Rarely does an issue spotlight the absurdity of government-imposed solutions as clearly as the Depression-era hangover called the "marketing order." In the panic of the Great Depression, desperate central planners decided that agricultural producers should have the right to regulate the amount of a crop sold in order to guarantee growers' prices and a stable supply. It's legalized price fixing.
One man is thumbing his nose at the system of marketing orders and may actually topple it. Carl "Skip" Pescosolido, a good-natured orange grower in central California's San Joaquin Valley, has succeeded in embarrassing the US Department of Agriculture (USDA) by flaunting his disgust for marketing orders on oranges. Skip laughs as he throws monkey wrench after monkey wrench into the machinery that allows Sunkist—an agricultural cooperative that, with the help of USDA marketing orders, controls 75 percent of lemon and orange production in the western United States—to rob producers of their right to compete and consumers of the chance to buy cheaper oranges.
Looking at Pescosolido's background, I would not have picked him as the man to buck the system. He was raised in Ipswich, Massachusetts, and attended the 220-year-old Governor Dummer Academy, America's oldest boarding school. Continuing his way through the establishment's hallowed halls, he entered Harvard and emerged—cum laude—with a degree in theoretical economics. Remarkably, however, his faith in the free market survived.
"I have two great loves in my life," Pescosolido says, "my wife, Linda, whom I met when I was 17, and the San Joaquin Valley that I first saw in '71." A year after setting eyes on the valley, he left the family heating-oil business in Massachusetts and bought orchards in California. At first he joined the Sunkist co-op, but as he grew familiar with the system, his frustration increased. In 1974 Pescosolido and some friends founded Exeter Packing Company, independent of Sunkist. "I was stymied and constrained by the marketing order," he says, "which is actually an antimarketing order, because it doesn't let us sell our oranges."
"Stage two"—Pescosolido's evolution as a free-market rebel—came in 1979. He says that he then decided "to cut out the bitching" and do something. He entered a period of intense research into the history and laws concerning marketing orders, and in mid-1980 Pescosolido and a partner filed a complaint against the Department of Agriculture, as both growers and handlers.
Sunkist "was incensed by the overt criticism of the leadership of the system," he says, and asked the USDA to have the complaint declared invalid. In fact, the USDA disallowed the portion of the complaint dealing with grower problems. "There is no due process for growers," concludes Pescosolido. The horticulturist says there is no hope of changing the system through the political process—the special interests are too powerful. So he is going through the courts. In 1981 he filed a $191-million suit against the secretary of Agriculture for business damages from unconstitutional marketing constraints.
Two years ago, "in a fit of rage and frustration," Pescosolido started giving away oranges he was not allowed to sell—a move that was widely reported in the news. Charitable contributions are exempt from regulation by marketing orders, but most contributions are small, only a few boxes at a time. Pescosolido gave away truckloads.
Of course, that many oranges in public hands, even the hands of charity, could conceivably lower prices. So, says Pescosolido, "the feds descended." The USDA decided to prosecute Exeter, but there was a public outcry. Even the marketing orders could not withstand the criticism of many angry people. San Francisco's USDA spokesman explained to a reporter why that many oranges shouldn't be given away. "Young lady," he said, "you just don't understand. People don't need to eat oranges—they can take vitamins."
The USDA finally backed down, and Pescosolido is still giving oranges away. According to him, it is just one way of redressing the injustice imposed on the poor, who cannot afford the cartel's artificially high prices.
More recently, the rural guerrilla took advantage of Jimmy Carter's Paperwork Reduction Act, by which all forms that the government requires from citizens must have printed on them an official number. The orange marketing board had ignored this requirement. So on January 1, 1982, Pescosolido stopped filing shipment records—the USDA had no way of telling how much he was selling. When the marketing board realized what was going on, it issued a number but neglected to print it on the forms. Pescosolido kept refusing to file. And since no law required him to save shipment records, he destroyed them.
For half a year, he sold as many oranges as he wanted. The USDA filed a suit against him, which he expects to win. But the money he earned by using legal loopholes has not made up for the legal expenses incurred in battling the system, he says, though the Capital Legal Foundation recently joined his struggle.
Pescosolido recently joined with dissident hops growers—also under marketing-order restrictions—to help "dynamite the system," and he has been asked to help reorganize the free-market agriculture program at the University of California at Davis. This guy is looking for trouble, and he loves it.
Patrick Cox is a free-lance writer, a frequent guest columnist for USA Today, and public affairs director of the Pacific Institute for Public Policy Research.
This article originally appeared in print under the headline "Spotlight: Orange Guerrilla".