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January 2012 Archive

Pig Blood and the Clean Water Act

January 31, 2012

Wow. This is disgusting.

Hypervocal, an on-line news aggregator, reports further on some key facts:

“The EPA, Texas Parks & Wildlife and Texas Environmental Crimes Task Force investigated the Columbia Packing Co. and  found an underground drainage pipe, not linked to the city’s waste management system, discharging pig’s blood into the creek.”

That is potentially bad, awful, terrible news for the packing company. This discreet pipe is the definition of a point source under the federal Clean Water Act. Oh, and it is also a safe bet that PIG BLOOD is also a pollutant as defined by the Act:

“The term “pollutant” means dredged spoil, solid waste, incinerator residue, sewage, garbage, sewage sludge, munitions, chemical wastes, biological materials, radioactive materials, heat, wrecked or discarded equipment, rock, sand, cellar dirt and industrial, municipal, and agricultural waste discharged into water.”

Two very big strikes against the packing company. We’d probably need more facts in order to make a reliable determination that the packing company violated the CWA, but it looks pretty bad for them so far.

Farm Interns and Minimum Wage Laws

January 25, 2012

At midnight on December 31, 2011, a Washington State law exempting farm interns from the state’s minimum wage requirements expired. It is now illegal for unpaid interns to work on farms in the state, depriving farmers an economical opportunity to provide young, aspiring farmers with on-the-job training. I am terrible at segues, so lets just say we should use it as an excuse to talk about labor law on the farm.

A farm owner is a business employer and must therefore understand how to properly employ people. To do that every farm owner needs to understand the interplay between federal and state labor laws.

The Fair Labor Standards Act is the federal law that guarantees a minimum wage for employees. The Act defines ‘employment’ as any activity conducted by a person who is “suffered or permitted to work”, and anyone who fits the definition is entitled to receive the federal minimum wage. “Suffer or permit to work” is a broad definition of labor, and it includes almost any imaginable activity that is not specifically exempt by another federal law or regulation.

There is just such an exemption for what we would call “interns” and apprentices. The term “suffer or permit to work” cannot be applied to a person whose work serves only his or her own interest as an employee of another who provides aid or instruction. This means interns, who work in exchange for training and education. Under federal labor law, the following criteria are used to determine whether an employee is or is not an intern exempt from minimum wage:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2. The internship experience is for the benefit of the intern;

3. The intern does not displace regular employees, but works under close supervision of existing staff;

4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

5. The intern is not necessarily entitled to a job at the conclusion of the internship; and

6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If the conditions of work qualify for each of these criteria, the work is what we would call an internship, and is therefore generally exempt from federal minimum wage rules.

It is important to note that these criteria only apply towards compliance with federal law. States may have their own definitions of minimum wage, internships, and what it means to be employed. Because of the way our federalism works, however, states cannot mandate definitions of these terms that guarantee protection lower than those afforded by federal law. For example, a state may have a higher minimum wage than the federal level, but not one that is lower. A state may also require that employees fitting the description of “intern” receive a minimum wage, even though they qualify for the federal minimum wage exemption under the federal internship criteria.

Washington is an example of just such a state, which mandates pay for interns that would otherwise qualify as exempt under federal rules. The state construes the term “suffer or permit to work” more broadly than the federal government, and interns are not specifically exempted from the minimum wage law. Since the expiration of the farm intern exception, it is now illegal for this class of agricultural interns to work in exchange for training and education. A farm may be able to get creative with the remaining exceptions in order to get interns on the farm, but those would be risky strategies even with the guidance of an attorney. The safe bet is to just comply with the law.

On the other hand, California is an example of a state that adheres fairly closely to the federal guidelines for determining exemption to minimum wage.

Farm internships are both a national and a very local issue. Though a typical farm intern is likely exempt from federal minimum wage laws if he or she meets the criteria, as an employer you still need to check with your state to see if you get a pass there too. The information should be easy to come by on your state’s department of labor webpage, or you can give them a call and find out from them if you are still uncertain.

