Does the New Food Safety Bill Prevent Internet Sales by Small Producers?

The “Food Safety Bill” – FDA Food Safety Modernization Act – has finally passed the House of Representatives for the third time and is headed to the President for signature. In a series of snafus, fumbles, and controversies, the bill was passed back and forth from the House to the Senate several times until finally, on Dec. 21, it was passed by a substantial vote in the House.

(Read an excellent summary of the legislative process and final passage of the bill by Helena Bottemiller, Food Safety News, here.)

The new law will contain a provision that is intended to give small, local farmers and food producers some protection from the cost of developing risk management plans and product testing required by larger producers.

The bone of contention has been that smaller producers have also put contaminated and “adulterated” food on the market, just like larger producers. The counter argument is that small producers simply don’t expose as many consumers to risk.

What exactly is small producer exemption?

The so-called “Tester Amendment” is not as clearly stated as most would believe. The law will exempt small farms and producers from FDA oversight and leaves them under the control and management of state and local agencies. The conditions for exemption – according to a summary from the office of Senator Jon Tester – read:

A food facility is exempt if:

(1) They are either a “very small business” as defined by FDA in rulemaking; or

(2) The average annual monetary value of all food sold by the facility during the previous 3 year period was less than $500,000, but only so long as the majority of the food sold by that facility was sold directly to consumers, restaurants, or grocery stores (as opposed to 3rd party food brokers) and were in the same state where the facility sold the food or within 275 miles of the facility.

A farm is exempt if:

During the previous 3 year period, the average monetary value of the food they sold was less than $500,000, but only so long as the majority of sales were to consumers, restaurants, or grocery stores (as opposed to 3rd party food brokers) and were in the same state where the farm harvested or produced the food or within 275 miles of the farm.

The actual wording of the bill is slightly different; the bill defines a “qualified end-user” who purchases food products from small farms and small food processing facilities as:

(i) the consumer of the food; or

(ii) a restaurant or retail food establishment that —

(I) is located —

(aa) in the same State as the qualified facility that sold the food to such restaurant or establishment; or

(bb) not more than 275 miles from such facility; and

(II) is purchasing the food for sale directly to consumers at such restaurant or retail food establishment.

What about Internet sales?

If you read these carefully you get two different interpretations. The summary provided by Senator Tester’s office implies that sales must be to consumers, restaurants or grocer stores (not 3rd party brokers) in the same state where the food was harvested or produced or within 275 miles of the farm.

The actual wording of the legislation – by the placement of the semi-colon and the hierarchy of the definition – implies that the food can be sold to a “qualified end-user” which is either a consumer or a restaurant or retail establishment that is located in the same state or within 275 miles of the farm or food processor and sold directly to consumers.

Many small farms and food producers have embraced the Internet as a low-cost sales and marketing tool, and more and more consumers are buying online.

If the first interpretation is correct, no food product could be sold out of state or more than 275 miles away; that would mean online orders could not be shipped further than these requirements. And it would add considerable complexity to selling food products online since the seller would have to be able to tell if the buyer was qualified by geography to make the purchase.

If the second interpretation is correct, food products could be sold to consumers out of state or more than 275 miles away, but not to restaurants or retail establishments outside that geographic constraint. Thus, small farmers and food producers could sell to consumers anywhere but only to restaurants or retailers within the qualified geographic area.

State and Local Oversight Applies

Because the small producer exemption puts small farms and food producers under the control and management of state and local agencies, one must assume that a geographic limitation was the intention for all food sales.

Unfortunately any small producer now using the Internet to market their products and shipping them to consumers across the country will be limited to a much smaller market and their revenues will be much impacted.

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