Following on a previous blog–FDA Targets Cheesemakers–the Kennebec Journal in central Maine ran a story today on the plight of Maine’s small farmers titled: “Small farmers face hurdles . . . Growers seek exemptions from federal, state regulations” From the story:
Now several communities on the Blue Hill Peninsula have passed or are considering ordinances this town meeting season seeking to exempt local farmers and food producers from state and federal regulations.
Sedgwick, Blue Hill and Penobscot adopted local laws that say state and federal regulations do not apply in their towns if farmers and other food producers sell directly to their customers. Trenton voters will take up a similar ordinance next month, and comparable measures are being considered in Monroe and Mount Vernon. At the same time, several bills aimed at easing regulations for small farmers are working their way through the Legislature.
A group of farmers in and around Brooksville drafted the local laws. Brooksville was home to the late Helen and Scott Nearing, who were influential forces in the back-to-the-land movement. Ironically, Brooksville is the only town on the Blue Hill Peninsula where voters rejected such an ordinance.
The farmers say state and federal food safety regulations are designed for large-scale agribusinesses and make no sense for the state’s burgeoning numbers of small-scale farmers. Rather than wait for change at the state and federal level, they came up with their own model for deregulation at the local level, the Local Food and Community Self-governance Ordinance.
While the goal is laudable, their tactics simply won’t work. Also, the problems in Maine extend beyond the regulatory system. Note this passage:
He said part of the problem in Maine is that, along with its farms, the state has lost much of its food processing infrastructure, such as slaughterhouses and cold-storage facilities.
Over regulation would not cause this existing infrastructure to disappear . . . but over-taxation would. More specifically, the sales tax is particularly destructive to small businesses/farmers because it is levied on top of the cost of such infrastructure. So, for example, say you want to expand a barn with equipment and material costs of $100,000. Maine’s 5 percent sales tax would add $5,000 to the total bill.
While this may sound like peanuts, add it on top of the regulatory costs and it becomes the proverbial “straw that broke the camels back.” The margin of error for small farmers is already razor thin so it doesn’t take much to make to tip them into insolvency. In the end the problem is a double-whammy of over-regulation and over-taxation that has helped doom the small farmer.
Regionally, the perverse effects of the sales tax on small businesses is why we see so many Vermonters shopping in New Hampshire (pdf) and Mainers shopping in New Hampshire which does not levy a broad-based sales tax.