This article also appears on my buddy Taylor Reid’s awesome resource compendium, beginningfarmers.org

Raw Milk and the Law – Wisconsin

January 18, 2012

Yet another farmer faces fines for not following his state’s raw milk laws. From what I gather from the article, the farmer in question sought to avoid regulatory liability by using a cow-share arrangement to distribute dairy products to fellow members.

As I covered in my recent raw milk article in Cornell’s Small Farms Quarterly, the effectiveness of informal schemes which are designed to avoid pasteurization requirements are highly questionable. The legality of cow-share and other “moo-n shine” arrangements vary from state to state and they usually fail. Anyone who contemplates selling raw milk has to take these uncertainties into account and build them into a business and distribution plan. A comprehensive risk management analysis, especially for raw milk, must extend beyond product safety and production standards. Regulatory compliance is itself a form of risk management. It deserves the equal weight and attention as a HACCP plan or the good agricultural practices that a farmer adopts.

Raw milk engenders some very strong opinions from all sides. For every eager dairy producer scheming to circumvent the law, there is an equally zealous public health advocate or agricultural department inspector looking to hand out a hefty fine. A farmer may feel very earnestly that he or she has done nothing wrong by selling a raw dairy product, but there is a high probability a district attorney or state regulators will strongly disagree. If so, the fines are inevitable.

If you disagree with the law, that is fine, but tempting regulators with sketchy schemes is just about the worst form of advocacy there is. Failing to honestly assess, without bias, how the law may adversely view your agricultural activity is also bad business. It is certainly no way to bring about change in the law.

Crab Soup Has Crab? Crab Soup Has Crab.

January 17, 2012

Since last appearing as resident Milk Expert on this humble blog, Dave Jackson has added to his Food Law skill-set, mastering the byzantine world of food labeling regulations. Late last week, Consumerist ran a story on a product recall for mislabeled crab soup found in Whole Foods. I asked Dave for an easy explanation of FDA labeling rules, in a crab-shell:

Last week FDA and Blount Fine Foods announced a voluntary recall of Rip Roar’N Crab Soup because the soup label lacked an allergen statement saying “Contains Crab.”  The back labels were mistakenly replaced with “Manhattan Clam Chowder” labels so the ingredient listing and allergen statements did not match.  However, the result was that Crab Soup correctly labeled on the front still required the allergen statement with the ingredients listing.  How could that be?
In 2004, Congress passed the “Food Allergen Labeling and Consumer Protection Act” (Public Law 108-282) requiring that food manufacturers label products containing 8 major allergens: milk, eggs, wheat, fish, crustacean shellfish, tree nuts, peanuts, and soybeans.  The law requires that the common or usual name for each of the allergens be listed in the ingredients or in a separate statement starting with “Contains.”  21 U.S.C. § 343(w)(1).
FDA takes allergen labeling very seriously. Recent FDA Warning Letters to food manufacturers involve allergen labeling errors, commonly associated with seafood and bakery products.  What happens if the product does not have the allergens labeled?  FDA considers the product “misbranded,” one of the two big violations of FDA law along with “adulteration.”  Misbranding can result in warnings, costly product recalls, and over time, fines and imprisonment.  21 U.S.C.  333. Just because an ingredient is in the product title doesn’t mean you have satisfied the regulatory requirements. While it seems a bit redundant to separately tell consumers that Crab Soup does in fact “Contain Crab,” it’s better to overcommunicate than risk FDA coming after you.

Lex Cibus, The Quarterly Food Law Newsletter, Vol. 2

January 12, 2012

The latest edition of my Food Law Newsletter just went out. If it is not in your email box, you can view the whole thing here. If you like it, sign up for the next edition on the left of the page (Scroll down a bit… There!).

