

America's raisin regime - JumpCrisscross
http://www.economist.com/news/united-states/21574522-supreme-court-grapples-tiny-fruit-de-minimis-curat-lex

======
jacobolus
This isn’t a particularly nuanced or balanced presentation of the outcomes of
such a policy.

Any agricultural product with a long lag between planting and harvest ends up
getting sucked into cycles of boom and bust, which are terribly destructive
for all involved. The cycle goes like this:

    
    
      Insufficient supply one year results in very high prices
      Everyone and his grandmother decides to plant raisins
      5 years pass
      There’s a giant glut, and prices drop through the floor
      All the raisin farmers decide to ditch such a shitty product
      Repeat
    

This cycle absolutely wrecks agricultural economies which are dependent on one
or a handful of key exports.

~~~
JumpCrisscross
This is why we have agricultural derivatives, e.g. forwards and options: to
transfer food price volatility from lightly capitalised farmers to investors
better able to absorb the risk. In fact, farming is the original raison d'être
(raisin d'être? :D) for these derivatives.

" _the notion that the government’s raisin-administrators ward off chaotic
gyrations in prices far-fetched: walnut and citrus farmers, after all, have
abandoned similar systems in recent years without any ill effects"_

This issue has been studied extensively - "agricultural central banks" are a
bad way to deal with a perishable commodity because they shift demand
volatility onto the government's balance sheet and so dull the incentive for
supply to adjust, or find ways to become more versatile.

~~~
confluence
Good argument. Fails in reality.

Derivatives began as insurance contracts that worked fairly well between
interested parties that actually wanted to move physical product and reduce
risk (say farmers and supermarkets).

However, most of these markets have mutated and are mostly used for
speculation by agents who have little to no interest in the actual delivery of
said commodities (Glencore) - and are in fact more interested in pricing
manipulation and monopolistic/oligopolistic market control than acting as a
volatility store. Derivatives work well when the agents in the contract
actually care about locking in the price of the commodity (say oil miners and
airlines) - but when the people on either side don't care about reducing risk
(say speculators and speculators) - things fall apart.

In turn, pricing volatility and rents accrued to speculating market
participants increase, harming both supply/demand parts of the physical
commodity curve, and doing the exact opposite of what was intended.

A more humorous take on this:
[http://www.youtube.com/watch?feature=player_embedded&v=Q...](http://www.youtube.com/watch?feature=player_embedded&v=QPf-
D_r3Ni4)

~~~
JumpCrisscross
Glencore owns farms, mines, and production facilities around the world. It
also has direct supply relationships to manufacturers, power generators, and
food processors. It is not the example you were looking for.

If you want an example of someone who has "little to no interest in
[accepting] delivery of said commodities", pick me. I'm a trader. What I do is
analogous to the person at the Department of Agriculture who decides how much
supply at a given price should be produced. Central planning has an aesthetic
appeal, but especially when it comes to consumer discretionary products like
raisins, it is a messy way of shifting the burden of forecasting from those
unable (the farmers) to those with little incentive to get it right and an
even lower chance of being displaced.

~~~
confluence
_> Glencore owns farms, mines, and production facilities around the world_

How is this evidence against my point? De Beers does the same with diamonds.
Looks like they can manipulate prices easily enough.

My argument against yours cannot be taken as me stating that central planning
is good - but merely that derivative markets can become bad. Just because I
hold a critical a position on a thing, it does not necessarily mean that I'm
advocating for the use of an opposing thing. If I criticise capitalism for
doing such and such - it does not follow that I advocate replacing capitalism
with communism/socialism to fix such and such.

I like derivatives and financial markets just as much as the next guy - but
only when they are used properly - to reduce, and not to increase risk.

------
mutagen
I was vaguely aware of some of this but had no idea of the extent of it and
which products are affected. A bit of searching turns up the Agricultural
Marketing Service website [1] and some of the markets affected:

Fruit and Vegetables

Almonds Apricots Avocados Cherries [Sweet] [Tart] Citrus [Florida] [Texas]
Cranberries Dates Grapes Hazelnuts Kiwifruit Nectarines Olives Onions
[Idaho-E. Oregon] [S. Texas] [Vidalia] [Walla Walla] Peaches Pears [Oregon-
Washington] Pistachios Plums/Prunes [California] [Washington] Potatoes
[Idaho-E. Oregon] [Washington] [Oregon-California] [Colorado] [Virginia-North
Carolina] Raisins Spearmint Oil Tomatoes Walnuts

Dairy - a cursory search didn't turn up a comprehensive list but market
reports include milk, butter and cheese.

