Lawline: Counseling the Local Food Movement Part 1

Part 1: Counseling the Local Food Movement

LawlineOctober 24, 2013

By Cari B. Rincker, Esq.

My Background• Grew up on a beef cattle

farm in Central Illinois• Education– A.S. in Agriculture from

Lake Land College– B.S. in Animal Science

from Texas A & M– M.S. in Ruminant (Beef

Cattle) Nutrition from University of Illinois

My Background• J.D. from Pace Law School

(2007)– Certificates in Environmental

Law & International Law• Associate at Budd-Falen Law

Offices in Cheyenne, Wyoming (2008-2009)– Environmental Law, Property

Law, Land Use & Federal Lands

– Worked with “cowboys”

Cattle branding in Casper, Wyoming

My Background

• Have my own food and agriculture law practice in New York City

• Chair of the American Bar Association, General Practice, Solo & Small Firm Division’s Agriculture Law Committee

• My food and agriculture client base– Farmers to ranchers– Small to mid-size agri-business– Food entrepreneurs

Overview

• Direct Farm Marketing • Cottage Food

Operation Law• Liability• Insurance

Direct Farm Marketing

(C) Cari Rincker, 2013 7

What is Direct Farm Marketing?• Direct farm marketing refers to a method of marketing

when a farmer sells his/her farm-grown food product directly to the consumer instead of a wholesaler or retailer.

• Types:– Farmers’ markets– Roadside stands– On farm stands– Community Supported Agriculture (“CSA”)

• Subscribers for a fruit, vegetable, dairy, meat, egg, and/or homemade product share (e.g., pies)


Advantages of Direct Farm Marketing• It allows farmers to sell the food they raise directly to

consumers eliminating the middle man (thus, giving the farmer a greater portion of the revenue);

• It offers consumers a way to buy fresh local farm products directly from the producer;

• It keeps dollars spent on farm products in the local community;

• It helps facilitate consumer education in local agriculture industries; and

• It helps a consumer build a relationship directly with the agricultural producer.


Overview of Direct Farm Marketing

Sarah A. Low and Stephen Vogel, “Direct and Intermediated Marketing of Local Foods in the United States,” USDA Economic Research Service Report 128 (November 2011).• Based on a 2008 Agriculture Resource Management

Survey


So What Exactly is “Local Food?”• In the ERS study, direct-to-

consumer and intermediated marketed channels (e.g., farm-to-restaurant, school, grocery store) were considered “local foods.”

• Please note that there is not legal definition for a “local food.”


Historical Trends in Direct Farm Marketing

• Between 1978 to 2007, 5.5% of farm sold food direct to the consumer– 0.3% of total farm sales– Peak in 1982 due to the 1976 Farmer-to-Consumer Direct

Marketing Act• Fostered direct marketing • Provided technical assistance to farmers via agriculture

extension

• Between 1992 and 2007, the number of farmers selling direct to consumer increased by 58%– $1.2 billion (77% increase)

ERS article at 2


Direct-to-Consumer Outlets• Types:

– Farmers’ markets– Roadside stands– On- farm stand– Community Supported Agriculture

(“CSA”)• 2008 Study

– 71,200 farms• 81% small local farms (less than $50K

gross sales)• 14% medium-sized farms ($50K-

$249,999)• 5% large farms ($250K +)

– $877 million in salesERS article at 3-4


Intermediated Outlets• Types:– Farm-to-restaurant– Farm-to-grocery store– Farm-to-institution (school

or government) • Data:– 13, 400 farms– $2.7 billion in sales

(compare to direct-to-consumer - $877 mil)

ERS article at 3


Table 1 SummaryItem Small Farms (less than

$50K gross sales)Medium Farms ($50K-$249,999 gross sales)

Large Farms($250K + gross sales)

Number of Farms with Local Food Sales

86, 726 15,202 5,301

Ave. Ratio of Local Food Sales to Total Sales

68.8% 67.2% 57.5%

Direct-to-Consumer Only

72.1% 46.5% 31.0%

Intermediated Channels Only

11.3% 10.4% 37.1%

Average dollars marketed through either direct or intermediate per farm

$9,768 $72,312 $352,375

ERS article at 5


Summary Points• Small farms are more likely to market

direct-to-consumer because it is more difficult to generate enough volume for distributors and institutions that demand higher volumes of food

• Intermediated outlets require less labor • Roadside stands and farmers’ markets

accounted for about 80% of the direct to consumer outlets

• On average, farmers traveled 30.7 miles to the farmers’ market

• Consumers acquaint the public face of “local foods” with farmers using direct-to-consumer outlets– But 60% of local food passes through

intermediate channels

ERS article at 4-7


Table 2 : Marketing Channels

Item Small Farms (less than $50K gross sales)

Medium Farms ($50K-$249,999 gross sales)

Large Farms($250K + gross sales)

Roadside Stands 34.1% 24.9% 23.7%

Farmers Markets 34.6% 24.9% 23.7%

On Farm Stores 8.3% 17.4% 15.7%

CSAs 1.1% 2.5% 1.4%

Intermediated Outlets 22.0% 29.3% 45.0%

ERS article at 6


What Commodities are Being Produced?

Sales

Vegetable, Fruit and NutsLivestock and Field CropsOther

ERS article at 7


Vegetable, Fruit and Nut Farms• Operate fewer acres while

generating higher gross sales per acre than field crop or livestock farms– Average of 149 acres

yielding $590 per acre– Average U.S. farm is 349

acres yielding $304 per acre• East vs. West• Soil Type


Table 3: Farms with Local Food Sales vs. Non- Local Food Sales

Item Farms with Local Food Sales Farms with No Local Food Sales

Ages of Primary Operator 57.2 57.8

Beginning Farmers (less than 10 yrs of experience)

25.4% 23.3%

Years of Experience* 23.4 25.9

Years of Education* 14.0 13.2

Internet Use* 69.9% 63.4%

ERS article at 8

*Statistically Significant (P < 10% or less)


Table 3: Farms with Local Food Sales vs. Non- Local Food Sales

Item Farms with Local Food Sales Farms with No Local Food Sales

Farming as Primary Occupation*

58.3% 44.6%

Full-time equivalent operator jobs per farm*

1.3 .9

One or both spouses work off-farm job

57.3% 61.4%

Average off-farm labor income*

36,739 44,196

ERS article at 8

*Statistically Significant (P < 10% or less)

(C) Cari Rincker, 2013

Local Food Operators

• 30% more likely to list his/her primary occupation as farming

• Household members devote more time to farming – 40% more operator work to

farming = 1.3 full-time equivalent• Full-time equivalent is 2,000

hours annually

– Earn 17% percentage less in off-farm income• Less time to work an off-farm job

ERS article at 8-9


Location of Farms Selling Local Food

• Regionally– Highest in Northeast, West Coast, and around selected

metropolitan areas– Neighborhood effect– More popular in regions that produce fruits and vegetables

• West Coast, for example, produces 56% of U.S. vegetables, fruits, nuts and specialty crops

