This post is the first in a multi-part series analyzing FDA’s recently released Preventive Controls Rule for Human Food, and the rules and requirements for farms and facilities that may fall under its purview. This first post addresses those farms and food enterprises that are exempt from the rule. Subsequent posts will look at facilities and farm mixed-type facilities that are partially exempt, are subject to modified requirements (and what those requirements entail), or are fully covered by the new rules.

In broad terms, the Food and Drug Administration’s (FDA) new rule governing human food facilities (aka “the Preventive Controls Rule” or “PC Rule”) requires domestic and foreign food facilities to follow updated good manufacturing practices, and establish and implement hazard analysis and risk-based preventive controls for human food products.

To understand who is required to comply with FDA’s new rule, you first must understand FDA’s food facility registration requirement, which was initially authorized under the Bioterrorism Act (officially known as the Public Health Security and Bioterrorism Preparedness and Response Act of 2002).

The Bioterrorism Act authorized FDA to establish a registration requirement for food facilities for traceability purposes. The Food Safety Modernization Act (FSMA), which became law in 2011, requires facilities that must register with FDA to also follow the Preventive Controls Rule’s new food safety requirements.

This means that if you do not have to register with FDA as a food facility, then the Preventive Controls Rule does not apply to you.

Who has to register?

Broadly speaking, if you manufacture, process, pack, or hold food for consumption in the US, then you meet FDA’s definition of a “facility,” and are required to register.

However, certain businesses are exempt from registering, even though they may technically meet FDA’s definition of “facility.”

So who doesn’t have to register?

The exemptions from registration were first established in the Bioterrorism Act, and they include farms (in some, but not all cases) and retail food establishments (stores, restaurants, certain types of direct market farms, etc.). There are other exemptions, but for our purposes we will only be focusing on those most relevant for farms and local food businesses.

For the Preventive Controls Rule, FDA has clarified and expanded the exemptions for farms and retail food establishments from their original Bioterrorism Act definitions in response to Congress’ mandate in FSMA to protect small and mid-sized family farms and other local and regional supply chain participants from the costs and burdens associated with these new rules.

Exemptions for Farms

If you fit FDA’s definition of “farm,” then you are exempt from registration, and therefore are also exempt from the PC Rule. Since FDA first proposed this rule, the farm definition has come a long way in the right direction, reflecting the input of farmers and the sustainable agriculture community, who called on FDA to draft a definition that farmers could see themselves in.

Under the final definition, there are two different ways you can be considered a farm: as a “primary production farm,” or as a “secondary activities farm.”

1. Primary Production Farm

A primary production farm is:

An operation under one management in one general (but not necessarily contiguous) physical location devoted to the growing of crops, the harvesting of crops, the raising of animals (including seafood), or any combination of these activities.

These farms can also do activities within the definition of “harvesting,” “packing,” and “holding” as well as some activities considered processing/manufacturing, but that do not change the raw agricultural product into a processed food.

Accepted manufacturing/processing activities include:

1. Drying/dehydrating raw agricultural product to create a distinct commodity (such as drying/dehydrating grapes to produce raisins), and then packaging and labeling them. If additional manufacturing or processing is done during the dehydration process (e.g. slicing apple rings), then the activity is no longer within the farm definition.

2. Treatment to manipulate the ripening of raw agricultural commodities (such as by treating produce with ethylene gas), and then packaging and labeling them (again, without additional manufacturing/processing); and

3. Packaging and labeling raw agricultural products, provided these activities do not involve additional manufacturing/processing (e.g irradiation).

If a farm is manufacturing/processing food – or packing or holding processed food – that is solely for on-farm consumption, then it is still within the farm definition.

Farms can also pack and hold raw agricultural commodities (RACs), regardless of whether they were grown on that farm or another farm. This means that a farm that aggregates produce from other farms for distribution through a CSA is still a farm, even though the CSA includes produce from her farm and her neighbor’s farm.

