Regulators Crush Another Small Business

Tuesday, August 9th, 2011

You might keep this story handy the next time you hear someone complain about how “industry” is to blame for our food being over-processed, filled with preservatives, and loaded up with various other additives.

A few years ago, Kris Swanberg, having been laid-off from her job as a Chicago Public School teacher, remembered she received an ice cream maker as a wedding gift. TheChicago mom fished it out of her kitchen cabinet and eventually started a new career.

Today Swanberg’s Nice Cream — on offer at local Whole Foods and farmers markets — is considered a star of Chicago’s rich and beloved artisanal ice cream scene, one that could be shut down entirely by state rules, she recently learned.

She says that a couple of weeks ago a representative from the Illinois Department of Public Health came to Logan Square Kitchen and informed her she’d have to shut down if she did not get something called  “a dairy license.”

Swanberg and others in her field had operated for years now without ever hearing of such a thing and, indeed, they say, the City’s Department of Business Affairs and Consumer Protection, to whom they applied for business licenses, never informed them they would need one to operate.

Apparently, they do. And in order to keep operating they’ll need to “work out of their own space,” have their ice cream tested once a month for bacteria levels, change all packaging and labels to meet state standards, and purchase a $40,000 pasteurizer.

More:

Swanberg says that the IDPH officer who visited told her that her ice cream probably wouldn’t pass the bacteria tests if she continued to use fresh strawberries. Instead the officer suggested she use “strawberry syrup,” Swanberg said.

IDPH spokesperson Melanie Arnold said that it isn’t illegal to use real strawberries but that IDPH “does not encourage it simply because when you try and clean a strawberry to make sure it doesn’t have any bacteria, it kind of deteriorates.”

The department’s Dairy Equipment Specialist, Don Wilding, said that other ice cream producers use irradiated strawberries. He says look good but he can’t vouch for the taste.

Swanberg could continue to work without a license, Wilding said, if she used a premade ice cream mix that is usually formulated with stabilizers and other additives — the kind of thing typically used at Dairy Queens, Wilding noted.

Still, Swanberg feels that using strawberry syrup and a premade soft serve mix might not attract the same customers who buy her product made from fresh organic cream blended with local and often organic produce like basil and strawberries she picks herself.

The department could not confirm the $40,000 price tag on a pasteurizing machine. But it did confirm that, even if she uses pasteurized milk and boils all of her ingredients together, she would then need to pasteurize it in this special machine again.

I guess it could have been worse. They could have sent the SWAT team.


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115 Responses to “Regulators Crush Another Small Business”

  1. #1 |  Highway | 

    There doesn’t have to be some centralized authority. What’s the benefit to that? That everyone knows the rules? That the rules get decided by politics? Why is there some inherent benefit to it being the government, and beholden to the political process?

    There are many cases where the government rules aren’t considered stringent enough by outside folks. Consider auto crash test ratings: Insurance Institute for Highway Safety (non-government) or National Highway Traffic Safety Administration (government). IIHS introduces tougher standards before NHTSA does, like frontal offset into a deformable barrier, or even two vehicle crash tests. NHTSA runs a full frontal crash into a solid barrier at a slower speed.

    Neither gives a pass/fail rating, so it’s not a case of all cars meeting some minimum standard. Both give ranked ratings. But IIHS is able to change their testing regimen faster, able to respond to new concerns faster. NHTSA still uses older test protocols because of lobbying efforts to prevent changes to them. IIHS isn’t accused of favoritism, although it’s known they have an agenda. They don’t want to pay out insurance claims. So they want the vehicles to be as safe as possible.

  2. #2 |  James | 

    Highway –

    I am not particularly fond of politics creating regulatory standards. And I do not think there is any inherent benefit in government regulatory control. I am quite willing to accept alternatives.

    My questions about centralization have everything to do with everyone knowing the rules. What I’m struggling with here is that although there have been a few vague but reasonable alternative proposals offered, the impediments to implementation of these alternatives mean overwhelming uncertainty about product quality/safety standards for both producers and consumers. And we keep hearing over and over that “uncertainty” (over regulations and, yes, I know, taxes) is the problem with businesses hiring (or, more specifically, not hiring).

    Another question…

    How do we establish truly competitive regulatory markets? I don’t see how enough competing private regulatory firms can be profitable enough for long enough to be called a real market. And, if there are not enough firms to be a truly competitive market, how do we guard against the very same behaviors that we currently find in government regulatory bodies (fraud/cronyism/etc.), especially with profit motivated firms running the show.