• West coast has long standing farmers’ markets dating back to 1970’s

• 85% of West Coast local sales were through intermediated channels

– Concentration of young farmers in the West Coast

ERS article at 10-11


Location of Local Food Sales• Highest in Urban areas

– 50% local food sales in metropolitan counties (e.g., NYC)

– 30% local food sales adjunct to metropolitan counties (e.g., Long Island)

• Why– Population– Dense farmers’ markets– Access to labor/ transportation

networks– Infrastructure

• Larger local food farms are more likely to be located in remote, rural areas (50.1%)

ERS article at 12


Summary Stats• Marketing of local foods grossed $4.8 billion in 2008

– Mostly intermediated channels

• Small farms with $50K or less in annual sales accounted for 81% of local food sales– More likely to use direct farm marketing methods– 10% exclusively used direct marketing methods

• Large farms represented 5% of all local food sales– Averaging $770K in local food sales per farm– 93% of the value of local food sales marked through

intermediate channels


Direct Farm Marketing of Food Products

• Contract Law• What can be sold in New

York via Direct Marketing

• Sanitation requirements• Community Supported

Agriculture• Farmers’ Markets


Contract Law• Typically, direct marketing

transactions take place with oral agreements– Agriculture is a handshake culture

• However, Article 2 of the Uniform Commercial Codes applies to the Sale of Goods– Section 2-201 of UCC requires to be in

writing for the sale of goods over $500 in order to be enforceable

– Food lawyers can (and should) be hired to write simple, straightforward contracts for direct marketing transactions


What Can be Sold via Direct Marketing?• This is a state law issue. Differences from state to state.• In New York, farms are permitted to sell the following products

direct-to-consumer so long as they are not considered a “retail food store” under Article 17 of NY Agric. & Mkts Law:– Unprocessed fruits and vegetables, – Eggs (if clean and refrigerated at 45° F),– Grains,– Legumes, – Honey, and – Maple Syrup.

See New York State Department of Agriculture, “Sanitary Regulations for Direct Marketing,” available at http://www.agriculture.ny.gov/FS/industry/sanitary.html.


What Can be Sold via Direct Marketing?• Additionally, NYSDAM permits direct

marketing farm businesses to sell certain highly perishable products like meat and dairy products (including hard and soft cheeses), if the products are:– Processed at an approved food processing

facility; – Prepackaged and properly labeled; and– Kept at required cold temperatures to

prevent spoilage or contamination.

See New York State Department of Agriculture, “Sanitary Regulations for Direct Marketing,” available at http://www.agriculture.ny.gov/FS/industry/sanitary.html.


What Cannot Be Sold via Direct Farm Marketing?

• Home-canned or jarred fruits and vegetables, pickled products, sauces, relishes and other low-acid foods (unless manufactured "under an approved processing method at an inspected facility);

• Cream, custard, pumpkin, meat or other single-crust pies or cream or cheese-filled baked goods (unless prepared in an approved, inspected baking facility, packaged and properly refrigerated); and

• Any other prepared foods made with highly perishable ingredients for immediate consumption or reheating (unless manufactured and vended under proper food processing and vending licenses).

See New York State Department of Agriculture, “Sanitary Regulations for Direct Marketing,” available at http://www.agriculture.ny.gov/FS/industry/sanitary.html. We will talk about cottage

food operation law in a little bit.


NYSDAM Inspections• Even though farmers selling

directly to consumers are subject to a food safety inspection from NYSDAM, if the producer is only selling raw fruits/veggies, eggs, grains, legumes, honey and/or maple syrup, then NYSDAM typically will only inspect these products if it receives a consumer complaint.

• Farmers selling more highly perishable products are inspected more often by NYSDAM.


Processing

Roadside stands, on-farm outlets and farmers’ markets may not use packaging, cutting, slicing or portioning of fruits and vegetables, meat, dairy products or ready-to-eat food unless the proper sanitary conditions are met for “retail food stores” under Circular 962 “Rules and Regulations Relating to Retail Food Stores”


Farmers Markets


The Definition of a Farmers’ Markets• According to Prof. Neil Hamilton, a

farmers’ market is:– Farmers selling produce and food

they raise or create,– To individual customers,– At a temporary location, often on

public property (e.g., street or parking lot),

– On a periodic basis (typically once or twice a week),

– For a set period of time (typically 3 to 4 hours),

– During the local growing season (usually 5 or 6 months), and

– Operated by a government or non-profit organization.


Market Rules• Farmer-Vendors usually receive a copy of

the Market Rules (or “Statement of Rules” for the Farmers’ Market)– It is the contract between the farmer and

farmers’ market

• Discusses all the key terms– Application process– Rent/Fees– Approval of vendors and products– Carrying crafts– Whether farmers can sell products raised by

other farms– Category of products allowed– Transfer/Change in ownership


Market Rules• Market Rules (Cont.)

– Enforcement Process– Farm Visit/Inspection– Special food sanitation/safety

requirements– Whether sampling is allowed– Indemnification Clause– Length of the market (typically a 5-6 mo.

Span)– Location of the farmers’ markets– Who is the Market Manager?– Market operational procedures– Organizational structure– Necessary permits/documentation– Whether peddlers are allowed (reselling

food purchased at wholesale)


Market Rules• Market Rules (Cont.)

– Proof of Insurance– Farmers’ list of products that will be

sold– Whether prepared or processed food

may be sold– Logo use of the Sponsor– Criteria for selecting vendors– Nutrition programs (e.g., SNAP, WIC)– Alternative Dispute Resolution– Payment– Choice of Law


Questions for Vendors to Consider Before Joining a Farmers Market

• Who sponsors the farmers’ market?

• How long has the farmers’ market been established?

• What is the expected crowd for the farmers’ market (quantity of people and geographic reach)?

• What is the application fee and/or procedures?

See Neil Hamilton, “Farmers’ Markets Rules, Regulations and Opportunities” (June 2002) and NEIL HAMILTON, THE LEGAL GUIDE FOR DIRECT FARM MARKETING (1999).



• Do vendors pay seasonally, monthly or weekly flat fees and/or a percentage of gross sales?

• Who owns/rents the land on which the farmers’ market is located?

• Who is responsible in case of slip-and-fall accidents or injuries to shoppers?

• Which areas of the farmers’ market get the most traffic?




• Who has the authority to decide which farm sets up in which location? Is there an additional fee for preference?

• Is the market a “producer only” market or does the market allow for wholesale peddlers or sale of food raised by other farmers?

• Can vendors provide free samples to consumers?




• What is the penalty (if any) for violating a market rule?

• What is the penalty, if any, for missing a market day?

• If a vendor is forced to leave the market or is unable to continue to participate, is any portion of the fee/rent refundable?

• What are the dispute resolution procedures, if any? In other words, what are the procedures if there is an alleged violation of the market rules?




• Does the market have all the necessary local business permits and/or licenses?

• Can the vendor ask for copies of said permit and/or licenses?

• Is the farmers’ market approved to participate in the WIC Farmers’ Market Nutrition Program (“FMNP”)?




• What food products may be sold at the farmers’ market (e.g., meat, poultry, eggs, homemade processed foods)?