2. Secondary Activities Farm

A secondary activities farm is:

An operation, not located on a primary production farm, devoted to harvesting (such as hulling or shelling), packing, and/or holding of raw agricultural commodities [RACs]. However, this definition only applies if the primary production farm(s) that grows, harvests, and/or raises the majority of the raw agricultural commodities harvested, packed, and/or held by the secondary activities farm owns, or jointly owns, a majority interest in the secondary activities farm.

Secondary activities farms can do the same packing and holding and manufacturing/processing activities that primary production farms can do without losing their exemption.

So if you are doing activities that fall within the definitions of harvesting, packing, or holding — and you’re doing them on your farm – then you are a primary production farm. And that’s true whether the farm is under an owner-operator, is rented, or is cooperatively or otherwise jointly owned. As long as it’s under one management, it doesn’t matter what the management structure looks like.

If you are doing activities that fit the harvesting, packing, and holding definitions but are doing them at a separate location and under a separate business structure (like a cooperatively owned packing shed that aggregates from multiple farms), then it is still considered a farm (a “secondary activities farm”) as long as the primary production farm(s) providing the majority of the products to be packed hold a majority interest in the packing operation.

Some Examples to Clarify Secondary Activities Farms

Some hypothetical examples may help clarify the new secondary activities farms designation.

• Consider the example of four farmers that cooperatively own and pack their produce in a shed that is located on a piece of rented land 20 miles away from any of their individual farms. Each farmer contributes 25 percent of the produce to the operation and holds a 25 percent ownership interest in the operation. The packing operation would be considered a secondary activity farm, because it is not located on a primary production farm, but collectively the participating farmers provide a majority (in this case, 100 percent) of the produce and own a majority (in this case, again, 100 percent) of the business. Such an operation would be exempt from the registration requirement, and the PC Rule would not apply.
• Now consider the scenario where a local businessperson starts up a distribution operation that aggregates produce from multiple farms to sell to institutional buyers. In this case, the ownership structure becomes more important. If four farms provide 100 percent of the produce, but none of them have an ownership interest in the operation, then the aggregator does not satisfy the secondary activities farm definition, and is not exempt from the registration requirement or the PC Rule.
• If, however, each of the four farmers holds a 15 percent ownership interest in the business, then it would be considered a secondary activities farm. It would be exempt from the registration requirement and the PC Rule would not apply, because a majority interest in the operation is held by farms providing a majority of the produce.
• Now consider the same ownership scenario, but that the four farmer-owners together provide only 49 percent of the produce, and the remaining 51 percent of produce comes from farms that do not hold an ownership interest in the operation. In this case, there is majority ownership, but not majority RACs.
• Similarly, modify the scenario so that each of the four farmers hold a 10 percent ownership interest each, but they supply 100 percent of the produce. Now there is majority RACs, but not a majority ownership by the farmers providing the RACs. Under both of these last two scenarios, the operations would not qualify as a secondary activities farm because both conditions (majority ownership and majority RACs) are not satisfied.

These are only a few examples to demonstrate the types of off-farm operations that may or may not satisfy the farm exemption. Clearly, ambiguities remain in determining whether an agricultural operation satisfies the “secondary activities farm” exemption, and the outcome varies based on the complexity and uniqueness of each individual farming operation.

Important note — Many of the above operations – though maybe not subject to the PC Rule – would likely be subject to the forthcoming Produce Rule, which will be finalized in late October.

Harvesting

FDA defines harvesting as “activities that are traditionally performed on farms for the purpose of removing raw agricultural commodities from the place they were grown or raised and preparing them for use as food. This includes cutting (or otherwise separating) the edible portion of the raw agricultural commodity from the crop plant and removing or trimming part of the raw agricultural commodity (e.g., foliage, husks, roots or stems).” This distinction is important, because “cutting” is also considered a manufacturing or processing activity. However, where the cutting is done to remove the edible portion of the crop from the plant or the ground, or trim away non-edible portions, then it is considered harvesting, and within the farm definition.