Business Models That Will Change the Food System

January 11, 2012

Real changes in the food system will require a systemic realignment of agricultural producers and the food processors who can place big orders for inputs. Though direct market sales offer a farmer the plumpest margin, nothing can beat the dependable revenue of large wholesale orders to secure a base of income. Regional food processors are just now starting this long process of realignment by forming economic ties with local farmers, and they love to brag about just how good their sources are.

In no particular order, here are some innovative food entrepreneurs building their businesses in partnership with regional farmers that we are keeping an eye on in 2012.

1. Caledonia Spirits. Caledonia creates artisanal alcoholic beverages using local ingredients like honey, corn, elderberry, and barley. To secure access to these raw materials, Caledonia uses contracts and other legal agreements to create ties of dependency with its regional producers. Input sources are reflected on the label of each individual product, as well as on the company’s website. The admirable production ethos of Caledonia is aptly summed-up by the company’s Mission Statement:

The purpose of Caledonia Spirits is to add value to the work of the people of Vermont, including those growing grains, herbs, medicinal plants, and honey; to support and encourage the organic production of plants and honey in Vermont and surrounding regions; to provide employment and contribute to the health, spiritual, economic and social well being of the community, and to honor the traditions of Vermont, Scotland, France, Quebec and other agricultural communities that inspire our formulations.

We particularly love that Caledonia’s mission statement includes a reference to added-value, which is ag-geek for artisanal processing. Value-added activity helps support the price of raw agricultural products like honey and barley by refining them into attractive, delicious, high-value products like alcohol. Booze is one of the classic value-added products, right up there with charcuterie and cheese. A world-class cheese, a famous whiskey, or a desirable ham all have the potential to command a sale price far above their costs of production if they inspire enough rabid demand. It would be wonderful to see Calendonia reach these stratospheric heights of consumer esteem in the coming years. Given Caledonia’s commendable production ethos, we are sure its agricultural producers would reap their fair share of the compensation in the event its spirits gain reknown. The mutually beneficial financial and legal ties have limitless potential to return value for all involved as the reputation of Caledonia grows.

2. Brooklyn Bouillon: It takes talent to refine great raw materials into a superior artisanal product. Creating a superb product from waste however, is the near-miraculous apotheosis of value-added agriculture. Founder of Brooklyn Bouillon, Rachael Mamane, takes chicken bones, feet, and other assorted nasty bits from local farms, then morphs them into refined, beautifully packaged, professional grade chicken stock. Of course, all product inputs come from the sturdy, nutrient-rich bones of pastured chickens, which are raised within the upstate region of New York.

Rachael takes the concept of partnering with local input producers to its fanatical conclusion. Stocks are made in distinct batches using ingredients from a single contributing farm, just like single-malt scotch. The company profits in one of two ways. Using the traditional route, Brooklyn pays the farmer cash for the inputs, then prepares the stock for its own direct-market and wholesale distribution.

Alternatively, farmers can also elect to have Brooklyn refine their bones and bits for them, then ship them back to the farm. Farmers then sell the stock, made with the inputs from their own farm, at markets or on the roadside. They then split the profits with Rachael.

Using either method, the identity of the farm goes right onto the front of the label, so both Brooklyn Bouillon and the farm share the credit for the product, which is just as important to the business as product revenue.

3. Two Guys In Vermont: Not only has this innovative soup company purchased nearly 8,000 pounds of vegetables from 9 local farms in the last year, they have been savvy enough to brag about it in their marketing materials. That’s 4 tons worth of value that stayed within the New England community. Like the other businesses on this list, Two Guys promotes these farmers throughout their website and marketing materials. Recipes are tailored to promote the agricultural products which grow best in Vermont, like apples, butternut squash, sweet potato, carrots and fennel, and cream (dairy is used in their Garden Tomato Soup). Two Guys does most of their cooking during harvest season, but they are able to extend the season by fresh-freezing some ingredients, like butternut squash, that hold their flavor very well during the freeze. That way they can make locally grown soups throughout the year. The Guys mission goes like this:

Two Guys in Vermont prepares delicious foods using natural ingredients and continuously seeks regional farm food supply sources.  We are committed to reducing personal exposures to pesticide and herbicide residues, not using GMO’s in our foods and using safe food packaging options.  We aspire to participate in an emerging regional food supply chain that supports family-scale size farms and preserves their communities.

