Meet the Cottage Food Industry

kari-shea--DesRxj28Ns-unsplash Photo credit: Kari Shea

Social media is full of marketing for small-batch food products. Many people sell products exclusively through Facebook and Instagram. The pictures and description of the products are enticing. The price is more than reasonable. It's hard to resist. Stop! Think about this for a minute. Where is this food made, by whom, and with what ingredients?

Many consumers don't realize that there are regulations that cover food production and sales at all levels. Food produced in home kitchens and sold to the public falls under the Cottage Food umbrella and is regulated by local health departments. These limited regulations allow small food businesses to produce certain "low-risk foods" while ensuring food safety to protect the consumer. In Illinois, these foods may be sold at farmer's markets.

Cottage Food Regulations

The regulations vary by state and county. Here in Illinois, the person producing and packaging the food must hold a current Food Service Sanitation Management Certificate. The purpose of this

is to protect the public from food-borne illnesses such as salmonella, E.coli, and hepatitis A. Also, food production must take place in a primary domestic residence that is registered with the health department in that county. There is a nominal fee associated with these requirements which likely gets passed on to the consumer.

There are products deemed potentially hazardous that are not allowed to be made and sold by cottage food operations. Generally speaking, these are foods that require refrigeration or can spoil easily. Examples of these "high risk" foods include meat and dairy products, pickled products, pumpkin, sweet potato, custard or any cream pies, cheesecake, or fish.

Proper labeling for cottage food products is required and must include the following:

  • Name and address of cottage food operation
  • The common name of product and weight
  • All ingredients listed in descending order by weight
  • Allergens (Milk, eggs, wheat, peanuts, soybeans, fish, crustacean shellfish, and tree nuts) must be identified
  • Date product was processed
  • The statement "This product was produced in a home kitchen not subject to public health inspection that may also process common food allergens." 
Many states impose annual sales limits on cottage food operations. The state of Illinois removed its limit is $36,000 in gross receipts in 2018 however some counties may impose sales limits. Those who exceed the annual limit are legally required to produce their food in a shared commercial kitchen which must meet stricter food safety standards. A major reason for this is that if there is a foodborne illness outbreak from a cottage food operation, a sales cap may provide the benefit of limiting the potential harm from the outbreak.

Home Kitchen Operations

In 2014, Illinois passed an amendment to the previous law, in order to allow "home kitchen operations". This was created in response to 11-year-old Chloe Sterling and her home cupcake business that was shut down when someone notified the health department about her food business. At the time she was making approximately $200 per month. This amendment is a positive outcome from getting turned in to the local health department.

Without this amendment, Chloe would only be able to continue her business if her parents built her a separate kitchen. Instead, bakers are now allowed to produce non-perishable baked goods in a home kitchen without any permit or registration with the health department. These items can be sold directly to consumers as long as gross receipts do not exceed $1000 per month.

What does all of this mean?

Cottage Food regulations are good for the consumer, and they are also good for the food entrepreneur. Without these regulations, anyone who wanted to produce food products to sell at their local farmer's market would be subject to the same laws that govern Hostess and Nabisco. This allows food entrepreneurs the ability to start a business without the up-front costs of working out of a commercial kitchen. New Jersey remains the only state without a cottage food industry and thus no small food businesses.

Some food businesses who offer food made in their home kitchen without the proper certification may be charging less than an established business and undercutting the sales of true cottage food entrepreneurs. They are not paying for the health department registration or for the Food Service Sanitation Management course and certification. They may not be purchasing quality ingredients allowing them to have a lower price point and ability able to take customers away from high-quality food businesses who rely on their Cottage Food business for their livelihood.

Our recommendation is simply this. Don't buy perishable food products from someone you don't know if they make it in their homes and don't have the proper certification. Even if the photos they post on social media look amazing, you might be taking a risk. However, if they are selling cupcakes, bread, or cookies, your purchase may be helping them financially. Asking if they are registered with their local health department is enough to figure out what you need to know.

If you want to purchase a cheesecake or a pumpkin pie from a trusted friend or relative who is an amazing baker, go ahead. Do it and enjoy! Otherwise, caveat emptor (buyer beware).

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The Business of Food, LLC
1330 E. State Street, Unit B
Sycamore, IL 60178