The warehouse at Fifth Season was lined with boxes, each containing one watermelon. When I walked in to say hello to the folks at the Viroqua farmers’ cooperative I wondered what the story was behind the odd sight.
A man was taping the two long rows of boxes shut. He was clearly tired, having assembled all 130 of them and put the watermelons into the boxes one at a time. My years of experience as a food salesman made me scratch my head. What’s going on, I wondered. Produce like this is usually shipped in bulk.
The director, Diane Chapeta, arrived while I was conversing with Eric, the farmer who was working double shifts for Fifth Season. I’ve met Diane a couple times before, once while touring her facility.
They were in a hurry to prep the shipment of watermelons for a pick-up by a truck from Reinhart Foods that was coming up quickly. I offered to help, so Eric and Diane told my staff member and I that we could start by taping a row of boxes shut. We gladly obliged.
While I closed the boxes and Chris taped them I learned this whole routine was new to Fifth Season. As we started applying Diane’s hand-written labels I wasn’t surprised to find out they were being forced to go through this routine because of a change in corporate policy. The company that was trucking Fifth Season’s products from Viroqua to its hub in La Crosse was no longer selling these products individually unless they’re individually labeled.
It struck me as odd, but I had to ask myself what the real reason was. I found out it was actually the result of a new federal regulation that bars food distributors from splitting cases, or receiving cases of multiple products like watermelons from cooperatives like Fifth Season, then selling them individually to restaurants, grocery stores, and others.
The ripple effects, unbeknownst to regulators and elected officials, hurt only the smaller businesses. Businesses like Fifth Season, which is just starting off, will be forced to stop buying products that the largest customers usually don’t purchase one at a time.
The small farming operations that grow watermelons and other crops sold in bulk are hurt because cooperatives must either pass along higher costs to them or stop buying their products because of the added packaging costs. How much could individual packaging cost? The boxes, labels, tape, wrap, and labels are enough of a cost to slash the profit margin.
Smaller restaurants and grocers will be hurt because they can no longer buy smaller quantities of necessary products. Instead of buying smaller quantities, they’re now forced to buy bulk and store them in inventory. They pay taxes on their inventories, so they’re hit twice, once when the grocery bill arrives, and next when the tax bill arrives.
The regulation’s reason is probably to better track food items that carry contaminants. But the ripple effect is a small earthquake that hurts many bystanders.
But it’s just one regulation among tens of thousands of pages. It’s also the kind of story that usually goes untold, but I’m telling it here to make a clear point: we need our legislators to be careful to look at the unintended consequences of their laws, and to make sure regulations that go on the books are sensible.