FSMA 204 exemptions: what small food businesses can and cannot skip

Being small does not exempt you from the FDA Food Traceability Rule by itself. The rule has a specific list of exemptions and partial exemptions in 21 CFR 1.1305. Some depend on size, some on how you sell, some on what you do to the food, and some on the food itself.

Whether one applies is fact-specific. It can differ by product, by activity and by location. Treat this as a map, then confirm with FDA’s guidance. FDA’s Food Traceability Rule page links to an exemptions tool, and FDA’s FSMA Technical Assistance Network can answer questions.

FDA has proposed moving the compliance date from January 20, 2026 to July 20, 2028, but had not finalized that change at the time of writing. Separately, Congress’s FY2026 appropriations law directed FDA not to enforce the rule before July 20, 2028, and FDA says it intends to comply. Check FDA’s rule page for the current date. New to the rule? Start with FSMA 204 in plain English.

Exemptions based on size

Small produce farms. Exempt if the farm falls outside the produce safety rule under that rule’s own small-farm test (21 CFR 112.4(a)), or if its average annual produce sales, plus the market value of produce it packs or holds without selling (for example, for a fee), were no more than $25,000 over the previous three years. The $25,000 figure is adjusted for inflation from a 2020 baseline. FDA’s draft guidance says all produce sales count, on or off the list, and non-produce sales do not.
Small shell egg producers. Farms with fewer than 3,000 laying hens, for eggs from that farm.
Other small raw commodity producers. Producers of raw agricultural commodities other than produce or shell eggs, such as aquaculture operations, at $25,000 or less on the same three-year average.
Small retail food establishments and restaurants. An average of no more than $250,000 a year in food sold or provided over the previous three years, adjusted for inflation. FDA says this is an average, not a total, and applies to each establishment, counting all food sold or provided there.

Exemptions based on how you sell

Direct to consumers. A farm is exempt for food it produced and sells or donates directly to consumers. FDA’s guidance says this includes farmers’ markets, roadside stands, community supported agriculture and online sales.
Farm-packaged food. Food produced and packaged on a farm is exempt if the package stays in place until it reaches the consumer and keeps the product intact, and the label has the farm’s name, full address and business phone number.
Buying direct from a farm. A retailer or restaurant that buys food straight from the farm that produced it keeps only the farm’s name and address, for 180 days. The farm itself gets no exemption from this provision.
Ad hoc purchases between retailers or restaurants. A one-off purchase outside the buyer’s usual purchasing practice needs only a receipt-type record of the product, the date, and the seller’s name and address.
Farm to school and farm to institution programs. Similar partial exemption, with the 180-day farm record.

Exemptions based on what you do to the food

Kill step. A kill step is lethality processing that significantly minimizes pathogens. If you apply one, you keep receiving records (unless a written agreement covers the food) and a record of the kill step. After that, the food is out of the rule, and so is anyone who receives it later.
Changed off the list. If you change the food so it is no longer on the list, you keep receiving records and nothing more.
Written agreements. If a later business other than a retailer, restaurant or consumer will apply the kill step or make the change, a written agreement can exempt the food earlier in the chain. It needs an effective date, printed names, signatures and the substance of the agreement. Both sides keep it while it is in effect and renew it at least every three years. If the treatment happens further down the chain, your customer must also agree to ship only to businesses that agree in writing to treat the food or pass the same agreement on. FDA’s draft guidance describes these agreements for supply chains that know in advance the food will be treated.
Commercially processed produce and treated eggs. Produce that receives qualifying commercial processing is exempt if the conditions in the produce safety rule are met. So are shell eggs from a farm where all eggs get a treatment defined in FDA’s shell egg rule.

Exemptions based on the food or the business

Produce on the “rarely consumed raw” list in FDA’s produce safety rule.
Raw bivalve molluscan shellfish covered by the National Shellfish Sanitation Program and related requirements.
Food under the exclusive jurisdiction of USDA.
Commingled raw agricultural commodities other than produce. This is a partial exemption, with written agreements and basic source and recipient records for registered facilities.
Grade “A” cottage cheese on the Interstate Milk Shippers List, exempted by FDA notice in February 2026.
Transporters, nonprofit food establishments, food for personal consumption, and food for research that carries the required statement.

FDA can also waive requirements where they would cause economic hardship because of a business’s unique circumstances, if the waiver would not significantly impair rapid tracing and is not contrary to the public interest (21 CFR 1.1405). An individual business asks FDA in writing.

FDA’s draft guidance says a fully exempt business needs no traceability plan, but a business with only a partial exemption still does.

The spreadsheet carve-out is not an exemption from records

During an outbreak or recall, FDA can ask for your records as an electronic sortable spreadsheet. Some smaller businesses may send the information in another electronic or paper form instead. That applies to:

Farms averaging no more than $250,000 a year in raw agricultural commodity sales, plus the market value of commodities held without sale
Retailers and restaurants averaging no more than $1 million a year in food sold or provided
Other businesses averaging no more than $1 million a year in food sales, plus the market value of food held without sale

All use three-year rolling averages, adjusted for inflation. You still keep the same records, and you still have 24 hours (or a time FDA agrees to) to provide them. Paper is allowed, but records must be legible, and you must give FDA whatever it needs to understand them, such as a key to your codes. See the FDA 24-hour sortable spreadsheet for how to prepare.

Common traps

Exempt in one place, covered in another. The retail threshold applies per establishment. A farm may have an exempt produce operation and a covered cheese operation.
Exempt customers do not exempt you. If you sell to a small shop, you still keep shipping records unless an exemption covers you.
Exempt suppliers still affect you. If you receive a listed food from one, you may need to assign a lot code. See how to assign traceability lot codes.
Thresholds move. The tests use rolling averages. A good year can change your answer.
Buyers may ask anyway. Retail customers can require data regardless of the rule. See why retailers want traceability data.

How to check

List your products and the activities you perform, by location.
Match each product against the Food Traceability List.
Walk through each exemption above for each product and location.
Calculate your three-year averages. FDA says it intends to post inflation-adjusted values on its inflation cut-offs page.
Write down the exemption, the numbers and the date. Review every year.
Keep signed copies of any written agreements and a renewal date.

Where Lotcrumb fits

Lotcrumb is being built to record which exemption you rely on for each product, the figures behind it, and the records you keep either way. Join the waitlist for early access.

This guide is general information, not regulatory advice. Exemption analysis is fact-specific, so confirm yours with FDA’s guidance, FDA’s exemptions tool or a food safety professional.