Food Fight

Oh, Manitoba. Just when you start looking sane, you go back to your old wacky ways.

Recall that Manitoba is the province where you can't sell a potato without, well, hassles.*

Now, read this one and weep. Since I was a kid in Manitoba, the government made much fuss about agricultural diversification, wanting farmers to move to more processing and oddball thin-market crops.

The Cavers at Harborside Farms are a great example of how this can be done well. They raise Berkshire hogs outside of Pilot Mound, a small town a couple hours southwest of Winnipeg. They started curing hams following old Italian recipes. Bartley Kives reports:

In May, Manitoba Agriculture Food and Rural Initiatives awarded a $10,000 prize to Harborside Farms, after inviting owner Pamela and Clinton Cavers to compete in a contest called the Great Manitoba Food Fight in Brandon.

The cash prize for the Cavers' pastured-pork prosciutto was intended to help the couple further commercialize the cured meats they had been producing on their farm since 2008, using traditional Italian recipes.

In June, inspectors from a different branch of MAFRI ordered Harborside to stop selling all of its cured meats, known in culinary terms as charcuterie, which had appeared on the tables of higher-end Winnipeg restaurants such as Pizzeria Gusto and Bistro 71/4.

The Cavers, who also hoped to sell their product at De Luca's Specialty Foods, claim they complied with the order.

But on Wednesday, as University of Manitoba environment students were about to tour the Harborside grounds, a pair of inspectors drove up and seized the couple's entire inventory of charcuterie -- about 160 kilograms of the cured pork and beef products known as prosciutto, lonzino, capicollo, bresaola, salumi and soppressata.

The Cavers said they were each handed $600 fines.

"The fine was for selling food unfit for human consumption. This was the same food the agriculture minister ate in May," said Pamela Cavers, referring to MAFRI Minister Ron Kostyshyn, who tasted Harborside's prize-winning prosciutto at the contest in May.

So, was anything wrong with their cured meats? No. Absolutely nothing. But they didn't follow the approved process. Why? Because there wasn't one. They were following traditional processes, the food was safe, and they'd asked the government for advice on making sure they were also compliant with any process specs that the government might wish to impose.

The provincial inspectors took no issue with any aspect of the farm aside from the charcuterie operation, whose entire processes they deemed unsatisfactory, Pamela Cavers said. A June inspection yielded an order to build a separate drying room and acquire instruments to monitor pH levels and moisture, among other issues, she said.

The Cavers said they had been attempting to obtain specific guidelines for producing artisanal charcuterie, but could not receive direction from the provincial food development centre in Portage la Prairie.

"They said they had no idea what to compare it to," she said, adding officials had no experience with charcuterie. She said a call to the minister's office during the Wednesday raid yielded advice to call the chief veterinary officer. "They didn't even know what charcuterie was," she said.

Were the Cavers selling unfit food? No. An informed correspondent tells me that Manitoba Health has no adopted procedures as yet for dry cured meats. The Cavers tried proving that their product was safe, by various bacteria, moisture, and pH tests at the Portage Food Lab. But there's no standard that the government could point to showing whether it was good enough.

Because Manitoba Agriculture, Food and Rural Initiatives (MAFRI) does not have Manitoba Health standards against which they can judge things, they just took all of the Cavers' stuff. Even if the Cavers perfectly followed all of the Italian standards, they're still in violation of Manitoba law. Because they're not following Manitoba standards. Because nobody has written any Manitoba standards.

A rational province would, where no official provincial standard exists, simply adopt an existing proven standard from an outside trusted source and verify that a Manitoba producer's practices meet that standard. Alternatively, perhaps somebody in Manitoba should start trying to get approval to sell chocolate-coated cotton.

There's a petition up here wishing that the Manitoba government be sensible. I hope it's successful.

* See:

• Canadian agriculture is completely screwed up
• Manitoba potato monopoly
• More Manitoba potatoes
• Manitoba potato monopoly...update
• Manitoba potatoes - again!
• Ceasefire in the spud wars

Liquor traps

Gordon Tullock warned us that once substantial rents accrue to some regulatory provision, it gets hard to change the regulation even if it is spectacularly inefficient. He illustrated the case with New York's taxicab medallion system: the restriction on the supply of cabs doesn't help the drivers but instead drives up the price of the asset in fixed supply, the medallion itself. Abolishing the medallions would bring prices down for dispersed consumers but would impose substantial capital losses on the medallion-holders.

