When the federal government regulates food quality, consumers lose. Unfortunately, a Washington Post article on a recent increase in class-action lawsuits by consumers against food manufacturers over the use of “natural” labels shows how consumer groups are missing this point. In suing food companies, plaintiffs are arguing that these manufacturers (of cheese, in one particular case) are misleadingly labeling their food as “natural” while using milk from cows that use a growth hormone and eat animal feed made from genetically modified grain.
Though the plaintiffs and food companies disagree over what should be labeled as “natural,” one thing they do agree on is that the U.S. Food & Drug Administration, which has so far stayed silent on the issue, needs to provide guidance on what “natural” actually means. Manufacturers argue that clear rules would help them avoid legal battles, while consumer groups believe that government regulation would reduce what they view as deceptive marketing.
The “natural” label fight is a repeat of last decade’s fight over labeling food “organic.” In that case, the federal government did step in, with the U.S. Department of Agriculture creating the “USDA Organic” label and establishing rules on when the label can be used. However, that hardly ended the controversy over the use of the term “organic.”
As I discussed in a previous post, traditional organic farmers are now fighting with new hydroponic farmers over the latter’s use of the “USDA Organic” label. Hydroponic farming seems consistent with organic farming goals: producing environmentally friendly and healthy foods. However, traditional organic farmers don’t want competition from the upstart hydroponics industry because that competition will likely cut into the price premium that organic foods now fetch. An FDA defined “natural” label would compel the same type of jockeying by producers to hurt rivals.
The “organic” label also illustrates that there is no reason to believe regulations actually provide any assurances about health and environmental benefits. I highlighted in another post that the “USDA Organic” label, far from indicating increased health, safety, and quality, is instead a taxpayer-funded marketing tool with dubious benefit to human health or the environment.
My chapter on health and safety policy in the most recent Cato Handbook for Policymakers explains why manufacturers call for these types of regulations. FDA regulation of “natural” foods would create what’s known as a “pooled market”—one in which anonymous producers provide a good without any branding and consumers are reassured about the good’s quality by government inspection and regulation. To appreciate this, think of the supermarket shelf of “normal” bananas that sits next to the shelf of “organic” bananas; can consumers really tell the difference between the two goods that warrants the difference in price? The “USDA Organic” label is supposed to assure consumers of that difference, but there are good reasons to question the value of that government assurance.
A separated market—a market with different levels of price and quality conveyed to consumers through marketing and branding—would provide more choices for consumers. For example, in the past several years both Whole Foods and Perdue have used concerns about genetically modified foods and antibiotics as opportunities to market the safety and quality of their foods. Consumers who are motivated to pay more for healthy foods incentivize transparency and increased quality from producers.
And while consumer groups are claiming that manufacturers are misleadingly marketing their foods as “natural,” pooling the market through FDA regulation would protect the producers without effectively addressing the groups’ complaints. A pooled market allows manufacturers to hide behind the false assurances regulations offer, but in a competitive, separated market other food companies will step in to offer truly “natural” foods and reap the benefits.
As the “USDA Organic” label has demonstrated, FDA intervention into “natural” foods would stifle competition and limit manufacturer transparency. Consumers concerned with the health and safety of the food they buy should instead push for the choices and accountability that markets provide.
Written with research assistant David Kemp.
Tim Lynch was right. Dallas Buyers Club is a terrific movie with a strong libertarian message about self-help, entrepreneurship, overbearing and even lethal regulation, and social tolerance. Matthew McConaughey, almost unrecognizable after losing 40 pounds, plays Ron Woodroof, a homophobic electrician in 1985 who learns he has AIDS and has 30 days to live. There's lots of strong language in his denunciation of the kinds of people who get AIDS, which he certainly is not. But after doing some research, he asks his doctor for AZT, the only drug for HIV/AIDS then available, but he wasn't eligible for the trials then in process. He turns to the black market, finds his way to Mexico, encounters a doctor who tells him that AZT is toxic and that there are better vitamins and drugs, and beats his original prognosis. As it occurs to him that there are plenty of other people in Dallas who could use these drugs, he sees an opportunity to make some money -- if he can only learn to deal with gay people.
Soon he's setting up a "buyers club," in an attempt to evade FDA regulations on selling illegal or non-approved drugs. He's got customers -- oops, potential members -- lining up. He's on planes to Japan and Amsterdam to get drugs not available in the United States. And at every turn he's impeded and harassed by the FDA, which insists that people with terminal illnesses just accept their fate. Can't have them taking drugs that might be dangerous! You'll be surprised to see how many armed FDA agents it takes to raid a storefront clinic operated by two dying men.
Here's a Cato study on AIDS and the FDA from 1986. Here's the original 1992 magazine story about the Dallas Buyers Club, published just before Ron Woodroof died.
Go see Dallas Buyers Club.
