Regulation, Competition, and “Antibiotic-free” Chicken

In an effort to distinguish itself from competitors, poultry producer Perdue recently ran advertisements touting its “no antibiotics ever” line of chicken products. This is not just another corporate ad campaign; the story goes deeper than that, as the New York Times recently reported. At issue is the definition of what makes poultry “antibiotic free.”

Poultry companies like Perdue and its main competitors, Tyson and Foster Farms, have long used antibiotics important to humans in the raising of chickens. Many scientists have advocated a ban on routine (non-disease) use of antibiotics in the raising of food animals because of concerns that such use will hasten the evolution of antibiotic-resistant bacteria. In 2012 the Food and Drug Administration issued nonbinding regulatory guidance on using human-important antibiotics in livestock.

Companies other than Perdue continue to use animal-only antibiotics called ionophores. Even if the FDA regulatory guidance was instead a legally binding regulation, such antibiotics would not be banned because they are not “human-important,” hence Perdue’s move to use the term “no antibiotics ever” in marketing its products.

The debate over ionophores is reminiscent over the fights as to what constitutes “organic” food. The popular perception of “organic” often differs from the government’s specific definition of the term. According to Henry Miller of the Hoover Institution at Stanford University, “so long as an organic farmer abides by his organic system (production) plan–a plan that an organic certifying agent must approve before granting the farmer organic status–the unintentional presence of GMOs (or, for that matter, prohibited synthetic pesticides) in any amount does not affect the organic status of the farmer’s products or farm.” Only 5 percent of organic operators area actually tested every year.

Each time the government defines the characteristics of an acceptable product regarding its safety, organic, or antibiotic-free characteristics, some competition in the market is lost. Only those who deeply understand the intricacies of the definition can both produce compliant products and work around some of the “in spirit” rules. Ionophores are one of these workarounds. They keep chickens healthy, reduce costs, and are technically compliant with rules on human-important antibiotic use in poultry production.

Most command-and-control regulations have some anticompetitive aspects. They hinder innovation at the margins of regulatory definitions that otherwise would occur in a free market. The battle between Perdue, Tyson, and Foster Farms is an excellent case study of how competition rather than regulation can serve consumer and public health interests.