Its not that its broken….

This blog started after my experiences as a Roots of Change Planning Fellow, so it was a pleasure to be invited back to do a piece for them marking the release of my book, Picking Our Future. Link to the ROC article below:

http://www.rootsofchange.org/content/its-not-its-broken

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The FTC and Local Food

December 1st may have been a big day for the local food movement, but it passed without much notice. What happened that day, you ask? That is the day that a new set of guidelines from the Federal Trade Commission [Guides Concerning the Use of Endorsements and Testimonials in Advertising (16 CFR 255)] went into effect. Specifically, these expand “Truth in Advertising” laws and create a much higher standard for endorsements. These stricter standards apply both to the “generally expected performance” of the product and any “material connections” between the parties involved. Also the new rules make clear that they apply to all forms of social media, not just traditional advertising. 

How it impacts the local and sustainable food movement:

This is a highly interconnected movement. In this context, how can “material connections” be defined? Applicability is clear in cases where money is involved. But what about endorsements on a personal blog, or a plug on Facebook? On both the for-profit and non-profit sides of the local food movement, people recognize the value of social media to spread the word and cross-promote friends and business partners. Since the users of social media recognize it as having advertising or marketing value, in due course it is probable that the FTC or a plaintiff’s lawyer will as well.

Who gets to speak? In the traditional top-down world that the FTC is used to regulating, the authority to speak on behalf of the organization is typically pretty clear. The new rules expressly hold employers liable for the endorsements of their employees, even if the employee makes the statements on her own blog or Facebook page. Do interns or volunteers within your organization provide “endorsements” to other businesses or advocacy groups?

The other potential vulnerability is in the poorly defined language that is common within discussions of sustainable foods. Take the word “sustainable” itself. While the word is clearly defined in many venues, it is not always clear that it can be applied to a particular product or practice without a large dose of opinion. Likewise, the words “healthy” or “local” are open to interpretation. “Organic” is clearly defined and has clear applicability. But even here there is danger, since benefits beyond organic status are often implied if not explicitly stated. Can these statements live up to a higher burden of proof?

Finally, the new guidelines mandate that the “advertiser” create policies and training for employees, and have a structure in place to monitor compliance. As a practical matter, this is likely to be another case where a small producer may find compliance more difficult than their larger, more traditionally structured competitors. 

Now don’t get me wrong… I believe in accountability and transparency as much as the next guy. But I am concerned that the eventual implementation and enforcement of these rules may have a particularly severe impact in a movement defined by a network of non-traditional business relationships, multiple communication paths via social media, and product claims that may be difficult to quantify. My hope is that we can create and adopt practices which the FTC will accept and others can model, before an unreasonable interpretation is imposed upon us.

The death of HR 2749? The Limitations of Policy.

As I wrote the first draft of this it looked as if  the House of Representatives had voted down a sweeping food safety bill, HR 2749. With a few new maneuvers, it looks like it may not be dead yet. If it stays dead, this non-event is perhaps one of the best things to happen to agriculture this year. I say this not because I am a fan of unsafe food. But this bill would have placed the same level of documentary requirements on food producers of all levels, regardless of the systemic risk posed by their operation. It as if the corner bike shop in your town had to meet the same regulatory requirements as General Motors. Despite a flurry of proposed amendments, some of them potentially big improvements, the bill died as it should have. It died because even legislators under pressure to do something about food safety recognized that this wasn’t the answer. It would have added huge costs and administrative burdens to the part of the food system not having any problems, without providing resources to do anything about the corners of the system where problems are known to linger. Why can’t we find a policy solution to a complex problem as important as food safety?

Sadly some of the trouble is with policy tools themselves. No matter how hard we try or how complex we make them, policies have a great deal of trouble with complexity. Policy handles course-grained issues well. More calories, less cost? Easy. All food must be organic? No problem. Everything must be from within 100 miles? Piece of cake, legislatively speaking. Policies and regulations are great at prohibiting certain actions or practices. Pass the law and it is so. (Implementation is another matter, of course.)