This weekend the Washington Post and New York Times took a closer look at a development mentioned in this space a while back and in a related Cato audio, namely growing federal pressure on small producers of artisan and farmstead cheeses. Here's the Post:
....artisanal cheesemakers, and their boosters in the local-food movement, say they are being unfairly targeted. They say the FDA does not understand their craft and is trying to impose standards better suited for industrial food companies. ...
Listeria is ubiquitous in the environment, but the FDA has a zero-tolerance rule for it in ready-to-eat food such as cheese. If the bacteria are present, the food is considered adulterated and cannot be sold. Some countries, including cheese-loving France, tolerate minute amounts of listeria in food.
Why can't we in America enjoy at least as much freedom at our dinner tables as the French?
Many artisan cheese producers favor the use of raw (unpasteurized) milk and the rules on that subject are coming in particular to (as it were) a non-boil. The Food and Drug Administration has long required that cheeses made from raw milk be aged for 60 days in hopes of killing all potentially harmful bacteria. Trouble is, it's been known for a while that 60 days is not long enough to guarantee that the survival rate of such bacteria is 0.00000 percent. Here's the Times:
The F.D.A. has not tipped its hand [on its review of the aging rule], but some in the industry fear that raw milk cheese could be banned altogether or that some types of cheese deemed to pose a higher safety risk could no longer be made with raw milk. Others say they believe the aging period may be extended, perhaps to 90 days. That could make it difficult or impossible for cheesemakers to continue using raw milk for some popular cheese styles, like blue cheese or taleggio-type cheeses, that may not lend themselves to such lengthy aging.
“A very important and thriving section of the American agricultural scene is in danger of being compromised or put out of business if the 60-day minimum were to be raised or if raw milk cheeses were to be entirely outlawed,” said Liz Thorpe, a vice president of Murray’s Cheese, a Manhattan retailer where about half the cheese is made with raw milk.
As Virginia Postrel pointed out the other day in a Wall Street Journal piece, the artisan food folks are relatively lucky: "proponents of small-scale farming are organized, ideological, and well represented in the elite media". Other producers victimized by overreaching regulation have much more trouble getting their voices heard in New York and Washington. That's one reason small food producers were able to achieve at least a limited and modest carve-out in the recent federal food safety bill, while small producers of children's apparel and other craft goods continue to flounder without relief under the impossible strictures of CPSIA.
Speaking of the Times, I think it sums up everything wrong with the world that Mark Bittman has quit his stellar food column to start a NYT politics column that begins with a "manifesto" whose planks include the following public policy proposal:
Encourage and subsidize home cooking. (Someday soon, I'll write about my idea for a new Civilian Cooking Corps.) When people cook their own food, they make better choices.
Talk about artists in uniform. Also speaking of the Times, reporter Sheryl Gay Stolberg quotes me today on Wal-Mart's nutrition deal with Michelle Obama, which takes a series of changes the giant retailer might well have been considering anyway for market reasons, rolls it together with some long-pursued public policy objectives like getting the opportunity to open stores in big cities despite union resistance, and clothes it all in a First Lady endorsement. Clever, no?
Last Tuesday, despite warnings of regulatory overreach, the Senate voted 73-25 in favor of S. 510, the Food Safety Modernization Act, which would greatly expand the powers of the federal Food and Drug Administration and impose extensive new testing and paperwork requirements on farmers and food producers. Almost at once, however, the bill was derailed -- whether temporarily or otherwise remains to be seen -- by what the New York Times called an "arcane parliamentary mistake" and the L.A. Times considered a purely "technical flaw". Roll Call put it more bluntly: "[Senate] Democrats violated a constitutional provision requiring that tax provisions originate in the House." While the New York Times weirdly cast Senate Republicans as the villains in the affair, other news sources more accurately reported that it was the (Democratic) House leadership that was standing up for its prerogatives:
"Unfortunately, [the Senate] passed a bill which is not consistent with the Constitution of the United States, so we are going to have to figure out how to do that consistent with the constitutional requirement that revenue bills start in the House," [House Majority Leader Steny] Hoyer said.
According to Hoyer, this has happened multiple times this Congress, causing severe legislative angina.
"The Senate knows the rule and should follow the rule and they should be cognizant of the rule," Hoyer scolded. "Nobody ought to be surprised by the rule. It is in the Constitution, and you have all been lectured and we have as well about reading the Constitution."
To those familiar with the history of the U.S. Constitution, the Origination Clause should hardly count as arcane or technical. It stands as the very first sentence of Article I, Section 7: "All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills." Behind that simple statement were centuries of history in which one of the most dearly fought battles for partisans of liberty was to secure for the more popular of the parliamentary branches, in Britain's case the House of Commons, the "power of the purse," that is, the power to raise public revenue through taxation. While tinkering with the exact details a bit, the framers of the U.S. Constitution would never for a moment have thought of dropping the general principle, in those days familiar as it was to every schoolchild. Thus it is that the House Ways and Means Committee, with its jurisdiction over revenue measures, descends to this day as a much more important entity on Capitol Hill than its counterpart Senate Finance Committee.
