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Agricultural Production & Ag Input Supply Sectors

This page describes the oversight of production agriculture and the input supply sector. Regulation of the production agriculture sector of the food industry is perhaps undergoing the most significant changes at this time (2010s). Note that the changes are not solely motivated by government, but that the retail and processing sectors of the food industry (on behalf of consumers?) are imposing expectations (i.e., market forces) on the production sector.

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The safety of the final food product was seldom a concern for agricultural producers during the 20th century even as a smaller portion of agricultural production was consumed by the producer and more of the production was sold for use by non-farm consumers.  There was some concern about the impact that agricultural commodities would have on the quality of the final food product, but seldom was there concern about the safety of the final food product.  Apparently, it was assumed that food processors would somehow assure the safety of the final food product and that once the commodity was sold by the producer, concern about the safety of the final food product seemed to "evaporate" from the producer's thought process.

There was no regulation of agricultural production for the purpose of assuring safety of the food product.  Grading agricultural commodities by government (as an impartial assessor of the quality of the commodity) was intended to promote market transactions; but there was no discussion about the impact the commodity might have on the safety of the final food product (see USDA AMS quality standards, grading, certification, auditing, and inspection or USDA FGIS).  Even information about the grades of many commodities disappear once the commodity is processed, such as wheat ground into flour.

There were exceptions to these general practices, for example, designations of Grade A fluid milk and grades of meat are sometimes shared with consumers; but even meat grades focus on product quality, not product safety.

This "lack of concern" attitude about the impact of agricultural commodities on the safety of the final food product is changing.

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USDA Standards and Grades -- AMS and GIPSA

Since their inception in 1916, USDA quality standards for agricultural commodities have been based on measurable attributes that describe the value and utility of the product.  The purpose of the standards is to facilitate market transactions, that is, standards provide information so a buyer and seller are able to clearly communicate about the quality of the commodity they are considering.

Two USDA agencies are involved with agricultural standards:  Agricultural Marketing Service (AMS) and the Federal Grain Inspection Service (FGIS).  AMS focuses on cotton, fresh fruits and vegetables, processed fruits and vegetables, poultry and eggs, rabbit, livestock and meat, wool and mohair, catfish, dairy products, tobacco, and nuts and specialty crops.  FGIS focuses on grains (barley, canola, corn, flaxseed, mixed grain, oats, rye, sorghum, soybeans, sunflower seed, triticale, and wheat), rice, dry peas, split peas, feed peas, lentils, and dry beans.

Specific quality characteristics are defined to indicate where a particular commodity fits within its standards. For example, U.S. No. 1 corn has a minimum weight of 56 lbs per bushel, whereas U.S. No. 2 corn has a minimum weight of 54 lbs.  Another example:  carcass beef Yield Grade 1 usually has only a thin layer of external fat over the ribs, loins, rumps, whereas Yield Grade 2 usually is nearly covered with fat.

In addition to specifying standards, USDA also offers grading services for many of the commodities for which there are standards, that is, for a fee USDA will indicate which grade within the standard a particular commodity lot would fit.  USDA will indicate, for a fee, whether a beef carcass is a yield grade 1 or a yield grade 2.  That information can then be used when describing the carcass to a potential buyer, especially if the buyer is unable to view the carcass.  Grading is voluntary; it is at the option of the individual who wants to pay for the service of having the commodity graded.

Standards and grades, however, have nothing to do with whether the product is safe for human consumption.

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Dairy Industry

The dairy industry is an exception within production agriculture.  For more than a century, state and local governments have regulated/inspected the dairy industry; not only dairy processing firms but also dairy farms to assure the businesses are using practices to reduce the risk of unsafe milk.  See Milk and Dairy Food Safety Branch History for an overview of the history of dairy regulation in California.  These early (and continuing) regulatory oversights emphasize the safety of the dairy product, not just the quality.

