Is it legal for farmers to make their own processed products? How to do it compliantly
Small farmers making processed agricultural products are not following a hipster trend or evoking nostalgia for grandma's era; rather, when facing surplus production and out-of-spec losses, they offer a flexible response. Because they are small, they are highly flexible, and they are competitive in the market for flavor and innovation, something the fixed model of mass production by large factories cannot match.
Engaging in food manufacturing without factory registration is often called an "underground factory" by the media. However, according to the relevant regulations of the Ministry of Economic Affairs, factory registration is only required when the factory site area reaches 50 sq m and electricity use reaches 75 kilowatts or more. Therefore, if a person with farmer status wants to make their own processed agricultural products, do they need to set up a food factory? Or build a processing room? And how should they comply on taxes? Below, the common questions farmers have are explained one by one regarding production location, production activities, taxes… and so on
Regulations related to farmers' self-produced processing
✓ Production location
Farmers may, in accordance with the Regulations for the Review of Permitted Agricultural Facility Use on Agricultural Land, build a self-produced agricultural processing room, or apply to an organic certification body for an organic processing room; this is the more ideal approach. If the environment is safe and hygienic and production is small-scale, using one's own kitchen or an independent space is of course also acceptable.
✓ Production activities
As long as it is food manufacturing and processing, regardless of identity, the GHP Good Hygiene Practice Guidelines for Food must be followed. (Taiwan's current regulations are oriented toward tiered requirements, becoming stricter for specific items and operators with higher capital amounts. For smaller-scale producers, unlike the United States' Cottage Food Laws, there is no clear definition of the scope of small producers (items, scale, sales range), and relatively looser standards are adopted.)
✓ Taxes and vouchers
Farmers who make processed products from self-produced agricultural products and sell them themselves do not need to issue invoices and are exempt from business tax, but they must issue farmer receipts (vouchers). According to Article 8, Paragraph 1, Subparagraph 19, latter part of the Value-Added and Non-Value-Added Business Tax Act, Article 29, and the Ministry of Finance letter dated October 3, 2011, Tai Cai Shui Zi No. 10000366900, farmers selling the agricultural, forestry, fishery, and livestock products and by-products they harvest or catch, and farmers selling agricultural products they themselves produce (including self-produced processed agricultural products), are exempt from business registration and exempt from business tax.
✓ Food business operator registration
It is recommended to register on the Ministry of Health and Welfare Food Business Operator Registration Platform (Non-Deng-Bu-Ke), and to label the registration number on the food outer packaging.
✓ Product packaging labeling
• The food outer packaging must have complete and correct food labeling (see Article 22 of the Act Governing Food Safety and Sanitation)
• For processing procedures not verified as organic, no organic wording may be labeled in the text
• The text may not claim any therapeutic effects or advertise the product as infant food
★ Photograph and keep purchase receipts and invoices
Although the ingredients used in farmers' self-produced processed products are simple (such as salt, sugar, oil), in order to have traceable proof of source, be sure to obtain invoices, delivery notes, receipt vouchers… and so on. Simply buy a loose-leaf binder, file them in chronological order, and remember to photograph them as a backup.
★ Production records and shipment documents
For each production run, record the ingredients used, finished products, and loss quantities, and simply use the production date as the batch number. For shipment documents, you can buy commonly available carbon-copy shipment forms or farmer receipts from stationery stores, and fill in the correct shipment quantity, price, and production date (corresponding to the batch number). Production records can serve as a basis for traceability, and when a product spoils you can look back and review it. They also allow you to accurately calculate changes in product costs and find the most suitable batch production volume.
★ Retain finished products
After each production run, retain at least 2~3 finished product samples (note that the retained finished products must be in the same packaging as the products sold, not bulk). These can be used to assess product variation. If a product changes before reaching its expiry date (spoilage, souring, or changes in color, texture, or taste), it indicates there was a problem in the production process, or that the labeled shelf life should be shortened further. In addition, when a customer complaint occurs, having the same batch of product allows comparison to determine whether the issue is on the production side or due to improper storage by the consumer.
Finally, regarding environmental hygiene, personnel, and utensils, you can look for the "self-management checklist" from each county and city government health bureau. For example: electric fans must be clean and fitted with mesh covers, trash cans must have lids, toilets must have door curtains, ingredients and finished products should be placed off the ground and away from walls, wear proper clothing… and other basic requirements. Be sure to check them one by one and improve step by step. Only in this way can farmers' self-produced processed products gain support and recognition in terms of legal compliance and product quality.