Government intervention in the market for raisins - Assignment Example

Producers of specialty crops like raisin in California structured themselves into marketing associations. This essay paper will look into the broad subject relating with marketing orders, and narrow down into marketing order for raisins in the US. Discussion 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 handling of specified agricultural commodities in line with the legal framework in place (Clary 23). A board that consists of growers and packers, called 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. . isin growers have brought complaint regarding Agricultural Marketing Agreement Act of 1937 which empowers 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 production by competing countries. Taxpayers are not left out in 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 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 reap more from the same but if the rule denies farmers of reaping what they have produced and unfairly handing the same to government, which is seen as wasteful decision (Agriculture.). On the other hand, farmers can still vote for