FDA’s Proposed Rules Threaten Beginning Small Farmers and Local Food

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The federal Food and Drug Administration (FDA) is proposing rules for implementation of the Food Safety Modernization Act (FSMA) that will impact local food enterprises.  An in-depth discussion of the proposed rules is beyond our blog, but there is plenty of useful, easy-to-understand, as well as comprehensive, information available elsewhere on the net. We would encourage everyone interested in seeing our food system become more sustainable and more local, especially consumers whose choice will be affected by the rules, at least be aware of what the FDA's proposed rules are.  Not everything currently proposed will necessarily become a rule, but the process has advanced pretty far, and localists across the nation are concerned that the current proposed rules will adversely affect the ability of new small and sustainable farmers to launch, could put many small-scale farmers out of business or dramatically impact their profitability, and will do the same for food hubs and multi-farm CSAs.  For further reading, we suggest the brilliant writing and research found at the National Sustainable Agriculture Coalition.

Roots Memphis, as a small sustainable farm, and Roots Memphis Farm Academy, as a small-scale, sustainable farm incubator, will be particularly affected by the rule changes.  We have therefore done our best to brush up on the topic and respond via public comment to the FDA.  Our thoughts on the proposed rules are below.  Please feel free to ask us any questions and to make your own public comments to the FDA heard.  We would encourage you to please make comment, even if it's simply to say that the rules should be careful to encourage, rather than stifle, the re-localization of the food system.  Public comments on the FDA's rules can be made here, at the regulations.gov website.


Roots Memphis Farm Academy's Public Comment:

1) The FDA’s proposed rules do not distinguish between “profit” and “revenue.” Profit is revenue minus expenses. High costs of compliance with the FDA’s proposed rules are now adding to the expenses of small farmers, reducing their profit. The calculations the FDA provides to justify the financial burden the Produce Rule places on small farmers is that, in the category of farmers grossing between $25,000 and $250,000, cost of compliance averages 6% of gross sales. Considering 6% of gross sales to be a meager relative cost for farmers is extremely misleading and represents a deep misunderstanding of small farm finance. For an average farmer grossing $75,000 in revenue, the farmer’s annual profit, that which she lives off of, is much lower. Individual farmer profit is notoriously difficult to measure, as each farmer's context varies significantly. Many farmers with $75,000 per year of gross sales, however, are currently barely making enough to cover the costs of operating their farm and their costs of living. Subtracting an additional even 6% from them will likely put many of them out of business or significantly alter their operations. For some, it could mean taking more than half of profits. Tying compliance with the Produce Rule to gross sales figures is deeply problematic and should be revised. Specifically, every farmer should at least have the right to make a living wage before the FDA’s increased costs of compliance kick in.

We propose revising the proposed rules to account for overly burdensome cost of compliance, by either, a) capping cost of compliance at a percentage of gross revenues, not to exceed 3%, or b) capping cost of compliance as a percentage of profit, not including salary or wages.

Moreover, the extra costs of compliance on “facilities,” such as food hubs and multi-farm CSA aggregators, make the same revenue versus profit error. Many food hubs operate off of a slim margin from the gross sales they handle. Many local food hubs are operated as non-profits, for the simple reason that they cannot cover the costs of operation for aggregating and distributing local food on such slim margins. Applying a $2,000 cost of compliance to a facility that aggregates and distributes less than $250,000 could amount to 15% to 25% of actual income to that facility. That is overly burdensome by any definition.

We propose revising the proposed rules to account for overly burdensome cost of compliance, by either a) capping cost of compliance at a percentage of gross revenues, or b) capping cost of compliance as a percentage of profit, not including salary or wages.

2) The FDA’s proposed rules are overly burdensome on the production and distribution of local food. The FDA should revise both the Produce Rule and the Preventive Controls Rule to bolster local food production and distribution rather than making it more difficult. Because of the increased costs placed on small producers by the Produce Rule, those small producers will be driven to be increasingly dependent upon local distributors, such as aggregation sites and food hubs, to lower the financial risk and increase sales and revenues. Through the Preventive Controls Rule, the FDA has proposed to place a significant burden on local food “facilities,” which includes food hubs and farms that aggregate multi-farm CSAs. If the FDA increases the financial burden on small farmers, as the Produce Rule does, it must then make it relatively easier for food hubs and multi-farm CSAs to ease the financial burden placed on those farmers. Otherwise, the supply chain of the local food economy may be peril. Producers and facilities, working together, should be able to share and reduce costs of compliance with the FDA’s new rules.

We propose revising the proposed rules to apply the Modified Protective Controls Rule to food hubs and “facilities” grossing up to $2,000,000 annually, to encourage the connection of the local food supply chain, by incentivizing small producers to use food hubs and multi-farm aggregators, and to encourage those facilities to serve more farmers and scale up to a level at which they can bear the burden of more stringent food safety compliance measures.

3) The FDA’s failure to comply with Congress in clearly distinguishing direct-to-consumer operations such as CSAs, farm stands, roadside stands, and farmer’s markets from “facilities” is unconstitutional. Congress is clear that these methods of sale were not to be regulated by the FDA. To the extent the FDA’s Preventive Controls Rule attempts to regulate these direct-to-consumer sales platforms, it is unenforceable.

We propose clearly stating that CSAs, farm stands, roadside stands, farmer’s markets, and other direct to consumer sales platforms are not “facilities” subject to the regulation of the FDA.