The most complex and potentially devastating threat in the FDA’s proposed food safety regulations has its roots not in a major foodborne illness outbreak or recall, but in the spasm of terrorism fears that gripped this country after the 9/11 attacks. In 2002, Congress gave FDA sweeping new powers in a misconceived attempt to prevent terrorists from poisoning the food supply. The Bioterroism Act (BTA) required every food-manufacturing ‘facility’ in the US to register with FDA.
Congress specifically stated in the BTA that “farms; restaurants; other retail food establishments [i.e., grocers and caterers]; [and] nonprofit food establishments [that prepare and serve food] directly to the consumer” were not ‘facilities’ under the Act. But in FDA’s rule-writing process, things got Kafkaesque. Instead of following Congress’ plain language that farms, etc. aren’t covered by the BTA because they aren’t facilities, FDA defined those entities as facilities, but ones that are exempt from the BTA. And that is a big problem today, as local food systems face the FDA’s proposed rules under the Food Safety Modernization Act (FSMA). Here’s why.
A facility, according to the BTA, is an “establishment… that manufactures/processes, packs or holds” food; processing is defined as:
cutting, peeling, trimming, washing, waxing, eviscerating, rendering, cooking, baking, freezing, cooling, pasteurizing, homogenizing, mixing, formulating, bottling, milling, grinding, extracting juice, distilling, labeling, or packaging.
Look at that long list again, and you will see a whole lot of activities that take place on what we know as farms, especially produce farms, and especially produce farms that take advantage of opportunities to diversify into value-added marketing and local food. How is a farm supposed to sell its vegetables and fruits to a grocery store or restaurant if it doesn’t put them in packages and affix labels? In this light, you can begin to see how the FDA’s ‘you’re in but you’re out’ approach to the facility definition puts thousands of farms at risk of crossing the line into being ‘facilities’ that are required to register under the BTA.
The BTA rules attempted, clumsily, some accommodation for the reality of farming. FDA allowed that farms can wash, cool, trim outer leaves, pack and hold produce without losing their exemption from the BTA rules, but only if the produce involved comes from that farm only. Any form of cooperative packing, holding or processing, where multiple farms work together to market their crops, kicks the location where those activities take place out of its status as a farm.
Fundamentally this is a completely backwards understanding of what farms and farmers do because it assumes that farms exist simply to grow crops, and that getting those crops to market is some distinct process that ‘farms’ don’t do. In fact, obviously, a farm can’t stay in business without selling its crops, and the imperative to maximize the value that it gets for those crops is what creates the necessity for value-added marketing and cooperative distribution. Without these tools, farms fail, and that’s the way it’s been for two centuries of American farming.
And that is why this legacy of the BTA now creates such a significant threat to local food: FDA’s proposed preventive controls rules under FSMA make the life of a ‘facility’ perilous indeed. The agency’s estimated annual cost of compliance for a ‘very small’ facility varies from $10,000 to $19,000. For a farm that ends up on the wrong side of the farm/facility line, that amounts to three to six percent of annual sales. And when you realize that the typical American farm’s annual net income is 10 percent of sales, it becomes quickly clear that being classified as a facility would be a death knell for the vast majority of farms.
Likewise the scope of the facility definition would jeopardize cooperatives and food hubs, and the farms that rely on them. According to a USDA analysis, a food hub needs annual gross sales of at least $1 million to be financially viable. A typical food hub model is to return 80 percent of sales to the participating farmers, with the remaining 20 percent applied to the costs of capital equipment, insurance, personnel, storage, transportation, and marketing—leaving precious little net income to reinvest in the company. Taking $10,000 to $19,000 out of a hub’s 20 percent share amounts to a five to 10 percent increase in operating expenses for a $1 to $2 million firm, slashing profits and making it impossible for most such cooperatives to continue. And that means that the farms that would otherwise depend on those hubs would lose a critical market channel, compromising their financial viability even if they themselves manage to avoid being tagged a ‘facility.’
FDA knows the preventive controls rule will have devastating consequences. Its own economic impact analysis states, “Because facilities with less than 20 employees … will bear a large portion of the costs, the Agency tentatively concludes that the proposed rule will have a significant economic impact on a substantial number of small entities. […] The regulatory costs of this proposed rule may discourage at least some new small businesses from entering the industry.”
That is why it is so critical for you to take action today and comment on these rules, before it’s too late. The deadline for comments is Sept. 16, so we have just two months to make our voices heard. The Feds need to know the impact that these rules will have on your farm, your business, and your community. Whether you are a local food producer or supporter, FDA has to hear from you. Visit the CFSA website’s FSMA action page, https://www.carolinafarmstewards.org/fda-comments-how-to/, to find out how to submit your comments today!