More on the FSMA and the "Tester Amendment"
Earlier this week, I presented a webinar to the American Cheese Society entitled the "Food Safety Modernization Act and Product Liability." A link to the presentation is here. The presentation covered a number of topics and included a discussion of the so-called "Tester Amendment" to FSMA.
The "Tester Amendment" in section 103 of FSMA "exempts" from the hazard analysis and risk-based preventative controls requirements in section 103 certain "Qualified Facilities." To be a "Qualified Facility" you have to either (1) be a "Very Small Business" or (2) have "Limited Annual Monetary Value of Sales."
FSMA leaves it to FDA to define by regulation a "Very Small Business," so we have little guidance now on what this means.
FSMA does define what it means to have "Limited Annual Monetary Value of Sales":
a. You have average annual sales (over three years) of less than $500,000 (adjusted for inflation); and
b. Your sales to "Qualified End Users" exceed sales to others.
"Qualified End Users" mean consumers or restaurants/retailers located in the same state or within 275 miles from your facility who are selling directly to consumers.
BUT even if you qualify for the exemption to the hazard analysis and risk-based preventative controls, understand that it is not truly an exemption. Even qualified facilities will still have to provide documentation to FDA that either:
a. demonstrates you have “identified potential hazards associated with the food being produced” and “implementing” and “monitoring” preventative controls; or
b. “as specified” by FDA shows compliance with “State, local, county, or other applicable non-Federal food safety law.
A "Qualified Facility" also must provide to FDA “Documentation, as specified by FDA in a guidance document that the facility is a qualified facility.”
Hazard analysis and risk-based preventative controls provision of section 103 of FSMA will become effective in June 2012 irregardless of whether FDA completes its rule-making process.
DOJ and DOA Announce Workshops to Evaluate Agricultural Markets and Competition
By Guest Blogger Joel Dahlgren
Last week the Justice Department and U.S. Department of Agriculture announced that the two federal agencies will hold joint public workshops to explore competition issues affecting agriculture in the 21st century, including the appropriate role of the federal government in antitrust and regulatory enforcement. The first workshop will be held in 2010. Some workshops will be held in Washington, D.C., while others will be held regionally around the country.
The public and press are invited to attend these conferences. Written comments may be submitted ahead of time at agriculturalworkshops@usdoj.gov. Paper copies of comments should be submitted in addition to electronic copies, preferably by courier or overnight services. Agendas and schedules for the workshops will be posted at www.usdoj.gov/atr.
The federal government has a long, firmly held interest in agricultural markets, the competition in those markets, and concentration of the firms that compete in those markets. Just since the turn of the century, the General Accounting Office (GAO) has produced 15 reports on these issues. The latest report prepared by the GAO on the subject of concentration and competitive issues in agriculture was released a little over a month ago on June 30, 2009. The GAO summarized its findings to Senators Kohl and Grassley as follows:
In summary, we found the following:
• Concentration generally has increased at all levels of the food marketing chain in all agricultural sectors since the 1980s. At the farm level, less than 2 percent of farms accounted for 50 percent of total sales in 2007. At the food processors’ level, in general, a small number of companies accounted for a large and growing portion of sales in each of the five major agricultural sectors. For example, in the pork sector, the market share of the largest four hog slaughtering firms increased from 36 percent in 1982 to 63 percent in 2006. In addition, at the retail level, the share of grocery store sales held by the largest four firms more than doubled, from 16 percent in 1982 to 36 percent in 2005.
• While real annual per capita food expenditures have increased since 1982, households now spend a smaller share of disposable income on food. Total annual per capita food expenditures rose from $3,358 in 1982 to $3,888 in 2007, in constant 2008 dollars. Meanwhile, household spending on food decreased from 13 percent of disposable incomes in 1982 to 10 percent in 2007. Since 1982, overall food prices and food prices in each of the five major agricultural sectors have increased about as much as prices for consumer goods and services overall. However, from July 2008 through December 2008, food prices increased faster than the prices of other goods and services. Since then, food prices generally have not changed significantly.
• Since 1982, farmers have generally received higher monthly prices for their commodities, but these prices have increased less than food prices and inflation in the broader economy. Specifically, prices farmers received, including for beef, pork, dairy, and grains, increased by 34 percent from January 1982 to April 2009. For the same period, food prices rose by 128 percent, and prices in the general economy rose 102 percent. Commodity prices increased significantly in 2008, reaching a high of 68 percent above their 1982 levels in July 2008, but have declined since then.
• The empirical economic literature has not established that concentration in the processing segment of the beef, pork, or dairy sectors or the retail sector overall has adversely affected commodity or food prices. Most of the studies that we reviewed either found no evidence of market power or found efficiency effects that were larger than the market power effects of concentration. While a few studies found some evidence of market power, it is unclear whether this market power was caused by concentration or some other factor. All of the experts we spoke with said that concentration probably did not cause the 2008 increase in commodity and food prices, which were more likely due to factors such as higher energy costs and growing global demand for grains. Experts generally said that concentration is likely to increase in the future. Some said further increases in concentration may raise greater concerns in the future about the potential for market power and the manipulation of commodity or food prices. One expert said further increases in concentration would continue to generate efficiency gains and be beneficial. Enclosure II provides further information on the views of experts, and enclosure IV lists the studies we reviewed prices in these sectors.
The report (GAO-09-746R, June 30, 2009) is titled U.S. Agriculture: Retail Food Prices Grew Faster Than the Prices Farmers Received for Agricultural Commodities, but Economic Research Has Not Established That Concentration Has Affected These Trends. It can be found at http://www.gao.gov/new.items/d09746r.pdf.
