The poorest Americans could see their food bills soar thanks to a new swathe of regulations from the Food and Drug Administration.
Passed in 2010, Food Safety Modernization Act (FSMA) required the FDA to issue new safety regulations for all foods excluding meat and poultry. A new report from the Mercatus Center argues 10 of the FDA regulations have significantly more costs than benefits.
“Imposing ineffective rules on food production is likely to raise food prices and constitute a tax. This will disproportionately burden lower-income Americans, who spend a larger portion of their incomes on food than do those who are better off,” the report said.
Richard Williams, vice president for policy research and director of the Regulatory Studies at Mercatus, argues there is no systemic problem in the food supply that requires a new onslaught of federal rules.
The intentional adulteration rule which is intended to protect the food supply from terrorists is cited as possibly most justified. But even this rule may be surplus to requirement as the FDA already has regulations regarding bioterrorism.
Given these regulations are already in place, Mercatus found that the “intentional adulteration rule is merely another unjustified addition to the regulatory burden.”
The FDA’s claims that fresh regulations will cut down on costly food recalls also came under scrutiny. Mercatus claims FDA “offers no evidence to support this claim. In fact, more regulation seems to lead to more recalls, not fewer.”
The study explained that while regulation does not have the easy visibility that a tax has on the price of food, the result for consumers is the same.
“Regulations will actually have the same effect as a tax on food consumption because farmers and food producers will have to pass on the costs of the regulations in the form of higher prices,” Williams warns. (RELATED: Sin Taxes, Zoning Laws And Occupational Licensing Are Holding Back The Poor)
Instead of going ahead with the new rules, Mercatus said the FDA would better spend its time performing “risk assessments on the rules and reexamine the FSMA’s provisions to see which regulations might be salvageable to create ‘functional rules’—rules whose benefits exceed their costs.”
However, if Congress fails to take this approach, the FDA could do a better job when deciding to regulate so it won’t be a drain on people’s wallets. “Where no significant problem exists, it should choose regulatory alternatives with minimal economic impact. Where there is a problem, it should narrowly focus regulation on the facilities and products involved,” said Williams.