The federal government (FDA) has a reduced role in overseeing the dairy industry; that responsibility primarily falls to state and local governments.  However, the FDA in collaboration with state and local governments and representatives of the dairy industry have developed recommendations for state and local governments to consider in establishing regulations for the dairy industry.  The first Grade “A” Pasteurized Milk Ordinance (Grade "A" PMO) was released in 1965 and has been frequently updated since then.  The Grade "A" PMO addresses 1) inspection of dairy farms and milk handling/processing plants, 2) standards for Grade "A" milk and milk productions, 3) examination of milk and milk products, 4) permits for dairy farms and milk handling/processing plants, and 5) labeling in an effort to reduce the risk of adulterated and misbranded dairy products.  The most recent Grade "A" PMO was released in 2015 and is available at http://www.idfa.org/docs/default-source/d-news/2015-pmo-final.pdf .

Just as some consumers are interested in purchasing and consuming commodities (food) that has minimal processing (such as, fresh fruits & vegetables, and whole grain), consumers also are interested in consuming raw (unpasteurized) milk.  Federal law, as administered by the FDA, prohibits the interstate movement (transport) of unpasteurized milk (21 CFR 1240.61).  This federal law, however, does not prohibit intrastate unpasteurized milk; each state must decide how it will to regulate raw milk consumption (for example, see http://www.realrawmilkfacts.com/raw-milk-regulations).  Some states have directly addressed this issue by either prohibiting unpasteurized milk or establishing rules for the sale of unpasteurized milk.

  • It is not clear at this time (late 2016) whether federal law prohibits consumers from moving unpasteurized milk across state lines.
  • Remember, The U.S. Constitution limits the federal government to regulating only food in interstate commerce.  Thus milk that does not cross a state line is NOT subject to federal law.  This limitation as to the authority of the federal government underpins the strategy of “let’s sell raw milk only in-state to avoid federal regulation.”  There is nothing illegal about that.  However, states can regulate food within their borders; thus some states have stepped up to the idea that they must address raw milk more aggressively if the industry is operating in a manner that prevents the federal government from regulating the product.

Unpasteurized milk often is bottled or packaged on the farm where the milk is produced.  Even if the packaging of the unpasteurized milk is not subject to federal regulation, is the farm and the milk production (as opposed to the minimal processing when packaging) still subject to federal Grade "A" PMO standards?  Likewise, are there any state laws directing the production of dairy products (such as cheese) from unpasteurized milk?

  • INSTRUCTOR'S PERSONAL OPINION:  The PMO, as mentioned previously, addressed numerous issues other than pasteurization, such as construction and operation of the dairy farm facility, health of the dairy animal, and sanitation practices in handling, packaging and storing the product.  I would argue that producers and handlers of raw milk are not free to operate without complying with all of these standards; I would argue that the only standard these dairy producers and handlers are sidestepping is pasteurization.  All other standards in the PMO, I would argue, MUST still be met.  But this is my personal opinion.

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Beef Industry

In the past several decades, the beef industry recognized that production practices certainly impact the quality of the final product, and if there is not consistent quality for consumers, the industry may struggle to maintain a consumer base.  Accordingly, the industry, with cooperation from universities and other government programs, initiated the Beef Quality Assurance program (BQA).  The purpose of the program is to educate producers about how they can positively impact the final food product.  The BQA program did not not merely focus on education about quality, but also emphasized that producers need to understand how their practices impact the safety of the final food product.

The Beef Quality Assurance program was developed with leadership from the beef industry:  http://www.bqa.org/

  • BQA addresses quality and safety; it references HACCP concepts.
  • BQA, however, focuses on education and voluntary implementation;  BQA practices are not a mandate.

As suggested occasionally in these course materials, market forces are driving the food industry as much as government regulation is driving the industry.  If purchasers of beef animals only accept animals of certain standards, the industry will cause its businesses to meet these standards; the assumption is that if animals do not meet the industry standards, the livestock producer will have no one to purchase the substandard animals.  BQA, agruably, is an example of an industry setting standards based on the industry's perception of consumer demand.  This trend of market forces advancing consumer demand is not limited to the beef industry; it is a trend that is arising throughout the food industry.