• Does the farmers’ market itself carry its own insurance in case of accidents?

• What type of insurance does the farmers’ market expect vendors to have (e.g., 1 mil. face value of commercial insurance) and what proof of insurance must be provided to the market?




• Are there special food labeling requirements other than what is already required under New York and federal law (if applicable)?

• How quickly are Electronic Benefit Transfer (“EBT”) payments received?

• What does the farmers’ market do to help promote both the farmers’ market and its vendors? For example, will the vendors be listed on its website?See Neil Hamilton, “Farmers’ Markets Rules, Regulations and Opportunities”

(June 2002) and NEIL HAMILTON, THE LEGAL GUIDE FOR DIRECT FARM MARKETING (1999).



• Do the market rules require the farmer to actually attend the market or can vendors send employees/independent contractors to do the selling?

• Does the farmers’ market require the farmer/vendor to submit a plan before the market season begins listing what produce will be sold and in what approximate volume?

• Can the market officials visit a vendor’s farm to inspect the operation and/or its records?



Community Supported Agriculture


CSA Agreements• Rarely Used (Should be used more often)• Contract between the farmer and the

subscriber• It should state

– How long is the growing season– Types of share(s)– How is a share defined– Price/ Payment Methods– Delivery or pick-up– Subscriber’s sharing both risk and reward

of harvest– Forfeited products– Communication– Volunteer Requirements

Cottage Food Operation Law


Interaction Between Article 20-C Licenses and Cottage Food Operations in New York

New York applies an “exemption approach” to cottage food operations by exempting home-processed food from the typical requirements of a commercial kitchen under Article 20-C of the NYS Agric. & Mkts § 251-z-1 et sec.


Regulation of Food Establishments

• States have the primary authority over the health and well-being of their residents

– Thus, state and local governments establish laws addressing the production of food at “food establishments”


What is a “Food Processing Establishment” in New York?

• “[A]ny place which receives food or food products for the purposes of processing or otherwise adding to the value of the product for commercial sale…” See NY Agric. & Mkts § 251-z-2[1]. – Exemptions:

• Establishments that process/manufacture food that are sold exclusively at retail for consumption on the premises;

• Bottled water facilities;• Establishment which are covered by Article 4 (Dairy Products),

Article 4-A (Frozen Desserts), Article 5-B (Sale of Meat), Article 5-D (Sale of Poultry and Poultry Products), Article 17-B (Licensing of Food Salvagers) and Article 21 (Milk Control);

• Establishments under federal meat, poultry or egg product inspection;

• Establishments that are engaged solely in the harvesting, storage or distribution of one or more raw agricultural commodity;

• Home-based processed food if certain conditions are satisfied.


Applying for an Article 20-C License• If a food entrepreneur does not fit under the cottage food

operation exemption in New York and must obtain an Article 20-C license, section 251-z-3 sets forth application requirements which include proof of the following:– That he/she has good character; – That he/she has adequate experience or competency; – That the establishment has adequate facilities and equipment

for the business conducted; and– That the establishment can maintain cleanliness so that the

product will not be adulterated.• The applicant must also pay $400 every 24 months. • The license period varies according to the applicants last

name as set forth in the statute.


Suspending or Revoking Licenses• Under Section 251-z-5, NYSDAM may decline to grant a new

license or renewal, suspend or revoke an Article 20-C license based on one of the following reasons:– False or misleading statement in the application; – Insufficient facilities or equipment to maintain adequate sanitation

for activities; – Establishment is not maintained in a clean and sanitary condition;– Maintenance of the establishment is such where the food (product)

may be adulterated;– Establishment has failed or refused to produce requisite records or

other information sought; – The applicant/licensee or any officer, director, partner or owner of

10% or more shares, or any other person in management, has failed to comply with the statute; or

– The applicant/licensee, officer, director, partners, stockholder, or any other person in management has been convicted of a felony.


Requirements of 20-C Licensees• Record Keeping: Under Section 251-z-7,

licensees are required to keep such records as required by NYSDAM.

• Inspections: Under Section 251-z-8, NYSDAM must have access to inspect the premises during all reasonable hours “where food or food products are being manufactured, packaged, processed or stored, or where food or food products are being bought, sold or handled.”

• Education: Licensees are required to complete an approved food safety education program under Article 20-C.


Cottage Food Operation Law

CARI B. RINCKER AND PAT B. DILLON, “FIELD MANUAL: LEGAL GUIDE FOR NEW YORK FARMERS AND FOOD ENTREPRENEURS” (2013). (Chapter 22).

Harvard Food Law and Policy Clinic, “Cottage Food Laws in the United States” (August 2013).


Cottage Food Operation Law• Growth in small-scale food

production, including individuals producing non-potentially hazardous foods made in their home kitchen outside of expensive permitting and licensing procedures– Many states have

exemptions for cottage food operations


Cottage Food Operation Law• Advantages– Provides community residents

with locally produced food– Encourages food production if

creating cost-effective outlets to create value-added products from excess fruits and vegetables

– Increases money that stays in the local economy

57

West:• A

laska

• Arizona

• California

• Colorado

• Montana

• Nevada

• New Mexico

• Oregon

• Utah

• Washington

• Wyoming

East:• D

elaware

• Maine

• Maryland

• Massachusetts

• New Hampshire

• New York

• North Carolina

• Pennsylvania

• Rhode Island

• South Carolina

• Vermont

• Virginia

South:• A

labama

• Arkansas

• Florida

• Georgia

• Kentucky

• Louisiana

• Mississippi

• Texas

Midwest:• I

llinois

• Indiana

• Iowa

• Michigan

• Minnesota

• Missouri

• Nebraska

• Ohio

• Tennessee

• Wisconsin

Allow Cottage Food Operations


States that Don’t Allow for Cottage Food Operations

• Connecticut• District of Columbia• Hawaii• Idaho• Kansas• New Jersey• North Dakota• Oklahoma• West Virginia

Harvard at 5


Survey of U.S. Cottage Food Operation Law

• Although 2/3rds of the states have cottage food operation law, there is little uniformity among the laws

• Some states restrict home-based food processing activities to a very narrow category of processors, such as on-farm only – Delaware, see Del. Code Tit § 3 100.– Kentucky, see Ky. Rev. Stat. §§ 217.136-37.– New Hampshire, see N.H. Rev. Stat. §

143A:12– Rhode Island, see R.I. Gen Laws § 21-27-6.1

Harvard at 6


Rhode Island

…“farm home food manufacture and the sale of products of farm home food manufacture at farmers’ markets, farmstands, and other markets and stores operated by farmers for the purpose of the retail sale of the products of Rhode Island farms” provided that “the farm home food products [are] produced in a kitchen that is on the premises of a farm.”

See R.I. Gen Laws § 21-27-6.1 (Emphasis added) Harvard at 8



• Some states cap the allowable sales at a low amount, such that in-home processing activities can only be a hobby and not a viable launching pad for a traditional food processing business– See Minn. Stat. §

28A.15(10)(a) (restricting sales to $5K)



• Some states are relatively easy to find with clear requirements while other states’ cottage food laws are hidden with no clear direction

– New York’s cottage food operation law is found online at the NYS Department of Agriculture & Markets’ website

Harvard at 6


How Cottage Food Operation Laws Are Passed

• Usually, it starts with legislation. Then the statute directs a state government agency to enact regulations– Example: Maryland passed a cottage food operation law in 2012

• Maryland Department of Health was directed to adopted regulations. See Md. Code § 21-220.1.

