HOW DO YOU suppose it's determined how many navel oranges are produced and marketed in the United States each year? By the law of supply and demand? Guess again. An 11-member Navel Orange Administrative Committee, whose members are appointed by the secretary of agriculture, decides how many oranges can be sold every year. Most of the committee's members are citrus growers or packers, and they try to choose a number that will maximize their profits. Such marketing orders are enforceable by federal law. You can grow as many navel oranges as you like in this country. But unless you have a federal allotment, you can't sell any without subjecting yourself to some rather nasty penalties.

Such an arrangement in any other industry would be calleda restraint of trade and a violation of the antitrust laws. But in the fruit and nuts business, marketing orders and allotments have been sanctioned by the federal government since the 1930s. This is true despite the fact that these agreements, like other restraints of trade, tend to increase prices to consumers and give producers and distributors monopoly profits. The amounts involved are not small; products covered by marketing orders tote up sales of more than $10 billion yearly.

The justification for these arrangements in the 1930s was to keep producers in business at a time when prices for their products had dropped to near zero. That justification is pretty threadbare today. The producers involved are sophisticated, well organized and prosperous. They are up to the rigors of competition.

So we're pleased to hear that President Reagan is considering measures to limit marketing orders and revise the allotment system for fruits and nuts. He deserves some credit here for following his free-market principles to their logical ends; the Department of Agriculture and most growers, including, we suspect, many longtime Reagan supporters in California, like the present system just fine.

None of this is to advocate complete deregulation of agriculture or a withdrawal of the federal government from this field altogether. The American agricultural system is a hybrid of free enterprise and government involvement that no one person would have created from scratch. On the whole, it works pretty well: American agriculture is wonderfully efficient and productive. But for most commodities, we allow more play to market forces and put fewer restrictions on potential producers than is the case with most fruits and nuts. You don't have to be a free-market ideologue to applaud the president if, as expected, he moves to reform the system of marketing orders and allotments.