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EPA Pesticide Residues and Use of Antibiotics

Another issue for production agriculture is the residues that may remain in the food, such as pesticides applied to crops and then are incorporated into the processed food, or antibiotics administered to livestock that then remain in the meat product.  Do these pesticide/antibiotic residues pose a food safety concern for consumers?

EPA pesticide tolerances

  • See http://www2.epa.gov/pesticide-tolerances
  • "EPA is responsible for regulating the pesticides that are used by growers to protect crops and for setting limits on the amount of pesticides that may remain in or on foods marketed in the USA. These limits on pesticides left on foods are called "tolerances" in the U.S.; they are referred to as maximum residue limits (MRLs) in many other countries.

    "EPA establishes tolerances for each pesticide based on the potential risks to human health posed by that pesticide...

    "As stated above, EPA sets the tolerance limits for each pesticide that may be found on foods. But the US Department of Agriculture (USDA) enforces tolerances established for meat, poultry and some egg products, while the Food and Drug Administration (FDA) enforces tolerances established for other foods. In this way, these federal agencies ensure that the nation's food supply is maintained safely at all times."

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Livestock medications

The FDA "Center for Veterinary Medicine (CVM) regulates the manufacture and distribution of food additives and drugs that will be given to animals. These include animals from which human foods are derived, as well as food additives and drugs for pet (or companion) animals."  See http://www.fda.gov/AboutFDA/CentersOffices/OfficeofFoods/CVM/WhatWeDo/default.htm.

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The "illegal drug residues in meat, poultry, seafood and other animal derived foods" compliance program addresses consumer exposure to drug residues in the edible tissues of food animals. The immediate outcome for the program is to prevent future residue violations through on-farm educational efforts, and/or enforcement activity as warranted.

Tissue residue investigations may reveal:

  • the illegal sale of veterinary prescription drugs
  • the illegal use of bulk drugs
  • the extra-label use of drugs (which includes inadequate pre-slaughter withdrawal period)
  • cross-contamination of animal feeds due to poor Good Manufacturing Practices (GMPs) (21 CFR Parts 225 or 226)
  • failure to follow good animal husbandry practices
  • the misuse of drugs in medicated animal feeds
  • the marketing of treated/medicated animals intended for rendering purposes being diverted to slaughter for human consumption
  • inadequate animal identification

p. 5 of pdf at http://www.fda.gov/downloads/AnimalVeterinary/GuidanceComplianceEnforcement/ComplianceEnforcement/ucm113433.pdf; also see http://www.fda.gov/AnimalVeterinary/GuidanceComplianceEnforcement/ComplianceEnforcement/ucm264049.htm

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Organic Foods

Some consumers are interested in foods that are produced and processed without the application of pesticides, chemical fertilizers and other practices.  But how does a consumers know whether a food is organic?  Federal law established the National Organic Program (NOP) within the USDA.

In order to be able to market one's agricultural products and foods as organic, the producer's production practices must be certified as following standards of organic production.  The federal statute permits private entities to certify that a producer's practices meet the standards of organic production.  These certifying agents, however, need to be accredited by USDA AMS.  Restated, USDA AMS has regulations defining organic production.  USDA AMS also has regulations for businesses to be accredited as a certifying agent.  Once accredited, these entities can then certify the practices of producers (for a fee).  Accordingly, USDA AMS does not take on the task of directly certifying production practices.  Instead, the agency has set standards for organic production and also has set standards to accredit private businesses that want to certify producers. See USDA AMS NOP http://www.ams.usda.gov/AMSv1.0/nop.

  • "The OFPA and the National Organic Program (NOP) regulations require that agricultural products labeled as organic originate from farms or handling operations certified by a State or private entity that has been accredited by USDA."
  • Government (USDA AMS) takes a role in certification, verification, labeling, etc.
  • See 7 CFR part 205 for regulations of the NOP.
  • The regulations indicate standards in order to be accredited as a certifying agent.
  • The regulations specify practices that organic producers must follow in producing, handling and labeling organic product.  The regulations include allowable and prohibited substances.
  • The regulations direct USDA AMS in enforcing/administering the NOP.
  • The regulations define different levels of "organic" product: "100% Organic", "Organic", "Made with Organic ???" or "Contains Organic Ingredients".

