California closes a yogurt business

by Walter Olson on June 14, 2011

No wonder it had to go:

Her business, while it lasted, consisted of herself, making yogurt on the instructions of her father. Ms Dashtaki was renting space in the kitchen of an Egyptian restaurant where she and her father, “like elves before and after their working hours”, lovingly cultured their yogurt under a blanket, then drained it through a certain kind of cheese cloth, then stirred it for hours, and so forth. For the taste to be divine, everything has to be just so. And, being artisans, they kept the volume tiny, about 20 gallons (76 litres) a week, for sale only at local farmers’ markets.

Homa Dashtaki was eager to demonstrate that her yogurt was safe and healthful, but complying with California regulations turned out to be not so easy. In fact, authorities told her that she would face possible prosecution unless she established a “Grade A dairy facility” employing processes more commonly found in factories. A highlight: she’d have to install a pasteurizer even though she made her yogurt from milk that was already pasteurized. What’s more, California law makes it illegal to pasteurize milk twice, so there went any hope of continuing her straightforward way of obtaining milk, namely bringing it home from a fancy grocery store.

Ms Dashtaki is pondering whether to move to another state, one whose rules allow for artisanal products. She would not be the first entrepreneur to flee the Golden State.

Although a small artisan cheese sector struggles to get by, the California dairy market generally is dominated by mass-market producers selling blandly standardized wares. And you can see how that winds up happening. [The Economist]

More: Coyote. And more on the California regulatory climate from Ted at PoL, including a link to Cal-Peculiarities (PDF), by David Kadue of Seyfarth Shaw, on the state’s distinctively onerous employment laws.

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06.14.11 at 5:15 am
Why, yes, regulations do strangle businesses, why do you ask?
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{ 4 comments }

1 Andrew Zalotocky 06.14.11 at 9:47 am

This is also a demonstration of why big corporations aren’t bothered about excessive government regulation. They can afford it, but it kills off their smaller competitors. It also creates huge barriers to entry that stop any new competitors emerging, except for other big corporations that aren’t any more efficient or innovative than the incumbents.

2 DensityDuck 06.14.11 at 12:06 pm

What’s annoying about this is that there’s absolutely no indication that there was unsanitary activity going on. They didn’t even review her business process except to see if she met the compliance checklist.

It leaves you wondering whether it’s worth bothering to ask for a regulatory review at all when they’re just going to go down a checklist point-by-point and if you don’t exactly meet everything on it then you’re denied. This is bad, because it encourages people to hide from the regulators and avoid inspections.

3 Andrew Zalotocky 06.14.11 at 1:25 pm

It seems like there is a point at which regulation becomes de facto corporatism. When the regulatory burden becomes so great and the ways in which you can do business are so constrained then regulatory compliance is like joining a medieval guild. There are strict rules on what you can and can’t do, and you are nothing without that magic bit of paper that says you have been recognised by the powers that be. So doing business in that market becomes the exclusive preserve of the few companies that have managed to jump the hurdles of official recognition.

4 Andrew Zalotocky 06.14.11 at 3:23 pm

What worries me is that I can’t find the boundary between regulation and corporatism. There are things that are generally recognised as being one or the other, and a big grey area between them, but what is it that distinguishes one from another? I’m asking this as a layman and I’m assuming that passing economists will be able to provide an answer, but what is it? I’d rather ask a question that experts might consider stupid than not ask the question and never know the answer(s).

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