing orders to set aside reserves as a device to increase prices. The president nevertheless provided that reserves would still be permitted whenever the crops were more than 110 percent greater than crops in recent years. [12]

These positive steps were long overdue. Why the lack of publicity? The answer is because the president did nothing about the restrictive marketing orders of California and Arizona orange growers. This omission is significant because their abuses are the most highly visible and (not coincidentally) these growers are politically powerful. All the president did about the orange growers was to instruct the USDA to "provide for greater flexibility" regarding the establishment of volume restrictions. The OMB attempted to put the best face on its defeat by telling the Wall Street Journal that the president's decision meant that the USDA would have to "phase out the most restrictive features of the orders."[13] If OMB was restrained, USDA was positively euphoric. USDA Assistant Secretary C. W. McMillan told the Associated Press that Reagan's decision "represents a clear victory for [Agriculture Secretary Block] in preserving marketing orders and his ability to administer the programs."[14] Karen Darling, a USDA special assistant, told the New York Times that "the whole thing was threatened [but now] marketing orders have indeed been preserved."[15] Vern Highley, administrator of USDA's agricultural marketing service, told UPI that Reagan's decision "affirmed the Administration's support for the marketing-order concept."[16]

And what has the "marketing-order concept" done for consumers lately? Enriching Chilean citrus growers is a recent example. Officials of Riverbend Farms, Inc., reported on August 22, 1983, that they were forced to import lemons from Chile to meet demand, while tons of lemons were left to rot on the company's own southern California farms. Said one company official-

The situation is ironic because we have plenty of high quality lemons in our Ventura County lemon groves that are ready to be harvested for market. We are going to have to let much of the fruit in the Ventura groves drop and rot on the ground because of the prorate system in the marketing order . . . two-thirds to three-fourths of the 60,000 cartons of lemons we have in our Ventura County groves go to waste even though there is a demand for it.[17]

Volume-control marketing orders should be viewed as a symbol of the intellectual bankruptcy of U.S. farm programs-- policies of farmers, by farmers, for farmers and no one else. Such marketing orders have blatant production controls that subject violators to fines and (ultimately) imprisonment for civil contempt.[18] If these continue to exist, the Reagan administration will have no moral basis for questioning the present state of farm policy--which consists of little more than handing Congress a blank check and letting it fill in the amount.

On balance, the Reagan administration's farm policy--as symbolized by its inaction on marketing orders--has been long on rhetoric and short on performance. Indeed, if taken seri- ously, the rhetoric accompanying Reagan's farm policy could give the free market a bad name. The antidote is to take some good advice on politics: "Watch what we do, not what we say."[19]

FOOTNOTES http://www.cato.org/pubs/pas/pa030.html

CURRENT AGRICULTURAL NEWS

Farming and Agriculture
Thursday October 5, 2000
Negotiators Agree to Farm Aid
By PHILIP BRASHER, AP Farm Writer
WASHINGTON (AP) - Farmers who produce everything from avocados to milk would benefit from a $3.5 billion package of election-year aid.
House and Senate negotiators on Thursday put the money in an $80 billion appropriations bill that will fund operations of the Agriculture Department and Food and Drug Administration (news - web sites) over the next year.
The legislation includes $1.6 billion for payments to farmers whose crops were destroyed by drought or damaged by disease, $490 million to livestock producers who lost pasture to this summer's dry weather and $473 million for dairy prices to compensate for falling milk prices.
Most farmers have enjoyed good weather this year, but several states, including Nebraska, Kansas, Texas and Georgia, have been going through a severe drought. Agriculture Secretary Dan Glickman has estimated that $2.2 billion in disaster payments would be needed to compensate for losses that are not covered by insurance.
Other provisions in the bill:
-$138 million in subsidies to apple and potato farmers.
-$58 million to compensate citrus growers for diseased trees.
-$20 million for cranberry growers.
-$20 million for wool and mohair producers.
The aid comes on top of $15 billion in farm assistance that Congress approved earlier this year to compensate farmers for low commodity prices and to expand the use of federally subsidies crop insurance.
Because the dairy payments are targeted to smaller producers, nearly a quarter of the money is expected to go to producers in Wisconsin. ``It will provide substantial assistance to every producer,'' said Sen. Herb Kohl, D-Wis.
Kohl is the lead Senate Democratic negotiator on the spending bill.
Also included in the agricultural spending bill is a measure that would require foreign avocado producers to help pay for promoting sales of the fruit in the United States.
The avocado program would be funded by a mandatory fee on domestic producers and on importers of avocados from Chile, Mexico and elsewhere.
Sugar growers will benefit from a provision that guarantees that they can continue to forfeit sugar to the government in repayment of federal price-support loans. Nearly a million tons of sugar has been dumped on the government this year because of falling prices for the commodity.
Copyright © 2000 The Associated Press. All rights reserved.

