FDA Label Review to Prevent Food Import Refusal

Labeling violations are one of the leading causes of food import refusals to the United States. In fact, more than 7,000 labeling violations for food products were cited by the U.S. Food and Drug Administration (FDA) in 2017 alone.

If an imported food product is stopped by the FDA for a labeling violation they have three choices: detention, seizure or refusal of admission. None of these are good options for food importers. Know what to avoid to make sure this doesn’t happen to your business.

Below is a list of the top five labeling violations for food imports.

Nutrition information

 

More than 1,000 import refusals in 2017 were due to missing nutritional information. The FDA requires that most food and beverages are labeled with a specifically formatted nutrition facts panel. However, often import food labels include a nutrition facts panel from a foreign country. Unfortunately for the importer these panels don’t meet the FDA requirements and are therefore deemed misbranded under the law.

This will be even more important now that FDA has changed the Nutrition Facts panel to a new format. It is important to make sure you utilize the new format going forward to avoid potential labeling errors.

Ingredients

FDA requires that every ingredient included in a food or beverage be disclosed on the label in descending order of the prominence by weight. The FDA will not only review labels, but will sample products to ensure the labels are what they say they are, which is why it’s important to follow the rules when listing ingredients.

FDA regulations also require ingredients to be listed by specific  names. Imported food products, which often contain ingredients know by different names in their home country, frequently fail to list certain ingredients by the required name under FDA regulations.

Labeling in English

FDA requires that all information on labels appear in English. Labels may include other languages as well, but if a foreign language is used all of the information on the label must appear in that language as well.

Net Quantity

FDA requires a statement that provides the amount of food in a container or package. This statement must include both the U.S. and metric measurement and must be listed in the front of the package.

 

Manufacturer Name

The name and address of the manufacturer, packer or distributor must be listed on a food label. If the importer is not the manufacturer, or if the product is made for the importer, the name and address of the importer may be preceded by “Manufactured for” or “Imported by” if applicable.

 

If the FDA discovers that your food product has one of these labeling violations, the FDA will refuse entry or detain your product. This will end up costing you a lot of money and could potentially damage your relationships with buyers.

FDA is now also required to increase the number of routine inspections overseas at foreign food facilities. If a non-compliant label is found during an inspection, FDA can charge you to reinspect the facility to ensure the labels have been brought into compliance at a rate of $305 USD per hour.

Morsel Law can help assure your labels are FDA compliant through our label review service. Our experts will review and markup your labels to make sure they meet FDA regulations. Order your FDA import label review today and keep your import business running smoothly!

How to Start a Home-Based Food Business in Michigan

So you’ve got a killer recipe for double fudge peanut butter cookies you promised your grandmother never to reveal to anyone. When you put them out at parties they disappear quicker than the Cleveland Browns chances of making the playoffs. Your friends and family have told you countless times that you could make a killing selling these cookies, but you never took them seriously. But, while recently watching your favorite showing on the Cooking Channel, you finally realize you can do what these cooks are doing and decide to launch your own cookie business. But you’ve never started a business before, let alone a food business, so where do you begin?

Since you are working with a limited budget, you rule out starting your own manufacturing facility or hiring a contract manufacturer produce the cookies for you. You narrow your options down to renting space in a shared commercial kitchen or baking out of your home. Although your friends and family rave about the cookies you give away (which they should!), you’re uncertain whether people are willing to pay for your delicious product. Based on this analysis, you decide baking in your own kitchen is the most cost effective way to go until you prove there is a market for your cookies.

Now that you’ve decided to start a home-based food business (commonly referred to as a Cottage Food business), you ask yourself: “what do I do now?” The laws and regulations governing food businesses are difficult to navigate and can seem a bit daunting, but don’t let that discourage you. In this article we will walk you through the steps to start a home-based food business under the Michigan Cottage Food Law.

Where You Can Sell

In Michigan, cottage foods may only be sold by the producer directly to the consumer at farmers’ markets, farm stands, roadside stands and similar venues. Cottage foods cannot be sold to a retailer for resale or to a restaurant for use or sale in the restaurant. Cottage foods cannot not be sold over the Internet, by mail order, or to wholesalers, brokers or other food distributors for resale. Cottage Food businesses may take orders over the phone as long as the cash transaction and delivery of the product is face to face; however, Internet orders are prohibited. Shipping or third-party delivery of cottage food products is also prohibited.