Two Guys guarantees this high standard by hand selecting both their farmers and their ingredients.

4. Saucy By Nature. Saucy is a Brooklyn-based producer of pre-made sauces. Saucy hand-selects fresh products like beets, onions, horseradish, mushrooms, apple cider, cider, pears, cranberries, sauerkraut, tomatoes, garlic, cilantro, jalapenos and various herbs like rosemary and mint. These comprise about 90% of the ingredients that go into each sauce come from local farms.

Saucy is in the boost-phase right now, but have already made some ambitious plans to begin forward-contracting with farmers to provide ingredients for next season. Forward contracting for agricultural products means that they are grown-to-order, cash up-front. For a farmer, this is the sweetest form of revenue there is, and it is an excellent way for a processor to control costs.

5. Mountain Sweet Berry Farm Potato Chips. Mountain Sweet is run by the exceptionally talented Rick Bishop, Cornell grad and absolute soil savant. His latest mad-scientist creation is a new twist on the potato chip. Rick’s special talent is rare potato cultivars. He grows some 40 different varieties on his land in Roscoe, New York. Each of these potatoes have an incredibly distinctive taste when fried. No additives or flavorful powdered stuff comes anywhere near these chips and yet they have totally different flavors and textures. Rick’s embryonic venture has already created wealth in the tiny town of Roscoe, New York. Rick has already employed at least a chef and an assistant full-time in his operation, he has rented an underutilized production facility in which he makes his product, and he draws the urban dollars of New York City greenmarkets to his tiny hamlet every time he makes a direct market sale.

By some incredible stroke of good fortune, we were present when the first test-batch came out of the oil. Though we are reluctant to do product endorsements and turn the LLC into another foodie blog, we have to say these chips were astonishingly distinctive. Rick is so hardcore he doesn’t need a website to sell out of his product, otherwise we would certainly provide the link. Look for him at the Union Square Greenmarket and grab every last bag of his chips you can carry.

Transparency is the core concept shared by every one of these food innovators. Traceability is a natural result of their transparency. Each producer on this list vouches for the quality of their sources, and they do so right on the label. The distinctiveness of each refined product is completely dependent upon the skill of the farmer who grew the ingredient. The farmer is not an anonymous producer of bulk material but instead takes center stage with the processor. Consumers are starting to demand precisely this kind of accountability in their food, and it is gratifying to see the free market respond so adeptly to the needs of conscientious eaters.

Food entrepreneurs will be the primary agents of change. There will be no Happy Meal Ban to convert the masses at a single stroke to wholesome food. The next Farm Bill will be commodity centric just like every one of its predecessors. Advocates for convulsive change always come up against vested interest, and small producers do not have the bank accounts for attrition warfare.

Change will instead be haphazard but purposeful, plodding but elegantly economical, and almost imperceptible unless the new business models are carefully scrutinized. Our guess is that change will look a lot like the ties being made by the businesses on this list – a network of boring legal and financial relationships that create mutual dependencies between talented farmers and ingenious processors who create refined products that people will spend lots of money in order to consume.

Analyzing these relationships is not about fetishizing food or glorifying pastoralism. It’s just how business should be conducted. Consistent, contractually enforced orders going back and forth between farmers and processors are the basis for credit transactions to capitalize expansion for both groups. Local banks are more willing to lend to a farmer with a stack of open orders in her hand. The same banks would also be more willing to finance additional processing capacity for the food entrepreneur with a hot product, a loyal following, and a rapidly growing market share. Capital investment is the ultimate signifier and guarantor of stability and permanence.