Farming and Agriculture
Friday October 6, 2000
Grain Stockpiles Concern Railroads
By MARGERY BECK, Associated Press Writer
OMAHA, Neb. (AP) - For a second straight year, low grain prices are keeping farmers and grain elevators from selling and shipping their product.
Some railroad officials worry that if prices rise, the rush to move two years worth of grain will cripple the nation's transportation industry.
Normally busy grain-hauling rail cars are not seeing much action this fall, Union Pacific Railroad spokesman Mark Davis said.
``We're in probably year four where prices - along with weather conditions and export issues - are affecting the movement of grain,'' Davis said. ``With the low prices, producers and elevators are holding grain.''
Union Pacific uses 30,000 rail cars for transporting grain. This week, 2,500 remained in storage.
Burlington Northern Santa Fe, on the other hand, is pleased with the volume of grain it is moving. The railroad based in Fort Worth, Texas, has 29,000 grain cars, with about 600 currently in storage.
``Considering we usually have between 5,000 and 6,000 of those cars in storage during the off-season, that's pretty good,'' spokesman Steven Forsberg said.
Union Pacific has garnered criticism for recently increasing its shipping costs by about 3 percent. UP and Burlington Northern also have upset farmers and elevator operators by increasing penalties from $50 to $75 per day for grain elevators slow in filling grain cars.
Rising fuel costs led to UP's rate increase, Davis said. Fines for late movement of rail cars had not significantly increased since 1992, he said.
As long as grain prices remain low, farmers will keep their crops in storage, said Pat Ptacek, executive vice president of the Nebraska Grain and Feed Association.
``They'll be holding onto their crops as long as they possibly can,'' Ptacek said. ``No one can fault them for that.''
Corn can be held for about three years before it spoils.
Farmers are able to hold onto crops by taking advantage of government marketing loans in which producers borrow money while storing their crops to wait for higher prices.
The borrowing period lasts nine months, usually ending in October. When prices are low, farmers often forfeit their stored crop to the government, buy it back with another government loan and then continue to store it until prices go up.
Farmers also may take advantage of the federal Loan Deficiency Payment program, which pays farmers the difference between the price per bushel for which they contracted with the government and the market price of the grain.
For example, if a farmer contracted to sell corn to the government for $2 per bushel, and the market price for corn ends up being $1.80, the government simply pays the farmer the 20-cent difference.
The farmer keeps the crop, which can be sold or stored to sell when corn prices rise.
State farmers had 136 million bushels of grain from last year's crop stored on their farms as of Sept. 1, while elevators had 220 million bushels in storage.
How much of this year's harvest is being stockpiled is not expected to be known until December.

