Food Safety and Inspection Service United States Department of Agriculture Washington, D.C.  20250-3700

Office of Policy, Program Development and Evaluation

Meat and Poultry Advisory Committee Staff

National Advisory Committee on Meat and Poultry Inspection

November 14 - 15, 2001

The Committee has asked the Agency to reexamine it policy regarding retail exempt operations. The purpose of this presentation is to provide the Committee with an understanding of the Agency’s new thinking on retail exempt status for meat and poultry processing operations. The Agency now believes that its current policy of exempting from inspection operations that produce certain amounts of meat and poultry products for sale to hotels, restaurants, and similar institutions does not advance the purpose of the Acts, i.e., some meat and poultry prepared and processed for wholesale sales is not subject to inspection. Inspection of meat and poultry products prepared and processed for wholesale sale is required under the Federal Meat Inspection Act and the Poultry Products Inspection Act.

• Generally, operations that prepare meat products or process poultry products are subject to inspection.

• However, preparation or processing activities that have traditionally and usually been conducted at retail stores and restaurants, where meat and poultry is sold to individual consumers in normal retail quantities, are exempt from inspection. Meat and poultry products produced without inspection are subject to the adulteration and misbranding provisions of the Acts-except for the requirement of the inspection legend.

• The types of operations traditionally or usually conducted at a retail establishment are:

1. Cutting up, slicing, and trimming carcasses;
2. Grinding and freezing meat products;
3. Curing, cooking, smoking, rendering or refining of livestock fat, etc.
4. Breaking bulk shipments of product;
5. Wrapping or rewrapping product.

• Types of operations that have not been traditionally or usually conducted a retail establishment are:

1. Slaughtering.
2. Canning.
3. Irradiation.

• By regulation, FSIS exempts from inspection operations that produce meat and poultry product for sale to hotels, restaurants, and similar institutions (HRI) if

--75% of total sales (in terms of dollar value) of product represent sales to household consumers, and

--the total dollar value of sales of product to consumes other than household consumers does not exceed a dollar limitation set each calendar year by the Administrator.

• In response to a recommendation by this committee, and based on its review of the situation, the Agency’s new thinking is that it should eliminate the "HRI" policy explained above. This policy does not advance the purpose of the Acts to ensure food safety. Foods are prepared or processed for wholesale without the protections provided by inspection or consumer observation (i.e., consumers can make general determinations about the sanitary conditions and processing practices in retail stores and restaurants they frequent). It is also troublesome because it creates inequalities for small wholesalers who bear the cost of inspection while competing large retailers do not.

• The Agency ‘s new thinking is that it should only exempt from inspection the preparation of meat products and the processing of poultry products if: (1) preparation and processing are performed at a retail store, restaurant, or similar retail-type establishment that performs operations of the types that have been traditionally or usually conducted at a retail establishment and: (2) if the establishment sells product in normal retail quantities at the same price, terms, and conditions available to all consumers.

• This new policy would:

1. No longer define as a retail store one that may make up to 25% of its total sales in terms of dollar value of product to non-household consumers.

2. Define retail sales of meat and poultry products as any sales of normal retail quantities in which all product is available to all consumers at the price, and under the terms and conditions, as sales to household consumers.

• What is the Committee’s reaction to the Agency’s new thinking?

• Are there additional factors or concerns that should be considered by the Agency in revising this policy?

• How many now exempt firms would be place under inspection as a result of this revision? How many establishments now under inspection would be exempted from inspection as a result of this revision?

• What would the expected impact on state inspection and regulatory programs be?

John O’Connell  (202) 720-0345
Matthew Michael (202) 205-7788
Office of Policy, Program Development and Evaluation
FSIS, USDA
Room 112 Cotton Annex
1400 Independence Ave., SW
Washington, D.C. 20250-3700

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Last modified:  November 25, 2002