Occupational Licensing Review Committee Kicks Off Second Session

By Zach Burt

The Occupational Licensing Review Subcommittee recently began its second-ever round of license reviews since its creation in 2019. Representatives from the Department of Labor and Licensing and the Department of Agriculture presented arguments to the committee about the importance of licensing abstracters, plant breeders, industrial hemp growers, and agricultural seed dealers/labelers.

On September 16, I went before the Occupational Licensing Review Subcommittee to testify about the Agricultural Seed Dealer/Labeler license. I testified in favor of reducing the fees associated with the license, or eliminating the license altogether. My research at ACRE finds that the license constitutes a fee-only license, essentially a tax on licensees. There are no educational or experience requirements associated with the license. Applicants simply pay the annual fees and are licensed as Seed Dealer/Labelers. Additionally, the licensing fees scale up depending on the volume of seeds that licensees have sold in the previous year. This is the way it’s handled in Arkansas, but it doesn’t have to be. 

  • Many states, including Georgia, Kansas, Kentucky, North Carolina, and Virginia charge flat annual fees instead of scaling based on sales. 
  • Eleven states, including Texas, either do not license seed dealers at all, or simply use inspections as a regulatory tool.

Proponents of the license argue that the licensing fees help pay for inspections, which protect farmers from being sold mislabeled seed. However some states, such as Indiana, focus inspections on seed types most likely to contain contaminants, and do not charge dealers any licensing fees. 

In 2019, the Arkansas Directory of Licensed Occupations listed 203 active Seed Dealer/Labeler licenses in the state. Even if a number of those licensees paid large scaling fees each year, the Arkansas State Plant Board is unlikely to collect more than a few hundred thousand dollars in fees. However, during the 2019-2020 fiscal year, the Plant Board collected approximately $8.6 million dollars from all sources. License fees for seed dealers could be eliminated or reduced, and the Plant Board would still have adequate funding to conduct inspections, especially if inspections were prioritized to seed types most likely to contain contaminants. 

It is debatable whether the license actually serves to protect the public. However, it is clear that licensees are paying a tax to work in their profession. The scaling of the fee in particular is an impediment to the growth of agricultural businesses, especially in rural parts of the state. 

Based on our understanding at ACRE, either change would be a preferable alternative to the status quo in Arkansas. Moving from a sliding fee based on sales to a flat fee would be an improvement. However, we would encourage the committee to recommend eliminating the license and allowing for verification of seed quality through other means. The funding and structure of the Department of Agriculture and by extension the State Plant Board is resilient enough to reallocate funds to cover the cost of seed inspections without collecting license fees from Seed Dealer/Labelers. 

The Agricultural Seed Dealer/Labeler license requires no education or experience, it is simply a fee that dealers must pay before they can sell their product. Many other states either charge seed dealers lower fees, or do not license them at all. Arkansas could follow that example and remove an impediment to the growth of agricultural business. The legislators on the Occupational Licensing Review Subcommittee should take this opportunity to improve professional licensing in Arkansas and recommend that the licensing fees be reduced, or better yet, eliminate the license altogether and regulate seed dealers/labelers through other means. We need to give our agricultural business space to grow. 

For more information about fee-only licenses, read an ACRE report here

For a full rundown of how occupational licenses affect Arkansas’s economy, read an ACRE research paper on the subject here

Zachary Burt is an ACRE research associate currently working on occupational licensing in Arkansas. Contact him at zburt1@uca.edu with any questions or comments.