• However, some states establish cottage food rules through regulations only– Example: Georgia’s regulations were adopted by the Georgia Department of

Agriculture. See Ga. Comp. R & Regs § 40-7-19-.01-.10

• Sometimes cottage food law is implemented through an agreement between a state department of agriculture and state department of health and then posted on the website– Example: North Carolina, New York

Harvard at 7


FDA Model Food Code

• FDA has established a “model food code” that may be adopted by the states– Does not allow for any processing to take place

outside of commercial kitchens. See FDA Food Code § 1-201.10

– States that have adopted this FDA Food Code in its entirety did not have an exemption for cottage food operations, unless it adopted one• Example: Missouri said that local government may allow

for home-based food processing. See Mo. Cod Regs. Title 19 § 20-1.025(1)(B)(5).


FDA Model Food Code

• Usually states that all locations where food is produced or sold for pay are “food establishments”– Subject to licenses, permits, sanitation requirements,

inspections, and commercial kitchen requirements– There are a few important exemptions to this definition

of “food establishments”• Charity bake sales and religious events

– Required, by law, to inform the consumer that the products were made in an unregulated and uninspected home kitchen

– Allows for the production of non-potentially hazardous goods (e.g., baked goods, jams, jellies, granola, popcorn, coffee, and tea)

Harvard at 9


5 Typical Restrictions for Cottage Food Operations

Types of Cottage Food Products Allowed

Limits on Where Cottage Food Products Can Be Sold

Required Registration, Licenses and/or Permits

Limits on Total Sales

Food Labeling Requirements


Types of Food Products Allowed

• Typically restricted to foods that are “not potentially hazardous.”– Some states just say “not potentially hazardous”– Most states enumerated these foods

Example (Arkansas)“…non potentially hazardous foods, including without limitation: (A) Bakery products, (B) Candy, (C) Fruit butter, (D) Jams, (E) Jellies, and (F) Similar products specified in rules adopted by the [Arkansas] Department of Health.” See Ark. Code § 20-57-201(1)

Harvard at 10


Types of Foods AllowedCalifornia also enumerates allowed goods:

– Baked goods without cream, custard, or meat fillings, such as breads, biscuits, churros, cookies, pastries, and tortillas;

– Candy, such as brittle and toffee;– Chocolate covered nonperishable foods, such as nuts and dried fruit;‐– Dried fruit;– Dried pasta;– Dry baking mixes;– Fruit pies, fruit empanadas, and fruit tamales;– Granola, cereals, and trail mixes;– Herb blends and dried mole paste; – Honey and sweet sorghum syrup;– Jams, jellies, preservers, and fruit butter that comply with federal standards for fruit

butter;– Nut mixes and nut butters;– Popcorn;– Vinegar and mustard;– Roasted coffee and dried tea;– Waffle Codes and pizelles.

Harvard at 10-11

Cal. Health & Safety Code § 114365.5


Types of Foods Allowed

• Some states have more specific allowances or restrictions

– Wisconsin’s “pickle bill” only allows for processed fruits and vegetables that meet a certain pH value, such as pickled fruits and vegetables, sauerkraut, salsas, chutneys, jams, jellies, and applesauce. • See Wis. Stat. § 97.29(2)(b)(2).

– Vermont only allows for baked goods, breads, cakes, pies or other food products made from flour. • See Vt. Stat. § Title 18 4451.

Harvard at 11


FDA Code Definition of “Potentially Hazardous”• FDA Model Code has a detailed and technical definition, referring to the

acidity in the food– Focus is whether the food supports “pathogenic microorganism growth or toxic

formation.”– If food has potential to cause harm when not kept under proper temperature

and storage conditions– Examples:

• Meat• Dairy products• Shellfish• Mushrooms• Low-sugar jams and jellies• Cooked vegetables• Low-acidity pickles and salsa• Cut melons• Cut tomatoes• Untreated garlic-in-oil mixtures• Baked goods subject to spoilage (e.g., cream-filled pastries)• Raw seed sprouts


New York Cottage Food LawUnder NYS Agric. & Mkts Regulations Section 276.3(a)[3], a “[h]ome processed food” includes “any food processed in a private home or residence using only the ordinary kitchen facilities of that home or residence which are also used to prepare food for the owner thereof, his family, nonpaying guests and household and farm employees who reside therein, but shall exclude potentially hazardous foods [as defined in the regulation] or thermally processed low-acid foods packaged in hermetically sealed containers [under Part 277] and acidified food packed in closed containers including but not limited to pickles and relishes prepared from low-acid fruits, vegetables, poultry, meat, meat products, fish or seafood.” (Emphasis added).

No commercial kitchen equipment can be used


New York Cottage Food Law• Restricted to the following goods

– Bakery products (e.g., bread, rolls, cookies, cakes, brownies, fudge, and double-crust fruit pies) for wholesale marketing or retail agricultural venues such as farms, farm stands, farmers markets, green markets, craft fairs and flea markets;

– Traditional jams, jellies, and marmalades made with high acid/low pH fruits;

– Repacking/blending dried spices or herbs;– Snack items such as popcorn, caramel corn and

peanut brittle; and, – Candy (excluding chocolate).

See NFSI-898d, “Home Processing” Fact Sheet.


New York Cottage Food Law• If the product requires refrigeration then it is not allowed to be

produced under the home processor exemption. New York views food products that may require refrigeration as potentially hazardous. Examples of prohibited items include the following: – Fruit/ Vegetable Breads,– Pickled or Fermented Foods,– Cheesecake, Cream Filled Pastries,– Meat, Fish, or Poultry Products,– Vegetable Oils, Blended Oils,– Garlic and/or Herb in Oil Mixtures,– Wine Jellies, Chutneys, Fruit Butters,– Cooked or Canned Fruits or Vegetables,– Cheese, Yogurt, Fluid Dairy Products, and, – Sauces, Salsas, Marinades.

See NFSI-898d, “Home Processing” Fact Sheet.