Legal and business relationships justify investment in alternative agriculture and small-scale processing infrastructure. Change in the food system will achieve permanence only with a constellation of dreary and all-important legal and financial ties that bind together producers who grow fantastic, original raw materials and the processors who have the knowledge and resources to turn them into charged-up products consumers will throw their money at. The entrepreneurs on this list are the real vanguards of change. Reward their risk – buy local, and buy locally processed.

**Hat-tip to my buddy Taylor Cocalis of Good Food Jobs for suggesting the pioneers on the list.**

Guest-Blogger Matt DiScenna, Winter Planning on the Farm

January 9, 2012

My friend Matt is an aspiring farmer and student of environmental and agricultural law. He has farmed in his hometown of Cleveland, Ohio, as well as at farms in Lodi, New York, on farms all across Italy, and at the Finger Lakes Permaculture Institute, where he studied holistic landscape design for farms, gardens and communities. He now works for Fresh Picked Pantry, a start-up food processing venture which creates value added food products using only fresh, locally grown ingredients. His ultimate goal is to head back into the schoolhouse and get an environmental law degree so that he can continue to write and advocate for farmers, food entrepreneurs, and better food for everybody.

Matt was gracious enough to share his ideas on winter planning for small scale farm owners. Hit it, Matt:

As the snow falls and the fireplace crackles, quiet winter days offer many farmers the perfect opportunity to assess their farm business. What went well this past growing season? What didn’t go as planned? What were some of the challenges faced and overcome? A focused look back at both successes and areas in need of improvement can provide helpful insight for the coming year. Careful planning and timely restructuring are indispensable elements of any successful farm enterprise.

For meat and diary farmers, an anaerobic digester is a potential addition that can turn animal waste into free energy that can be used to power the farm and home. Digesters also alleviate groundwater contamination and reduce methane emissions, which could qualify a farmer for financial compensation in certain states. The startup costs of digesters has been fairly high in the past, but has decreased rapidly as more research has dedicated to digester design.

While major restructuring carries risks and management challenges, an approach geared toward a variety of small changes can have a powerful impact on the farm’s bottom line. For example, replacing aging equipment or vehicles provides the added benefit of tax write-offs for investments. Identifying better equipment can also significantly reduce costs in the long run. One example might be a new seeding implement that improves the accuracy of seed placement, thus reducing the cost of labor (for thinning) and seed. Whatever you decide to replace or repair, contact your accountant – one who is familiar with agricultural businesses –  and inquire about the specific tax advantages of upgrading your equipment.

Take some time to identify opportunities to grow new products. Reflect on what products you saw offered by other farms in your area. Talk to some chefs or local food entrepreneurs to find out what ingredients they are dying to use but cannot procure locally. Suppose the local farmer’s market has become flooded with organic vegetable producers, but there is a lack of fruit or mushrooms available. It might be worthwhile for a vegetable producer to consider diversifying the farm by adding a mushroom yard to a forested area of the property or using a few rows the following season to plant strawberries and raspberries instead of cabbage. Startup costs for both of these additions are low, yet each could fetch a high price at the market due to their limited supply.

Farmers can also use the idle time of winter to seek out and forge relationships with small food producers, restaurants and other potential wholesale clients as a source of supplemental or primary income depending on the business model of the particular farm. Fortunately for small scale farmers, demand for local products is steadily increasing, and there are ready-made markets for farmers to tap into in just about every region of the country. The key is to cross-promote each other’s products – get the name of your farm on the menu or on the label, and make sure you do the same for them.

Grants and low-interest loans through the state and federal government, as well as non-profit organizations, are well worth looking into. Beginning farmers, in particular, have many such opportunities available to them. Beginningfarmers.org (a great friend of this food law blog), is a great resource for funding opportunities. Also check out the National Center for Appropriate Technology, which has another great funding page.

The opportunity for creativity in a farming venture is endless, whether in the fields or the office. That’s what makes it fun. And the bottom line here is that wintertime presents a prime opportunity for farmers to be creative with their business in order to ensure that they remain thriving for years to come.