10-06-00
California Tri-Valley growers are a target in a federal farm spending bill.
By Michael Doyle
Fresno Bee Washington Bureau
(Published October 6, 2000)
WASHINGTON -- Being flush with cash and facing election, congressional negotiators Thursday boosted farm spending in a tentative deal that includes an extra $20 million for members of troubled Tri-Valley Growers.
The money would help compensate the California tomato, peach, pear and apricot growers affected when the Tri-Valley cooperative filed for Chapter 11 bankruptcy protection in July. The money would be part of a larger fiscal 2001 farm spending bill likely to increase crop subsidies almost across the board.
"Anything is good," said Modesto lawyer Fred Silva, who's representing growers in a class-action lawsuit against Tri-Valley's accountant and directors, "but this is kind of a drop in the bucket, when you look at the losses that the farmers sustained."
Details on how the money would be paid and how much each Tri-Valley grower might receive were not publicly available Thursday as negotiators continued their final bargaining inside the Capitol. Though she's in San Francisco recovering from leg surgery, Democratic Sen. Dianne Feinstein of the money-dealing Senate Appropriations Committee helped free up the funds that had been sought by all Central Valley lawmakers as well.
"This will go a long way to ease the suffering of growers who suffered staggering losses due to the bankruptcy," Feinstein spokesman Jim Hock said.
The Tri-Valley funds would be part of $3.5 billion in emergency funds added to an Agriculture Department spending bill. The Tri-Valley funds were eased into the package as part of a deal with Kentucky Republican Sen. Mitch McConnell, who had his own growers to tend.
Nor have the California growers simply been standing by. An ad hoc group of Tri-Valley growers hired Washington lobbyist Julian Heron, whose clients have included Sunkist, to seek aid.
The $20 million is less than the $31 million originally sought, pegged to cover production losses for Tri-Valley crops including 14,000 acres of unharvested tomatoes. As is common congressional practice, the spending bill will not actually cite Tri-Valley members as the funding recipients; the language, though, will be written so narrowly that they are the only ones eligible.
"It is a small amount, but it will help those who lost the most, certainly, the tomato growers," said Jack King, manager of national affairs for the California Farm Bureau Federation.
The cooperative that's been a Central Valley mainstay for 68 years lost upward of $200 million in the past three years and was saddled with $400 million in debts at the time of its bankruptcy filing.
The full cost of Tri-Valley's crash hasn't been estimated, but grower losses have been put as high as several hundred million dollars.
Silva said he's deposing witnesses for the lawsuit, which did not ask for a specific damage amount.
Ever since the surprising July 10 bankruptcy filing, California lawmakers and the Clinton administration have been sowing different forms of aid.
Although officials initially downplayed the prospects of significant federal help, some aid has been forthcoming.
Urged on by Sacramento Republican Doug Ose and other Valley lawmakers, the Agriculture Department already has announced it will be purchasing pears, peaches and processing tomatoes.
Copyright ©2000, The Fresno Bee

10-5-00
Record raisin crop produces bitterness
Growers and packers spar over strategies for pricing California Central Valley raisins.
By Robert Rodriguez
The Fresno Bee
(Published October 5, 2000)
Faced with one of the largest raisin crops in decades and potential low prices, more than 150 frustrated farmers vented their anger during a meeting of the Raisin Administrative Committee on Wednesday.
Several of the farmers took aim at the packers and the administrative committee for fostering policies that, they say, benefit the packers at the expense of the growers. Other growers called for revamping the entire system that determines tonnage and prices.
"It is time for a real change," said Marvin Horne, a Kerman-area grower.
The committee, which operates under a federal marketing order, didn't help matters by delivering the news that this year's estimated crop for natural seedless is big: 427,396 tons. Of that, 233,344 tons, or 55%, will be released as the "trade demand" for supplying the marketplace. The remainder will be put into reserves.
Growers and at least one packer urged the committee's 47-member board to increase the tonnage available for sale on the domestic market, under the argument that the more raisins available, the more that can be sold.
"I don't think we can ignore that as an industry the sale price for California raisins in the last 30 to 40 days has dropped 25%," said Bruce Lion of Lion Packing. "This 233,000 tons is not enough to supply the demand."
But others cautioned that releasing more tonnage and scrapping the federal marketing order could create more problems.
"Looking at what we are facing is not comforting but we need to keep the facts separate from the emotions," said Jon Marthedal. "Everyone wants a higher trade demand but we can't bring the (marketing) order to its downfall. We have to allow it to work."
Terry Stark, general manager of the Raisin Administrative Committee (RAC), agreed that while he sympathizes with the farmers plight, he doesn't want to see growers misrepresenting the facts.
He took issue with statements made by some growers that the RAC already has approved a controversial idea known as the "Market Expansion Program." The program, if approved, will help packers weather price fluctuations by allowing them to purchase reserve raisins at "significantly reduced prices" that they can turn around and sell.
Stark said the RAC has just started the process of discussing the program.
Growers view the program as a "give-away" that only helps the packers.
"When things are bad, we, as farmers, take a loss," said Cal Kaleka, a Kerman farmer. "Why should it be any different for the packers?"
Copyright ©2000, The Fresno Bee

