Northeast Beginning Farmer Project

#43 Value-Added Processing

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Value Added Processing for Urban Farmers

For urban farmers whose production is limited by space or other constraints, value added processing provides a way to increase the profitability of harvest.

When deciding what product to produce and sell, research your target market and distribution outlets to determine demand, taking into account which foods and products are popular and/or desirable but difficult to find.  You should also consider the cost of inputs, such as time, equipment, and raw materials, and select products that you can produce relatively inexpensively, so as to ensure a high enough profit margin and product viability.

The Penn State University Agricultural Marketing website has a Processing Page with resources to help you assess the potential profitability of your value-added venture at http://extension.psu.edu/business/farm/marketing.

For more information about value added processing and marketing in particular, see the University of Maryland Extension publication, “Processing for Profits: An Assessment Tool and Guide for Small-Scale On-Farm Food Processors,” by Ginger S. Myers, available for free download at https://www.extension.umd.edu/sites/default/files/_docs/programs/agmarketing/ProcessingForProfits.pdf.

Becoming a Small Scale Food Processor

The Federal government, individual states, cities and municipalities govern the operation of food processing facilities, whether home kitchens or commercial facilities. Regulations differ from state to state and are determined by the type of food product being prepared and the processing methods used.  When considering starting up a home or commercial kitchen, it is important to research which agencies regulate licensing of the product, inspection of the facility, foods allowed and not allowed to be produced in each facility, local zoning laws governing the use of the building, and building codes.

Foods that Require a Processing License (Article 20-C License) in New York

This regulation applies to anything that is altered by baking, canning, preserving, freezing, dehydrating, juicing, cider making, pickling, brining, bottling, packaging, repackaging, pressing, waxing, heating or cooking, smoking, roasting, manufacturing.  Requirements vary depending on product.  A scheduled process must be developed which outlines recipe testing/formulation, critical control points (to avoid contamination and control hazards), processing steps, storage requirements, distribution and selling conditions/restrictions.

Assistance for developing a scheduled process is available from the NYS Food Venture Center (see below).  For a complete list of products that require an Article 20-C license visit http://www.agriculture.ny.gov/FS/general/license.html or call (518) 457-4492.

Food Safety

HACCP (Hazard Analysis & Critical Control Points) Plans are mandated by FDA regulations for certain products and processes, specifying procedures to be followed to minimize contamination and to minimize and eliminate chemical, physical and biological hazards when processing foods.  HACCP plans are required for wholesale sale (not for retail) of seafood, dairy, meat and poultry products, as well as juice and cider processing facilities.  Other sectors of the food industry are coming into voluntary compliance.  For more information, visit http://www.fda.gov/Food/GuidanceRegulation/HACCP/.

Home Processing Exemption

New York State allows non-hazardous foods such as candy, cakes not requiring refrigeration, cookies, brownies, two-crusted fruit pies, breads and rolls, standard fruit jams and jellies, dried spices and herbs, and snack items to be produced in home kitchens. A review of processing procedures may be required for certain products before exemption is granted.

Anyone seeking a Home Processing Exemption must contact the NYS Department of Agriculture & Markets to obtain this certificate (http://www.agriculture.ny.gov/FS/consumer/processor.html). An annual water test for bacteria is required for all home processors on private water supplies.  Internet sales are not allowed under this exemption.

Some types of foods may not be produced in a home kitchen, as mandated by federal regulations.  These foods are considered potentially hazardous, and include:

• Low acid and acidified (pickled) foods packed in hermetically sealed containers must be registered with the US Food and Drug Administration (FDA),
• Meat products with more than 3% raw or 2% cooked meat ingredients in a completed product are regulated by the US Department of Agriculture (USDA), and
• Vacuum packaged and any other reduced oxygen packaged products.

Zoning Regulations

Local municipal zoning and planning boards determine the scale of operations permitted in an establishment. They regulate the number of employees allowed on premises and whether a second separate kitchen facility is allowed to operate on site.  Check with local building inspectors to determine what operations can take place in the kitchen chosen for food production.  There are local building codes that govern the volume of business in a building and egress from a building, drainage issues such as back flow protection, and grease traps.  Commercial equipment must comply with fire codes, FDA and USDA requirements as appropriate.