Examples of harvesting also include (but are not limited to):

• Cooling;
• Field coring;
• Filtering;
• Gathering;
• Hulling;
• Removing stems and husks from;
• Shelling;
• Sifting;
• Threshing
• Trimming of outer leaves of, and;
• Washing.

Washing is another example of an activity that could be considered harvesting, packing, or manufacturing/processing. FDA distinguishes between washing raw agricultural products (like intact produce) and washing processed foods (like fresh-cut lettuce). You can cut the lettuce out of the field, and wash it before taking it to market and still be within the harvesting definition. But if you are cutting the lettuce into chopped salad mixes and washing the cut lettuce, then you are manufacturing/processing, and you are now outside the farm definition.

Packing

FDA defines packing as “placing food into a container other than packaging the food.” The definition of packing also includes re- packing and “activities performed incidental to packing or re-packing a food,” such as “activities performed for the safe or effective packing or re-packing of that food.”

This includes, but is not limited to:

• Sorting;
• Culling,
• Grading, and;
• Weighing or conveying incidental to packing or re-packing.

FDA also considers coating RACs with wax/oil/resin for the purpose of storage or transport to be a packing activity.

Holding

FDA defines holding as the “storage of food” and the activities performed “incidental to storage of a food (e.g., activities performed for the safe or effective storage of that food),” or performed “as a practical necessity for the distribution of that food.”

This includes, but is not limited to:

• Fumigating food during storage;
• Drying/dehydrating raw agricultural commodities when the drying/dehydrating does not create a distinct commodity (such as drying/dehydrating hay or alfalfa));
• Blending of the same raw agricultural commodity; and
• Breaking down pallets.

FDA uses the term “blending” when the raw agricultural commodities (“RACs”) being combined are the same (e.g. different lots of the same grain). FDA uses the term “mixing” when the RACs being combined are different. FDA typically classifies “mixing” as manufacturing/processing.

However, if a farm mixes intact RACs in a way that does not change the nature of the RAC and make it a processed food (e.g. bagging different types of lettuce to make a salad mix, or placing whole carrots and beets together in a bag), then FDA would consider that activity incidental to packing or holding, and therefore the activity would not trigger the facility definition.

Holding facilities could include warehouses, cold storage facilities, storage silos, grain elevators, and liquid storage tanks.

Manufacturing/Processing

Farms can engage in certain manufacturing/processing activities without falling outside the farm definition. However, most manufacturing/processing activities trigger the facility definition.

FDA defines “manufacturing/processing” to mean “making food from one or more ingredients, or synthesizing, preparing, treating, modifying or manipulating food, including food crops or ingredients.”

Examples of manufacturing/processing activities include:

• Baking;
• Boiling;
• Bottling;
• Canning;
• Cooking;
• Cooling;
• Cutting;
• Distilling;
• Drying/dehydrating raw agricultural commodities to create a distinct commodity (such as drying/dehydrating grapes to produce raisins);
• Evaporating;
• Eviscerating;
• Extracting juice;
• Formulating;
• Freezing;
• Grinding;
• Homogenizing;
• Irradiating;
• Labeling;
• Milling;
• Mixing;
• Packaging (including modified atmosphere packaging);
• Pasteurizing;
• Peeling;
• Rendering;
• Treating to manipulate ripening;
• Trimming;
• Washing, and
• Waxing.

The italicized activities are those that FDA has identified as being manufacturing/processing activities that are part of the farm definition. So a farm can perform those activities (drying/dehydrating; packaging/labeling; and treating to manipulate ripening) as long as they do not include any additional activities (e.g. slicing) that would transform a RAC into a processed food.

Some of those activities are also activities that could occur on farms as necessary for or incidental to packing and holding. In that case, they are not considered manufacturing/processing for purposes of the farm definition.

Clearly, the line between what constitutes a farm and what doesn’t is not black and white, and will require further elaboration through examples and explanatory materials. FDA has said it will be developing guidance documents related to activities that are included within the farm definition, and activities that are not.