CAFOs vs. Pasture and the Food Laws That Affect Meat Price

January 5, 2012

Over at Politics of the Plate, Barry Estabrook posts about the lives of two contrasting Texas cattle ranches – one, an industrial CAFO, the other, a free range operation just a short distance away. There is an interesting food law issue lurking behind the cowboy boots, Texas drawls, and pastoral charm. Piggy-backing on Estabrook’s juxtaposition a bit, both ranchers do business under legal regimes that are as different as their agricultural methods. The difference is important to note because it creates an artificial price disparity between their products. Beef price is discussed in the article, but not the policy behind it that creates the market distortions these two ranchers have to deal with.

Food law and federal agricultural policy disproportionately favor large producers who operate Concentrated Animal Feeding Operations. Federal law helps other big producers to distort the cost of their agricultural production by allowing them to sequester lakes of animal waste on their land, which are absolutely inevitable byproducts of CAFO production. This regulatory policy allows the CAFO producer in the Estabrook post to hide some of their production costs. For a multitude of reasons, small scale farmers and ranchers do not share these economic benefits and are therefore held hostage to inelastic costs of production which they must reflect in their retail pricing.

CAFOs definitely create efficiencies in agriculture. Cramming many animals in a small lot most obviously saves acreage, and land is expensive. Putting all the animals in one place allows ranchers to stuff cattle full of cheap, subsidized commodity crops like soybeans and corn. It is easier to apply veterinary care to CAFO animals and they require less labor to oversee during their development.

But in order to achieve these efficiencies, CAFOs must contend with the salient problem of waste concentration. Thousands of cattle confined to a small lot produce a volume of waste that overloads the ability of the natural environment to recuperate on its own. CAFO operators need to scoop it all up and put it someplace. Federal law allows for these waste products to be sequestered into lagoons adjacent to farms and fields. But for these lakes of animal waste, all of the other efficiencies created by CAFO production would be obviated.

If properly built and maintained, the lagoons are statistically speaking a relatively safe environmental risk. (When they do occasionally burst their seams due to flooding or poor maintenance, the results are catastrophic.) Even viewed in the best possible light, a CAFO’s lake of sequestered waste is a way to indefinitely postpone one of the biggest costs of concentrated production. This cost of environmental degradation does not make its way down to the sticker price because the law allows wastes to be cheaply bottled-up instead of dealt with by sewage treatment or some other expensive method of disposal.

In the context of CAFO regulation, this form of agricultural exceptionalism is an insincere policy. Regulators’ intent is to get the sticker price of commodity meat to seem as low as possible without regard to production costs. Some may view CAFO policy as completely benign, such as most commodity farmers. The vast majority of supermarket consumers may be supremely indifferent to it even if made aware of its deleterious environmental consequences or its dishonesty as an agricultural ethic. But it really puts a crimp in the style of alternative producers and free-grazers like the ones discussed in the Estabrook post.

There are many ethical or logistical reasons why smaller agricultural producers cannot achieve the efficiencies of CAFO production. Individually, they lack the herd-size to create the economies of scale which are sufficient to justify the trouble. They may lack the capital to equip such a facility. Others simply find it morally abhorrent. Regardless of the reason, because they may not avail themselves of the false economies of CAFO agriculture, their products reflect the true price of meat that honestly includes all of its costs of production.

For any number of reasons, Seth Nitschke is unable to avail himself of the trade-off achieved by concentration and waste sequestration. (Judging from the article, I take it he’s morally opposed to doing so even if he could.) Raising on pasture means that Nitschke cannot cheat on his prices. All costs of production must be reflected in his price. His price seems relatively high only because his production costs are absolutely accurate. Adding to his challenge as a salesman, his price seems excessively expensive relative to the artificially low price of its commodity corollary grown across the valley using food law and policy exemptions that are available only to CAFO producers.