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  • Tales of the Red Tape #14: Old MacDonald’s Commodity Cartel

    Growing an herb (the legal kind) might seem pretty straightforward. Clear soil; plant seeds; water, fertilize, and harvest. Until the government gets involved, that is. Then we have the likes of Marketing Order No. 985 (7 CFR part 985), as amended.

    Just as with almonds, apricots, avocados, cherries (both sweet and tart), citrus (from Florida and Texas), cranberries, dates, grapes, hazelnuts, kiwis, nectarines, olives, onions (from Idaho, eastern Oregon, southern Texas and Walla Walla), peaches, pears (from Oregon and Washington), pistachios, plums, prunes (from California and Washington), potatoes (from Idaho, eastern Oregon, Washington, California, Colorado, Virginia and North Carolina), raisins, tomatoes, walnuts, and wheat, to name but a few, the federal government actually oversees the precise amount of spearmint oil (!) available for sale every year in various locales.

    The quotas are set by the estimable Spearmint Oil Administrative Committee for the Far West Region, which works alongside The Almond Board of California, The Apricot Marketing Committee, The Avocado Administrative Committee, The Cherry Industry Administrative Board, The Citrus Administrative Committee…well, you get the picture.

    Authority to establish these cartels dates back to the Agricultural Marketing Agreement Act of 1937, which codified President Franklin Roosevelt’s policy of destroying millions of acres of crops and livestock to constrain supply and thus inflate commodity prices.

    The statute describes the practice as necessary to maintain “orderly marketing conditions” and avoid “unreasonable fluctuations in supplies and prices.”

    Sounds kind of noble, right?

    It isn’t.

    Not only do marketing orders inflate food prices, but they also undermine the most fundamental principles of free enterprise.

    Cartels are generally illegal under federal law, but those created by marketing orders get a pass. In fact, the federal government enforces the production limits by fining any farmer who dares grow more than the Administrative Committee decrees.

    For the 122 producers of spearmint oil in Washington, Idaho, Oregon, a portion of Nevada north of 37th parallel and a portion of Utah west of the 111th meridian, that means selling no more than 34 percent of their crop of Scotch spearmint oil and no more than 44 percent of their crop of Native spearmint oil. It says so in the May 13 edition of the Federal Register.

    Posted in Economics [slideshow_deploy]

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