reform of our food
safety laws in more than 70 years”, the U.S. Food and Drug
Administration (FDA) Food Safety Modernization Act (FSMA) established
new guidelines to protect U.S. food supply, shifting the focus from
response to prevention of contamination. Comprising seven
foundational rules, the new regulation has far-reaching consequences
that impact food companies around the globe.
Despite the burden that this
changing regulatory scenario may present, forward-thinking companies
can see new requirements as opportunities to gain competitive advantage
in a highly competitive industry. Even more so, companies should take
advantage of Federal and State R&D Tax Credits to support their
efforts towards safer and more efficient operations.
The Research & Development Tax Credit
Enacted in 1981, the federal
Research and Development (R&D) Tax Credit allows a credit of up to
13% of eligible spending for new and improved products and processes.
Qualified research must meet the following four criteria:
New or improved products, processes, or software
Technological in nature
Elimination of uncertainty
Process of experimentation
Eligible costs include
employee wages, cost of supplies, cost of testing, contract research
expenses, and costs associated with developing a patent. On
December 18, 2015, President Obama signed the bill making the R&D
Tax Credit permanent. Beginning in 2016, the R&D credit can be used
to offset Alternative Minimum tax and startup businesses can utilize
the credit against $250,000 per year in payroll taxes.
Key FSMA Rules
According to the FDA, one in
every six Americans, or 48 million people, get sick, 128 thousand are
hospitalized, and three thousand die from food-borne diseases every
year. Aiming to mitigate this major public health burden, the FSMA
established a new focus on preventing food safety problems rather than
responding to them after they occur.
The urgent need for new,
comprehensive regulation emerged against the backdrop of an
increasingly globalized food supply chain. The complexity of food
safety concerns has reached unprecedented levels, with FDA regulated
products coming into the U.S. from over 300 thousand facilities in 150
different countries. An estimated 15 percent of food consumed in the
U.S. is imported, 50 percent of fresh fruits, 20 percent of vegetables,
and 80 percent of seafood.
Within the FSMA framework, the
FDA established seven foundational rules designed to create a modern,
risk-based approach to food safety. The following paragraphs summarize
Safety: This rule establishes science-based standards
for the safe growing, harvesting, packing, and holding of fruits and
vegetables grown for human consumption. Key requirements pertain to six
areas, namely, 1) agricultural, 2) biological soil amendments, 3)
sprouts, 4) domesticated and wild animals, 5) worker training and
health and hygiene, and 6) equipment, tools and buildings. All of these
are identified as potential routes for microbial contamination.
II. Preventive Controls for Human Food: This rule updates
the Current Good Manufacturing Practices (CGMPs) with new provisions
pertaining the education and training of employees and the control of
allergens. It also requires food facilities to implement a written food
safety plan containing hazard analyses, risk-based preventive controls
as well as supply chain and recall programs.
Food: Similar to the requirements
for human food, this rule urges facilities to implement new CGMPs
specially targeted at the animal food sector, which consider the
particularities of different species when assessing risks.
Against Intentional Adulteration:
Aiming to prevent wide-scale harms to public health, including acts of
terrorism involving food supply, this rule requires risk-reducing
strategies for certain food-related processes. Food companies must
prepare and implement a food defense plan that identifies
vulnerabilities and establishes actionable steps to overcome them.
Mitigation strategies should include monitoring, corrective actions,
and verification activities. In addition, facilities are urged to
maintain records and ensure adequate training.
V. Foreign Supplier Verification Programs (FSVP):
Targeting importers of food for humans and animals, this rule
establishes certain risk-based activities designed to verify whether
imported food meets U.S. safety standards. In order to guarantee the
required level of public health protection, importers must perform
hazard analyses, evaluation of food risk and supplier performance,
supplier verification (options include on-site audits, sampling and
testing, and the review of food safety records), and corrective
Certification: The FSMA establishes a
voluntary program for the accreditation of third-party auditors that
can issue certification for foreign suppliers and the food they
produce. Requirements for accreditation include standards of competency
and capacity, impartiality and objectivity, quality assurance, and
records of procedures.
Animal Food: With the
objective of protecting food from farm to table, this rule addresses
potential issues in transportation that can create food safety risks,
including deficient refrigeration, cleaning procedures, and protection
protocols. Requirements pertain to shippers, loaders, carriers by motor
or rail vehicle, and receivers.
Overall, these rules aim to
balance flexibility and robustness to effectively protect the American
consumer, while offering a viable path towards compliance.
It is abundantly clear that as
the implementation process unfolds, food organizations of all sizes and
origins must turn towards innovation to ensure timely adjustments. The
greatest challenge is to achieve regulatory compliance while
concurrently satisfying other business needs.