3 Generally Types of Cottage Food Products Allowed

Broad List of Allowed Foods•“non-potentially hazardous foods, including” …

Limited List of Allowed Foods•“non-potentially hazardous foods, limited to …”

Other (More Restrictive)

•No home canned goods made using pressure cooker•Primary ingredients must be grown by microprocessor•Pickled products only

Harvard at 11


Broad List of Allowed Foods•Alabama•Alaska•Arizona•California•Delaware•Florida•Georgia•Iowa•Massachusetts•Michigan•Mississippi•Missouri•Nebraska•New Hampshire•New Mexico•New York•North Carolina•Pennsylvania•Rhode Island•South Carolina•South Dakota•Tennessee•Texas•Utah•Virginia•Washington•Wyoming

Limited List of Allowed Foods

•Arkansas•Colorado•Illinois•Montana•Nevada•New Hampshire•Ohio

Other (More Restrictive)

•Indiana•Kentucky•Louisiana•Maine•Maryland•Minnesota•Oregon •Vermont•Wisconsin

Harvard at 11



• Most states restrict the sale to be direct to consumers – Don’t permit sales to restaurants or other retail food

establishments– Restricted to sales at:

• Farmers’ markets• County fairs• Roadside stands• On-farm stands/ Producers’ premises• Community Supported Agriculture

Illinois State FairHarvard at 12



• Tennessee:– “may be sold at that person’s personal residence, a

community or social event, including church bazaars and festivals, flea markets, or at farmers’ markets located in this state.” Tenn. Code Ann. § 53-8-117(b)

– California has two levels of cottage food operations• Class A operations – direct to consumer only• Class B operations – may also sell to restaurants and other

retail food establishments See Cal Health & Safety Code § 113758(a).

Harvard at 12


Limits on Where Cottage Food Products are Sold

Direct to Consumer Only• Alabama, Alaska• Arizona, Arkansas• Colorado, Delaware• Florida, Georgia• Illinois, Indiana• Iowa, Kentucky• Maryland, Michigan• Minnesota, Mississippi• Missouri, Nebraska• Nevada, New Mexico• Oregon, Rhode Island• South Carolina• South Dakota• Tennessee, Texas• Vermont, Virginia• Washington, Wisconsin• Wyoming

Indirect Sales Allowed (e.g., restaurants, retail food establishments, wholesale)• California• Maine• New Hampshire• Ohio• Pennsylvania

Law is Silent (no information/requirements)• Louisiana• Massachusetts• New York• North Carolina• Utah

Harvard at 12


Additional Common Prohibitions

Internet Sales Prohibited

•Arkansas•Florida•Kentucky•Michigan•Nevada•New Mexico•New York•Texas•Washington

Farmers’ Markets or Producer’s Premises

•Alabama•Arkansas•Colorado•Delaware•Illinois•Indiana•Kentucky•Maryland•Minnesota•Nebraska•Nevada•New Hampshire•New Mexico•Pennsylvania•Rhode Island•Texas •Vermont•Virginia•Washington•Wisconsin•Wyoming

Harvard at 12


New York Cottage Food Law

• Prohibits Internet sales, but farms can use the Internet for communications and marketing

– See NFSI-898d, “Home Processing” Fact Sheet.


Why Would Some States Prohibit Internet or Mail-Order Sales?

• If the product crosses interstate commerce, then it becomes subject to federal regulations– Restricting Internet sales

reduces likelihood that the cottage food will cross state lines

• Some states like Georgia specifically allow Internet Sales if purchased by someone in that state.


Required Registration, Licenses, and/or Permits

• States vary on whether any license or permit is required

– Also vary on what is required on the license or permit application itself


Required Registration, License, and/or Permits

States that Have Requirements• Alaska, Arizona• California, Colorado• Delaware, Georgia• Illinois, Kentucky• Maine, Massachusetts• Nevada, New Mexico• Oregon, Pennsylvania• Rhode Island, Tennessee• Utah, Washington• New York

States with No Requirements• Alabama, Arkansas• Florida, Indiana• Iowa, Louisiana• Maryland, Michigan• Minnesota, Mississippi• Missouri, Montana• Nebraska, New Hampshire• North Carolina• Ohio, South Carolina• South Dakota, Texas• Vermont, Virginia• Wisconsin, Wyoming

Harvard at 13


Example of Registration, Permit or License Requirements

• Alaska requires cottage food operators obtain a business license. See Alaska Admin. Code Tit. 18 § 31.012(a)(4).

• Colorado requires a certificate in safe food handling and processing. See Colo. Rev. Stat. § 25-4-1614(1)(c).

• Washington requires a food and beverage service worker’s permit. See Wash. Rev. Code § 69.22.030(2).

Harvard at 13-14

Example of Registration, Permit or License Requirements

• Utah requires a food handler’s permit. See Utah Code § 4-5-9.5(4)(a).

• Pennsylvania requires inspection of home-based food kitchens.

(C) Cari Rincker, 2013 85Harvard at 13-14


New York Requires Registration of Home-Based Kitchens

• Cottage food operations must be registered with NYSDAM, Division of Food Safety and Inspection by completing FSI-989c available at http://www.agriculture.ny.gov/FS/consumer/FSI898c.pdf (last visited March 4, 2013). – No Fee

• The cottage food operation must disclose to NYSDAM whether the water supply is municipal or a private well.

– If the home-based processor is on a private water/well system, then

he/she must have a water test analysis performed for Coliform registering with NYSDAM (no more than 3 months old).

http://www.agriculture.ny.gov/FS/consumer/FSI898c.pdf

http://www.agriculture.ny.gov/FS/consumer/FSI898c.pdf


New York Cottage Food Law

• Even though some cottage food operations are exempt from Article 20-C licensing requirements, it is still subject to NYSDAM inspection requirements and food labeling. regulations.

– From a practical standpoint, this is only if there is a problem.


Fees Associated with Permits and Licenses

• Usually very cheap, if not free– New York – free– Maine - $20

• Can vary depending on the type of fee– Washington

• Inspection fee- $125• Public health review fee -

$75• Processing fee - $30

Harvard at 14


Limits on Total Sales• Approximately 50% of the states

that allow cottage food operations have a limitation on gross sales per year– Typically between $5K and $50K

• Low end ($5K limit)– Louisiana, see Law. Rev. Stat. § 4:9(B).– Minnesota, see Minn. Stat. §

28A.15(10)(a)– Wisconsin, see Wis. Stat. § 97.29(2)

(b)(2)(c)

• High end ($50K limit)– Texas, see Tex. Health & Safety Code

437.0001(2-b)Harvard at 14


Limits on Total Sales

• Some states’ statutes allow for a gradual increase in sales caps– Michigan, see Mich. Comp. Laws

§ 289.4102(5)• 2017 - $20K• After 2017- $25K

– California, see Cal. Health & Safety Code § 1137558(a).• 2013- $35K• 2014 - $45K• 2015 and thereafter - $50K

Harvard at 14


Limits on Total Sales • Some states place limits

on each eligible food item– Colorado has a $5K limit

on each item, see Colo. Rev. Stat. § 25-4-16-1614(2)(e)

• $5K for each flavor of jam• $5K for each type of cake• $5K for each type of

cookie

Harvard at 14


Limits on Sales

• A few states frame their sales restriction based on weekly sales (in terms of dollars or units)– Tennessee limits sales to 100 units per week,

see Tenn Comp. R. & Regs. § 0080-04-11-0.20• Unit defined as 1 package of good

– Vermont restricts food sales to $125/week (=$6500/year), see VT Stat. Title 18 § 4451.


