Samuel R. Wiseman (Florida State University - College of Law) has posted Fraud in the Market (Regent University Law Review, Forthcoming) on SSRN. Here is the abstract:
Cities and towns around the United States host an increasingly common ritual: large crowds of local food enthusiasts in search of the fruits of regional agriculture. These consumers are not simply seeking out the freshest produce; they also flock to farmers’ markets in search of the many values attached to food that is sold by the people who grew it. Locavores prefer small farms to massive, distant agribusiness for freshness, environmental, social, and safety-based reasons, and they assume, when so assured by the market, that the food at the market is in fact local. And these consumers have not been, for the most part, deceived; the large majority of sellers who claim to sell local produce are very likely honest. But there are strong incentives for fraud: local produce can bring premiums at farmers’ markets, and the costs of packaging, labeling, and middlemen are greatly reduced. These incentives are sometimes too tempting to resist. Some sellers that claim to sell freshly-picked carrots have picked these carrots from a grocery store pallet, not from a field.
Misrepresentations about the source of produce harms consumers who are cheated, and it damages the many honest farmers who lose their customer base. This Essay explores this troubling phenomenon and explores possible solutions. After examining existing and potential approaches to curb fraud, including market agreements and grower contracts, regulation, and criminal enforcement, it suggests a hybrid system. Where consumers can distinguish between locally-grown and mass-produced products and there is competition among markets, markets should — and likely will — adopt and enforce rules for monitoring and enforcing food source claims. But where it is difficult for consumers to identify product sources or competition is weak, more regulation is needed: states should adopt clearer standards for defining and enforcing producer sales, and markets, which have local knowledge and staff already on the ground, should enforce them.