The new framework has endowed the
FDA with increased power to penalize non-compliant agents. In the
pre-FSMA era, the risk of non-compliance may have been worth it when
weighted against modernization costs. The new regulation has
dramatically changed this scenario, with heavier penalties and
significant business impact for offenders, which can ultimately
compromise entire operations.
FSMA Implementation Public
Technologies for Compliance
Even though the FDA does not
require the use of any specific system or technology, innovative and
automated solutions can support food companies as they navigate this
new era of food safety. For each one of the seven rules established so
far, rapid response, consistency, documentation, and data analysis seem
to be the key pillars of successful compliance efforts.
It is important to consider the
transition into FSMA standards as an opportunity to create new
efficiencies that not only ensure compliance but enhance
competitiveness. Access to real-time data analytics is a game-changer
when it comes to prevention in food safety. A wide array of
technologies, including advanced sensors and IoT-enabled equipment,
promise to change the production, processing, storage, and
transportation of food, facilitating compliance with new regulations.
The following sections present examples of innovative technologies that
are bound to be at the basis of a new, preventive approach to food
Data-driven solutions can
support compliance in a variety of ways. For instance, when it comes to
process controls or the need to control for hazards that are
“reasonably likely to occur”, the monitoring of key metrics and
parameters can be decisive.
One area that has greatly
benefited from data-driven innovation is agriculture. Based on
cutting-edge data collection technologies, precision agriculture
enables farmers to use predictive analytics to optimize yield and
overcome operating deficiencies. The variable-rate application of
agricultural inputs, such as water, seed, fertilizers, and pesticides,
is an interesting example of how precision techniques can reduce costs
and increase productivity. The use of sensor and location technologies
help farmers determine the exact needs of each area, allowing them to
make smart decisions that take into consideration field
Monitoring capabilities in
precision farming can also facilitate compliance with food safety
regulation. Headquartered in Molina, Illinois, John Deere has been at the forefront
of agricultural innovation. The company uses sensor and image data from
its equipment to optimize machine performance as well as agricultural
processes. Using the John Deere Operations Center app, farmers can
access, analyze, and share data to record and document processes, which
is a key aspect of FSMA compliance.
Norwood, Massachusetts-based Analog Devices is also engaged in
creating innovative monitoring solutions for agricultural applications.
Their recently prototyped system aims to allow farmers to know exactly
which part of a field each piece of produce came from and which
amendments were made regarding fertilization and pest control. The IoT,
sensor-to-cloud solution will combine near-real-time monitoring of
produce metrics and near infrared (NIR) miniaturized spectrometers to
provide advanced food quality analysis. Working in partnership with
Israeli company Consumer Physics,
a fingerprint of the fruit or
vegetable, giving farmers access to comprehensive data on its history.
USDA-ARS Agricultural Engineer
ADjust the Field of View for Wireless Infrared Thermometers
As has been the in many other
industries, smart wireless sensors can also revolutionize the way
food processing, storage, and transportation are monitored and
accounted for. Innovative systems provide automated, 24/7 monitoring
and recording of key metrics including temperature, humidity, and
equipment status. Furthermore, wireless handheld devices can be used to
collect temperature and hygiene data whenever needed, speeding up
monitoring processes and eliminating the risk of human error.
Located in Bedford Heights, Ohio,
Paragon Robotics offers smart
sensor systems to monitor temperature, light, and humidity in food
storage facilities and refrigeration units. In addition to ensuring
product quality and eliminating costly spoilage, the system facilitates
regulatory compliance. With an accompanying software suite that
provides a real-time dashboard, analysis charting, and alarm
notification history with custom annotations, the system easily exports
data for audit requirements.
Technology can also help
create more efficient testing practices. For instance, automated
systems organize information regarding what needs to be tested in which
frequency. Similarly, analytic solutions deliver actionable information
based on test results, which may include the identification of
recurrent problem areas and the need for further investigation.
Innovative technology can also allow for faster test times and higher
accuracy of results. Smaller, more flexible solutions offer a smooth
transition to automated laboratories, as they can be easily integrated
into existing configurations and workflows.
