Question

The Huy Fong Foods factory in Irwindale, California, makes a very popular hot sauce called Sriracha. The sauce, which has Thai origins, is made from red chili peppers and a combination of more neutral ingredients like vinegar and sugar. Huy Fong Foods’ Irwindale factory is very successful and contributes to the community in terms of employment and tax revenue.

Unfortunately, the factor also contributes a strong odor. In October 2013, several Irwindale residents complained of sore throats, nosebleeds and burning eyes that were allegedly due to Sriracha manufacture. The city council considered the complaints and, in April 2014, declared the factory a “public nuisance.” This move gave the city the power to shut down the plant pending a trial on the issue.

The Huy Fong Foods case presents a classic property rights problem. Should Irwindale residents have the power to shut down a factory,( i.e. eliminate its value as a property asset,) because of its impact on the community’s enjoyment of their land? Or should the factory be required to compensate for proven injuries while being permitted to make its own decision on the economics of staying in business?

Answer 1

As the question says that this is a classic case of Property Rights problems, so it is.

In any society public shouldn’t be allowed to take law in its hands. In the given problem, city council has only declared the factory a ‘public nuisance’ and hasn’t given any orders to shut down the factory and hence residents of Irwindale cannot shut down the factory. This is something which is to be decided by legislative body of the city

Further, though the factory was providing employment and tax revenue and thus making a contribution in the growth and development of city, then also the bad effects of their product Sriracha cannot be ignored.

Ideally, firstly factory should be made to compensate for proven injuries and then the court should take action to give Hug Fong Foods a separate land with no/least residents living nearby. This will solve both the issues – public health will not be compromised and economy will be supported by business.