This fact sheet describes how producers should determine whether the sales from multiple business entities count toward calculating a farm’s exemption status under the Produce Safety Rule. There may be situations where it is appropriate to consider sales from separate farm business entities separately.
The existence of separate legal business entities for different aspects of a farm’s operation may affect the farm’s eligibility for an exemption under the FSMA Produce Safety Rule (FSMA PSR). However, forming two separate entities on paper alone is likely not sufficient to establish separate operations for purposes of exemption eligibility.
A producer should consider the overall goals of their business—including taxes, labor, risk management, succession planning, and capital improvements or other costs—when deciding on the most appropriate business form and operational structure, rather than making decisions about legal entity formation based exclusively on FSMA PSR exemption criteria.
This fact sheet identifies factors that should be considered in determining whether the sales from multiple legal entities should be considered together or separately for purposes of FSMA PSR exemptions, and uses specific scenarios to illustrate how these factors may influence the determination of whether a farm is covered under the FSMA PSR or not.
Suggested Citation
FMSA PSR Coverage and Exemptions for Farms with Multiple Business Entities, NECAFS & Vt. L. Sch. Ctr. for Agric. & Food Sys. (2020), https://elsi.necafs.org/sites/default/files/uploads/fsma_psr_coverage_multiple_business_entities_factsheet.pdf.