States with Sales Limits for Cottage Food Operations

$500 to $15K• Florida• Louisiana• Minnesota• New

Hampshire• Vermont• Washington• Wisconsin

$15K to $25K• Indiana• Michigan• Mississippi• Oregon

$25K plus• Alaska• California• Delaware• Illinois• Nevada• Texas

Other• Colorado• Iowa• Maryland• South Carolina• Tennessee

Harvard at 15


States with No Sales Limits• Alabama• Arizona• Arkansas• Georgia• Indiana• Maine• Massachusetts• Missouri• Montana• Nebraska• New Mexico• New York• North Carolina• Ohio• Pennsylvania• Rhode Island• South Dakota• Utah• Virginia• Wyoming

Harvard at 15


Food Labeling Requirements• Almost all states with cottage food laws have labeling

requirements of some kind• Typical requirements include:

– Name and address of the producer– Common or usual name or product– Ingredients of product in descending order of predominance by

weight– Food allergens– Net weight and volume of the food product by standard measure

or numerical count– Date on which the food was processed– Statement similar to the following: “Made in a home kitchen that

has not been inspected by the [state] department of agriculture/health.”


Who Does Not Have Food Labeling Requirements?

• States with no food labeling requirements for cottage food– Louisiana– Montana– Vermont

I took this picture while living in Montana

Harvard at 16


New York Cottage Food Law• In New York, products made in a home-based

kitchen should include the following on the label:– name and address of the home processor; – common or usual name of the food; – if the food is fabricated from two or more ingredients,

the common or usual name of each ingredient in their order of predominance (except that spices, flavorings and colorings may be designated as spices, flavorings and colorings without naming each, and spices and flavorings may be designated together as flavorings); and

– the net weight, standard measure or numerical count.

Rincker at 334


Other Legal Considerations for Cottage Food Operations

• May conflict with residential leases• Local zoning code may prohibit commercial activity in residential zones

– Variances or special use permits should be sought• Insurance

– Typically not covered under homeowner’s or rental insurance– Commercial insurance policy will cover general commercial liability (e.g., slip

and fall)– Recall insurance insurance/ or products liability insurance can be obtained to

cover food safety risk• Are they a sole proprietor? Should they form a LLC or limited

partnership? Think about risk management for client.• Food entrepreneurs should always think about protecting their

intellectual property.

Rincker at 335

Liability

Liability

• 2 Main Types of Liability

– Premises Liability

– Products Liability

Premises Liability • Applicability with Local Food– Farmers’ Markets– Roadside stands– Pick-Your-Own – Agri-Tourism/ Agri-Tainment– On-Farm Sales

• Livestock• Produce• Meat• Dairy

– Farm Tours– Cooking Classes

Premises Liability

• Let’s Think Back to Law School Days

• Different Standards of Care– Trespassers– Children– Licensees– Invitees• This is what we’ll focus on

Premises Liability: Invitees• Landowners owe the highest

duty of care to an invitee, or members of the public that enter the land for the purpose of business dealings.

• Examples include the following: (1) farmstands, (2) pick-your-own produce, (3) cooking classes, (4) on-farm horse or livestock sales, (5) corn mazes, (6) hay rides, (7) petting zoos, and (8) farm tours.

Premises Liability: Invitees• Landowner will be subject to liability for

physical harm caused by invitees by a condition on the land if he/she failed to exercise reasonable care and he/she knew or should have known about the harmful condition and it would be expected that the public would not discover the dangerous condition. – Landowners have the duty to warn invitees of

potentially dangerous conditions.

Premises Liability: Invitees

• Landowners who have members of the public come on their property should use barriers to prevent the public from entering areas of the property that may be potentially hazardous. There should be signs warning invitees of potential hazards.

• Landowners with pets should be particularly mindful of potential injuries (e.g., dog bites).

My dog, Taylor

Products Liability• Products liability is the legal

responsibility for personal injuries and property damage caused by defective products. – Potential liability attaches to

every set of hands that touch a food product until it gets to the consumer.

• Farms and food entrepreneurs selling food directly to the consumer increase their likelihood for potential products liability issues.

Products Liability • States differ in the

products liability theory they employ – New York is a strict liability state. – To illustrate, if a consumer at

a pick-your-own farm picks and then consumes berries and becomes ill because the berries were contaminated, a New York court will likely hold the producer strictly liable for the consumer’s injuries.

Some products like meat and dairy,have more products liability risk.

Common Risk Management Methods

• Business Organizations– Limited Partnerships– Limited Liability

Companies– Corporations

• Insurance– We’ll talk more about this

next• Food safety/sanitation

Insurance

Insurance is a Contract

• Drafted in favor of the insurance company

• Not all insurance products are the same– Food and agriculture lawyers

should review insurance policies for the client to ensure there are not any concerns

– Pay attention to the duties of the client under the insurance policy

Insurance is a Contract

• Insurance Company – Duty to indemnify the insured – Duty to defend the farmer/food

entrepreneur in a law suit for a covered risk

• Insured– Duty to pay the premium– Duty to cooperate– Duty to disclose toe the

insurance company relevant information

Duty to Defend• The insurance company’s duty

to defend is carried out by hiring an attorney chosen by the company and controlling that attorney’s right to settle.

• If the farmer or food entrepreneur is dead set against settling, the insurance company has the right to do so anyway.

• Once the insurance company pays out its policy limits, it has no further duty to defend the farmer or food entrepreneur.

Insurance is a Risk Management Tool

• Put simply, the purpose of an insurance policy is to shift the financial risk of the food and agriculture operation to the insurance company.

• The insurance company will pay any covered claim (up to the limit) and defense costs in a lawsuit (including attorneys’ fees and court costs).


Clients might be tempted to save money on insurance premiums (the cost of the insurance) by hand-selecting only limited coverages that they think they are likely to need with high deductibles (the out-of-pocket amount they’re responsible for if a loss occurs).


Inadequate amounts of insurance that won’t pay out what the farmer or food entrepreneur will need to stay up and running if a loss occurs.

Claims-Made vs. Occurrence Based

Claims-Made• Will only cover the insured

for claims made within the window of time the insurance policy is in effect so long as the claim is made within the specified time

Occurrence-Based• Covers anything that

happens within a certain window of time and will “pay out” regardless of when the claim is made to the insurance company

Educate your client on the type of policy they have

Pay Attention to Exclusions• An insurance contract almost

always carves out exclusions from coverage. – intentional acts, such as theft by

employees – assaults, – alcohol-related events

• Other exclusions may relate more specifically to the type of insurance involved. – For example, a typical farmowners

policy might not be adequate to insure against losses suffered from the flooding of a nearby creek

Know the Type of Coverage

•intended to compensate for losses from causes like fire, lightning, explosion, windstorm, hail, riot or civil commotion, aircraft or vehicle, vandalism, theft, sinkhole collapse, and volcanic action.

Basic Coverage

•include all of the above and adds additional coverage for damage from causes like the weight of ice, snow, or sleet, falling objects and accidental discharges of water.

Broad Form Coverage

•Includes the same protections in basic and broad coverage•Also offers open peril coverage under which other causes of damage are covered unless they are specifically excluded under the farm policy (e.g., flood loss).

