USDA Moves to End Rent-Seeking in Poultry Industry

By | 2018-07-11T07:26:18+00:00 July 11th, 2018|
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The U.S. Department of Agriculture in December ruffled a few feathers by withdrawing a regulation published on the final full day of the Obama Administration that would have created new requirements for producers of “organic” eggs and poultry.

Called the Organic Livestock and Poultry Practices (OLPP) rule, it would have, among other things, specified that to boast the coveted “USDA Organic” seal, animals would need to be raised with certain minimum amounts of space, light, and access to the outdoors.

USDA officials offered several rationales for first delaying and then withdrawing the rule. First, they argued that by being overly prescriptive, it could discourage the development of new, innovative organic farming practices that both meet humane standards and also keep costs under control.

Second, USDA interpreted the relevant enabling statute more narrowly than the previous administration and therefore considered that the rule exceeded statutory authority.

Finally, USDA said in its proposed rule withdrawing the original one: “Withdrawal of the OLPP also is independently justified based upon USDA’s revised assessments of its benefits and burdens and USDA’s view of sound regulatory policy.” The proposed rule expounded at length on those points—persuasively, we believe.

Many large-scale organic egg producers applauded USDA’s decision to withdraw the rule because it would have required them to modify their facilities at significant expense. But the rule’s proponents cried foul at the change in course. For them, the rule would have been a financial boon, inasmuch as they were already generally conforming to the standards they had spent years lobbying for. The rule would have permanently protected their businesses from larger-scale producers who sought to enter the organic marketplace with innovative animal welfare approaches.

The Washington Post quoted the outraged comments of Jesse Laflamme, co-owner and CEO of egg company Pete and Gerry’s Organics: “What’s so upsetting is that there is such a gap between what organic consumers expect and what these factory farms are producing.”

Crying “Fowl” Over Government Regulated “Organics”

Therein lies the fundamental problem with the premise of government standards for organic agriculture, whether it involves the production of meat and eggs or farming of grain, fruits and vegetables: The entire enterprise is driven more by what the purchasers of organic products expect or feel, rather than any evidence-based criteria. Many of these consumers resemble deluded members of a religious cult led by a con-man preacher. People should be free to exercise their beliefs, to be sure, but the government should not be in the business of codifying or promoting them.

Why, then, did USDA become involved in organic certification in the first place? When the organic standards were promulgated in 2000, Secretary of Agriculture Dan Glickman was unequivocal about the fundamental meaninglessness of the organic designation: “Let me be clear about one thing, the organic label is a marketing tool. It is not a statement about food safety. Nor is ‘organic’ a value judgment about nutrition or quality.”

That’s why far from setting more rigid standards for it, the feds should be fully extricating themselves from defining “organic.” Those issues are best adjudicated by the market, at the expense of those who are willing to pay the premium.

It’s worth repeating: The organic label is no more than a marketing tool. And it’s a cynical one, because so many unsuspecting consumers are ripped off by the high prices of organic products, without palpable benefit either to human health or the environment. That’s why far from setting more rigid standards for it, the feds should be fully extricating themselves from defining “organic.” Those issues are best adjudicated by the market, at the expense of those who are willing to pay the premium.

USDA “Organics” Are a Golden Egg for Special Interests

Organic agriculture has morphed into a massive special-interest bonanza. Annual sales of organic food in the United States now exceed $40 billion. Federal spending on organic agriculture has mushroomed from $20 million in the 2002 Farm Act to more than $160 million in the 2014 version (with further increases under consideration). And according to the USDA, during the Obama administration the department “has helped organic stakeholders access programs that support conservation, provide access to loans and grants, fund organic research and education and mitigate pest emergencies,” all of which could (and should) be funded by industry.

It is especially noteworthy that other, analogous special interests—such as the producers of kosher and halal foods—don’t receive similar government benefits. And for that, they are better off. There are enough kosher food-certifying organizations to meet a very wide range of belief systems, for example, and consumers are free to choose products only from groups which meet their standards. This approach allows those who seek to adhere to the strictest standards to have certifying agencies on which they can rely, while also allowing those who accept more relaxed standards to have a wide range of affordable products that meet their religious needs. They are, in Milton Friedman’s memorable phrase, free to choose.

This democratized private-sector approach has had the effect of expanding the market for fresh kosher meat in the United States. In smaller communities that can’t support a market for the significantly more expensive “glatt” kosher meat (which must meet the strictest standard), kosher consumers in “underserved” areas can now go to Trader Joe’s throughout the country and purchase meat which satisfies a more basic, and affordable, kosher standard.

Belief Communities Should Be Free to Set Their Own Standards

Some of this stratification is taking root in the organic industry already: some true-believers are promoting a kind of stricter-standard, “organic-plus” designation. That’s fine: As long as the government isn’t involved and there isn’t fraudulent advertising, the government should not care if, in order to avoid earthly contamination, organic-plus products are required to be produced on the moon.

The private-sector approach to certifying faith-driven food purchases expands the market and keeps cost down, by allowing consumers to pay premiums that reflect their beliefs. And it doesn’t cost nonbelievers a penny.

That’s why those who favor the OLPP are so outraged about its withdrawal. Without new, more rigid, federally-mandated standards, they’d be forced not only to compete among a range of organic options but would have to justify the higher cost of their own products through marketing—at their own expense.

Organic boosterism at the federal level is not without consequences. Consumers have been snookered into believing that organic food is healthier, safer, or better for the environment than nonorganic options, although the evidence argues otherwise. Lower crop yields are inevitable given organic farming’s systematic rejection of many advanced methods and technologies—which increases the pressure for the conversion of more land to farming and more water for irrigation, both of which are serious environmental issues.

Organic Boosters Need to Pay for Their Own Marketing Gimmicks

Because prices for organic food are much higher, those misconceptions eat away at consumers’ buying power. And while organic marketers like to promote the idea that “organic” implies “locally grown,” the United States is actually a net importer of organic goods, including organic grains from countries like China, India, Turkey and Romania, with no way to be sure those countries adhere to “organic” standards that even remotely resemble those in the United States. Moreover, there is documented widespread cheating in the organic designation of eggs, milk, and imported grains.

Let’s return to the Organic Livestock and Poultry Practices rule and USDA’s decision to withdraw it, which elicited bitter condemnation from many organic farmers and the Organic Trade Association, whose long-standing lobbying for the rule was rent-seeking, pure and simple. The group knows its constituency, whose views were reflected in a March 2017 survey by Consumer Reports: (1) 60 percent of Americans say that it is extremely or very important that animals used to produce organic food “are raised on farms with high standards for animal welfare”; and (2) 54 percent of Americans say that it is extremely or very important that eggs labeled “organic” come from hens that were “able to go outdoors and move freely outdoors.” (The results of the survey were silent on whether purchasers of organic eggs prefer that the hens were serenaded with Chopin or rap music.)

We support the withdrawal of the OLPP rule, as a first step in ending the federal imposition and promotion of belief-based food-production standards. If industry and consumers want such standards, they are free to form non-governmental entities at their own expense to develop whatever rules or sets of rules they prefer. If they do so, we, as believers—in market-driven solutions—will gladly give them our blessing.

Photo credit:  John Greim/LightRocket via Getty Images

About the Author:

Henry I. Miller, a physician and molecular biologist, is the Robert Wesson Fellow in Scientific Philosophy and Public Policy at Stanford University’s Hoover Institution. Jeff Stier is a senior fellow at the Consumer Choice Center. This column has been adapted from an article in the Summer 2018 issue of Regulation, published by the Cato Institute.