How the USDA Raises Your Grocery Bill

The U.S. Department of Agriculture is raising costs for American consumers by dictating to farmers the quality and quantity of crops they can sell. With fruit and vegetable prices rising, it’s time to take a new look at the market orders that control the produce that farmers are allowed to sell.

During the early 20th century, fruits and vegetables were cheaper than ever before. As a result, farmers’ revenues fell and some were driven into bankruptcy. These circumstances led to theAgricultural Marketing Agreement Act of 1937(AMAA).

The AMAA allows the USDA to issue “market orders” that cap the volume of fruits and vegetables sold, prescribe conditions regarding packaging, handling, and set quality standards. 

AMAA advocates argue that market orders help prevent dangerous swings in crop prices and protect consumer confidence. For example, without market orders, a particularly plentiful avocado harvest may mean that avocado farmers would be unable to earn enough money to cover their production costs. If returns were especially low, some avocado farmers might even be forced out of business. 

Prior to the AMAA, such prospects and incidents were a source of much concern to the agricultural community. The recovery of the agricultural industry following the AMAA’s passage at the end of the Great Depression lends credence to advocates’ arguments. Though it is undeniable that market orders helped prices climb back to their pre-Depression-era levels and prevent swings in prices, the AMAA’s effects are worrying. 

By restricting the supply of fruits and vegetables with market orders, growers are able to charge consumers higher prices. While good harvests may be risky for farmers, they can be valuable to consumers, especially those on the lower end of the income spectrum. 

The negative consequences of the AAMA have been well-documented. Over 30 years ago, in a 1981article for the New York Times, investigative reporter Ann Crittenden wrote the following:
“From afar, it looks like a red haze on the horizon. But after the car swings onto the Famoso strip, a swath of pavement amid the citrus groves of the San Joaquin Valley, it becomes clear that what lies in the distance really is mounds of oranges.

Stretching in all directions are millions and millions of navel oranges, some stamped with the Sunkist label, all abandoned to rot under the California sun. The oranges have been dumped under what is known as a Federal marketing order.”

When this article was published, 40 percent of California’s orange crop was prevented from being sold and wholesale orange prices were 12 percent higher than they were the year before. According to Crittenden, this market order effectively mandated the voluntary measures which the Sunkist cooperative has been supporting since the 1920s.

Today, the USDA has 20 fewer market orders than it did in 1981, yet it still maintains 28 on produce that ranges from Kiwis to pistachios. Eighteen of these orders regulate quality and handling. For example, one prevents misshapen kiwis from sale, even though people might like to buy these kiwis at a discount. Another mandates that only pears of certain sizes can be sold.

Read the rest here.