Under the Produce Safety Rule (PSR), farms can be classified as farms:  a) Not covered by the Rule, b) farms eligible for a qualified exemption and modified requirements or c) Covered farms. This page will focus on farms that are “not covered” and farms that are eligible for a qualified exemption and modified requirements. Most small and some medium scale produce farms in North Carolina are likely to fall into these categories. For more information about “covered” farms, visit the Produce Safety Rule page.

Farms not covered by the PS Rule (2024)

Farms that are not covered by the PSR meet one of the following criteria:

• The farm’s average annual produce sales for the previous 3-year period is $31,925* or less.
• Farms that grow produce only for personal consumption.

These are farms that will not be subject to regular inspections. FDA has implied that there is an expectation that these farms keep financial records to show that their produce sales are below $31,925. This value is adjusted for inflation annually, the figures used in this publication have already been adjusted for inflation for 2024 A sample template to calculate produce sales can be accessed on page 1:

Template for farms to determine their status with the PSR in 2024

Farms eligible for a qualified exemption and modified requirements

In order to be eligible for a qualified exemption and modified requirements produce farms must meet these two requirements:

1) The farm must sell the majority of the food** directly to qualified end-users. Qualified end-users are the consumer of the food as long as the consumer is not a business. Internet sales to the consumer of the food are allowed. A qualified end user is also a restaurant and retail food establishment*** that is located within NC or not more than 275 miles from the farm that produced the food. Based on this, if the farm sells food to a business such as a broker, those sales should be 49% or less of total food sales.

2) The average annual monetary value of food** sales for the past three years must be less than $638,491*. To calculate this value for your farm use annual sales starting in 2021.

Any farm, CSA or U-pick operation can be eligible for a qualified exemption and modified requirements as long as they meet the two conditions set above by the PS Rule. If a farm does not meet both requirements, then the farm should be considered a “covered farm”. Covered farms have to comply with the practices outlined in the PSR and have specific compliance dates.

*This value has been adjusted for inflation in 2024. FSMA’s Inflation adjusted cut offs can be found on the FDA’s FSMA Inflation Adjusted Cut Offs page.

Notes and definitions that apply to these requirements:

**Food is defined as articles used for food or drink for man or animals, or articles used to make components of it. It includes seeds and beans used to grow sprouts. As farms calculate food sales take into account that cotton, tobacco and timber are not considered food. Examples of food include: fruits, vegetables, fish, dairy products, eggs, raw agricultural commodities for use as food or as components of food, animal feed (including pet food), food and feed ingredients, food and feed additives, dietary supplements and dietary ingredients, infant formula, beverages (including alcoholic beverages and bottled water), live food animals, bakery goods, snack foods, candy and canned foods. Livestock and meat are both food within this definition. FDA may interpret the “food” to include “live animals raised for food”.

There are instances when live animals are sold for purposes other than for food, such as being sold as pets (e.g., dogs), pets are not considered food. FDA notes that only the value of food “sold” during the year should be counted to determine the eligibility for the qualified exemption. As farms calculate food sales take into account that cotton, tobacco and timber are not considered food.

***Retail food establishment means an establishment that sells food products directly to consumers as its primary function. The term “retail food establishment” includes facilities that manufacture, process, pack, or hold food if the establishment’s primary function is to sell from that establishment food, including food that it manufactures, processes, packs, or holds, directly to consumers. A retail food establishment’s primary function is to sell food directly to consumers if the annual monetary value of sales of food products directly to consumers exceeds the annual monetary value of sales of food products to all other buyers. The term “consumers” does not include businesses. A “retail food establishment” includes grocery stores, convenience stores, and vending machine locations. A “retail food establishment” also includes certain farm-operated businesses selling food directly to consumers as their primary function.

Sale of food directly to consumers from an establishment located on a farm or by a farm-operated business includes sales by that establishment directly to consumers:

(i) At a roadside stand (a stand situated on the side of or near a road or thoroughfare at which a farmer sells food from his or her farm directly to consumers) or farmers’ market (a location where one or more local farmers assemble to sell food from their farms directly to consumers);

(ii) Through a community supported agriculture program. Community supported agriculture (CSA) program means a program under which a farmer or group of farmers grows food for a group of shareholders (or subscribers) who pledge to buy a portion of the farmer’s crop(s) for that season. This includes CSA programs in which a group of farmers consolidate their crops at a central location for distribution to shareholders or subscribers; and

(iii) At other such direct-to-consumer sales platforms, including door-to-door sales; mail, catalog and Internet order, including online farmer’s markets and online grocery delivery; religious or other organization bazaars; and State and local fairs.

For the purposes of this definition, farm-operated business means a business that is managed by one or more farms and conducts manufacturing/processing not on the farm(s).

 What do “Qualified exempt” farms have to do to be in compliance with the Produce Safety Rule?

These farms have to comply with two requirements: keep financial records and follow modified labeling requirements.

Financial Records: A farm must establish and keep adequate records necessary to demonstrate that the farm satisfies the criteria for a qualified exemption, including a written record reflecting that an annual review has been performed and verification of the farm’s continued eligibility for the qualified exemption. Farms must keep financial records to prove food sales are under $638,491 by keeping dated receipts for the past three years. Farms must have a record of food sales starting with sales from 2021. The records do not need to be submitted to FDA, NCDA or any other agency. These records must be kept by the farm on file in case they are formally requested by an inspector.