    I don’t trust government either. I just think that its incompetence is a known quantity. But it seems silly to me to suggest that the private sector is inherently more trustworthy.

    Finally, and I ask this honestly, do the Agitatortots think that regulatory standards are actually any use at all? If not, perhaps that explains my confusion. (I know, JCR, my confusion is a product of my corrupted and warped mind, dominated by thoughts of control and thought-crime prosecution.)

  3. #3 |  crazybab | 

    “It has. It’s called “heating.” But the state regulators won’t let her do that.”

    Um no – Pasteurizing involves heating milk products to a specific narrow range of temperatures for a specific period and then cooling the mixture quickly- all in a sterile environment.

    The temperature & time is enough to kill most harmful bacteria but not enough to cause the ingredients to “cook”- start the chemical changes associated with heat.

    Its very difficult to do on the stove top – and because cooking will wreck the product a stove top operation is likely to err on the side of under pasteurizing the product.

    That said I don’t have a problem with this operation running without a pasteurizer, so long as it is clearly labelled as such and the business has insurance to cover all the harm contaminated product might cause in any realistic scenario. Of course that requirement would probably be much more onerous than buying a pasteurizer.

  4. #4 |  crazybab | 

    Years ago odwalla used to sell unpasteurized product in California. When that product killed a little girl they saw the light and realized pasteurization was cheaper than the liability.

  5. #5 |  damaged justice | 

    I believe pasteurization causes more problems than it solves, and eat accordingly. If you believe otherwise, knock yourself out.

  6. #6 |  Brandon | 

    James and Samk, here are your objective, centralized, selfless protectors of the consumer’s interest:

    http://www.foxnews.com/health/2011/08/10/government-knew-about-bacteria-in-turkey/

    That is how it actually works in the real world. And what did the USDA have at stake here? Nothing. For them, business continues as usual, and they might get a budget increase to ensure something like this “never happens again.”

  7. #7 |  James | 

    Again though, Brandon, to what extent does this differ from finance firm executives getting massive bonuses (let alone keeping their jobs) after plunging the country into financial crisis through greed and fraud and cronyism? Is it even as bad?

    I am still not arguing in favor of government regulatory authority. I just don’t see it as being inherently worse than a private sector equivalent. And I still think there are massive risks in introducing a profit motive into safety/health regulation.

    At the moment, it is crystal clear who is to blame for issues such as the one you raise above. A private regulatory market, however that might be manifest, seems like it would be far more difficult to assess with clarity. Do you disagree?

    I completely understand and agree that there are many cases of ineptitude and abuse in governmental regulatory agencies. To suggest that this is how they always works is, of course, utterly ridiculous. Analogously, Balko is not advocating the abolition of all law enforcement despite countless cases of gross ineptitude and abuse. He advocates for accountability and prosecution of those who permit and incubate the abhorrent behaviors. (If I have this wrong, RB, please correct me.) I don’t particularly think he would like the analogy, but I think it’s fitting. Pubic safety is at stake in both cases. This seems important to me.

  8. #8 |  Highway | 

    James, I still think you’re worrying about it from the wrong direction. People want to get information about what they do. Most people don’t like being uninformed, at least about the stuff they have to pay for and use (people’s idiocy about government notwithstanding). Wherever there are two competing products, there are people asking which is better.

    I also think you’re a little hung up on rules. What are the rules supposed to be? Isn’t that up to the manufacturer of the product and the user? If a manufacturer makes something that people think is worth using, they use it. If it’s not worth using, they don’t. As I and many people have said: companies don’t want to hurt their users. They may make a calculation that some additional safety margin is not cost effective, but this isn’t because they want dead customers, it’s because their computation doesn’t work out that way. Sometimes it’s a losing bet in the short term, or sometimes in the long term with loss of confidence in the company.

    The competitive part is just a description of the possibility. If one company is filling the need, then why does there need to be competition (and how is this different from that one ‘company’ being the government)? It’s when the incumbent is *not* filling the need when you need the possibility for competition. Maybe the incumbent is too expensive, or uses old theory or testing, or even is too rigorous for reality. Then there’s the opportunity for other companies to fill in that perceived need.

  9. #9 |  crazybab | 

    “”That is how it actually works in the real world. And what did the USDA have at stake here? Nothing. For them, business continues as usual, and they might get a budget increase to ensure something like this “never happens again.”””

