Date: Oct 31, 2016
Magazine:
November 2016

A siege mentality is taking hold in California’s agriculture community. The state’s farmers have never confronted so many existential threats at one time.  The most well-known to people outside the industry are the lack of a legal and stable workforce to harvest crops, and the lack of water that has been brought about by a historic drought and made much worse by failed environmental policies that cause water to be flushed out to sea.

Less understood among the general public is the overwhelming burden of federal and state regulations that have been layered on farmers year after year for decades.  At this moment, virtually every state agency that touches agriculture is promoting aggressive regulatory mandates, driven by labor unions and environmental activists, which will cause serious economic harm to California’s only remaining legacy industry.

Policymakers, however, have been keenly aware of this for many years.  All businesses in California struggle with the state’s thick red tape and regulatory mandates.  Chief Executive magazine’s ranking of the best and worst states to operate a business placed California dead last—again—in 2016.  While the state ranked in the bottom half for “workforce quality,” it took the 50th position for taxes and regulation.

Think for a moment about what ranking 50th on taxes and regulations means.  Worse than every other state, even Massachusetts!

It takes a serious and sustained effort to beat that competition!

The state’s Legislature is dominated by urban Democrats, who are closely aligned with labor unions and environmental activists.  Some have demonstrated a sincere desire to understand and support the state’s farmers, but as the debate over the overtime legislation demonstrated, the overwhelming power in the California Legislature lies with the unions, who can resurrect a defeated bill and, through relentless application of political pressure, subdue the concerns of Democratic legislators who can foresee the harm that will come to farmers and farm employees alike.

We’ll have more to say on that problem—the Legislature’s majority—in the near future, but for the moment, let’s turn to Governor Brown.

Jerry Brown came back into the governor’s office in 2011 as the experienced and decidedly non-flashy pragmatist, a man who had seen much and knew more than any legislator about balancing California’s complex web of interests to effect relative harmony and economic growth.

And he seemed to bring with him a newfound clarity on the ills that come with hyperactive legislating and the proliferation of regulations and rules that inevitably follow.  In a 2009 interview with LegalNewsline.com, then-state Attorney General Jerry Brown spoke quite eloquently:

 

“The whole framework of law is crucial for the operations of business enterprises,” Brown said. “But when over prescriptive, it creates a huge and growing amount of overhead and it does seem that we’re reaching the point of counter-productivity.”

 

The publication went on to report this passage from a speech Brown had given earlier that day:

 

“We are moving every year to add more and more legal prescription to our lives, to our organizations, to our businesses and how we all function,” Brown said, estimating that the state has about 30,000 more laws today than when he was a two-term governor from 1975 to 1983.

·  ·

“We’re overlaid too much with too many rules,” Brown said. “The real challenge for lawyers and legislators and chief executives is to do no harm and to add to the system ways that give more elbow room, more flexibility, more discretion, more judgment.”

·  ·

“The capacity to manage people in society by unending escalation of pervasive legal prescription is questionable,” Brown said.

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Too often public officials notice a problem, Brown said, and want to do something about it immediately.

·  ·

“If the ‘something’ is only more law, then I would oppose that,” Brown said, noting that with each new statute comes disputes, litigation and subsequent appeals.

·  ·

 

And, he might have added, stifling rules and compliance mandates that add cost to economic enterprises while all too often failing to advance the stated objective. These are the immediate impacts.

In the long-term, the impacts are severe. Urban Democratic legislators may believe that they are the champions of small “sustainable” and “local” farmers. And they may believe that because farm land cannot move out of California, farming will stay here. They are wrong.

Larger farming operations have the financial wherewithal to manage California’s mass of regulations and mandates.  They can hire the lawyers and environmental consultants needed to comply with California’s rules.  It is the small farmers who can’t afford these burdens.  They will be forced to sell out to larger farming companies, and in fact consolidation has been increasing in pace for years in California.

Furthermore, when the large farming operations crunch the numbers and find that producing the same food in another state or a foreign country costs so little compared to California, they possess the capital and the business relationships to move production out of the state.  The buyers of most fresh produce—the big box stores, grocery chains and restaurant companies—understand this as well.  For example, Costco recently announced its intention to finance farmland acquisition in Mexico and subsidize the cost borne by growers of transitioning that land to organic production.  Why would Costco do that?  They quite reasonably see the high cost of sourcing fresh produce in California compared to Mexico, and, working with trusted growers, choose instead to source from Mexico.  The message to our governor, legislators, and regulators is simple: There are economic and social consequences to your actions.

Jerry Brown has two years remaining as California’s chief executive.  I pray that soon he will stand back, look long and hard at the many regulatory arms of his administration, and remember the wise words of a former state attorney general who dared to reveal a truth so rarely heard from career politicians: The “counter-productivity” of a government that never stops passing laws, imposing rules, and trying to force outcomes.

WG Staff Contact

Tom Nassif
Former President and CEO

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