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Old Aug 12, 2013, 05:03 PM   #1
P-Worm
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Government enforced raisin industry collusion

I listened to the following Planet Money podcast the other day and can't figure it out for the me (worth a listen if you can spare ~20 min):

Rocky Pipkin, private eye vs the Raisin Outlaw

Long and short: Unlike almost all other industries, the raisin industry not only allows the growers to get together and decide how much product to release to the public, but the government actually enforces it. The episode is about a raisin grower that, during a particularly bountiful season, decided to sell all of his crop against the wishes of the raisin community as a whole who decided to store away 40% of their crop to keep raising prices higher. The rest of the raisin growers sued the man that sold all of his and the case went all the way to the Supreme Court (though the Supreme Court knocked the case down to a lower court).

They interview the CEO of Sun Maid raisins and he said the raisin industry is fundamentally different from other industries and that is why they don't have to compete, though he doesn't explain how. Is there anyone here that can even explain this to me?

Link to condensed article:

http://www.npr.org/blogs/money/2013/...man-california

Quote:
In most other industries, selling all the goods you can make is just good business. But in the raisin world, things are different. In the raisin world, this can be illegal.

The decision about how many raisins should be sold to the public isn't supposed to be made by individual farmers working on individual farms across California. It's supposed to be made by a group — the Raisin Administrative Committee. The committee gets together regularly to decide how to market the raisins of California, and they set grades and standards for California raisins. Another, more unusual, part of their work is determining how many raisins to sell to the public.

Each year the committee uses an equation to decide just how many raisins to release out into the world. If they don't think the demand is high enough for all the raisins made that year, they tell raisin farmers to turn over or divert some of their raisins into something called the raisin "reserve."
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Old Aug 12, 2013, 05:39 PM   #2
localoid
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And here I though that those California Raisin commercials in the '80s were a ploy to sell more raisins...

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