But does this produce the result we are looking for? Does it produce a food system with a wide variety of healthy food options for people of all incomes, successful farmers, happily fulfilled farmworkers, ethically treated animals, clean streams, thriving local businesses, empowered cook-at-home consumers, equitable taxes, delighted gourmets, abundant wildlife, pristine views, smart urban growth and development….

Sorry, kind of dozed off there for a second without finishing that sentence. But the point is that the preceding sentence can never be finished. Why? Because we want it all. And that’s the problem. We have never had it all, either through policy and regulation, free market capitalism, feudalism, monarchies, hunter-gatherer clans or any other form of human enterprise.

Does this mean we shouldn’t have policies or regulations? Of course not. But I’m skeptical that we will ever develop the perfect policy that delivers the perfect outcome. And if you look at the most dysfunctional aspects of our society, is it any surprise that they have the most regulation attached to them? To look at examples beyond food and agriculture, how good of a job does the Pentagon’s mountains of procurement policies do at ensuring our defense dollars are well spent? Does our tax code do what we want it to do? Pick a handful of state and local rules that impact you directly. How do they measure up?

My point is that no matter how much we complicate our policy, it can never  fully embrace the continually changing complexity of reality. What we are left with is an increasingly burdensome legacy that creates a lot of work for accountants, attorneys, consultants and bureaucrats. What happens when  the number of people regulating an activity approaches the number of people performing the activity? I’m not sure what would happen at a basketball game with 10 officials on the court.

I offer no solution, merely a recommendation for mitigation. Let’s look at paring down our libraries of statutes. Let’s consider that maybe some of the regulatory medicine is worse than the disease.  Didn’t we try deregulation in the financial markets, you ask? We did, and you are correct… it didn’t turn out well. But what really happened? A few outright frauds like Bernie Madoff are headed to jail. A few poorly managed companies no longer exist. Unreasonably inflated asset values returned to more rational levels, painful though the process was. I’m not trying to be cavalier about this… I know people got hurt. It turns out we did strip out a few important regulatory safeguards, but because of the complexity of the whole system, no-one recognized them as such. A simpler regulatory scheme would have been better. Enough capital reserves? Prudent risk assessment? Reasonable use of leveraged capital? A simple set of rules is superior to one that is too complex for anyone, even the experts, to follow.

Phrased another way, if Moses had brought down the 27,896 commandments from Mt. Sinai, would the whole Judeo-Christian thing have caught on? I think not.

When Local Food will Work

Without making a conscious decision to do so, I have divested myself from major banks. I no longer own Citigroup stock, and I no longer use BofA for my business banking. I belong to a credit union, finance my farm within the Farm Credit system, and am a customer and minor shareholder of our local Santa Clara Valley Bank. With all the turmoil these days, many critics of our financial systems say this is the right approach to take. It is what we should do. But I didn’t do it to make a political statement or encourage an alternative financial structure for our nation.
I did it because it works. Today I enjoy all the technological conveniences that used to be the domain of the big banks. Online billpay and transfers, ATM access all over the world… you name it. But I get much better service from people who not only know my name, in some cases they even know my dog’s names. Such is community banking in a small farm town. I get the chance to talk with the bank’s CEO on a regular basis as we serve together on several community projects. I would have needed a lot of money on deposit with Bank of America to get that kind of access.
What does this have to do with local and regional food? Right now, a number of people advocate for a local and regional model for our food system. It is what we should do, they say. Very possibly they are right. But in food, as in banking and energy (the other tack I could have taken for this piece) , we don’t do things just because we should. We go with what works for us.
Currently, local food systems fall short. Sure ,we have the Farmer’s market system, and a few CSAs, but access is a real issue. A few consumers with the knowledge, extra time, and disposable income gain the benefits… they get to meet their farmer. But this system hasn’t yet shown the ability to rival the mainstream. But it is growing and getting better. You still need to make sacrifices to eat locally but not to the same degree as just a couple of years ago. So maybe the day is not far off, when this is no longer something we “should do”, but simply “do.”
That will be when local food works.