Permitted Foods

Under the Cottage Food Law, only non-potentially hazardous foods that do not require time and/or temperature controls for safety are permitted to be made in a home-based kitchen. “Potentially hazardous food” is food that can be safely kept at room temperature and do not require refrigeration. Examples of permitted foods include: Breads; Similar baked goods; Vinegar and flavored vinegars; Cakes, including celebration cakes (birthday, anniversary, wedding); Sweet breads and muffins that contain fruits or vegetables (e.g., pumpkin or zucchini bread); Cooked fruit pies, including pie crusts made with butter, lard or shortening; Fruit jams and jellies in glass jars that can be stored at room temperature (except vegetable jams/jellies); Cookies; Dry herbs and dry herb mixtures; Dry baking mixes; Dry dip mixes; Dry soup mixes; Dehydrated vegetables or fruits; Popcorn; Cotton Candy; Non-potentially hazardous dry bulk mixes sold wholesale can be repackaged into a Cottage Food product (similar items already packaged and labeled for retail sale cannot be repackaged and/or relabeled); Chocolate covered pretzels, marshmallows, graham crackers, Rice Krispies treats, strawberries, pineapple or bananas; Coated or uncoated nuts; Dried pasta made with eggs; Roasted coffee beans or ground roasted coffee; Vanilla extract (Note: these products require licensing by the Michigan Liquor Control Commission); Baked goods that contain alcohol, like rum cake or bourbon balls (Note: these products require licensing by the Michigan Liquor Control Commission).

Prohibited Foods

Potentially hazardous foods are not permitted to be made in a home-based kitchen. Examples of prohibited foods include: Meat and meat products like fresh and dried meats (jerky); Fish and fish products like smoked fish; Raw seed sprouts; Vegetable jams/jellies (e.g., hot pepper jelly); Canned fruits or vegetables like salsa or canned peaches; Canned fruit or vegetable butters like pumpkin or apple butter; Canned pickled products like corn relish, pickles or sauerkraut; Pies or cakes that require refrigeration to assure safety like banana cream, pumpkin, lemon meringue or custard pies, cheesecake, and cakes with glaze or frosting that requires refrigeration (e.g., cream cheese frosting); Milk and dairy products like cheese or yogurt; Cut melons; Caramel apples; Hummus; Garlic in oil mixtures; All beverages, including fruit/vegetable juices, Kombucha tea, and apple cider; Ice and ice products; Cut tomatoes or chopped/shredded leafy greens; Confections that contain alcohol, like truffles or liqueur-filled chocolates; Focaccia style breads with fresh vegetables and/or cheeses; Food products made from fresh cut tomatoes, cut melons or cut leafy greens; Food products made with cooked vegetable products that are not canned; Sauces and condiments, including barbeque sauce, hot sauce, ketchup, or mustard; Salad dressings; and Pet food or treats.

Limitations

Currently, Cottage Food businesses are limited to $20,000 per year in gross sales. The limit will increase again December 31, 2017 to $25,000 per year. You need to maintain sales records and provide them upon request to a food inspector.

Licenses and Permits

Under Michigan law, if you qualify to operate as a Cottage Food business, you are exempt from obtaining a food establishment license. There are no application forms to complete, no registration process and you do not need to obtain a food license or permit. However, the Cottage Food Law does not exempt you from the requirements of the Michigan Food Code, such as not distributing adulterated (unsafe) food.

Local Zoning

Home-based food businesses should be aware of local laws and ordinances, including zoning and small business permitting. It is important to check with your local health inspector to determine whether your home is properly zoned for a home-based food business.

Labeling

If your product is only sold within the state in which you operate, then you are exempt from federal labeling requirements. However, your label must comply with the labeling requirements under the Cottage Food Law.

In Michigan, your product label must contain the following:

  • Name and physical address of the Cottage Food operation (P.O. Box addresses are not allowed)
  • Name of the Cottage Food product (all capital letters or upper/lower case)
  • Ingredients in descending order of predominance by weight. If you use a prepared item in your recipe, you must list the sub ingredients as well (For example: soy sauce is not acceptable; soy sauce (wheat, soybeans, salt) would be acceptable).
  • Net weight or net volume (must also include the metric equivalent)
  • Allergen labeling (as specified in federal labeling requirements)
  • Must include the following statement: “Made in a home kitchen that has not been inspected by the Michigan Department of Agriculture & Rural Development” in at least the equivalent of 11-point font (about 1/8″ tall) and in a color that provides a clear contrast to the background (all capital letters or upper/lower case)

Hand-printed labels are acceptable if they are clearly legible, written with durable, permanent ink and printed large enough to equal the font size requirements listed above.