A sample template developed by the Produce Safety Alliance and modified by the author is provided and can be used to fulfill the requirement of a written record reflecting that an annual review has been performed. By completing pages 3 to 5 the farm can determined its continued eligibility for the qualified exemption.

Template for farms to determine their status with the PSR in 2024

The receipts that must accompany this record need to be dated but not individually signed. The farm is free to use the template that is provided in this publication or develop its own form.

Any records established and kept for compliance with the PSR must include the following information and adhere to these guidelines:

• Include the name and location of the farm
• Provide the location of growing areas and packing sheds.
• Records need to be created at the time an activity is performed or observed.
• Records must be accurate, legible and indelible.
• A farm has 24 hours to obtain records kept offsite and make them accessible to FDA for inspection and copying upon oral or written request.

Important provisions about records under the PSR:

• Existing records to comply with other federal, state or local regulations can be used.
• Records to substantiate the qualified exemption must be kept for 3 years.
• Records can be kept electronically; true copies are accepted or can be handwritten.
• The records must be signed by the person who created them.

Modified labeling: The labeling requirement consists of including the name and complete business address of the farm where the produce was grown either on the label of the produce or to display the same information at the point-of-purchase. The labeling requirement became effective January 20, 2020.

Specific guidelines about labeling produce:

• Include the name and the business address of the farm where the produce was grown on any food packaging label.
• When food packaging label is not required, display at the point of purchase, the name and complete business address of the farm where the produce was grown, on a label, poster, sign, placard or documents delivered with the produce in the normal course of business, or in the case of Internet sales, in an electronic notice.
• The complete business address must include: street address or post office box, city, state and zip code for domestic farms, and comparable full address information for foreign farms.

As long as a farm satisfies the requirements for records and labeling listed above or the FDA has not withdrawn a qualified exemption then the farm is compliant with the Produce Safety Rule. Qualified exempt farms are not considered “covered farms” by the PSR. Nonetheless, FDA is expecting these farms to grow, harvest, pack, hold and distribute produce under sanitary conditions. Failure to comply with requirements listed is prohibited by the FDA.

If a farm is not currently implementing good agricultural practices, it is important for the farmer to attend an educational program to learn about the practices that are considered acceptable when growing, harvesting, packing, holding or transporting produce and consider voluntarily implementing practices that reduce the risk of foodborne illness.

Important aspects of Compliance and Enforcement

• FDA can withdraw a qualified exemption if produce has been grown, harvested, packed or held in a farm under such conditions that it is unfit for food or if it has been prepared, packed or held under unsanitary conditions where it can be contaminated with filth or have been rendered injurious to health.
• An exemption can be withdrawn in the event of an active investigation of a foodborne illness outbreak that is directly linked to a farm; or if FDA determines that is necessary to protect the public health and prevent or mitigate a foodborne illness outbreak based on conduct or conditions associated with the farm that are material to the safety of the food.

Withdrawing an Exemption

Before FDA issues an order to withdraw a qualified exemption:

• FDA may consider other actions to protect public health and prevent or mitigate a foodborne illness outbreak, including a warning letter, recall, administrative detention, refusal or food offered for import, seizure, and injunction;
• FDA must notify the owner, operator, or agent in charge of the farm, in writing, of circumstances that may lead FDA to withdraw the exemption and provide an opportunity for the owner, operator, or agent in charge of the farm to respond in writing, within 15 calendar days of the date of receipt of the notification, to FDA’s notification; and
• FDA must consider the actions taken by the farm to address the circumstance that may lead FDA to withdraw the exemption.

To withdraw an exemption: 

• FDA will issue an order to withdraw the exemption in writing to the owner, operator, or agent in charge of the farm. The order must be in writing and signed and dated by the officer or qualified employee of FDA who is issuing the order.

Process to reinstate qualified exemptions

If FDA determines that a farm has adequately resolved any problems with the conduct and conditions that are material to the safety of the food produced or harvested at such farm, and that continued withdrawal of the exemption is not necessary to protect the public health or prevent or mitigate a foodborne illness outbreak, FDA will, on its own initiative or at your request, reinstate the qualified exemption.

A farmer may ask FDA to reinstate a qualified exemption that has been withdrawn by submitting a request in writing and presenting data and information to demonstrate that the farm has adequately responded to any problems with the conduct and conditions that are material to the safety of the food produced and harvested at such farm.

If a qualified exemption was withdrawn because of an active foodborne illness outbreak investigation at a farm and FDA determines after finishing the active investigation that the outbreak is not directly linked to the farm, FDA will reinstate the qualified exemption and will notify the farmer in writing that his or her exempt status has been reinstated.

Compliance dates for farms eligible for a qualified exemption and modified requirements not growing sprouts.

This information is not legal advice, it is based on the information published in Subparts A, O, Q and R of the PS Rule, answers provided by FDA through the Technical Assistance Network and the Standards for the Growing, Harvesting, Packing, and Holding of Produce for Human Consumption: What You Need to Know About the FDA Regulation: Guidance for Industry Small Entity Compliance Guide.

NCSU is providing educational programs coordinated by the Area Specialized Agents in Food Safety- Fresh produce to help you implement practices in your farm. If you need assistance contact your local Extension Agent. Additional resources can be found on the NC Fresh Produce Safety site.

Updated: May 10, 2024