Headquartered in Bellevue,
Washington, BioControl System
has created the Assurance GDS, an innovative testing system that
combines targeted isolation capabilities of immunomagnetic separation
and DNA-based detection to provide quick and highly-reliable tests for
a diverse range of food samples. The solution allows for both automated
and manual tests while accommodating “batch-and-test” and “continuous
processing” alike. BioControl has also developed software that
automatically stores all associated test data into a laboratory
management system (LIMS). The electronic concentration of information
streamlines documentation, while allowing for trend analysis and
traceability, all of which are key aspects of FSMA compliance. By
offering a customizable, user-friendly platform the software solution
enables lab managers to oversee operations in a more effective and
Located in Beverly,
Massachusetts, LexaGene is
also engaged in testing innovation for food safety applications. The
biotechnology company is working on an open-access, fully automated
pathogen detection platform that could change the way food companies
diagnose and prevent contamination. The Polymerase Chain Reaction (PCR)
technology utilizes single-use disposable cartridges that concentrate
and purify genetic material from samples as well as microfluidics to
perform molecular analyses. Designed for on-site use without the need
of a skilled technician, the technology is expected to drastically
reduce testing times, from one to three days to just one hour.
The FSMA has also introduced new
requirements for allergen control. Special attention must be paid to
“undeclared allergens”, meaning allergens that are accidentally found
in a food product. Accidental cross-contact contamination is the main
source of undeclared allergens, which constitute a frequent cause of
recalls. In fact, between 2005 and 2014, some 12 million pounds of
product were recalled because of this kind of contamination. Food
companies must be prepared to detect and avoid this important form of
hazard, specially as certain allergen-free segments experience
unprecedented grow, such as gluten-free products.
Headquartered in Lansing,
Michigan, Neogen offers test
kits to detect a wide variety of allergens, including tree nuts,
almond, egg, gluten, crustacea, and walnut residues. Capable of
detecting target allergens in ingredients, liquids, clean-in-place
rinses, finished foods, and environmental surfaces, Neogen’s food
allergen kits exemplify how technology can facilitate regulatory
compliance. The solution offers results in 10 minutes or less.
The FSMA is built upon a
holistic approach to the supply chain. New track-and-trace standards
target the integrated supply chain, instead of focusing on its isolated
components. Supply chain traceability enables companies to know exactly
where each ingredient came from and where finished product has gone,
including detailed information for every step of the way. Digitized
systems facilitate documentation, report, and monitoring, which can
ultimately reduce the number of FDA mandated recalls. By adopting this
kind of technology, companies not only protect their consumers but also
avoid costly, and sometimes permanent, damages to their reputation.
Headquartered in New Hartford,
New York, Par Technology has
created SureCheck, a food safety system that combines IoT and
traceability software to support monitoring activities, data input, and
task management along the supply chain. The Software as a Service
(SaaS) solution captures data and stores it in the cloud, giving users
real-time access, wherever they may be. It automates hazard analysis
and critical points (HACCP) plans and audit trail documentation,
reducing the time necessary to complete food safety inspections by up
to 60 percent. This is made possible by SureCheck Advantage, an
IoT-enabled, multifunction device that offers infrared and RFID with
Bluetooth wireless connectivity.
In addition, Wayne,
offers an integrated ERP software featuring advanced lot tracking and
traceability functionalities, capable of instantly reporting any aspect
of inventory history. Users can see every raw material that went into a
particular job, offering the ability to track lots up and down the
entire formulation to shipment process. It also provides specific
details, including full contact information on customers who received
the lots. Deacom’s software helps optimize inventory levels through a
material requirements planning function that balances supply and demand
taking expiration dates into account. Recipe management is yet another
functionality, with descriptive information, technical properties,
quantities, costing, notes, and history. The innovative ERP further
simplifies distribution with direct store delivery capabilities. It
provides real-time driver information along with various mobile
functionalities that allow for payment, signature, order changes, etc.
Also in an effort to enhance
traceability, Livermore, California-based SafeTraces has developed an
innovative method to accurately verify source, purity, and food safety
and sanitation on-site, in minutes. The odorless, tasteless, and
invisible tracer is extracted from natural sources and has high
stability, past normal product shelf-life. It works as a microscopic
barcode that can be applied on fresh produce, protein, processed foods,
liquid and dry goods. The technology could contribute to reducing the
impact of contaminated food and prevent foodborne illnesses, which are
both a public health and economic concern.
The FSMA is a turning point
for the American food industry, with a ripple effect across the globe.
Aiming to establish a science-based, preventative approach to food
safety, the Act has imposed a considerable amount of new requirements,
putting additional strain on companies, who must factor compliance
initiatives into their list of priorities.
Technology is a key ingredient in
enabling a smooth transition into this new era of food safety.
Innovative solutions can help companies take advantage of this moment
of change to implement modernization solutions that not only guarantee
compliance but also create efficiencies and positively impact their
bottom-line. Federal and State R&D Tax Credits are designed to
support and stimulate companies as they develop/adopt new and improved
processes and solutions. FSMA compliance efforts are strong candidates
to qualify for this tax credit opportunity.