April 14, 2023
The U.S. Food and Drug Administration will be transitioning away from its policy regarding flexibilities available to qualified exempt farms under the Produce Safety Rule during the COVID-19 Public Health Emergency (PHE).
Under the FDA Food Safety Modernization Act (FSMA) Produce Safety Rule, farms are eligible for a qualified exemption and associated modified requirements if they meet the below criteria:
- The average annual value of the farm’s direct sales of food to qualified end-users exceeded the average annual value of the farm’s food sales to all others during the previous three years. A qualified end-user is either (a) the consumer of the food (where the term consumer does not include a business) or (b) a restaurant or retail food establishment that is located in the same State or the same Indian reservation as the farm or not more than 275 miles away; and
- The farm’s food sales averaged less than $500,000 (adjusted for inflation) per year during the previous three years.
During the COVID-19 PHE, state and local governments across the United States instituted public health orders, and some businesses took other mitigating efforts, that resulted in many restaurants, retail food establishments and schools significantly limiting their operations, leaving many farmers without their usual qualified end-user customers. In May 2020, the FDA issued temporary guidance regarding available flexibilities under which affected farmers could shift their sales away from qualified end-users while still being considered eligible for the qualified exemption, as long as they continued to meet the requirement that their average annual food sales during the previous three years totaled less than $500,000 (adjusted for inflation).
Recently, the Department of Health and Human Services announced that it is planning for the COVID-19 PHE declaration to expire at the end of the day on May 11, 2023. Soon after HHS’ announcement, FDA announced that the temporary Qualified Exemption guidance (among others) would remain in effect until November 7, 2023. Today the FDA issued guidance to help explain how farms may transition from the temporary policy back to the qualified exempt criteria in the Produce Safety Rule.
In the guidance, the FDA notes that the preamble to the Produce Safety Rule acknowledges that, under some circumstances, farms may have less than three years of records to support their eligibility for the qualified exemption, during which time the FDA would consider it reasonable for the farm to base their calculations on the records they have (such as records for the preceding one or two calendar years). For farms that have no records regarding direct sales to qualified end-users for any of the preceding three calendar years, but that meet the other criterion for the qualified exemption (average annual food sales for the previous three years less than $500,000), the FDA will restart the clock beginning January 1, 2024.
This means that in 2024, farms should begin collecting data regarding their direct sales to qualified end-users as described in the first criterion above. In 2025, farms will be able to use their records from 2024, without averaging in other years, to demonstrate that they meet the criteria for the exemption. In 2026 and 2027, farms should be able to average their sales from the previous 2-3 years to demonstrate eligibility for the qualified exemption. Farms that fail to demonstrate eligibility will no longer have qualified exempt status and will need to come into compliance with the full requirements of the Produce Safety Rule unless another exemption applies.