By Sarah Everhart
This article is not a substitute for legal advice. See here for the site’s reposting policy.
Limitations due to the COVID-19 pandemic have forced many produce growers to quickly adopt new marketing strategies and/or consider new ways to get their produce to consumers. Given these recent marketing pivots, I thought it would be a good time to review the importance of tracking, for the purposes of the Food Safety Modernization Act’s Produce Safety Rule (PSR), how and to whom you sell your produce. Producers who are experiencing an increase in local sales may be interested in determining if they are eligible for qualified exempt status. Additionally, growers who are already considered qualified exempt to the PSR in particular should remember to continue tracking sales. For background information on the PSR you can search for past posts about the PSR, watch this video specifically about the qualified exemption of the PSR, and check out the new and improved University of Maryland Extension’s food safety webpage.
By way of review, in order to be eligible for the qualified exemption to the PSR requirements, a farm must sell more than half (50.1%) of all its food to qualified end-users, and the average annual of all food sales must be less than $500,000 (adjusted for inflation for the years 2017-2019 $561,494) over the past three calendar years.
A qualified end-user is one of three classes of buyer:
Retail food establishments* (defined as an establishment that sells food products directly to consumers as its primary function. It can include facilities that manufacture, process, pack, or hold food if the establishment’s primary function is to sell that food directly to consumers ((not businesses)). A “retail food establishment” includes grocery stores, convenience stores, vending machine locations and certain farm-operated businesses selling food directly to consumers as their primary function.)
*To qualify the retail food establishments and restaurants must be within the same state as the farm, or on the same Indian reservation as the farm, or within 275 miles of the farm.
Wholesale distributors are not considered qualified end-users. If a farm sells food through a CSA, food hub, or produce auction, however, it requires further analysis and an understanding of who is actually buying the food. Although this isn’t specified in the law, the Food & Drug Administration (FDA)(the agency responsible for oversight and enforcement of Food Safety Modernization Act) has addressed this question in a publicly available comment (see Comment 134).
According to the FDA, a farm’s direct sales to individual consumers enrolled in a CSA operation or to individual consumers at an auction can be counted as sales to qualified end-users, because consumers are qualified end-users regardless of location. A direct sale to a restaurant or retail food establishment enrolled in the CSA or at an auction can also be counted as a sale to a qualified end-user if the restaurant or retail food establishment is located either in the same State or the same Indian reservation as the farm or is located not more than 275 miles from the farm.
If a farm sells its produce to a separate business that runs a CSA, rather than directly to individual consumers enrolled in the CSA, these sales would not be sales to consumers. The analysis is the same in a circumstance where a farm sells its produce to a separate business that runs a produce auction, rather than directly to specific buyers at the auction. Such sales would only be sales to a qualified end-user if the CSA operation, or the produce auction, fits the definition of a retail food establishment or a restaurant, and meets the location requirements explained above.
If you want to take advantage of the qualified exemption to the PSR, you can use the Produce Safety Alliance’s recordkeeping forms to assist you in tracking whether the amount of food you sell and to whom you sell it make you are eligible.