Post Raisin -- Not the Cereal

The Washington Post has a Style piece on the raisin farmer in California who's violating the terms of the raisin marketing agreement and won an interim victory at the Supreme Court this term.

I don't know enough about this marketing agreement, or the other agreements, to be comfortable in any detailed commentary on the case.

What I do know is this:  agricultural producers in the 1930's had very little power in the market--they had to accept whatever prices the buyers would offer.  The perception then was the imbalance in pricing power between producers and buyers resulted in an unstable market, with wide swings in price as producers over-produced in response to good products, creating surpluses.  Because the demand for food is usually inelastic, it takes a big drop in prices to clear the market of surpluses.  

Hence the cartelization of commodity producers, whether tobacco producers in the 1930s, or oil producers in the 1970's.  In the area of fruit and vegetables the cartels took the form of marketing agreements.  (I'm in danger of confusing marketing agreements with research and promotion agreements, which try to increase demand without controlling supply.  Both types may be initially approved by producer referendums.)

IMHO the question today is whether there are other mechanisms available to producers?  For example, the price of eggs went up and down rapidly in the 1940's and 50's, reflecting the same sort of free market mechanics.  My mother got very disgusted with those farmers who'd expand production when the price was high, knowing the sure result would be low prices a year later.  (She didn't believe in following self-interest; one should look out for the greater good.)

But unlike Canada (I think) the US never had an egg cartel.  And what happened?  Contract growers happened.  Big companies contracted with growers to produce eggs and poultry as innovation paved the way for 100,000 chicken houses.   That process of consolidation meant lots of small poultry producers went out of business, but those who remained faced much less risk because the industry was vertically integrated. 

That's happened in other areas, but mechanisms like futures and forward contracting seem also to have played a part, not to mention crop insurance.  If we were re-creating the raisin industry from scratch, would we have a marketing agreement, or some other mechanism to reduce price risk?