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Buying fruits and vegetables shouldn’t be frightening. Across the United States consumers place their trust in farmers to provide safe, healthy food. This summer, that trust has been shaken by a multistate outbreak of cyclosporiasis linked to fresh produce.
Whenever foodborne illnesses make headlines, calls for expanding government regulation are rarely far behind. Farmers and food producers already have a powerful incentive to prevent outbreaks: Their livelihoods depend on it.
Our free-market system acts as its own regulator, protecting consumers through competition as companies seek to maintain their reputation with customers. When a food-borne outbreak occurs, the consequences extend far beyond the farm or processor responsible. Consumer confidence declines, and sales plummet. Businesses can suffer lasting reputational and financial damage. To avoid these consequences, producers often adopt food-safety standards more rigorous than those required by government.
An outbreak can jeopardize an entire industry. In 2006, the FDA warned against eating spinach following an E. coli outbreak linked to the leafy green. This warning devastated spinach growers across the country as consumers stopped buying the crop.
It was out of this crisis that some businesses in the produce industry created the Leafy Greens Marketing Agreement. The West Coast farming industry saw self-regulation as the way to protect itself from future business loss. The agreement creates a coalition of farmers who adhere to strict food-safety protocols. It sends a valuable signal to retailers and consumers that products from participating businesses meet high safety standards.
Unlike a one-size-fits-all government regulation (which doesn’t stop horror stories), the agreement allows growers to readily adapt their safety practices as new risks emerge and better technologies become available. Because the standards are developed by the people who best understand the production process, they can evolve more quickly than government rules. The industry’s incentive to protect its reputation creates a system that is both flexible and accountable.
Farms join the agreement of their own free will. But once they are a part of the agreement, they must follow the rules. Jack Vessey, a fourth-generation farmer in Southern California, thought that adopting the agreement was a no-brainer. “We have to do it. Any kind of outbreak is detrimental to our industry,” he told CBS News.
With their reputations and profits on the line, Vessey and other farmers created a way to ensure the products are as safe as possible — without government intervention. The agreement requires participants to take several precautions, including testing irrigation water and installing barcodes for tracing. These farmers and their consumers can feel safe thanks to producer-developed regulations.
The Leafy Greens Marketing Agreement can teach us an important lesson. Businesses do not need to be forced to care about product safety. The market already does it through the threat of lawsuits and the incentive to have a good rapport. In a competitive environment, consumers who face a problem with one product or supplier can turn to alternatives. We have seen this with the cyclosporiasis outbreak. The market has given consumers so many options that they can turn away from lettuce to another vegetable. When a business does not provide a safe environment, consumers can express their opinion through their buying choices, causing growers to care about their processes.
Government has a role in enforcing laws against fraud and in responding to public health threats. But policymakers should also recognize that markets create incentives. Industries whose success depends on consumer trust often have compelling reasons to regulate themselves — sometimes more effectively than government can.
Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.
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