9-21-00
Grapes of Wrath
Low prices, overplanting and a bumper crop are forcing some Valley producers to tear their vineyards out of the ground.
By Robert Rodriguez
The Fresno Bee
(Published September 21, 2000)
EASTON -- All that's left of farmer Jim Woodward's season are pulled-up grape vines stacked 18 feet high. Resembling a field of huge tumbleweeds, the 30-year-old vineyard waits to be torched.
Low prices, overplanting and a 20% larger crop has forced some central San Joaquin Valley wine grape farmers such as Woodward to call it quits.
"You work all year long to produce a crop, and then the price drops so low it doesn't even to pay to pick," said Woodward, who manages Van Erickson Ranches. "We are not going to fight this anymore."
And he is not the only one getting out.
Heavy-equipment operator William Boos Jr. said he expects to rip out about 300 acres of wine grapes in Fresno County this year as a glut of wine grapes -- 3.2 million tons -- chokes the state's wineries.
"Five to seven years ago, we rarely got a call to tear out vineyards," he said. "Now the phone won't stop ringing. It's just a shame."
All told, Woodward said 160 acres of barbera and ruby cabernet wine grapes are being torn out of the ground. The price for the hearty grapes fell by as much as $100 a ton this year.
Central and southern San Joaquin Valley growers are hit particularly hard, in part because more sell their crop on the volatile open market and their grapes end up in less expensive wines whose sales are stagnant.
Growers who signed contracts with wineries and other buyers will fare much better than those trying to unload their fruit on the open market.
Wine grapes that once fetched $600 a ton on the open, or spot, market a few years ago may get $125 a ton this year, said Nat DiBuduo, president of the Fresno-based Allied Grape Growers.
"It is the pits," DiBuduo said. "The fears the people had about overplanting too many grapes have finally hit. We are facing an abundance of a supply."
The number of wine acres statewide has risen 10% from 385,000 acres in 1998 to 424,000 in 1999, largely because of America's vigorous consumption of wine. But what concerns industry officials is the estimated 130,000 newly planted acres that are not in full production.
The plantings of some premium wine varieties such as merlot have exploded.
From 1990 to 1999, the number of merlot acres statewide jumped from 4,010 to 36,506.
The central San Joaquin Valley accounts for roughly one-third of all new vineyards planted since 1997 and nearly 80% of the state's total wine-grape production, according to the U.S. Department of Agriculture.
In areas such as San Luis Obispo County, wine acres totalled only about 8,000 a decade ago. This year, that acreage is expected to be more than double that -- 18,500 acres.
"What farmers have been finding is that wine grapes have become the highest and best use of their land and water," said Karen Ross, president of the California Association of Winegrape Growers. "They followed the price and rolled the dice."
What is troubling for local farmers is that their grapes generally are used in wines selling for less than $7 a bottle. Last year, sales in that category rose by 1% in 1999. By comparison, wines selling for more than $7 a bottle grew by 13%.
"We are in the age of consumerism and the pursuit of quality," Ross said. "There is a huge transition going on with consumers who are drinking slightly less but higher-quality wines."
Making matters worse, foreign-made wines from Spain, Italy and France also have crowded the market for value-priced wines, Ross said.
For the short term, industry officials say, growers with existing contracts will survive the glut of grapes. Contracted prices are anticipated to decline by as much as 10% to 20%, while spot market prices will drop by as much as 70% to 80% said Barry Bedwell, general manager for Joseph W. Ciatti Co. based in San Rafael.
A majority -- about 80% -- of the central and southern San Joaquin Valley growers are under contract. About 15% to 20% rely on the spot market to sell their grapes.
"Those are the guys who are really going to take it on the chin," Bedwell said. "People chase profits until there needs to be shakeout."
Older or generic varieties, such as barbera and ruby cabernet, also are likely to be pushed out.
Recently, Woodward watched the heavy equipment tear the vineyards out of the ground, scattering the twisted vines like twigs. They will be piled up and burned. The ranch's sandy soil will be cleared for the spring planting of almonds, another crop that has suffered from overproduction.
"At least we still believe we can get a return on almonds," Woodward said. "Besides, what else is there?"
Associated Press contributed to this report.
Copyright ©2000, The Fresno Bee