USDA Abolishes Controversial Citrus Quotas : Agriculture: Accusations of cheating by Sunkist Growers and others reportedly lead to ‘turmoil,’ costly lawsuits.

In a repudiation of the giant citrus cooperative Sunkist Growers, the U.S. Department of Agriculture said Monday that it will abolish a scandal-ridden, Depression-era quota system that let growers keep oranges and lemons off the market to prop up prices.

The USDA said it took the action because accusations of widespread cheating on quotas by Sunkist and dozens of citrus growers and packers had led to “division and turmoil” within the California-Arizona citrus industry and dozens of costly lawsuits.

The government’s action is unlikely to bring immediate change in citrus prices or supplies. The quota system had been suspended since December, 1992, and the season just ending operated free of market constraints without radical changes in prices or per-acre revenues.

Indeed, the fact that the orange market didn’t collapse “demonstrated that the industry could be profitable in a non-quota environment,” said Rep. Calvin Dooley (D-Fresno), who tried unsuccessfully to forge a consensus among the growers.

The action was greeted euphorically by many independent growers and packers who had chafed under the cartel-like system, which they said rewarded inefficient growers and was controlled by Sunkist.

Sunkist, based in Sherman Oaks, had no immediate comment.

The co-op, which markets citrus for its 6,500 members who grow two-thirds of California’s citrus, has long contended that quotas are needed to prevent sharp swings in supply and price volatility to consumers.

But Richard Rominger, a California farmer who is also deputy secretary of USDA, said that he notified Sunkist personally of the decision Monday. While “they may not have been happy . . . they were resigned to the fact that this is probably the only thing left to do,” he said.

The government acted just a week before federal prosecutors were to go to trial in Fresno in a decade-old case against Sequoia Orange Co., a packinghouse that deliberately violated the quotas in the early 1980s to protest the system.

That case, which put the Justice Department in the position of prosecuting someone for growing too many oranges, was among more than 60 pending lawsuits triggered by the system--including 19 filed by the government last year accusing Sunkist and several of its biggest growers and packers of cheating on the system.

As part of Monday’s action, the government dropped all those suits.

“I don’t think a progressive Democratic administration could tolerate being in the role of keeping food off the table,” said James Moody, a Washington lawyer who has been instrumental in fighting such quotas.

Rominger stressed that the federal agency still favors marketing orders, of which production quotas are considered the most onerous part. Such orders also let growers act together to promote and market their products.

The USDA said it would consider a new proposal for a citrus marketing order if the industry could ever agree on one, and Rominger said Sunkist officials indicated they might make such a proposal.

Joel Nelsen, president of California Citrus Mutual, a trade group for 850 growers, said the association is scrambling to get a marketing order in place that could operate a statistical and crop forecasting service. Those functions were performed under the program being terminated.

Critics and supporters generally agreed that Sunkist will survive the USDA’s action, though its 65% market share might fall. Sunkist’s brand name and elaborate international marketing system still make it attractive to many smaller growers.

But without the quotas, some larger citrus growers and packers may decide to quit the cooperative, which would save them fees paid to Sunkist, and strike out on their own.

“I’m jumping up and down,” said Dennis Johnston, a third-generation citrus farmer in Kern County.

Johnston said that in the past, he’s had to sell as many as 75,000 40-pound boxes of navel oranges to juice makers, getting about 50 cents a box, because quotas prevented him from selling them as fresh fruit, for which he gets about $8 a box.

“Now, it’ll let me ship the fruit when I decide to ship, and not the boys who sit on the (administrative) committee,” said Johnston, referring to the Sunkist-dominated committee of growers and packers who run the quota system by allocating orders to growers.

The program will end after the expiration of a 60-day notice required by the 1937 legislation that authorized marketing orders.