Minimum Food Processing Facility Requirements in New York State

Procedure	Home Kitchen	Home Annex	Commercial
Inspection	Yes, potable water required (documented) – municipal or treated well water	Yes, potable water required (documented) – municipal or treated well water	Yes, potable water required (documented) – municipal or treated well water
Licensing	Non-potentially hazardous foods for wholesale market exempt from licensing by NYS Dept. of Agriculture & Markets (NYSDAM)	20-C license (NYSDAM separate cleaning, sanitizing, and hand wash facilities, Fee: $400.00/2 years	20-C license ((NYDAM), Fee: $400.00/2 years
Inspection Agency	NYSDAM (may request review of processing procedures by recognized processing authority – only normal kitchen facilities can be used)	NYSDAM (Dept. of Health –fresh-serve foods only, kitchen held to restaurant standards – see below)	NYSDAM (Dept. of Health –fresh-serve foods only, kitchen held to restaurant standards – see below)
Foods Allowed	Candy (non-chocolate, fudge), cakes not requiring refrigeration, cookies, brownies, two-crust fruit pies bread, rolls, fruit jams, jellies spices, herbs, snack items, baked goods (i.e. bread, rolls) for wholesale distribution	Any processed food, low acid and acidified foods packed in hermetically-sealed containers (must register and file with the FDA)	Any processed food, low acid and acidified foods packed in hermetically-sealed containers (must register and file with the FDA)
Foods Not Allowed	Cakes which require refrigeration, pies containing milk, eggs or meat products, chocolates, low acid/acidified foods	Meat products (if more than 3% raw or 2% cooked meat ingredients) – USDA regulated	Meat products (if more than 3% raw or 2% cooked meat ingredients) – USDA regulated
Zoning	Check with city/town zoning or planning board, issues include scale of operation, number of employees	Check with municipality zoning/planning board, 2nd kitchen may not be allowed on premise, issues include scale of operation, number of employees	Check with municipality zoning/planning board, issues include scale of operation, number of employees

Basic Requirements for a Small-Scale Food Processing Establishment

State of New York Department of Health (DOH): Restaurants

• Submit kitchen drawings before construction
• Three-bay sink with stainless steel drain boards or two-bay sink with a commercial dishwasher
• Separate hand washing/mop sink
• Washable materials on walls and work surfaces
• Restaurant grade, commercial tile floors (painted concrete not allowed)
• Commercial coolers/refrigeration
• Water from non-municipal water supply (must be tested quarterly)
• Review DOH “Checklist for New or Remodeled Establishments” (some locales require food worker certification)

NY Department of Agriculture and Markets: Food Preparation and Processing

• Kitchen requirements based on food item(s) being produced (determined upon inspection)
• Easily cleanable, smooth work surfaces
• Non-absorbent, smooth and easily cleanable floors, walls and ceilings
• Review of processing procedures including hand washing, sanitizing, equipment sinks, water potability and food preparation
• Review* NYSDAM Circular 951 – Pursuant to the Licensing of Food Processing Establishments, Circular 938 – Rules and Regulations Relating to Food Processing Establishments, and Circular 933 – Good Manufacturing Practices

*Circulars are available through the local Department of Agriculture & Markets (10B Airline Drive Albany, NY 12235).  Contact by phone at (518) 457-3880 or (800) 554-4501.

Shared-Use and Incubator Kitchens

To reduce the cost of inputs and save money, consider using a shared-use commercial or incubator kitchen, or co-packer, listings of which are provided by:

• Culinary Incubator at http://www.culinaryincubator.com/, and
• Cornell University College of Agriculture and Life Sciences Department of Food Science at https://necfe.foodscience.cals.cornell.edu/kitchens-supplies/small-co-packers-commercial-kitchens/new-york.

Not included in these listings but serving food entrepreneurs is the Syracuse Community Test Kitchen, a program which trains participants in business planning, market research, recipe development, sensory analysis, and FDA requirements.  For more information, visit http://whitman.syr.edu/programs-and-academics/centers-and-institutes/falcone/programs/comtek.aspx.

Helpful Resources for Small-Scale Food Processors

For assistance in developing a scheduled process for your recipe or developing a processed food product, contact the New York Food Venture Center at the NYS Agricultural Experiment Station in Geneva at (315) 787-2259 or .  Request the publication Small Scale Food Entrepreneurship:  A Technical Guide for Food Ventures from Elizabeth Keller at (315) 787-2273 or , or access the online version at http://www8.gsb.columbia.edu/rtfiles/entrepreneurship/Small%20Scale%20Food%20Entrepreneurship_Initial%20Guide.pdf.

Product development, processing and distribution assistance is also available from Nelson Farms at SUNY Morrisville (www.nelsonfarms.org).

The USDA Sustainable Agriculture Research and Education (SARE) agency has published a plain-language guide to Value-Added Food Processing that is available online at http://www.sare.org/Learning-Center/Topics/Value-Added.

To learn about small scale food processing activities in New York State, join the NYS Small Scale Food Processors Association (www.nyssfpa.com) and become a member of Pride of New York (www.prideofny.com).

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