There is a way out of transitional gains traps: tax the winners to pay off the losers. But it's awfully hard to implement. Opaque transfers are opaque for a reason: voters do not understand them and regularly oppose things that would make them better off. Tullock's biggest lesson then is that we should never ever get into transitional gains traps in the first place as they are just so very hard to escape.

Today's edition: liquor permits. Cities like restricting the number of liquor outlets, reckoning that they can thereby reduce the number of problems caused by drunks. If the restriction is binding, then the licence to sell alcohol becomes an asset for the owner. If the restriction is really binding, it can be a really valuable asset. Witness Flemington, New Jersey [ht @MarketUrbanism]:

Local officials who want a more lively town center and a development team seeking to restore a landmark hotel were hoping to put a new watering hole on Main Street. Then they ran smack into New Jersey's strict, Prohibition-era alcohol laws, which restrict the number of liquor licenses per town. Flemington had just three—two belonging to establishments in strip malls and one for a Veterans of Foreign Wars hall.

Having a decent bar, it turns out, is helpful to reviving small downtowns, development experts say. So, in February, the developers came up with a novel but expensive solution, buying the Italian restaurant that owned a license and eventually transferring it to the downtown hotel. The price: about $1 million for the permit alone.
...
The Union Hotel owners' arduous journey to opening a bar is emblematic of a conundrum facing small downtowns across New Jersey. In a state making efforts to reverse decades of sprawling suburban development, a shortage of liquor licenses has emerged as a hurdle to rejuvenating Main Streets, according to development consultants and planning groups.
...
The ramifications have been felt across the state. Local officials in Glassboro, N.J., a South Jersey borough of about 18,000 people, said their $300 million public-private downtown development plan has been set back because it only has seven liquor licenses, with one changing hands recently for $700,000, said Joe Brigandi, the borough administrator. It has made it difficult to attract a new downtown restaurant, he said.

Meanwhile, Manitoba's emergence from the liquor dark ages is hindered by the existing rent-holders. The Winnipeg Free Press's Bartley Kives* documents the insanity of the prior liquor regulations, with 12 different highly prescribed liquor licences that often require venues provide services of negative value to their customers. Live music requirements ban the use of DJs for some licencees, for example.  But Kives also sees the transitional gains trap:

And more politically, the province isn't prepared to undermine entrepreneurs who've invested heavily in restaurant-lounge concepts such as Earls, Moxies and the Keg, which have proven extremely successful in recent years.

"We're not going to step all over people who've invested in infrastructure," said Chomiak, referring to independently owned restaurants as well as the chains.

In Manitoba, Earls-style venues have stolen the club-going clientele away from hotel beverage rooms, suggested Jim Baker, president and CEO of the Manitoba Hotel Association.

Decades ago, hoteliers opposed liquor-regulation reform in fear of losing market share to stand-alone venues. Today, hoteliers are more concerned about the prospect of legalizing alcohol-delivery services -- which would harm beer vendors -- than they are with the idea of more small clubs serving alcohol in downtown Winnipeg.

Baker said he would also like to see the province ease up on regulations governing minors in beverage rooms, especially in rural areas where banquets and fundraisers would present a business opportunity if people under 18 were allowed on-site.

"There's a need to see how these people can use the larger rooms for other purposes," said Baker, who cautiously supports the idea of regulatory reform. "We want to be part of this discussion."

Hotel, restaurant and club owners are also united in their desire to see liquor inspectors ease up on the enforcement of minor infractions such as improper paperwork. That sort of cultural change is coming as part of the creation of a new regulatory agency, Chomiak said.

There's a great Masters thesis to be written applying the Peltzman model of regulation and deregulation to liquor law in Manitoba.

New Zealand has been a minor oasis of sanity relative to these kinds of cases. Australia, as I understand things, has sufficiently restrictive liquor permitting laws in some parts of the country that people buy hotels just to be able to run the permitted liquor outlet attached to the hotel. I worry that NZ's move to greater local control of licensing options will wind up letting local activists restrict the supply of new licences, to the hoozahs of existing permittees, and move us into the trap. Read New Jersey and Manitoba as cautionary tales.


* When I was in Manitoba, I remember Kives having had the entertainment beat (though I could have that wrong; it was a long time ago). Now, every time there's a great piece in the Winnipeg Free Press, it's from Kives (and here and here). I wonder how long it'll be 'till he's scooped up by one of the national papers.