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Contrary to frequent statements, biotechnology is not the opposite of organic, but it is accepted that biotech is NOT organic.

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Biotechnology/Genetically-Modified

Biotechnology that modifies plants is overseen through a collaborative effort of the USDA APHIS, EPA and FDA.  See

  • "Within USDA, the Animal and Plant Health Inspection Service (APHIS) is responsible for protecting agriculture from pests and diseases.  Under the Plant Protection Act, USDA-APHIS has regulatory oversight over products of modern biotechnology that could pose such a risk.  Accordingly, USDA-APHIS regulates organisms and products that are known or suspected to be plant pests or to pose a plant pest risk, including those that have been altered or produced through genetic engineering."
  • "The EPA through a registration process regulates the sale, distribution and use of pesticides ... This includes regulation of those pesticides that are produced by an organism through techniques of modern biotechnology.  The [EPA] regulates the distribution, sale, use and testing of pesticidal substances produced in plants and microbes. Generally, Experimental Use Permits are issued for field testing.

"... the Environmental Protection Agency (EPA), the U.S. Department of Agriculture (USDA), and the Food and Drug Administration (FDA) have shared responsibility for regulating agricultural biotechnology in the United States. In particular, EPA regulates pesticides created through biotechnology as a part of its regulatory jurisdiction over all pesticides marketed and used in the United States. As such, EPA has tailored its basic regulatory framework to fit the distinctive characteristics of these genetically engineered biological pesticides."

  • "The FDA is responsible for ensuring the safety and proper labeling of all plant-derived foods and feeds, including those developed through bioengineering.  All foods and feeds, whether imported or domestic and whether derived from crops modified by conventional breeding techniques or by genetic engineering  techniques, must meet the same rigorous safety standards.  Under [U.S. federal law], it is the responsibility of food and feed manufacturers to ensure that the products they market are safe and properly labeled.

"To help sponsors of foods and feeds derived from genetically engineered crops comply with their obligations, the FDA encourages them to participate in its voluntary consultation process.  All foods and feeds from genetically engineered crops currently on the market in the U.S. have gone through this consultation process.  With one exception, none of these foods and feeds were considered to contain a food additive, and so did not require approval prior to marketing. (The term "food additive" refers to substances introduced into food that are not pesticides and are not "generally recognized as safe" (GRAS) by qualified scientific experts.)"

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Good Agricultural Practices

Good agricultural practices (GAP) appears to be the emerging global norms for agricultural producers.  GAP standards are being enforced by government regulations, but also by market forces, such as food processors.  GAP is broader than just the safety of the final food product; GAP also imposes expectations on agricultural producers in terms of their environmental impact, labor practices, and possibly "carbon footprint".

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GAP is "just arriving" in the United States.  It has a longer history in many other regions or nations, especially Europe, Japan, and other countries.  From the perspective of U.S. government, GAP and Good Handling Practices (GHP) were implemented by the USDA AMS for fresh fruits and vegetables; through a Produce Audit Verification Program.  That step was in response to incidents in the past decade in which unsafe food was identified as raw vegetables and then traced back to the farmers' fields.

GAP for fresh/raw produce is now being implemented by FDA as a result of the Food Safety Modernization Act (passed by Congress in late 2010 and signed by the President in early 2011).  The FDA has established a "Produce Safety" regulation based on GAP principles.  The regulation is 21 CFR 112; it addresses

    • Personnel Qualifications and Training
    • Health and Hygiene
    • Agricultural Water
    • Biological Soil Amendments of Animal Origin and Human Waste
    • Domesticated and Wild Animals
    • Growing, Harvesting, Packing, and Holding Activities
    • Equipment, Tools, Buildings, and Sanitation
    • Production of Sprouts

Also see http://www.fda.gov/Food/GuidanceRegulation/FSMA/ucm304045.htm

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GAP has characteristics of HACCP, such as, "producers:  do your production practices impose a risk that the product will be unsafe?  Are you taking steps to reduce the risk of unsafe food as a result of production and handling practices?  Are you documenting your practices, your assessments and your strategies to reduce the risk of unsafe food?"   The Produce Safety regulations mandates the producers of commodities for the fresh/raw market assess their practices, and adopt and document practices that reduce the risk of unsafe food.  

