The proposed rule, which would implement the Food Safety Modernization Act of 2011 (FSMA), establishes certain standards for farm-grown produce that are intended to reduce the presence of microbiological hazards that can lead to food-borne illness. It includes requirements related to worker training, worker health and hygiene, agricultural water quality, soil treatment, the presence of domesticated animals on produce fields, and for equipment, tools, and buildings.

The FDA estimates the cost of complying with these requirements at $630.18 million per year. It also predicts benefits of $1.04 billion per year; however, the benefit estimates are based on very limited data and unscientific methods. The agency concedes that it probably overstates the likely incidence of food-borne illness in the absence of the proposed regulations, and its estimates of the effectiveness of the proposed requirements at reducing microbial hazards are based on nothing more scientific than surveys of its own staff.

However, even accepting the FDA’s analysis at face value, the proposed rule does not maximize net benefits as required by Executive Orders 12866 and 13563, which require agencies to “select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity).” In its proposal, the FDA rejected alternatives that it estimates would provide more than $100 million in net benefits annually above the benefits of its selected alternative.

Very small farms | According to the FDA’s analysis, implementation of the proposed rule will result in significant compliance costs to all covered farms. However, the costs will be especially burdensome for farms with sales of less than $250,000 annually, which the FDA defines as “very small” farms. Very small farms beneath this threshold comprise nearly one-quarter of all farms that would be covered under this rule.

Table 1 shows the FDA’s estimates of annualized compliance costs (over a seven-year period) for farms of different sizes. “Large” farms (which the agency defines as having sales of more than $500,000 per year) have average food sales of $2.6 million. Their compliance costs—$30,566—constitute only 1 percent of their annual sales. For “very small” farms (sales less than $250,000 per year) and “small” farms (sales between $250,000 and $500,000 per year), the FDA expects compliance costs to consume a higher share of the farms’ annual food sales—6 percent and 4 percent, respectively.

According to the FDA’s analysis, its preferred version of the proposed rule, which would exempt farms with annual food sales of less than $25,000, would produce $411 million in annual net benefits. However, of all the exemption thresholds the FDA considered in its analysis, this proposed option offers the lowest net benefits. Net benefits are maximized by exempting all farms with produce sales less than $100,000, which would increase the annual net benefits of the rule by $115 million, to $526 million annually. Over a 10-year timeframe, exempting farms smaller than $100,000 would increase the rule’s anticipated net benefits by more than $1 billion above the estimated benefits of the FDA’s preferred version.

Given that the FSMA specifically directs the agency to “provide sufficient flexibility to … small businesses” and gives the FDA both the discretion to exempt small farms from the standards in this proposed rule and to determine what constitutes a “small farm,” the agency’s proposed exclusion threshold is too low. Given the requirements of the statute and the instructions in EOs 12866 and 13563, the FDA cannot justify limiting its proposed exemption to farms smaller than $25,000.

Better regulation | The FDA’s multiple extensions of the comment period suggest it recognizes that its proposed regulation could be improved and is open to public input on how to do so. There are a number of improvements the agency can make. First, the FDA needs to gather better information on both the prevalence of food-borne illnesses attributable to farm-grown produce and the potential for different requirements to reduce the incidence of food-borne illnesses. Second, the agency estimates that some of the standards it is proposing have high costs relative to their benefits, and thus the agency should shift its focus toward standards that are likely to reduce more tangible risks. Third, the FDA should provide small farms with additional flexibility and work to maximize the net benefits of its rule, as directed by the executive orders. The exemption threshold proposed in this rule neither provides small farms with this flexibility nor maximizes net benefits. Based on the agency’s own analysis, exempting all farms with annual sales less than $100,000 would maximize net benefits while also providing additional flexibility for small farms.

Given the uncertainty in its estimates of the effectiveness of the rule, the FDA should commit to retrospectively measure efficacy of the standards at two-year increments following implementation of the rule, measured as percent reductions in food-borne illnesses. This information will tell both the agency and the public how accurate the FDA’s impact estimates were and will provide information for future rulemakings on how to tailor standards to achieve desired outcomes. In addition, retrospective review efforts may be able to provide information on whether the small business exemption was appropriate for maximizing net benefits. If the retrospective reviews indicate that the FDA’s standards were ineffective, the agency should consider a rulemaking to change the standards to best reflect the lessons learned.