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    Supermarket Retailers: Washington Regulations Have Us "Under Attack"

    01/23/2013

    Washington's sweeping regulations for the food retail industry seem too tough to swallow for some business leaders, as retailers and consumers alike can expect higher costs for a government program that will contribute little to its stated goal - improving food safety.

    A recent gathering known as the Food Marketing Institute (FMI) Midwinter Conference saw major executives in the supermarket business challenge the administration to recognize that burdensome regulations do not necessarily equate to progress for industry safety.

    A panel at the FMI this week, hosted by Fox News contributor Tucker Carlson, discussed the effects that a new round of Washington regulations are having on their businesses.  

    Specifically of interest are the latest safety rules implemented by the U.S. Food and Drug Administration (FDA) that seek to make food processors and farms more accountable for reducing foodborne illnesses.  The rules, which are required via the Food Safety Modernization Act (FSMA), were released earlier this month.

    But the executives at the FMI feel they are consistently a step ahead of government anyhow, and that massive regulations need to be relaxed, not amplified.

    Judy Spires, the CEO of AG Supermarket Holdings stated that food safety "is a priority in our business, and we are proactive without having to have it legislated to us."

    Spires added, "We're an industry that's been forever providing food in the most effective way.  Yet we feel under attack."

    Steve Smith, president and CEO of K-VA-T Food Stores, agrees.  He emphasized the food industry's proactive stance on other safety and health issues, saying retailers and suppliers can address issues on their own.

    A host of problems for his company's business prospects, Smith believes, begins and ends with government regulations.  

    "For a big part of our customer base, unemployment has gone from 5% four years ago to more than 10% today," Smith claims.  "A lot of it is due to regulations."

    He adds, "I don't see it getting better in the next four years."

    Smith is correct.  Some conservative estimates place the cost of implementing these new regulations to anywhere between $5,000 and $7,500 annually for a medium-sized farm. Other estimates however, predict that even small farms will be put out at a clip of $13,000 per year, while larger farms will be hit with a $30,000 yearly price tag.

    With farms and food producers having to absorb such costs and reduce overhead, the unemployment rate is likely to go even higher.

    But are those costs worth it?  Surely the security and safety of the nation's food supply will make this a worthwhile venture.

    Diane Katz of the Heritage Foundation thinks not, referring to the newly minted powers of the FDA as a "costly and ineffective answer to a manufactured crisis."  

    The FSMA is designed in theory to protect America's food supply, and by extension, Americans themselves.  But Katz summarizes the regulatory effort as follows:

    "... rhetoric aside, the nation’s food supply has never been safer, thanks largely to technological advances and market forces. Consequently, granting vast new powers to the Food and Drug Administration (FDA) would raise the cost of food but would not increase consumer protection."

    Raising the cost of food is a consequence that most Americans right now simply can't afford.  And with no tangible benefits to safety, the FSMA seems to simply be yet another government program intent on issuing red tape for the sake of issuing red tape.

    In reality, food contamination illnesses have been on the decline for well over a decade; and they've been on the decline without this regulatory overreach, and without the subsequent costs. 

    In the end, executives in the food retail industry all seem to be in consensus - government is just now catching up to their already intact progressive safety standards.  And that game of catch up will only raise the costs for food producers and consumers alike.

    Perhaps the administration should call off the attack on food retailers, and allow the markets to drive costs and safety - the way they already have.

    That may just be something to chew on.

    Follow Rusty on Twitter @rustyweiss74