Below is an example of an approved label:

MADE IN A HOME KITCHEN THAT HAS NOT BEEN INSPECTED BY THE MICHIGAN DEPARTMENT OF AGRICULTURE & RURAL DEVELOPMENT

Chocolate Chip Cookies

Joe’s Cookie Company
123 Chocolate Lane
Dessert City, MI 48009

Ingredients: Enriched flour (Wheat flour, niacin, reduced iron, thiamine, mononitrate, riboflavin and folic acid), butter (milk, salt), chocolate chips (sugar, chocolate liquor, cocoa butter, butterfat (milk), Soy lecithin as an emulsifier), walnuts, sugar, eggs, salt, artificial vanilla extract, baking soda

Contains: wheat, eggs, milk, soy, walnuts

Net Wt. 3 oz (85.05g)

If you have questions about starting a cottage-food business, please contact one of our attorneys at Morsel Law.

FDA Approves Peanut Allergy Prevention Claims on Baby Food Labels

It’s now recommended to introduce peanuts to young infants.

FDA has announced that companies will be able to label baby food products with advice about how the early introduction of peanuts in an infant’s diet may reduce the risk of developing a peanut allergy. This marks the first time the FDA has permitted a qualified health claim of food allergy prevention. These labels will be allowed on foods containing ground peanuts suitable for infant consumption, but not whole peanuts, which may be a choking hazard for young children.

The full story can be found here.

If you have questions about FDA labeling regulations, contact our attorneys at Morsel Law.

Your Organic Food May Not Be Organic

The USDA’s Inspector General recently released its annual report on the National Organic Program (NOP). The report found widespread problems with the NOP that could result in “reduced U.S. consumer confidence in the integrity of organic products imported into the United States.” The report cites the USDA’s Agricultural Marketing Service’s (AMS) failure to reconcile organic standards between different countries, verify documents at U.S. ports of entry and conduct mandatory audits of major exporters.

In visits to seven U.S. ports of entry, the IG found produce shipments of all kinds are fumigated at the border to prevent pests from entering the country. That practice, according to the IG, runs counter to the assurance U.S. consumers get from the NOP that “foreign agricultural products maintain their organic integrity from farm to table.” The IG recommends that the NOP come up with performance measures for timely audits and suggests adoption of a schedule to review each participating country every two years.

The failure of the AMS to do their job is inviting trouble. Food fraud is big business and will probably be even more so after this report is shared across the globe. If a farmer can sell his non-organic wheat as organic for twice the price, he might consider it, or he might not. But what about a wholesale broker run by a criminal enterprise looking for new sources of income, would they think twice about reclassifying products as organic to make more profit? Probably not.

Hopefully the IG report will lead to significant changes for the NOP, but in the meantime consumers should be vigilant about identifying the source of their organic foods. Maybe you’ll think twice about spending extra money on organic food that probably isn’t organic.

If you have questions about products labeling, contact our attorneys at Morsel Law.

Label Reviews Are Critical For Food Importers

I previously posted a similar article discussing the importance of label reviews for domestic produced products here. But a recent event reminded me to reiterate the importance of accurate labeling, especially for food importers. Non-compliant labels can cost you time, money and even your relationship with customers.

A few weeks ago, JFC International Inc. issued a voluntary recall for rice seasoning products shipped to the United States. Apparently, the recall was initiated after the company discovered the product was not labeled in English, which is required under U.S. law. Also, because the label was not in English, it is deemed to have failed to disclose allergens contained in the ingredients. Important to point out is that this isn’t JFC International Inc.’s first time being involved with a recall event; they issued a similar recall in 2016 for failing to label in English and undeclared allergens.

This event is an important illustration of how important it is to review your labels prior to shipping your products to the United States. First, one of the most common misbranding mistakes for imports is failure to label in English. This seems like a simple fix, but you would be surprised how often this occurs. Importers should require the shipper to forward a copy of the label prior to shipping to confirm compliance with U.S. law. Now this won’t stop mistakes by workers at the warehouse who load the EU labeled products onto a pallet instead of the U.S. bound product, but if you include language in your contract that makes the shipper responsible for all costs to correct the misbranding in the event the wrong product labels are attached, they will quickly change their quality control practices. This is especially true for shippers who have had to foot the bill after a container is stopped by U.S. Customs.

