(a) An establishment engaged in selling feed may qualify as an
exempt retail or service establishment under section 13(a)(2) of the Act
if it meets all the requirements of that exemption. Similarly an
establishment making and processing the feed it sells may qualify as an
exempt establishment under section 13(a)(4) of the Act if it meets all
the requirements of that exemption.
(b) In determining whether, under the 13(a)(2) exemption, 75 percent
of the establishment's sales are not for resale and are recognized as
retail sales in the industry, sales of feed to feeders will generally
meet the requirements for such classification as previously explained in
this subpart and will ordinarily be considered to be retail sales except
for the following which do not meet the requirements and are not
recognized as retail: Any sale of feed for shipment by railcar direct to
the feeder; and sales made at a quantity discount which results in a
price comparable to or lower than the establishment's price to dealers
for resale or, if the establishment makes no sales to other dealers, at
a price comparable to or lower than the price prevailing in the
immediate area in sales by similar establishments to dealers for resale.
(c) The custom grinding and mixing of feed (including the addition
of supplements) for feeders from the grain they themselves bring in will
be regarded as the performance of a service, and not the making or
processing of goods for sale under section 13(a)(4). Such services are
recognized as retail
services in the industry and the revenue derived therefrom will be
included with the retail receipts of the establishment.
(d) Employees employed in the grinding and mixing of feed for sale
(as distinguished from the grinding and mixing services discussed in
paragraph (c) of this section) are engaged in the making or processing
of goods and are therefore not exempt under section 13(a)(2). In order
for these employees to be exempt, the establishment by which they are
employed must meet all the requirements of section 13(a)(4), including
the requirement that the establishment must be recognized as a retail
establishment in the particular industry. The typical small feed mill
engaged in selling goods to farmers appears to be recognized as retail
in the industry. There are, of course, large mills which are essentially
factories which are not so recognized. As an enforcement policy an
establishment which qualifies for exemption under section 13(a)(2) will
be considered to have met this requirement: (1) If less than 50 percent
of its retail sales are composed of feed manufactured at the
establishment; or (2) if its sales of feeds manufactured at the
establishment do not exceed 2,000 tons a year. In determining these
tests for the applicability of the exemption, the computation of the
sales of feed manufactured will be made on an annual basis in the same
manner as set forth in Secs. 779.265 through 779.269 for the computation
of sales.