    Look again at your own article:

    “Food-safety specialists said the delay reflected a gap in federal rules that don’t treat salmonella as a poisonous contaminant, even if inspectors find antibiotic-resistant forms such as the Heidelberg strain implicated in the latest outbreak.”

    The problem is that we have regulatory capture by the private sector of the regulators – don’t you think it would be worse if the regulators were private?

    What we need to do is get the money out of politics. I’ve come to believe that public financing – for all its flaws – is better than any alternative.

  10. #10 |  Radley Balko | 

    The problem is that we have regulatory capture by the private sector of the regulators – don’t you think it would be worse if the regulators were private?

    No, it wouldn’t. Because as soon as this happened, the private company would be exposed and lose credibility. And/or be sued. You can’t switch to another FDA or USDA. You can’t sue the FDA or USDA.

    What we need to do is get the money out of politics.

    FDA and USDA officials and inspectors aren’t elected. At the very top, they’re appointed and approved by the Senate. But most of the agency is filled with career public servants. If there’s money exchanging hands that is influencing decisions, it’s already happening illegally. There is a revolving door problem. But I don’t know how you solve that unless you’re going to bar people from working in the private sector once they’ve held a public service job, or vice versa. And I doubt a law like that would be upheld.

  11. #11 |  James | 

    Highway –

    Personally, I like to do intensive (obsessive?) research about most things I buy, but I think you are wrong about people’s desire to get information about things they purchase. I think the opposite is true. I think most people assume that, if a product/service is available, it is safe, and, very generally speaking, the lowest cost option is preferred. We can debate whether they’re lazy idiots, but think of the crazy plastic crap that parents buy their kids. When it turns out to be painted with lead or mercury, everyone loses their shit. We have, as a society, decided that it is not worth the social cost to allow people to purchase (usually unknowingly), or companies to sell, products that are demonstrably unsafe/unhealthy. This allows people a baseline for comparison. If I know that everything on the shelf in front of me has exceeded some safety/health floor, I can spend what time I choose to invest figuring out which product I prefer without worrying that I am ignorant of some safety/health issue. It turns everything into apples. This is why I keep prating on about centralization of standards, too.

    Regarding rules, I think we may be getting somewhere here. To some extent, I guess I agree that the rules should be set by producers and consumers. However, aren’t government regulatory agencies formed because “The Public” (as if we are some monolith) desires consistent and predictable outcomes? They represent, to some degree, a collective, “We refuse to allow product safety to be a bargaining chip.” It is entirely possible, of course, because government has near-monopolistic regulatory control, that everyone is just being lazy and assuming that the gov’t is doing a good job (or good enough or whatever). Do we really think, though, that by making things less predictable or consistent, that everyone will assume the role of self-regulators somehow?

    Finally, regarding market competitiveness, my question still stands. Why, if a single private regulatory agency is indistinguishable, in theory anyway, as you suggest, from a single government regulatory agency, why should we prefer it necessarily? You might not trust government, but I certainly don’t trust profit-driven private enterprise when there is no competition. This is why I appear to be hung up on the regulatory marketplace. If we are looking for market-driven outcomes, well, isn’t a market a prerequisite?

    I still am not seeing a reasonable alternative to the current system that doesn’t require complete overhaul of the entire consumer-producer relationship.

  12. #12 |  mad libertarian guy | 

    The internetz took a collective shit and made a collective whine when fucking Netflix changed their pricing scheme. Do you not think that contaminated ice cream which is not an isolated incident wouldn’t get the same.

    I’m my own goddamn regulator. If you need the state to tell you that some particular food is okay, you’re doing it wrong.

  13. #13 |  Boyd Durkin | 

    I’d love a job like the FDA and USDA have (or building code inspectors). Bossing people around, showing up with guns if I want, charging people fines or throwing them in jail, badges (!)…and no accountability. If I fail, you get to fuck off.

  14. #14 |  Boyd Durkin | 

    I still am not seeing a reasonable alternative to the current system that doesn’t require complete overhaul of the entire consumer-producer relationship.

    I also don’t see how I’m supposed to lose weight without eating better and exercising.

  15. #15 |  George Arndt | 

    Big meat producers are allowed by the governmetn to inject thier animals with large amounts anti-biotics with is creating super-bugs. Sounds a bit more dangerous than strawberrys!