Important Note — In the next post, we will look at the manufacturing/processing activities that FDA considers “low risk” when done on certain foods. Small and very small farms doing those low-risk processing activities are not exempt from the registration requirement, but they may be exempt from complying with the majority of the PC Rule.

Exemptions for Retail Food Establishments

In addition to the registration exemption for farms, the Bioterrorism Act exempts retail food establishments from the registration requirement. This means that farms and food businesses that meet FDA’s definition of “retail food establishment” are not required to register, and the PC Rule does not apply to them. (They may, however, be subject to state laws governing retail food establishments.)

The current definition of “retail food establishment” is:

• An establishment that sells food products directly to consumers as its primary function.
• A retail food establishment may manufacture/process, pack, or hold food if the establishment’s primary function is to sell from that establishment food, including food that it manufactures/processes, packs, or holds, directly to consumers.
• A retail food establishment’s primary function is to sell food directly to consumers if the annual monetary value of sales of food products directly to consumers exceeds the annual monetary value of sales of food products to all other buyers. The term “consumers” does not include businesses.
• A “retail food establishment” includes grocery stores, convenience stores, and vending machine locations.

In FSMA, Congress clarified that sales through direct-to-consumer sales platforms like roadside stands, farmers markets, and community-supported agriculture (CSAs) operations were included within the exemption for retail food establishments.

This clarification had two goals – the first was to reinforce that CSAs, farmers markets, roadside stands, and other direct-to-consumer operations that sell the majority of their food directly to consumers are not food facilities, do not have to register with FDA as facilities, and are not therefore subject to the Preventive Controls Rule. The second was to clarify that the location of the direct sale could not trigger the facility definition – for example, delivering a CSA box to a location where customers could pick up their boxes would not make that location a facility.

In April 2015, FDA issued a separate proposed rule making the needed clarification to the definition of retail food establishment. The final PC Rule does not contain the finalized definition for retail food establishments. Rather, FDA notes that the definition will be updated when the separate rule is finalized. Until then, FDA refers to their most recently updated facility registration guidance, which provides some indication of how the final rule will turn out.

NSAC continues to urge FDA to expediently finalize this definition, which many local and regional food producers need in order to understand whether or not they must register and follow the PC Rule. Once the final rule is released, we will update our analysis to include more detail on exemptions relevant to retail food establishments.

What Happens Next?

If you do not satisfy FDA’s definition of farm or retail food establishment, then you must register with FDA.

However, depending on your size and the types of value-added activities you are doing on your farm, you may be exempt from the majority of the PC Rule, or eligible for modified requirements.

And remember, even if the PC Rule applies to you, you have at least one year — and likely two or three years depending on the size of your operation — to come into compliance.

Our second post in the series looks at the exemptions from the bulk of the PC Rule for low-risk on-farm processing that falls outside the “farm” definition, and at the modified requirements for qualified facilities, which are facilities with under $1 million in human food sales. We will also provide more information on the compliance timelines for these types of operations.

Our final post analyzes requirements for facilities that are fully covered by the PC Rule, including compliance timelines, as well as information for facilities that purchase from farms or qualified facilities.

Additional Information and Resources

You can view the final regulations and the discussion of comments received on the proposed rule via the Federal Register. You may also be interested in the final rule for animal food facilities.

FDA will be following up on many issues in the final rule by developing guidance documents, which provide more explanation for the regulated industry (and regulators) to use in determining whether and how the final rules apply to a specific situation. FDA is accepting questions and suggestions as they begin to develop these documents. You can submit questions or recommendations to FDA here to assist them in identifying issues that will require further explanation.

In the near future, NSAC will be updating our website and “Am I Affected” flowchart to reflect the final rules, designed to help farmers, small food businesses – and the organizations that work with them – understand whether the FSMA rules apply to them and if so, what requirements apply.

You can also read our recent blog posts on FSMA implementation and appropriations issues to learn more.