May 10, 2017
For farms and small businesses trying to determine whether and to what extent they may be impacted by the Food and Drug Administration’s (FDA) new food safety rules, FDA has recently published an informative website where producers can get some added assistance.
If you recall from our previous posts about FDA’s Food Safety Modernization Act (FSMA) rules, certain farms that grow produce and food processors can be exempt from the rules depending on how much they sell and to whom they sell it. Producers may either be completely exempt from compliance with the new requirements, or they may be “qualified exempt” and eligible for modified requirements. To determine whether an exemption applies, there are sales thresholds for each category; these sales thresholds vary depending on whether the operator is potentially subject to regulations as a produce farmer or a food processor. Regardless of which regulation applies, however, the sales thresholds or cutoffs are based on an average of the past three years’ worth of sales and are supposed to be adjusted for inflation. Until now, we have not had clear information from FDA about how they would implement the “adjusted for inflation” language.
This clarification is important because the qualified exemption in the Produce Safety Rule applies to farms with less than $500,000 in food sales (where the majority of those sales are direct to qualified end users). However, because this figure is intended to be adjusted for inflation, it means that the dollar cutoff is actually higher than $500,000. The same is true for the $25,000 “de minimis” exemption, which exempts produce farms with no more than $25,000 in produce sales from compliance with the new rules.
FDA’s new website provides the inflation-adjusted values relevant to all of the FSMA rules that have these kinds of sales thresholds or cutoffs, and will be updated in March of each year to reflect the most recent inflation-adjusted values. For 2014-2016 sales (and 2017 compliance purposes), the inflation-adjusted average value is $532,645 for the qualified exemption and $26,632 for the de minimis exemption.
How It Works
A farm that is looking to assess whether they satisfy the qualified exemption for 2017 should average their past three years of food sales (2014, 2015, and 2016), and then compare that number to the Produce Safety Rule inflation-adjusted average for 2014-2016 (posted on FDA’s website). If the farm’s sales are below that value, then they qualify for the exemption (assuming they also are selling majority direct to a qualified end user; see our post on the Produce Safety Rule for more information about what counts as a qualified end user, and what modified requirements apply to qualified exempt farms).
In 2018, the farm should average their food sales from 2015, 2016, and 2017 and compare that number to the updated inflation-adjusted average for 2018, which FDA says it will post by March.
The FDA page also contains inflation-adjusted cutoffs for qualified facilities under the Preventive Controls Rule. Under that rule, very small businesses are considered qualified facilities and are eligible for modified requirements. A very small business has less than $1 million in food sales, but again, that number is adjusted for inflation.
A facility would follow the same process as outlined above for the Produce Safety Rule: for 2017, the facility would average the past three years’ worth of food sales (2014, 2015, and 2016) and then compare that averaged value to the inflation-adjusted cutoff for 2014-2016 posted on FDA’s new website. For 2014-2016 sales (and 2017 compliance purposes), that value is $1,065,291.
We appreciate that FDA is supplying this information in a straightforward, accessible manner, and believe it provides an easy way for farmers to verify their sales against the cutoff.
If you have additional questions about whether the FSMA rules apply to your operation, check out our Am I Affected? FSMA Flowchart and our multi-part series on the Produce Safety Rule and the Preventive Controls Rule for food processors.