Negotiating State Commercial Feed Licensing Requirements

Even if the regulator does not require a company to formally register its products, many states will require the company to submit a label with its company or facility registration. Additionally even if there is no explicit requirement to submit a product label, a regulator will typically want a copy of the label for its files as well as for reference purposes. In developing a product label, a company should consult the state to determine what label requirements are imposed under state law. As discussed above, South Dakota, within the distillers dried grains context, requires a sulfur maximum guarantee in addition to the other guarantees which apply in most states. To avoid misbranding or any other product label issues within a state, a company will need to pay close attention to the labeling requirements for each product the company intends to distribute. Following up with the regulator after submitting the label may help to avoid any obvious misbranding issues.

Inspection fees

Once an entity has registered the facilities and products as required by any applicable state regulations, the entity will typically be required to pay the state an inspection fee. This payment, typically pegged to cover the costs of the grain inspection program within the state, is based upon the quantity of feed distributed by the company. Not every state imposes an inspection fee, but in those states requiring this payment (a large majority), inspection fees can range anywhere from $ .02 to $1 a ton for commercial feed (pet food is a category apart as inspection fees on these products can be upward of $50 a ton). Where applicable, a company will need to pay close attention to the reporting cycle for this inspection fee (i.e., when does the company need to report its sales via an affidavit of tonnage, and pay the inspection fee — on a quarterly, semiannual, or annual basis), and take steps to ensure that it is in compliance. It should be noted that some states take express steps to assist companies in avoiding double “taxation” of the tonnage sold. For example, Indiana allows a manufacturer or distributor to apply for interstate exclusion status if they furnish substantial quantities of commercial feeds to customers in other states (which exempts those sales made across state lines from inspection fees).

Additionally, a company will be required to keep sufficient records to demonstrate or verify the amount of feed being sold or distributed, and the failure to keep these records can result in fines being levied against the company. The state will also typically have broad authority to inspect and test commercial feed during typical and normal business hours (although some states do require advance notice of the inspection).

Regulation within the commercial feed industry will likely continue to increase as consumers continue to demand additional transparency and regulation of the food supply. By paying close attention to regulatory developments, and by developing sufficient monitoring processes, a company and/or facilities can ensure that it remains compliant with any applicable state commercial feed laws.