Napoleon III, Butter and West Marin

by John on September 14, 2012

Large cheese waiting for shipment on the platform at Fallon, West Marin in the late 1800’s

Napoleon III had a huge effect on agriculture, product branding, lobbying and indeed, on the health of West Marin’s dairies. In 1869 he offered a prize for developing a butter substitute for his army, while appeasing the lower classes (as they were described at the time) with a low-cost spread. By clarifying animal fat and extracting the liquid portion under pressure, letting it solidify, then combining it with water and esters of butyric acid (naturally present in butter) French chemist Hippolyte Mège-Mouriés produced a gray substance that spread and tasted somewhat like butter. He likened the color to pearls, using the Greek word for pearl, margaris, and came up with the name oleomargarine.

Meanwhile, in Point Reyes, the dairy industry was establishing the superior quality and taste of its product as one of the first branded consumer goods. In 1857 Clara Steele and her family began making cheddar cheese with milk from range cattle, for sale in San Francisco. To insure a less hazardous and more stable milk supply, they started a 6,000-acre dairy ranch in Point Reyes. By 1861 it was the State’s biggest dairy producer. In 1864 they made a 21,800lb cheese for the Mechanic’s Fair in San Francisco. Pieces of the “20 feet in circumference, 18 inches thick,” cheese were sold for a dollar a pound to benefit charities. I guess using the larger circumference rather than the slightly over six-foot diameter was designed to impress. It was still a big cheese.

In the 1870’s, by adding ranches in what is now Point Reyes National Seashore, West Marin became the state’s leading dairy region. The Shafter-Howard dairies started stamping a trademark on their butter to distinguish it from lower-quality competitors. By 1878, California’s rapidly-growing dairy industry had enough influence to get the legislature to pass the State’s first dairy law, making it a crime to sell the newfangled oleomargarine as butter. This started what became perhaps the first major battle between industries where the weapons in the fight for market share were legislation and branding. At first the dairy industry prevailed, forcing regulations and taxes on the emerging margarine industry.  At the turn of the century, some dairy states even passed laws saying that margarine must be dyed pink to avoid confusion with butter.

Margarine technology changed. The battle raged as the dairy and margarine industries grew larger and more centralized. The dairy industry got special taxes imposed on margarine; the margarine industry avoided the ban on coloring their product to resemble butter by including packets of color to be kneaded into the gray margarine to make the color more appealing. Finally (well, not quite), President Truman signed the Margarine Act of 1950, repealing all federal taxes and restrictions on the lower-priced spread. The Point Reyes Light, at the time known as the Baywood Press, ran stories prophesying that the loss of the lucrative market for high-quality dairy products would doom West Marin’s agricultural industry.

Sadly they were largely correct: milk, butter and cheese became commodities, indistinguishable in quality, taste or origin. West Marin’s milk products, long prized for taste and quality, could no longer charge a premium representing true value. The farms and the community declined. Margarine had won the lobbying battle and changed the regulations that once favored butter.

This was an early case where two competing consumer products battled for market share via regulation. Economists call this type of behavior ‘rent seeking’ (from the 18th  -century political economist Ricardo’s theory of rents): the business is trying to profit by getting the rules changed, rather than competing in trade and producing wealth. This devastates local communities, as small producers of high quality goods are forced out, favoring larger producers with more political influence.

We see it today in discrimination against small local fishermen in California’s allocation of fishing rights that favor large, out-of-state trawlers and lobbying by large food distributors to let cheaper, less inspected foreign produce such as oysters to be imported and compete with local sources. This is additionally bad for local communities as the income and services to support the businesses are lost to the community and seldom return. But there are bright spots like the Strauss family, who pioneered organic dairy ranching on the West Coast, and organic beef producers who show that it is indeed possible for local producers to compete in the marketplace.

Even with organic dairy products, ‘rent seeking’ continues, as large East Coast producers try to slant regulations to favor their farming methods at the expense of competitors. Our legislators must ensure that local agriculture, fisheries and the communities they support are not penalized by predatory “rent seeking” regulations that favor large businesses.  May the highest-quality, most-sustainable product win.

 

(I originally wrote this for  the Pt. Reyes Light in 2009)

 

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