Why the Golden State’s Fruit Laws Are the Pits

Sell a nectarine, go to jail.

Well, not exactly. But the federal government is suing a Fresno-area grower for selling peaches and nectarines a fraction of an inch smaller than the legal minimum. The buyers in this case were wholesalers who apparently resold the fruit to mom-and-pop grocery stores in central Los Angeles.

Yes, it’s those pesky agricultural marketing orders again. You know, the ones that keep healthful fruits and vegetables off the market, prop up prices and help rich growers keep down the competition.

It’s a big year for California tree fruit, but the grower-controlled Nectarine Administrative Committee (and a similar peach panel) are up in arms because the marketplace has brazenly stuck its nose into the tent of California agriculture.

Empowered by Depression-era federal legislation, the committees set minimum size standards, among other things, for California-grown peaches and nectarines going to market. The boards say the idea is to maintain quality standards, but it’s also a handy way to control supplies. Because of the size rules, millions of perfectly good peaches and nectarines are left to rot every year. The pits are ground into paving material.

Since virtually the entire U.S. nectarine crop is grown in California, this is a big deal. Legal “sizism” means that less fruit gets to the stores, which in turn means higher prices for the fruit that does get there. Ultimately, consumers are deprived of choice. Worse yet, poor people are deprived of an affordable way to get some of the foods now considered important in quantity for a healthy diet.

Every now and then, some brave grower suicidally bent on (gasp!) selling his produce bucks the system and gets into trouble. Carl Pescosolido, an Exeter, Calif., orange grower, has waged this battle for years, at great personal expense.

In what Dr. Watson might have called The Case of the Undersized Tree Fruit, Gerawan Farms of Reedley, Calif., had the temerity to sell some small peaches and nectarines to wholesalers at the Los Angeles Terminal Market.

Small fruit isn’t poisonous; it’s just cheaper. There’s no evidence the buyers were fooled, either; they paid for small fruit, and that’s what they got.

No doubt they were delighted. Small fruit from elsewhere is legally--and routinely--sold in California, and it tastes fine. Customers have no trouble distinguishing it from big fruit, or deciding which they prefer at what price. The market is very good at this sort of thing.

Nevertheless, the U.S. attorney’s office in Fresno cracked down, seeking an injunction against Gerawan Farms to impose Draconian fines for any future violations of the marketing orders that limit the size of peaches and nectarines California growers can sell.

The Gerawans are unlikely criminals. Ray Gerawan started the family’s business years ago by saving enough from his packinghouse wages to buy five acres; he and his sons have built that into a 6,000-acre fruit-growing and packing operation. It’s a classic California success story.

“Now that they’re done with Noriega, I guess they have to come after me,” says Dan Gerawan.

The law is the law, of course, but in this case it’s ridiculous. Harry Snyder, director of the Consumers Union regional office in San Francisco, says his group has fought these marketing orders for years, adding that they hurt the poor, children and the elderly most.

Unfortunately, lots of California fruits and vegetables are governed by such orders. Just today, for example, the Navel Orange Administrative Committee, which functions as a government-sanctioned cartel for California and Arizona navels, will meet to decide how many oranges it wants to reach consumers. (The government lifted the navel marketing order last February, but odds are that NOAC will ask for reinstatement.)

“If it were the steel companies doing this,” says Snyder, “they’d go to jail.”

The marketing order covering nectarines and peaches doesn’t directly control volume, but it still manages to limit the variety and supply of California fruit. Anywhere from 5% to 15% of the annual peach and nectarine crop is below the minimum legal size, and most of it gets dumped.

Gerawan estimates that 500 million California peaches and nectarines will be kept off the market this year, and the vast majority will go to waste. You can’t sell it for eating, and the demand for processed fruits is small. Even giving it away is a problem. Trucking it to some big-city charity costs money, and how many charitable groups are looking for a few tons of peaches all at once? (It’s illegal for food charities to resell the fruit.)

At considerable expense, the Gerawan family donates a good deal of fruit to charity, not that that’s anyone else’s business. The Gerawans’ real problem is that marketing orders give competitors a big say in the family’s business.

The Gerawans even have to contribute to keeping the California Tree Fruit Agreement afloat. This is the agency that, with an annual budget of $13 million to $15 million raised from assessments on growers, polices the marketing orders the Gerawans are fighting.

Without such policing, all sorts of awful things could happen. Dan Gerawan recalls the time the Grand Union supermarkets in New Jersey asked him to ship plums in 24-pound boxes instead of 28-pound boxes. The store apparently found the smaller boxes easier to store or display. Eager to please a customer, Gerawan complied, but not before the California plum board tried to block the move.

Gerawan outlasted the plum board, which was eventually abolished. Let’s hope the peach and nectarine police meet a similar fate. The victory for consumers might be small, but it would be sweet.