Marketing orders and government regulations



Marketing orders and government regulations


The U.S. Agriculture Department puts into effect regulatory controls that are extensive on markets for agricultural products. Some of these regulations are meant to enhance and reduce disease, while others have the effect of restricting commodity supplies and raising consumer prices. Federal marketing orders have been imposed on fruits, milk, vegetables, raisins, and other agricultural products.

Marketing orders are said to have originated as early as the 1920s with farmers trying to impose regulatory controls on crops voluntarily (Christensen). Producers of specialty crops like a raisin in California structured themselves into marketing associations. This essay paper will look into the broad subject relating to marketing orders, and narrow down into marketing order for raisins in the US.


In 1949, following twenty years of ceaseless agitation, discouragement, bitter struggle, pools, forced combinations and raisin exchanges, raisin growers from California voted to come up with a federal marketing order based on the Agricultural Marketing Act of 1937.

Critical components of this marketing order have brought a number of economic impacts, a program of price discrimination and a program of supply control. The Agriculture Secretary, in line with the provisions of the law, issues and carries out amendments on the same from time to time. Such orders are intended to regulate the handling of specified agricultural commodities in line with the legal framework in place (Clary).

A board that consists of growers and packers, called the Raisin Administrative Committee (RAC) is bestowed with the mandate of watching over the marketing order. RAC is a federal marketing order which is led by packers, 47 growers and a public member. This authority is directly supervised by the United States Department of Agriculture which was established in 1949 due to the Agricultural Marketing Agreement Act of 1937. Raisin Administrative Committee consists of 35 members who represent producers; 10 members who represent handlers of differing sizes; one representation member from Raisin Bargaining Association (RBA); and one member from the public.

A number of raisin growers have brought a complaint regarding Agricultural Marketing Agreement Act of 1937 which empowers the government to confiscate some portion of the yearly raisin crop, the initiative which, for instance, saw 47% being confiscated in 2003 and 30% in 2004. Farmers who don’t cooperate in surrendering their raisins are penalized. The amount that should be surrendered to the government is based on the annual production volume and other factors like a production by competing countries. Taxpayers are not left out in the analysis of the potential effects of this surrender.

The surrender minimizes the available share of raisin supply which in return causes the consumers of the product to buy it at higher prices. RAC does not pay any consideration to farmers upon expropriations. Actually, much of the raisin is given away and others sold for export at low prices. It is only after it has covered its costs that the remaining profits, if any, are given to the farmers. Farmers who disregard this marketing order are fined.

Raisin is not the only fruit that is federally regulated. In total, close to thirty products are subject to the ‘marketing orders’, overseeing of which is conducted by the Department of Agriculture.  In other products like milk, the system of Federal Milk Marketing Order does set the lowest prices for milk and milk products.

Farmers, if they were given an opportunity, would vote in the abolishment of the marketing order rule. It is plain that the pronouncements of this rule have economically affected them. It is rational to produce more and read more from the same but if the rule denies farmers of reaping what they have produced and unfairly handing the same to the government, which is seen as wasteful decision (Agriculture.). On the other hand, farmers can still vote for retention of the same in the understanding that it has regulated the economy and eliminated unnecessary competition.

Other than marketing orders, there are some other possible policies that can work. For instance, some grapes can be purchased and stuck on the sun to dry up, and market the same as ‘Organic Sun-Dried Grapes’ (Goldberg).

Market orders are helpful in controlling the mode of trade, with the purpose of enhancing efficiency. It is, therefore, wrong to term them as cartels. Raisin production would not be efficiently traded in a free market.

The Supreme Court is handling a case involving raisin market orders, with farmers complaining of the confiscation conducted by the government without recompensing them. The issue is to determine the constitutionalism of the arrangement.



This essay has tackled various economic issues surrounding agricultural produce, with specific emphasis being given to raisin crop in California. It has analyzed all key issues related to the policy given alternative measures.

Work Cited

Agriculture., United States. Department of. Agriculture decisions. Washington: For sale by the Supt. of Docs., 1942.

Christensen, Peter L. Raisin production manual. Oakland: University of California, Agriculture and Natural Resources, 2000.

Clary, Carter D. A treatise on raisin production, processing, and marketing. Clovis: Malcolm Media Press in association with American Vineyard Magazine, 2001.

Goldberg, Victor P. Framing contract law: an economic perspective. Cambridge: Harvard University Press, 2006.





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