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GAP is not solely being imposed by government.  Increasingly, the firms that buy from producers (that is, the processors) are expecting producers to apply the concept of GAP and to document that they are practice GAP.  Restated, market forces are imposing GAP on producers:  "if you cannot provide documents that you are following GAP principles, we will not buy from you."  Market forces urging GAP are more prevalent outside the United States, but they are becoming more common in the United States.  Examples:

  • Walmart Sets New Standards For Beef Suppliers

Shawn Stevens

"Walmart and Sam’s Club have announced that they will impose enhanced food safety measures on their beef suppliers. According to the company, the new mandates are designed to reduce to the greatest extent possible the risk of potential contamination by pathogens such as E. coli O157:H7 and Salmonella.

"Under the new standards, beef processing (grinding) facilities which supply the company will be required to provide validated evidence within the next year that their process controls can achieve a 2-log reduction of pathogenic microorganisms. By June 2011, slaughter facilities supplying the company will be required to demonstrate a 3-log reduction. In turn, Walmart has also mandated that, by June 2012, slaughter facilities must go even further and validate a cumulative 5-log reduction."

  • Walmart Food Safety Requirements
    • All companies that provide edible products must meet our food safety requirements to become a supplier. Please see the guides below for complete requirements for your product type.

      Food Safety Requirements for Processors
      Food Safety Requirements for Produce Suppliers 
      Food Safety Requirements for Pet Food Suppliers

      Global Food Sourcing – Supply Chain Security
      New Food Factories - Suppliers must request an onsite audit of a food factory through Retail Link prior to the receipt of a Purchase Order. The cost for an onsite audit ranges from $975 to $1,250 USD depending on the location of the facility.

      Pack Houses
      For new pack houses: suppliers are required to have the primary pack house complete a “Pre-Assessment Checklist for Pack Houses” prior to receipt of a Purchase Order. The supplier must also immediately request an onsite audit of the pack house through Retail Link. The cost for an onsite audit ranges from $975 to $1,250 USD depending on the location of the facility.

      Note: Walmart will accept the official security audit results of any pack house or food factory that has been audited on behalf of another retailer by any Walmart authorized third party audit firm, and has received a passing score of 71 or above. If the facility failed the audit, it will not be accepted and the facility must undergo a Walmart security audit.

  • McDonalds Meet our Suppliers

"From the beginning, McDonald’s has built a system of quality, service and cleanliness (QSC) into every aspect of our business - from our suppliers to our restaurants. We take food safety and quality very seriously at McDonald’s. Which is why our quality and safety requirements - which meet or exceed USDA standards - are among the strictest in the restaurant industry.

"Get the story behind the food. Take a look at our long-term relationships with some of the most trusted and experienced food suppliers in the industry."

See http://www.mcdonalds.com/us/en/food/food_quality/see_what_we_are_made_of/meet_our_suppliers.html

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Other Points about GAP

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Future Trend for Production Agriculture?

  • A merging of market forces and government regulation to direct the practices of agricultural producers.
  • A merging of concerns about food safety, environmental stewardship, labor practices, animal husbandry, "carbon footprint", etc will direct market forces and government oversight as they direct the practices of agricultural producers.
  • The food industry will expect agricultural producers to document their production/handling practices.
  • How will businesses supplying inputs to production agriculture be incorporated into the expanding "food safety" expectations of the overall  food supply chain?

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Summary

Expectations for production agriculture are changing.  Even though education will continue to be a major force in shaping how producers continue to advance and refine the practices, market and regulatory expectations will increasingly shape the practices of production agriculture and suppliers of production ag inputs.

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Email David.Saxowsky@ndsu.edu

This material is intended for educational purposes only. It is not a substitute for competent legal counsel. Seek appropriate professional advice for answers to your specific questions.

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