By Sarah Everhart
If you are a regular reader of this blog, you have likely read many posts in the past year on the Food Safety Modernization Act (FSMA) including the most recent Who Needs To Attend a Training for the Food Safety Modernization Act (FSMA)? Perhaps, like many farmers, you are feeling relieved because you believe you are exempt from FSMA. Or maybe you are feeling temporarily relieved because, due to the size of your operation, you have many years before you need to comply. Are you prepared, however, to prove you are exempt?
By way of review, if the average annual produce sales of a farm over the last 3 years is less than $25,000, the farm is not subject to FSMA. To prove a farm falls into this category or is eligible for the full exemption, three years of sales records limited to just produce sales must be shown. A farm not currently keeping these records should begin doing so as soon as possible. If a farm is a diversified operation and sells products other than produce, separating out the produce sales from other sales will be a necessary exercise.
The same record keeping needs apply to decipher when farms subject to FSMA need to comply. According to FSMA, very small farms are those with over $25,000 but no more than $250,000 in produce sales during the previous 3-year period. Very small farms must comply with FSMA by January 2020 (for certain agricultural water requirements the compliance date is 2 years later – January 2021). Further, small farms are those with over $250,000 but no more than $500,000 in average annual produce sales during the previous 3-year period. Small farms must comply with FSMA by January 2019 (for certain agricultural water requirements the compliance date is 2 years later – January 2021). Regular farms, with over $500,000 in average annual produce sales, must comply by January 2018 (for certain agricultural water requirements the compliance date is 2 years later – January 2020). Thus farms must have 3 years of produce-only sales records to qualify for the extended compliance dates.
Many farmers are hoping to fit into the qualified exemption category established by FSMA. Farmers who are qualified exempt are subject to modified requirements including disclosing the name and complete business address of the farm where the produce was grown on the label of the produce or at the point of purchase, and certain other record keeping requirements.
To qualify as an exempt farm, the average annual food sales (this includes commodities, produce not covered and not covered by FSMA, dairy, livestock, etc.) of the farm over the last 3 years must be less than $500,000; more than 50% of those food sales must be to qualified end users such as restaurants, retail food establishments located in your state or within a 275-mile radius of the farm, and to consumers through direct marketing such as farmers markets, CSA, or internet sales.
Therefore a large grain operation with a small produce component and a 3-year average sales of grain plus produce exceeding $500,000 does not meet the requirements for the qualified exemption even though its produce sales may be quite small in relation to the overall farm sales. To overcome this hurdle, some farmers are setting up separate legal entities to own the produce components of their farms. Farmers considering this, however, should know that many large retail food establishments may soon require all their produce suppliers to be FSMA-certified just as they currently do in for Good Agricultural Practices.
A farmer planning to use the qualified exemption when their compliance date arrives should begin collecting sales records 3 years before the applicable compliance date. For example, if the farm is a small business with average annual produce sales over $250,000 but no more than $500,000, the farm will need records from January 2016 through January 2019 to prove it is eligible for the qualified exemption when its January 2019 compliance date arrives.