What laws do I have to follow to sell food produced on a farm?
Whether you sell your farm-produced food through a community-supported agriculture (CSA) program, at a farm stand or farmer's markets, or through vetted distribution channels, you will likely need to know federal and state laws before you set up shop. Also, these rules can differ by the type of food product. For example, eggs and meat may need to be kept at a certain temperature, while unprocessed vegetables and fruit preserves may not.
The U.S. Food and Drug Administration (FDA) has set rules about selling food items that usually must be followed in every state. The rules are included in the Federal Food, Drugs, and Cosmetics (FD&C) Act and the Food Safety Modernization Act (FSMA). While the laws set safety standards and other requirements, they do not apply to most urban farms. Also, the FSMA says farms do not have to follow these rules if either of these is true:
- They have less than $500,000 in annual gross sales.
- They sell more than half of their produce to consumers, restaurants, or stores within 275 miles of the farm.
As long as you do not sell your goods across state lines, you probably do not have to get a federal permit to set up a farm stand or sell unprocessed fruits and vegetables directly to consumers.
But states may have their own requirements. For example, these are the California licensing requirements for selling unprocessed produce directly to consumers:
- Farm stand. No permit required (while on agriculturally zoned property).
- Farmer's market. Certified producer certificate required from the California Department of Food and Agriculture (CDFA).
- CSA (subscription-based sales). Register with the CDFA.
Laws differ for the sale of meats, other animal products (such as milk or eggs), or processed foods (anything that has been sliced, frozen, cooked, or mixed with other ingredients). Meat sold within the state must be prepared in a USDA-inspected and approved facility. However, the meat itself does not have to be federally inspected if it is regulated by a State Meat and Poultry Inspection (MPI) program.
State laws vary quite a bit for meat sales, so you may want to check with your state's Department of Agriculture. For example, North Dakota farmers may sell up to 1,000 chickens off the farm without inspection each year (if they are registered with the state and follow all food safety guidelines). In Montana, farmers who store meat for sale must have a meat depot license.
What's more, states often have different laws about selling other animal-based farm products, such as eggs and milk. While the FDA does not permit the sale of unpasteurized (raw) milk, states can make laws about its sale within their borders as they see fit.
If you would like to sell processed goods, like pies and other prepared foods, at your farm, roadside farm stand, CSA, or farmer's market, you will likely need to follow your state's cottage food laws. While states differ, they typically limit such sales to jams and jellies, baked goods, and candies.
What paperwork do I need before selling produce to a distributor?
Do you have extra produce you need to sell quickly, or have you decided to let a third party handle retail sales instead of doing it yourself? If so, you may want to sell your goods to a distributor. This can make selling your product easier due to the increased time and energy involved in selling directly to consumers. But you may need to take additional steps to follow the law and protect yourself from legal trouble.
The distributor usually has to meet a high standard of quality and safety, so they will try to make sure your produce meets or exceeds certain standards. They will likely want to discuss these standards when you work out a distribution deal:
- Paperwork. This may include a Food Safety Plan, proof of a clean water source for washing your produce, and proof of insurance in case your product causes harm. Paperwork can also include proper certification, such as an organic certification.
- Packing. Depending on the volume, type of produce, and distributor's process, they will likely require standards such as a certain number of items per package or a certain type of packaging.
- Labeling. Products must be traceable by the farm name, lot number, and harvest date.
What do I need to sell or lease livestock or other live animals?
When you sell livestock or other live animals from your farm, it is wise to give the buyer details about the animal's health, birth date and weight, and weight at weaning (if applicable). Also, you may need to prepare a Livestock Bill of Sale, Horse Bill of Sale, or other paperwork memorializing the deal.
You can also lease animals. This is a great option for farmers who have too many animals or livestock from prized bloodlines. Farmers who are searching for breeding stock or have other short-term needs may also want to lease farm animals.
When leasing, it is important to get everything in writing to describe exactly how the animal may or may not be used. A written deal can also give the lessor a chance to give information that could protect them from legal trouble (such as if a horse has a history of bucking riders). If you are leasing a horse, for example, you may want to take the time to write a detailed Horse Lease, and even a Release of Liability if the lessee agrees.
It is true that some deals are still made by talking and with a handshake. However, leases — written legal contracts governed by state laws — are often much easier to enforce than a handshake deal. Also, most states require certain farm animal leases to be in writing, so putting it on paper is just smart practice.
Do I need a contract to buy, sell, or lease a used trailer, farm vehicle, or other equipment?
For vehicles intended for use only on a farm, you may not need a contract to buy or sell a piece of used farm equipment. If a vehicle is registered in the state, or meant for normal roadways, then there may be a requirement to document the sale. It is always a good idea to protect your rights with written paperwork, such as with a Trailer Bill of Sale.
Additionally, you may need a Purchase Agreement for Personal Property if you want to insure the equipment or list it on your tax return. In the same way, a Sales Agreement gives a written record of your deal if you are the seller.
Equipment leasing deals are almost always sealed with a contract due to the nature of the relationship. Typically, the owner leases the equipment for a set period of time, and the lessee makes payments. Whether you are the lessor or the lessee, a detailed written Equipment Lease Agreement should protect your rights and help you avoid any costly surprises.
What can I require in an Equipment Lease?
If you are the one leasing a tractor, combine, trailer, or other piece of farm equipment, you will likely want to feel sure that the lessee takes care of the equipment and makes their payments on time. The key is to make sure that your agreement is crystal clear about the terms of the deal.
An Equipment Lease lists the terms for both lessee and lessor, which may include:
- Beginning and ending date.
- Payment schedule, payment date, and late fees.
- Base number of hours or miles the equipment will be used for, and any other fees to be charged if the lessee goes over those limits.
- How much the lessee must pay at the end of the lease period to buy the equipment, if that is an option.
- What to do if the equipment stops running, is damaged, or is lost.
- Insurance requirements.
- Licensed operator requirements, for equipment requiring a licensed operator.
As you can see, buying, selling, and leasing farm produce, livestock, and equipment is a complex process due to the many federal, state, and local laws. If you have legal questions about your farming business, reach out to a Rocket Lawyer network attorney for affordable legal advice.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
