Do Cottage Food Laws Reduce Barriers to Entry for Food Manufacturers?

AAEA President-Elect and co-authors release new research in AEPP

The COVID-19 pandemic has impacted direct-to-consumer outlets, like farmers markets.  In new research released in the Applied Economic Perspectives and Policy (AEPP), AAEA’s President Elect and co-authors demonstrate that it is important to keep in mind that COVID-related impacts are affecting a wide range of small-scale food and beverage businesses, many of which qualify as small businesses, in addition to farms and ranches.

The new research “Do Cottage Food Laws Reduce Barriers to Entry for Food Manufacturers?” was written by AAEA President-Elect, Dawn Thilmany McFadden from Colorado State University, Marcelo Castillo from the USDA’s Economic Research Service, and Jeffrey O’Hara from the USDA’s Agricultural Marketing Service.

Thilmany McFadden says that, “We find that cottage food laws have a significant and positive impact on the number of manufactured baked good establishments (a sector most commonly covered by these cottage food laws).  While the effect is qualitatively the same for employer and nonemployer businesses, we find that the magnitude of the impact is proportionally greater for nonemployer businesses.  However, we do not find that cottage food laws impact the number of establishments for other pertinent food manufacturing sectors.”

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ABOUT AAEA: Established in 1910, the Agricultural & Applied Economics Association (AAEA) is the leading professional association for agricultural and applied economists, with 2,500 members in more than 60 countries. Members of the AAEA work in academic or government institutions as well as in industry and not-for-profit organizations, and engage in a variety of research, teaching, and outreach activities in the areas of agriculture, the environment, food, health, and international development. The AAEA publishes two journals, the American Journal of Agricultural Economics and Applied Economic Perspectives & Policy, as well as the online magazine Choices and the online open access publication series Applied Economics Teaching Resources. To learn more, visit www.aaea.org.

Contact: Allison Scheetz
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