Special Coverage

Types of InsuranceFarmers

Comprehensive Personal Liability

Policy

Commercial Insurance

Policy

Home Owners/ Renters

Insurance

Products Liability

Insurance

Auto Insurance

Cyber Liability Insurance

Environmental Insurance

Pollution Insurance

Crop Insurance

Livestock Insurance

Equine Insurance

Special Riders (or

Endorsements)

The insurance puzzle

Farmers Comprehensive Personal Liability (“FCPL”) Policy

• A/k/a “Farmowner’s Insurance”• Most farms use a farmowner’s insurance policy to cover the

ordinary risks of a farming operation. • This type of policy normally only covers activities ancillary to

farming (i.e., not agri-tourism or cottage food operations). • Pay special attention to the exclusions section in this policy

to see what is not covered. – Sale of processed vegetables or meat products at a farmers’

market or roadside stand – Injuries to the policyholder or family member– Property damage by the insured him/herself.

Homeowner’s/ Renters Insurance

• Homeowner’s insurance usually does not cover business activities.

• Therefore, clients should consider a commercial policy if they have a home business office, cottage food operation, a rooftop garden, offer in-home cooking classes, or sell produce from their home.

Commercial Insurance• A commercial insurance policy or endorsement is

appropriate for operations engaging in business outside the scope of the basic farmowners’ insurance policy. – For example, most farmowners’ policies cover products

liability for the sale of raw food products, whereas the commercial insurance policy may cover personal injuries (such as slip and falls and other types of injuries not related to defective products) resulting from the sale of processed food products (e.g., slicing vegetables, cutting meat products, making beef jerky).

• A commercial insurance policy should be purchased if a business is being run out of a home, has agri-tourism activities, or engages in on-farm poultry slaughter.

Products Liability Policy• Products liability policies help provide coverage

for liability resulting from an illness or death due to contaminated food products sold by the purchaser.

• It is highly suggested that farms involved with the direct marketing of food products to consumers, schools or restaurants have products liability insurance.

• Farms selling raw milk should also consider a products liability policy.

Crop Insurance

• Federal crop insurance is subsidized by the U.S. Department of Agriculture (“USDA”) Risk Management Agency (“RMA”).

• It protects the producer against crop losses due to natural disasters such as drought or flood.

• It is available for nearly every type of commodity ranging from sweet corn to raisins.

Livestock Insurance

• There are two types of livestock insurance: – RMA reinsured livestock

insurance (similar to the federal crop insurance program)• Natural causes only

– private livestock insurance• Wider coverage, including theft• Common with horses

Cyber Insurance• This is a fairly new type of insurance,

relatively speaking, and it addresses risks associated with doing business over the Internet (or e-Commerce).

• Covered risks can include privacy

issues, infringement of intellectual property (trademark or copyright infringement), stolen credit card information (from PayPal, Google Checkout or other online credit card processor) or computer viruses.

Motor Vehicle Insurance

• Food and agriculture operations should pay special attention to their auto insurance policies if vehicles are used to transport goods, livestock or special equipment.

• A commercial automobile policy or special rider might be needed.

Special Riders/ Endorsements• There are many special activities on

agriculture or food operations that require amendments to the underlying policies.

• Examples of these special activities may include agri-tourism/agri-tainment, petting zoos or other activities where the public is in direct contact with animals, equine, custom farm work, on-farm poultry slaughter, production of processed foods, use of ATV’s, and the transportation of frozen genetics (e.g., embryos, semen).

Umbrella Insurance• The name “umbrella” improperly infers that umbrella

insurance adds coverage in the “holes” of existing insurance policies; instead, umbrella insurance should be viewed as a “top hat.” – It essentially raises your already existing limits and existing

coverage. – For example, if you have a $1 million farmowner’s insurance

policy with the $2 million umbrella, the umbrella policy would protect the farm against a $2 million court judgment.

• Umbrella insurance does not “fill in holes” in your existing insurance policies – it simply increases the limits.

How Much Insurance Coverage Does a Farm or Food Entrepreneur Need?

• Depends on budget and risk appetite• Most operations should have at least $1 million– Rule of thumb: should be more than the amount of

assets that you have• Depends on – Type of operation– Assets to protect– Other risk management techniques

Food Safety Modernization Act


Background the the Food Safety Modernization Act

• Pew estimates that the U.S. spends about $152 billion on food-borne illness per year– One in six Americans (48 million people) become sick from

contaminated food. – Number of outbreaks have been on the rise– Most prominent causes of foodborne outbreaks

• Poultry • Leafy greens• Beef• Dairy• Fruit-Nuts

“Food Safety Issues for the 113th Congress” at 1, 3.


Background the the Food Safety Modernization Act

• Congress heard the outcry from many groups on food safety – Parents of sick children– Children of sick elderly– Consumer protection groups– Farmers– Doctors– State departments of agriculture – Various segments of the food industry

• Was a bipartisan issue in the 111th Congress– Yet, controversial


Policy Reasons for the Food Safety Modernization Act

• The risk of getting sick or dying from food contaminated with food pathogens (e.g., E. coli) is largely preventable by preventative measure applied at each stage of the food supply chain– Different segments of the food chain have

different risks

• Post 9/11, the United States has a bioterrorism risk

• In 2009, Obama Administration created an inter-agency Food Safety Working Group to look at various food safety proposals



• Food Safety Modernization Act (“FSMA – pronounced Fiz-ma”) was signed into law by President Obama on January 4, 2011

– Shifts the focus from responding to contamination to preventing it• Reactive system to a proactive

system

– First major update to food safety law in 70 years



• FDA released proposed rules on January 2013– Comment period ended

on September 16, 2013– We’ll be talking about

the proposed rules – subject to change

• Awaiting final rules


Overview of the Food Safety Modernization Act

• Requires each owner, operator or agent in charge of a food facility to identify and implement preventative controls to significantly minimize or prevent hazards that could affect food manufactured, processed, packed or held by such facility

• Requires FDA to allocate resources to inspect facilities by 2018 according to the known safety risks of the facilities or food



• Increase detection and of the response to food safety problems

– FDA and USDA are required to coordinate under FSMA

– Must revisit and resubmit plan every 4 years

– Requires enhancement of foodborne illness surveillance systems to improve the collection, analysis, reporting and usefulness of data on foodborne illness



• FSMA enhances a traceability system

– FSMA requires the inspection of facilities and imported food to the known safety risks of the facilities for food

– Establish a product tracing system to track and trace food that is in the United States or offered for import into the United States



• Improves the safety of imported foods

– Requires importers to perform risk-based foreign supplier verification activities to verify that imported food is produced in compliance with applicable requirements related to hazard analysis and standards for produce safety and is not adulterated or misbranded

– Resources allocated to inspect facilities by 2018 and imported food according to the known safety risks of the facilities or food



• Scale appropriate regulations: rejecting the “one size fits all” approach, FSMA includes options for small, mid-sized and direct market agricultural operations

• Conservation practices: FSMA aims to not undermined existing on-farm conservation and wildlife practices in food production

• Organic production: FSMA aims to complement, not contradict, the National Organic Program

National Sustainable Agriculture Coalition



• Value-Added Processing: FSMA reduces regulations on low-risk processing

• Paperwork reduction: FSMA aims to help smaller operations by reducing unnecessary paperwork