Livestock Poultry and Seed Program Rulemaking includes the following:

Beef Lamb Pork Poultry and Eggs Sorghum Soybean

Other sections include tobacco, cotton, and even organic products.

Note that at least some of these programs are involved in grading food
products, standardizing marketing claims, and food safety instead of purely
market stabilization.

One article [2] paints a fairly positive view of these practices and points
out how cherry growers decided to go without the regulation and reserve
provided and within 10 years prices had plummeted to the point where they
decided to reinstate the Cherry Industry Administrative Board.

The National Agricultural Law Center has quite a bit more if you're interested
in case law, Congressional research, and a number of other resources.

[1] <http://www.ams.usda.gov/AMSv1.0/> [2]
[http://fruitgrowersnews.com/index.php/50th-
anniversary/entry...](http://fruitgrowersnews.com/index.php/50th-
anniversary/entry/marketing-orders-agreements-perform-different-functions) [3]
<http://nationalaglawcenter.org/readingrooms/marketing/>

------
liber8
"Absolutely no monopolies or cartels, unless, you know, we think its fun or
directly benefit from it." - Politicians worldwide

It's interesting that people readily recognize the absurdity of this truth
when it comes from some places, but insist that it's not only acceptable, but
actually required, when it comes from other places. Note that this has become
widespread in many parts of modern capitalist societies, and, by definition,
ubiquitous in every single experiment we've had with communism and socialism.

~~~
JumpCrisscross
To be fair, these are Depression-era programmes which predate modern
economics. We did not know, in 1937, why a government-backed authority who
guaranteed to buy the overproduction of a discretionary consumer item is a
market-distorting waste of resources.

~~~
liber8
This isn't really accurate. Bastiat, even Adam Smith, explored these concepts
in fair depth well before 1937. On top of that, trade simply isn't that
complicated. We've been doing it for thousands and thousands of years. I think
it has been pretty clear to any ancient Egyptian or Greek farmer, medieval
peasant, or Bedouin trader that if the king guaranteed to give some people
gold for as much product as they could produce, no matter what, that those
people would begin producing as much product as they could, regardless of
whether that product was needed or useful.

------
ChuckMcM
I am amazed these laws have survived as long as they have. I met a gal on an
airplane once whose "job" was being the taxpayer representative an outdated
agricultural committee for the US DoA. She was making 6 figures, for attending
four meetings a year (transportation costs included). I was stunned at the
waste of it all, but as waste go it was minor.

~~~
russell
"Woman" is the technical term for the female of the species. ;-)

~~~
stdbrouw
Gal is the analog of guy, nothing demeaning in that.

~~~
EliRivers
Yet some women feel demeaned by being referred to by a corruption of the word
"girl", perhaps in the same way many men would take offence if you called them
"boy". Not to worry, though; next time I encounter any such complaints, I'll
tell them that you said it's not demeaning, so their feeling are an illusion.

~~~
stdbrouw
It's context, isn't it? I wouldn't appreciate you calling me "dude" in a
business setting, but I wouldn't mind in general. Likewise, I can imagine
scenarios in which "gal" would be offensive, but this just isn't one.

~~~
mooism2
It's partly context, but it's also that you don't get to choose whether a
particular word in a particular context is offensive to another person.

~~~
stdbrouw
What is socially acceptable is decided by society, not by any particular
individual. Mind you, that doesn't prevent us from being more careful around
people we know to sensitive to certain forms of address, but in a public forum
that's not really possible because you don't know who you're talking to.

------
shirro
It always amuses me that in Australia primary producers identify themselves as
conservative and align with the conservative party but have historically been
a bunch of agrarian socialists. We even had some towns founded as agricultural
communes in my area back in the late 19th century and when I was a kid there
were still farmers co-ops running lots of local businesses. The patrons at the
local hotel will tell you how much they hate unions and socialists while the
pub they are drinking in is community owned and actively fights independent
competition. Farmers are a strange bunch, they hate government intervention
but love a handout. We used to have similar things like a single authority
handling grain exports here. The justification was that it allowed us to
compete with countries which distorted the market due to subsidies and
barriers like the socialist USA :-) That has all gone as far as I know. Now
large corporations (still community owned in a sense via the stock market)
pretty much perform the same functions but there is the illusion of choice
where in fact little exists as dominant players in the market distort things
just as much as statutory ones. In fact that is their job.

~~~
AnthonyMouse
>Farmers are a strange bunch, they hate government intervention but love a
handout.

How is that at all strange? Hypocritical, certainly, but not strange. People
want the government to take money from others and give it to them but not the
other way around. That is basically the entire basis of politics on the
question of government spending.

------
hindsightbias
"He who controls the raisins controls Fresno"

\- Tyler Cane (Dabney Coleman)

------
revelation
It's funny, apparently two of the most major agricultural markets are not
governed by capitalist principles at all. The EU is infamous for spending half
of its many billion budget each year on subsidizing and aggressively
controlling agriculture.

The "right thing" with agriculture seems to be a mix between socialist tight
control and capitalist principles. Lenin had a lot of success with the New
Economic Policy [1], until Stalin crushed it all.

[1]: <http://en.wikipedia.org/wiki/New_Economic_Policy>

