The USDA’s War on Small Farms

(Mises)—Most students in America are introduced to the writings of Upton Sinclair. While they aren’t shown his incredible cover-up of the Holodomor or his other Soviet apologisms, they are presented with his most famous work: The Jungle. This work tells the tale of Sinclair’s investigation into the wretched working conditions of the meat-packers of its age. Between lost limbs and failed inspections, Sinclair writes about the meat being contaminated and barbarously prepared.

This tale is meant to show the supposed failures of laissez-faire capitalism, with its disregard for workers and health. Readers are supposed to walk away with a firm belief in the need for the regulation of these firms. Hurrah! Here comes the mighty state to provide safety to the masses that would otherwise be made sick by crony corporations. That’s far from the truth.

Murray Rothbard himself documents in The Progressive Era the truth of the United States Department of Agriculture (USDA) regulation. Rothbard observed that nearly every inspection passed in any form of legislature or bureaucracy was fueled by protectionism from existing firms. These regulations were not there to provide “safety” to consumers but rather to keep competition out of the marketplace by fiat. Rothbard states that the only meaningful definition of monopoly is an exclusive legal right granted by the state. Perhaps then, the only meaningful definition of so-called monopoly powers is a firm’s ability to push regulation that harms their competition through the state.

Even today, the USDA—and its regulations—threaten to crush small farmers under its heel. A small hobby farm, or even one that simply isn’t a factory farm, can hardly stand up to the regulations.

Meat processing in the United States must be done under the supervision of a USDA inspector if the goal is to sell the animal product to another person. A farmer cannot simply butcher his or her own animal, cut it into the usual meat products, and sell it at a farm stand. That would violate USDA regulations. Regardless of the ability of farmers to inspect and keep their own animals healthy or of their own skill in butchering livestock, they must have a USDA inspector to sell the product on the market.

This inspector is not provided, though, free of charge by the USDA through taxpayer dollars. Rather, the individual meat processor must pay out of pocket for these services. As far as meat processing goes, the USDA charges anywhere from $86 to $238 an hour for inspections. This does not guarantee the quality of the meat; it simply gives a rubber stamp to large processors that can afford to pay the processors.

Bigger is not necessarily better, as one can apply basic logic to the inspection process. Those moving larger volumes of meat are able to afford to pay an inspector hourly. By throwing large volumes of the goods over and over in a constant stream at their workers and the inspectors, mistakes can be made. This method of “inspection” incentivizes for large volumes rather than quality. It’s rare to come across a small farm causing health issues, but it has become increasingly common to come across recalls from large processors like Perdue and Lakeside Refrigerated. These large outlets can certainly afford to pay for an inspector, but that doesn’t guarantee quality.

The solution is, rather than increase the scale of operations, America must decentralize its meat packing and processing. This means opposing bureaucracy that forces family operations to pay for a bureaucrat who guarantees neither safety nor quality.

In a free market, quality and safety can be ensured by a variety of means. An organization like the USDA might arise, but it would be held accountable by profits and losses. Individual processing firms may pay the free-market USDA to verify the health of their product. However, if the free-market USDA fails to stop an illness from arising, through their own inspection failures, they may lose their credibility with both consumers and the producers that pay them. Profit and loss provide greater incentives for success than a bureaucracy that theoretically cannot “go under.”

Even better is the decentralization of the food processing industry altogether. Greater accountability can be held to more local institutions, such as farmers currently barred from processing their own food. Word of mouth spreads quickly among neighbors. Any exchange that a consumer is comfortable making, they should be allowed to, knowing full well the risks. Why should a government get between a farmer and their customer buying meat from them?

This is the entire basis for Thomas Massie’s Processing Revival and Intrastate Meat Exemption Act, or PRIME Act, which would circumvent the USDA’s jurisdiction for exchanges at a community level. The act would exempt custom slaughterhouses from USDA inspector requirements if the exchange occurs within state borders and follows any state-specific laws. It would be an important step toward decentralizing the food system.

If conservatives and libertarians care about competition for small farms, they should support defanging the federal bureaucracy used by large corporations to capture markets. The USDA should have its regulatory powers removed, and the ability to provide safety in food should be returned to the market. Markets provide a far more welcoming place for producers and a far safer result for consumers.

About the Author

David Brady is a Catholic libertarian and economics and finance undergraduate student at Florida Southern College. He is a co-host of the “Econphonics” podcast and a Mises Apprentice.

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