With its two-year terms of office and less populous constituencies, the House of Representatives was of course designed to be the legislative branch closest to the people, most readily thrown out of office when it strays from the public mood. Those considerations aside, the Constitution is rightly celebrated for the way its framers made the House and Senate different from each other precisely in order to ensure jealousies and dissensions between the two, those jealousies and dissensions serving as a safeguard against hasty or ill-considered legislation. In this case it worked exactly as planned, and the self-regard of the House leadership will serve as the reason for another round of scrutiny for a bill that could badly use some. Somewhere up above the spirit of James Madison may have heard the scolding words of Rep. Hoyer, and smiled.
Last week the New York Times reported on the story of Estrella Family Creamery, an award-winning, very-small-scale producer of raw milk farmstead cheeses in Montesano, Wash. The family faces a Food and Drug Administration ban on its products because the food pathogen listeria has been found in its facilities; when it expressed defiance, the FDA proceeded to stage a raid to seize its entire cheese stock. It's not easy to sort out how large a health risk may be involved (listeria, a widely disseminated form of bacteria, poses a real danger of food poisoning, but no actual illness has been traced to Estrella cheese). I was struck, in any event, by these paragraphs from the Times account:
“If the F.D.A. wanted to shut down the U.S. artisan cheese industry, all they’d have to do is do this environmental surveillance and the odds of finding a pathogen would be pretty great,” said Catherine W. Donnelly, co-director of the Vermont Institute for Artisan Cheese of the University of Vermont, referring to the listeria testing at cheese plants. “Is our role to shut these places down or help them?”
Kurt Beecher Dammeier, owner of Beecher’s Handmade Cheese, an artisan cheesemaker and retailer in Seattle, said the F.D.A. needed to work harder to understand artisans like Ms. Estrella. “The F.D.A. comes from an industrial, zero-defect, highly processed, repeatable perspective, and she comes from a more ancient time of creating with what she gets,” he said. “I’m not sure they can really even have a conversation.”
What lends some urgency to these continuing debates is that that the Senate is expected to vote as early as this week on a bill that will conscript thousands of food producers, processors and "facilities" -- including many that produce or import relatively low-risk foods for specialty, local or ethnic clienteles -- into a best-industrial-practices safety model with extensive recordkeeping requirements and other regulatory burdens. The bill cleared a Senate cloture vote the other day 74-25 and is scheduled for floor consideration Monday.
Much of the bill's press coverage -- as with a USA Today editorial which followed ridiculously slanted coverage in that paper -- appears blithely unaware of the apprehension the bill has raised among small farmers and organic/"locavore" advocates. Some of those fears played out in a battle over an amendment offered by Sen. Jon Tester (D-Mont.) to lessen regulatory burdens on smaller local producers, and strongly backed by (e.g.) foodie guru Michael Pollan. Most big "consumer" groups, however, including Consumers Union and the Center for Science in the Public Interest, lined up against the small farmers and facilities, as did (following their lead) the New York Times, whose editorial managed to denounce the Tester amendment without actually saying what it did, lest its readers (who of course include many foodie/locavore believers) be confused. Moreover, many big agribusiness sectors have actively opposed the Tester amendment as well, on the view that any regulatory regime they have to live with, Uncle Perry with his parsnip patch should have to live with too, even if it means he won't manage to stay in business while they will. Despite that line-up, Senate leaders have now reportedly accepted a watered-down version of the Tester amendment, which does not by any means exempt small producers from federal regulatory control -- they will face plenty of it -- but at least nods toward the principle of "tiering" burdens. (Earlier here, here, here, here, etc.)
The wider question is whether the bill as a whole, with its massive ramp-up of federal regulation to displace both voluntary market choices and state-level regulation, is a good idea. As I observed to TownHall's Jillian Bandes, despite the panic atmosphere generated over the issue in recent years, the best evidence is that the incidence of food poisoning continues to fall, not rise; one reason for the greater press coverage of the issue is that science has gotten better at identifying and tracing the sorts of outbreaks that were happening all along. To some who promote a more intensive regulatory state, the resulting "crisis" presents a welcome opportunity, even though, on these advocates' own terms, the existing array of laws provides ample means by which federal agencies can crack down on food actually shown to pose a hazard.
When the new Congress convenes in January, it will bring to Washington dozens of new lawmakers with more skeptical views about regulation, who may listen with favor to colleagues like Sen. Tom Coburn (R-Okla.), who has argued against the pending FSMA as an unjustified power grab. Could that be why Sen. Harry Reid (D-Nev.) is determined to force through the bill during the lame duck session? In this case -- as with the very bad Paycheck Fairness Act, which Republicans managed to stop earlier this month, and the even more appalling “Public Safety Employer-Employee Cooperation Act” to force unionization on local public safety workers -- it's almost as if the point of the post-election session is to push controversial measures that would encounter more resistance if held over to the next Congress. Is this really a proper use of the lame duck?