• Farm identity-preserved: FSMA allows farm identity-preserved marketing as an option in place of government trace-back control

• Training: FSMA authorizes a new competitive grants program to train farmers and processors on food safety




• New FDA Powers– Order a recall of food– Detain food based only on a “reason to believe” the food

is adulterated or misbranded– Suspend the registration thereby suspending the

operation of any food facility • If the FDA determines that the food manufactured, processed,

packed or held has a reasonable probably of causing serious adverse health consequences or death to humans or animals

– Expands FDA authority over imported food



• New FDA Responsibilities – FDA is required to review health

data every two years and issues guidance documents or regulations setting contaminant-specific performance standards for the the most problematic foodborne contaminants

– FDA is required to establish a product tracing system within the FDA to effectively and rapidly track and trace food


Food Safety Modernization Act• The proposed rule

mandates the establishment of two primary regulations:

– Standards for produce production (The “Produce Rule”)

– Food safety measures for facilities that process food for human consumption (the “Preventative Controls Rule”)


Proposed Produce Safety Rule• Establishes science-based minimum

standards for the safe growing, harvesting, packing and holding of produce on farms

• Proposed new standards regulate the following areas:– Worker training, health & hygiene– Agricultural water– Biological soil amendments of animal origin– Domesticated and wild animals– Equipment, tools and buildings

FDA – FAQ’s


Proposed Produced Safety Rules

The proposed rule has specific requirements for growing sprouts– treating seed before sprouting – testing sprout irrigation water for pathogens – monitoring the growing environment for Listeria


Proposed Produce Safety Rule

• Farm fall into one of three categories:– Exempt – Modified

requirements– Full requirements




• What kind of produce?– Most fruits and vegetables in the

raw / unprocessed state– Exemptions: Doesn’t apply to raw

agricultural commodities that are: • rarely consumed raw

– E.g., potatoes

• Produced for personal or on-farm consumption

• Destined for commercial processing (with documentation)– E.g., canning, bagged salads and leafy

greens



• Another Exemption: A farm is exempt if the average annual sales during the previous 3-year period is no more than $25K– This is sales not profit


Modified Requirements• If the produce will

undergo additional commercial processing that kills harmful microorganisms, then the produce is not covered

– However, the farm will be subject to recordkeeping requirements and the compliance and enforcement requirements of the Produce Rule



Modified Requirements• If the farm on average over the previous

3 years has less than $500K in gross annual sales and the majority of the food is sold directly to a “qualified end-user” (e.g., consumer, restaurant or retail food establishment) then the farmer must:– Provide the name and complete address of

the farm where the produce was grown on either a food packaging label or on a sign at the point of purchase

– Comply with the compliance and enforcement requirements of the Produce Rule; and

– Be subject to the provisions regarding the withdrawal of the farm’s status as a partially covered (“qualified exempt”) operation.




• FDA anticipates that the Produce Safety Rule will cover 40,496 domestic farms and 14,927 foreign farms

• FDA estimates that it will cost $460 million annually for domestic farms and $170 million annually for foreign farms

• FDA estimates that there will be $1.04 billion dollars in annual benefits


Proposed Preventative Controls Rule

• A “facility” is a location that manufactures, processes, packs or holds food for consumption in the United States

• FDA will look at whether there are any manufacturing or processing activities– Irradiation– Cutting/coring/chopping/slicing– Canning– Coating with things other than wax/oil/resin– Drying that creates a distinct commodity– Artificial ripening– Cooking– Pasteurizing/homogenizing– Infusing– Distilling– Salting– Smoking– Grinding/milling– Freezing– Slaughtering animals or post-slaughter operations




• FDA looks at the type manufacturing and processing activities – Whether the farm is

conducting the activities on its own agricultural products• Reduced requirements

– Whether the facility is manufacturing and processing someone else’s agricultural products



Proposed Preventative Controls Rule• Proposed rule has two main

points:– Requirements for hazard

analysis and risk-based preventative controls; and

– Revisions to existing Current Good Manufacturing Practice (“GMP”) requirements

• Some facilities are subject to only one and not the other- important to see them as two different requirementsNational Sustainable Agriculture Coalition



• Who is subject to the Hazard Analysis and Risk-Based Preventive Controls (“HARPC”)?

• 3 categories– Exemptions– Modified requirements– Full requirements



Exemptions from Hazard Analysis and Risk-Based Preventative Controls

• Following products are exempt– Juice– Seafood– Dietary Supplements– Alcoholic beverages– Low-acid canned foods

• Grain elevators and warehouses that are solely engaged in storing agricultural commodities or packaged food

• Small or very small on-farm businesses that conduct certain low-risk manufacturing and processing, packing or holding activities– Making jams and jellies– Manufacturing honey and maple syrup


159

Facilities Subject to Modified HARPC Requirements

• Very small businesses– FDA still debating what is deciding what is considered

a “very small business”• FDA proposing that if the business is less than

$250K, $500K or 1 mil. must maintain records and certify that it

• qualifies for the modified requirements; and• Implementing and monitoring preventative controls or

complying with applicable non-Federal food safety law and must display a label or sign with the complete business address of the facility at the point of sale

(C) Cari Rincker, 2013



Facilities Subject to Modified HARPC Requirements

• If the facility on average over the previous 3 years has less than $500K in gross annual sales and the majority of the food is sold directly to a “qualified end-user” (e.g., consumer, restaurant or retail food establishment) then the facility must maintain certain records and must certify that:

– It qualifies for modified requirements; and – It is implementing and monitoring preventive or complying with

applicable non-federal food safety law and must display a label or sign with the complete business address of the facility at the point of sale




• Who must comply with the current Good Manufacturing Practices (“GMPs”)?– Only facilities that are exempt

are warehouses and grain elevators that store raw agricultural commodities (including fruits and vegetables) intended for further processing



Other Legal Issues Affecting Direct Farm Marketing

Endres, A. Bryan et al., “New York Direct Farm Business: A Legal Guide to Market Access” (2013).

Questions on Being an Agriculture Lawyer

• Fridays with Cari Skype Calls– First Friday of the

month at 2pm ET– RSVP to

[email protected]– No charge

mailto:[email protected]

Oh, P.S. – I Just Wrote a Book

Cari B. Rincker & Patrick B. Dillon, “Field Manual: Legal Guide for New York Farmers & Food Entrepreneurs” (2013)

Available at http://www.amazon.com/Field-Manual-Legal-Farmers-Entrepreneurs/dp/1484965191

Please Stay in Touch• Send Me Snail Mail: 535 Fifth Avenue, 4th Floor, New

York, NY 10017• Call Me: (212) 427-2049 (office)• Email Me: [email protected]• Visit My Website: www.rinckerlaw.com • Read My Food & Ag Law Blog: www.rinckerlaw.com/blog• Tweet Me: @CariRincker @RinckerLaw• Facebook Me: www.facebook.com/rinckerlaw • Link to Me: http://www.linkedin.com/in/caririncker • Skype Me: Cari.Rincker

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Technology

Lawline: Counseling the Local Food Movement Part 1