Agricultural Innovation Exposes Regulations Ripe for Reform

By Matthew Nicaud
December 17, 2021

Agriculture is a growing industry. In a day when the nation has now has the ability to produce more agricultural products than prior generations, it has become apparent that agriculture is an industry where innovative business models and technologies have extraordinary potential. Despite this success, there has been a growth in regulations that inhibit this innovation.

According to the United States Department of Agriculture (USDA), the nation’s agricultural per-capita production has increased by almost 300 percent since 1948. While there was relatively little change in the inputs, the growth compounded. What is the cause of this? Studies by the USDA found that much of this growth was driven by the adoption of innovative business models and new technologies.

  • Excessive regulation statistically affects agricultural innovation

While innovations in technology and business carry a directly positive effect for agricultural growth, there is an opposite effect when regulations increase.  Ultimately, there are two main jurisdictions for agricultural regulation, the state government and the federal government.

A Purdue University analysis of the agricultural regulations imposed on the federal level from 1997 to 2012 by the Environmental Protection Agency (EPA) and the USDA found that the regulations had a substantial impact on innovative growth in productivity.  Because of USDA regulations, the study found a 24.7 percent decrease in productivity growth, for EPA regulations, the study found a 36.8 percent decrease in productivity growth.

Despite such dismal effects of regulation on growth, federal agricultural regulation has only increased since the Purdue study’s 2012 end year. A 2018 study conducted by the George Washington University Regulatory Studies Center, and again, the USDA itself, had similar findings. Stating that “growth in total regulatory restrictions has a negative relationship with growth in crop yield.” This federal environment has led to calls from groups such as the American Farm Bureau Federation for a decrease in these excessive regulations, citing a fundamental issue with the extent and enforcement of federal agricultural regulations.

While state-level regulations have varied across the nation, these state-level regulations can inhibit agricultural innovation and growth as well. The extent and enforcement of agricultural regulation is different in every state, but examples of regulatory burdens on agriculture abound. This is true both for innovative agricultural technology and innovative agricultural business models.

On the innovative technology side, California law requires all self-driving tractors to have an operator stationed in the vehicle, practically defeating the purpose of “driverless” tractors. In Mississippi, drone operators seeking to spray pesticide or fertilizer would have to get an airplane pilot’s license. This is due to an outdated requirement that all aerial applicators have a pilot’s license. Both of these rules are based on outdated laws from the 1970s, and these regulations are only two such examples of burdens that states have placed on agricultural technology.

In addition to regulations on ag-tech, many states also have regulatory burdens on innovative agri-business models as well. For several years, multiple states did not permit farmers to sell shares of their dairy herds to outside participants. In addition, several states have prohibited certain farm-to-consumer food sales from being marketed on social media, forcing many farmers to be excluded from a basic tool that other sectors are permitted to use widely.

  • Key reforms could help remove barriers to growth

Even a brief survey of the agricultural landscape demonstrates a need for meaningful regulatory reforms. Farmers across the state and country have recently battled economic downturns, natural disasters, a global pandemic, and numerous other challenges. The least that the government can do is remove regulations that inhibit their productivity and innovation.  While there is a myriad of agricultural regulations that should be fundamentally repealed on the state and federal level, there are also proactive reforms that could help maintain an environment that encourages growth.

With the backing of farmers and groups such as the American Legislative Exchange Council (ALEC), many states have enacted sweeping agricultural freedom laws that have expanded access to agricultural products by consumers. Given that a large percentage of the agricultural sector centers around food production, several states looking to cut regulations have enacted “Food Freedom” laws. Many of these laws encompass reforms such as expanding farm-to-table meat sales, broadening cottage food sales, and lowering small farmers' licensing and permit requirements.

In addition to specific changes to the most commonly burdensome regulations, there is also immense potential in a regulatory exemption program. In such a program, individual farmers could request specific exemptions from excessive agricultural regulations that do not affect health or safety. In some cases, a broad regulatory repeal like the food freedom laws may not apply to a farmer in a unique regulatory situation. 

Using such exemption programs, individual states, and even the federal government, could have platforms for farmers to continue operating and growing in the economy without being hamstrung by a one-size-fits-all approach. This “regulatory sandbox” model has a successful track record of success in other sectors, such as financial technology, and it could be a platform for farmers in unique scenarios to get the regulatory relief they need.

  • It’s time to let farmers work without limits

The outdated rules of yesterday, and arbitrary regulations of today, shouldn’t be permitted to restrict the growth of agricultural innovation and prosperity for the future. A proactive agricultural sector can only grow to its fullest potential in a free market context.

Farmers have enough challenges to face as they strive to produce products for their families, neighbors, and country. Instead of placing more burdens on these hardworking folks, sound public policy should ensure that farmers can continue to grow and innovate without having the blight of a heavy-handed government.


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