By Levi Russell
Agricultural regulation is an important issue for rural America. The Food and Drug Administration, the U.S. Department of Agriculture, and the Environmental Protection Agency (EPA) are the primary regulators affecting the food supply chain from farm to fork. For row crop and cattle producers that dominate the landscape of the Great Plains, the EPA’s rules have the biggest direct effects. While these regulations are designed to provide many benefits, they come at a cost. Individual regulations are evaluated on cost/benefit grounds prior to implementation, but the costs of the overall regulatory burden on agriculture are not well understood.
EPA regulation of agriculture has grown roughly four-fold since the mid-1970s (see graph, data from the Mercatus Center’s RegData). Key pieces of legislation on which EPA regulation of agriculture is based include the Federal Insecticide, Fungicide, and Rodenticide Act; the Clean Air Act; the Clean Water Act; the Endangered Species Act; and other transportation and occupational safety legislation. A recent example is a proposed change to pesticide licensure rules that would double the number of continuing education hours required for the license and require the license to be renewed every three years rather than the current five-year interval. A recent study of the rule conducted at Texas A&M University indicated that the EPA’s estimate of the cost of the program to the state failed to account for more than $57 million in costs. Another example is the case of a California farmer who was fined under the authority of the Clean Water Act for plowing his field even though the EPA’s rule has an explicit exemption for normal agricultural practices.
The uncertainty and compliance costs associated with these regulations represent serious concerns for producers. Recent surveys of row crop producers, cattle producers, and feedlot operators indicate that future environmental regulation is a top concern for their businesses over the long term. However, the costs of regulatory compliance are not borne solely by the farmers. Preliminary results of my own research indicate that the growth in environmental regulation since 1975 has put upward pressure on food prices, suggesting that food prices would be lower overall if environmental regulation had not increased as much as it has.
This is not to say that regulators are ill-intentioned. They face a highly complex and difficult problem: implementing the will of Congress for the betterment of the American people. The knowledge and information required to regulate even one industry is immense. Not only is it costly to obtain the information necessary to pass effective regulations, regulators can’t be sure that unforeseen unintended consequences won’t diminish the effectiveness of their rules or cause more harm than good. Proposed measures to ensure effective regulation that is not overly burdensome, such as sunset provisions that would require regulations to lapse on a periodic basis, have been put forth but have not been implemented widely. Other propositions include less federal and more local and state control over environmental policy and greater use of common law courts to deal with environmental problems. Both of these proposals acknowledge the information problems inherent in the regulation of agriculture.
Environmental regulation is an important issue facing American agriculture. Farmers will likely have to deal with more policy uncertainty and increased regulatory oversight in coming years. How these policies will affect farmers, consumers, and the environment remains to be seen.
Levi Russell (Ph.D., Kansas State University) is an assistant professor in the Department of Agricultural and Applied Economics at the University of Georgia. He also blogs at Farmer Hayek (www.farmerhayek.com), a blog providing economic commentary related to agriculture and natural resources from a free-market perspective.