~~~
smsm42
Saying that NEP was a success is like saying replacing daily savage beatings
with moderate floggings on weekends only is a success. Of course, the latter
is better, but you're still beaten pretty bad. NEP was better than what
preceded and followed it, but was very far from the "right thing" - and was
never intended as anything but temporary measure to allow the economy to
recover a bit after the savage years of the war and "war communism", and the
centrally planned economy always was and remained the ultimate goal of
socialism. What Stalin did was inevitable.

~~~
sageikosa
Total state = total war. It becomes a fight for resources between nations that
don't know what trade is.

------
eaurouge
And of course there are the cotton subsidies that cost West African cotton
farmers millions of dollars every year.

[http://www.guardian.co.uk/environment/2010/nov/15/cotton-
sub...](http://www.guardian.co.uk/environment/2010/nov/15/cotton-subsidies-
west-africa)

------
TorKlingberg
This may explain why many of the raisins sold in Sweden are grown in
California. I was wondering why, when there are plenty of grape farms in
Europe. It's unlikely that growing in California + shipping + import tariffs
is cheaper than growing in Spain. Turns of the export price of American
raisins is artificially depressed.

------
crazytony
Anybody know what the other 29 products would be? I haven't had much luck with
Google.

------
chunsaker
Please tell me this is an April Fools article. Please.

~~~
tropicalmug
Unfortunately it is not. New Deal era laws such as this one existed to help
prevent a flood of excess food ruin the market for farmers during the Great
Depression in the United States. Unfortunately, nobody is keen to revisit any
laws from the New Deal, no matter how outdated, because of the kind of
scrutiny it might bring on programs like Social Security.

~~~
fennecfoxen
Yes, the Great Depression, when our foremost leaders reasoned that we could
become more prosperous as a nation by destroying crops and making food more
expensive to a population facing an unemployment rate of 20% (and devoting a
far greater portion of their budget to food than you or I do).

FDR came up with the most toxic economic policy ever experienced in this
nation, bar none, and easily added seven years onto the Great Depression. And
no, it's wasn't the fault of Social Security: it was the fault of nonsense
like this.

They say in high school history classes World War II led the US out of the
Great Depression. It's only true because that's what finally convinced the
idiots in charge that they needed to get their act together if they actually
wanted to muster enough industrial output to fight a war.

If there is a God, Mr. Roosevelt, may he have mercy on your soul.

~~~
Shivetya
Not all is fault of the Great Depression legislation, take for example one
that came to the forefront during the "Fiscal Cliff" negotiations. Read about
the 1949 Agricultural Act on Wikipedia,
<http://en.wikipedia.org/wiki/Agricultural_Act_of_1949>

Remember that seven or eight dollar a gallon milk scare? That is the source of
that mess. Follow the links at the bottom of the article for all sorts of farm
bills.

Its pretty damn scary how much the government meddles in the industry because
we have 400 plus experts.

~~~
eru
What's good about that Act?

------
jellicle
Every time you see someone inveigh against a particular system that has been
in place for a long time, you should ask: "I wonder why that system was put
there? Maybe there was a reason."

Netscape decided to throw away all their code and do a complete rewrite, and
then realized that just about all of it was there for a reason. The Economist
is happy to do a drive-by on agricultural price stabilization, but if they
were successful there would be years where your frigging Raisin Bran was
priced at $200/box, and the Economist wouldn't have anything to say then,
except perhaps "not our problem if you idiots listened to us".

Agricultural price stabilization schemes exist for a reason.

~~~
raldi
When you say things like "$200 a box" that are clearly exaggerations, readers
of your comment are unable to tell whether your other statements are similarly
exaggerated -- in this case, your claim that most of the original Netscape
code was actually discovered to be non-cruft.

I know Joel Spolsky famously wrote about the Netscape rewrite, but a solid
citation would be really helpful here.