Second, does a voluntary recall trigger coverage under your product recall insurance policy? Generally, coverage isn’t triggered unless there is an “actual” contamination, which is usually proved by product testing or other evidence. For JCF International, if the recall was initiated for misbranding due to failure to label their products in English, the coverage would be denied. However, because the product contained “actual” allergens, then coverage would probably be triggered. But if the product didn’t contain allergens, then coverage would be denied. Even if the product didn’t contain allergens the company would still need to recall the product because it is still considered misbranded and in violation of the FDC Act, but the recall would potentially result is significant non-reimbursable expenses.

Most food label misbranding violations can be prevented through quality control measures. Importers should, if they have not already, institute best practices to minimize the risk of a potential violation that result in having to respond to FDA Notice of Action letter. These practices should also address who bears the cost and burden to deal with a misbranding violation. Prior planning can help ensure your business identifies and minimizes potential risks commonly associated with the food import industry.

If you have questions about labeling, contact our attorneys at Morsel Law.

Deadline to List Calories on Restaurant Menus Quickly Approaching

As of May 5, 2017, chain restaurants with 20 or more locations are required to provide nutrition labeling of “standard” menu items. Restaurant owners should, if they haven’t already, start preparing for the compliance deadline. In addition to restaurants, this requirement also applies to food facilities in entertainment venues, such as movie theaters and amusement parks, take-out food establishments, bakeries, convenience stores, grocery stores and supermarkets.

These menu labeling requirements were published on December 1, 2014 as a final rule by the Food and Drug Administration (“FDA”), as required under the Affordable Care Act. If you are a small business owner these new rules will have a significant impact on your operations. What it means is that calorie counts will have to be displayed for popcorn at a theater, food from a salad bar, hot dogs from a convenience store and takeout pizza. In addition, vending-machine operators with at least 20 locations also will be required to post calorie counts.

Calorie information also will be required for some alcoholic beverages served in bars and restaurants. This would apply to beverages listed on menus and menu boards, however, this would not apply to mixed drinks ordered at the bar. Craft brewers should take notice. Even if the rules may not directly affect beer manufacturers, those that sell their brews to chain retailers may be forced to supply calorie counts or take their products elsewhere.

While the purpose behind these rules are to combat obesity in America, where over one-third of meals are consumed outside the home, the effect is to burden retailers with significant compliance costs. Retailers are now faced with the choice of passing this additional cost onto the consumer or eliminating certain products from their menus. While not an easy decision for businesses to make, non-compliance can lead to legal action by the FDA.

The rule’s requirements for determining caloric content and labeling menus are highly detailed and complicated. Therefore, if your small business needs assistance in complying with the rule, please contact us at Morsel Law.

Worldwide Olive Oil Shortage

Buyers beware: this could mean an increase in food fraud as criminals attempt to cash in on record high prices. Olive Oil accounts for more than 10% of all incidents of food fraud worldwide. Fraudsters in the past have been caught passing off cheaper oils from Turkey and Tunisia as higher priced Italian oil.

Other schemes have been identified where importers were blending cheaper oils, such as hazelnut, soy, corn, walnut or palm oil, and passing the products off as 100% pure olive oil. This is especially concerning when nut-oils are substituted which can lead to major problems for those with food allergies.

For more, you can view the article.

If you have questions about food fraud, please contact our attorneys at Morsel Law.

President Signs Mandatory GMO Labeling Law: What You Need to Know

Last week President Obama signed the National Bioengineered Food Disclosure Standard into federal law. The law mandates disclosure of genetically modified organisms (“GMO”) on food labels. The law directs the U.S. Department of Agriculture (“USDA”) to establish, within two years, a nationwide mandatory disclosure standard for bioengineered foods and the labeling procedures. This means that the law itself does not define the standard, but instead gives the USDA significant discretion to define and implement the required disclosure.

Below are some things manufacturers should know about the law:

  • Preemption of State Laws. The new law specifically preempts all state and local labeling requirements applicable to genetically engineered (“GE”) foods that do not mirror the language in the law. This would even apply to state laws already passed, including Vermont where mandatory GMO labeling went into effect in July.
  • Defining Bioengineered Food. The law defines bioengineered food as food that contains genetic material “that has been modified through in vitro recombinant deoxyribonucleic acid (DNA) techniques” and “for which the modification could not otherwise be obtained through conventional breeding or found in nature.” This definition could be interpreted as quite restrictive, so it will be important to watch the rule-making process to see how the law is interpreted.
  • Labeling Requirements. The law does not specify GMO labeling standards, this is left up to the USDA to determine. However, the law does state the methods to disclose GMOs in food, such as text on the packaging, a USDA-created symbol, or an electronic or digital link (such as a QR code) selected by the manufacturer. Small food manufacturers are provided the additional flexibility to disclose GMO ingredients either by listing a toll free number or link to website containing the disclosure on their labels. The purpose of the law was to disclose GMO ingredients on food labels so consumers searching grocery store aisles could make informed decisions, but law effectively fails to achieve its purpose because “disclosure” can be a link to somewhere else, not on the label itself.
  • You Aren’t What You Eat. Meat from animals that consume bioengineered food are exempt from disclosure. Specifically, the law prohibits the USDA from considering any food primarily derived from an animal because “the animal consumed feed produced from, containing, or consisting of a bioengineered substance.” So, for example, you go into a store to buy some beef for a family barbecue and, because of your concern about the safety of GE foods, you want to purchase a GMO free product. You’re aware that most cows slated for consumption are fed a diet containing mostly corn, a majority of which is bioengineered. The label doesn’t disclose GMO ingredients, so you think you’re safe. Think again. Even if the cow eats nothing else but bioengineered corn its entire life, the meat is not considered GE under the new law. Thus, Congress is betting that consumers will be uniformed about the provisions in the law and think their meat is non-GMO, even if its arguably not.

Food Recalls: Does Your Insurance Policy Cover “Reasonable Probability” of Contamination?

Many food businesses, after conducting a risk assessment, will purchase some form of recall insurance (commonly referred to as product contamination insurance). These recall policies typically provide coverage for “actual” contamination, meaning for coverage to kick in the consumption or use of the product must have resulted in bodily injury and/or property damage. To date, recalls were voluntary and initiated by the company. However, earlier this year the final rules were issued under the Food Safety Modernization Act (FSMA), which provide FDA with the authority to mandate recalls for food products if there is a “reasonable probability” that the food product is adulterated or misbranded and the use and/or exposure to the product would cause serious health consequences or death.

The FDA’s mandatory recall authority under FSMA may put food businesses at risk because many insurance policies don’t provide coverage for government recalls without an “actual” contamination. The direct and indirect costs associated with these recalls can be substantial. It is important to know if your damages are covered by your policy and, if so, to what extent.

While many insurers have yet to address FSMA, some insurers have altered their basic form or issue an endorsement for “government recall”.  However, not all “government recall” clauses are created equal, so careful attention should be spent when reviewing or negotiating the policy to ensure proper coverage, especially since every business is different and are faced with different risks.

In order to better understand their insurance requirements, businesses should perform a comprehensive risk analysis. The risk analysis should not only include the business’s products and operations, but also the operations of their suppliers’ and an analysis of the quality of the ingredients included in the business’s final products. Often overlooked in the analysis process is the risks assumed in purchase and sale agreements and vendor contracts. Businesses should review these agreements to identify and determine which risks can and/or should be insured. Many contracts in the food industry are written in favor of the buyer, so in the event of a recall, the seller (policyholder) is responsible for associated costs. The effects of a recall to a seller without proper coverage could be devastating.

When discussing recall coverage with your broker, the following are a list ofitems you may want to address:

  • Direct Product Damage – Many policies cover the contaminated product in the field or warehouse, but some only cover product in the field.
  • Publicity – Publicity coverage is not always included in a basic policy, but when it is the most important feature of this coverage is that it can result from “an actual or alleged contamination, where the Named Insured’s Product(s) and the Named Insured must be specifically named.” If a business supplies an ingredient used by a buyer in a finished product and the buyer’s product is recalled (in most cases only the finished product is identified in the recall), then is this scenario the policy won’t provide coverage.
  • Lost Gross Profit/Extra Expense (LGP) – If the policyholder loses an account due to a recall event, this pays for a year or more of LGP. For many food businesses, a large account could represent a significant portion of their total revenue. Extra Expenses may arise when it is necessary to engage another processor and new processing costs exceed the businesses normal processing costs.
  • Rehabilitation Expenses – This coverage pays for the rehabilitation of the brand in the marketplace. Many businesses overlook the importance of obtaining this coverage because one food safety incident can destroy a brand that a business has spent years building.
  • Crisis Response/Consultant Expenses – Coverage for these expenses can be very important and largely address the costs involving specialized attorneys and public relations/crisis response specialists.

If you have questions about coverage under your insurance policy, please contact our attorneys at Morsel Law.