December, 2010

Fruits of Thought

Prosperity, Not Regulation, The Key To Food Safety

As this column is written, it is unclear whether the food safety bill that has been heralded as the first major modernization of the nation’s food safety laws in over 70 years will actually become law. Though the bill was passed by the Senate and it was thought that approval by the House was but a formality, it appears that the Senate bill includes some revenue-raising programs that violate the constitutional requirement that all tax increases originate in the House of Representatives. Whether the Democratic majority will find a way to revote on the bill before the lame duck session ends is unknown.

The bill was supported by virtually all produce associations who then shifted positions and opposed the bill after the so-called Tester Amendment, named after Montana’s Democratic senator Jon Tester, was approved. The amendment exempted growers who have less than half a million dollars a year in sales and who sell their crops direct to consumers, restaurants or retailers in state or within a 275-mile radius of the farm.

The produce associations changed their position because A) Their membership views exemptions for competitors as unfair, B) Their membership fears that a foodborne illness caused by an “exempt” farmer would still lead to massive FDA recalls and loss of consumer confidence that would damage the whole industry, and C) There was a fear that this standard was a camel’s nose under the tent. Once food safety legislation was influenced by anything other than food safety concerns, one could count on future political concerns to expand such exemptions.

It is a fair enough case. The associations believe it impolitic to say it, but most of the industry believes that the smaller players, the players being exempted, are the exact source of most safety problems. They lack the staff, the technology, the oversight of knowledgeable buyers and the financial flexibility to implement world class food safety standards.

A bigger question, though, is whether the industry should support this kind of legislation at all — with or without exemptions.  From a strictly business point of view, large producers and processors are inspected so often that the fact that this bill adds a federal inspection once every three to five years is really meaningless. Even giving the FDA power to order recalls and whatnot is not as threatening if you have a legal department and access to independent food safety experts.

So it is not surprising that the opposition to the bill was led by small farmers for whom the bill is burdensome. In fact, it is shocking that the small grower and organic groups went along with the Tester amendment, since $500,000 is so low. After all, there are lots of little growers that sell a million dollars a year.

In order to qualify for the exemption, each small producer must file three years of detailed financial records, produce a hazard analysis critical control point plan, and present proof of compliance with local, county and state laws. The Secretary of Health and Human Services must approve each exemption. This is pretty burdensome as well.

It is probably in the self-interest of many larger producers to see such difficulties imposed on small guys, and the argument against differential standards is powerful, but many in the industry will think it a sad thing for America to burden small producers in this fashion.

Especially because it may not achieve any purpose. Just because a bill is called a food safety bill doesn’t mean it actually will make anyone safer. Oh, one can quibble with the bill specifics… who, for example, has ever died because manufacturers wouldn’t recall their product? What evidence is there that sending one more inspector every three to five years to a plant or farm will do anything?

More broadly, though, in endorsing the bill, the industry bought into a vision of food safety that holds that the route to safety is governmental regulation. Maybe in the age of Obama and at a time when the Democrats had filibuster-proof majorities, the sense was “if you can’t beat them, join them,”  and so the industry advocates signed on to shape as good a bill as they could.

Still, someone has to stand up for a principle, and, in the future,  the industry may want to object to the notion that food safety will come from the dictate of a government commandant.

As the FDA has shown in its regulation of drugs, the institution becomes hyper-conservative. This means that with the more powerful regulatory regime, innovative new techniques become more difficult to implement.

Besides, if one is looking for the key to food safety, note this: As societies become more affluent, food becomes safer. So the best way to achieve safety is to enhance prosperity. Adding the risk of arbitrary government actions such as recalls and imposing new regulatory burdens on productive sectors of the society is unlikely to help in the pursuit of such prosperity. The cost in food safety of a society that grows by one percentage point less each year because of heavy regulation will probably never be known. It is, however, real and substantial, and the industry should make sure our representatives know it.     pb