Food entrepreneurs need real freedom

A story in the Pekin Daily Times reports that farm-market shoppers in Illinois will have more choices this year, thanks to a law Governor Quinn signed last August, the Local Food Entrepreneur and Cottage Food Operation Act. But the law might not be as beneficial as the its backers suggest — and Illinois and other governments can and should do...

A story in the Pekin Daily Times reports that farm-market shoppers in Illinois will have more choices this year, thanks to a law Governor Quinn signed last August, the Local Food Entrepreneur and Cottage Food Operation Act. But the law might not be as beneficial as the its backers suggest — and Illinois and other governments can and should do much more to get out of the way of people who want to start food-related businesses.

A few years ago, authorities in Illinois forced local farmers and others to stop selling baked goods, jams, and other foods they had produced in their homes because they hadn’t complied with costly food-preparation regulations.

Under the new law, these people can start selling again, with certain limitations: They can’t sell foods that have been classified “potentially hazardous” by the Food and Drug Administration; they have to comply with registration and labeling rules; and they can’t take in more than $25,000 from food sales in a calendar year.

This is good as far as it goes: Now some people who had been unable to sell their wares can do so. But the new law still places unnecessary, arbitrary barriers in entrepreneurs’ way.

In particular, the $25,000 cap on revenues makes no sense. If the foods in question aren’t “potentially hazardous,” as the law requires, then why should it matter to the government whether the person who sells them earns $25,000, $250,000, or $2.5 million?

According to Lt. Governor Sheila Simon, the law is intended to “boost our economy and create sustainable jobs.” But how many jobs can anyone create or sustain with just $25,000 per year in revenue? Who will seriously pursue this sort of business knowing that as soon as they start having some success, they’ll be suddenly subject to the full array of burdensome regulations that kept them away in the first place?

This law will have the effect of limiting “cottage industry” food sales to people looking for small-time, part-time work and hobbyists. Whether by design or not, it surely pleases established, politically connected food producers who won’t have to fear serious competition from upstarts who take advantage of the limited liberty the Act provides.

In addition to the revenue cap, the legislature should also reconsider its restriction of the law to foods that the FDA hasn’t deemed “potentially hazardous.” The distinction is rather arbitrary: Any food can, of course, be hazardous depending on how it has been prepared and handled. With the conspicuous, accurate labeling that the law requires and other consumer protections it provides, there’s little reason to think that consumers can’t judge for themselves whether they want to buy, say, dairy products from the farmer who produced them.

In fact, dairy laws impose some of the state’s worst barriers to food entrepreneurship. Regulations require businesses to spend many thousands of dollars on expensive equipment before bureaucrats decide whether they will be allowed to use that equipment. The rules on what equipment will be found acceptable are, unlike ordinary laws and regulations, not available to the general public and are practically unintelligible to anyone new to the business.

This creates an insurmountable financial obstacle for people trying to get a small business off the ground. Kris Swanberg learned that the hard way: last year, the mother and former schoolteacher had a burgeoning business selling all-natural ice cream, and Whole Foods had just accepted her products for distribution in its stores, when the state shut her down.

If politicians are serious about encouraging entrepreneurship, giving consumers choices, and growing the state’s economy, they need to re-examine and repeal unnecessary regulatory barriers across the board, and they need to enact reforms that don’t penalize success. In a state as economically stagnant and hostile to new business as Illinois, we can’t afford token gestures.

At the Liberty Justice Center, a central part of our mission is to challenge irrational barriers to entrepreneurship in the courts. If you know anyone trying to start or grow a business – food-related or otherwise – who might need our help, please let us know.