Expanding Organic Production in the United States: Challenges and Policy Recommendations November 2016 Draft Version 1
Table of Contents
The Opportunity and the Challenge .................................................................................................... 3 Consumer Growth in Demand for Organic Products ........................................................................................ 3 The Challenges Limiting Domestic Organic Production ............................................................... 7 Unique Costs that Organic Producers Face Relative to their Conventional Counterparts ................................ 7 Impediments to Domestic Production of Organic Feed Grains ......................................................................... 9 Sustainable Pay Price to Farmers .................................................................................................................... 12 Lack of Access to Land and Capital .................................................................................................................. 14 Lack of Control over Off-­‐Farm Contaminants that Interfere with Organic Production and Markets ............. 15 Solutions to the Challenge .................................................................................................................... 16 Research .......................................................................................................................................................... 16 Organic Certification Cost Share Assistance .................................................................................................... 20 Access to Regionally Adapted Seeds, Bred for Organic Farming Systems ....................................................... 21 Risk Management Options for Organic and Transitioning Farmers ................................................................ 22 Maintaining the Integrity of Organic Standards .............................................................................................. 23 Other Solutions Proposed by the Organic Sector ............................................................................................ 24 National Organic Coalition Policy Recommendations ................................................................ 26 Organic Research ............................................................................................................................................ 26 Organic Transitions Program (ORG) ................................................................................................................ 26 Organic Agriculture Research and Education Initiative (OREI) ........................................................................ 27 USDA Organic Data Collection ......................................................................................................................... 27 Seeds and Breeds Initiative ............................................................................................................................. 28 Organic Certification Cost Share Assistance .................................................................................................... 29 Compensation for Damage to Organic Crops from Off-­‐Farm Sources ............................................................ 30 USDA Conservation Program Reform .............................................................................................................. 31 USDA Risk Management Programs ................................................................................................................. 32 Access to Land and Capital for Beginning Organic Farmers ............................................................................ 33 Standards and Enforcement for Organic Contracts ........................................................................................ 34 Organic Imports ............................................................................................................................................... 34 2
The Opportunity and the Challenge Consumer demand for organic products continues to grow at over 10 percent annually, as has been true for years. This growth trend is an encouraging sign that consumers recognize and appreciate the multiple benefits of organic agriculture, and are willing to pay extra for that value. Such rapid consumer growth trends present an opportunity as well as a challenge. The consumer demand is an opportunity for new and transitioning U.S. farmers to take advantage of a growing market that offers higher net returns, on average, than conventional farming.1 2 The challenge is that domestic organic production is growing at a much slower pace than demand, requiring an increasing percent of U.S. organic food to be imported to meet consumer needs. For example, the number of U.S. certified organic farms grew by only 2.4 percent annually on average over the period of 2010-­‐2014, according to USDA’s National Organic Program data.3 This paper seeks to explore the impediments faced by U.S. farmers in transitioning to organic or scaling up their organic production, and to discuss various policy and market-­‐based tools that could help to address those challenges. Consumer Growth in Demand for Organic Products U.S. organic sales have grown at over 10 percent annually every year since the USDA organic rule was finalized in 2002. The only exception to the double-­‐digit growth trend was in the middle of the recession in 2009 and 2010, when organic sales still grew by an impressive 5 percent and 9 percent, respectively.4 1 U.S. Census of Agriculture from 2007 and 2012 and the related follow-­‐on Organic Production Surveys from 2008 and 2014, show higher net returns for organic farming relative to conventional farming (USDA’s National Agricultural Statistics Service). For example: 2014 Organic Production Survey: Average sales per organic farm: $387,070 (total value of organic ag products sold divided by number of farms from table 1) Average expenses per organic farm: $280,722 (from table 20) 2012 Census of Ag: Average sales for all U.S. farms: $187,097 (from table 2) Average expenses for all U.S. farms: $155,947 (from table 4)
2 A 2015 meta-­‐data analysis of the financial competitiveness of organic agriculture on a global scale concluded that “[d]espite lower yields…organic agriculture was significantly more profitable than conventional agriculture…. [Even in] longer or more diverse rotations.” Crowder, D. and J. Reganold. 2015. Financial competitiveness of organic agriculture on a global scale. PNAS, v.112; No. 24 pp. 7613-­‐14, June 16, 2015. 3
USDA/AMS/NOP database of certified organic operations for the years 2010-­‐2014, https://apps.ams.usda.gov/integrity/Reports/DataHistory.aspx. Some anecdotal evidence points to a jump in U.S. organic acreage and farm numbers in 2015, but those data will not be confirmed more definitively until NASS publishes the 2015 Certified Organic Production Survey estimates in the fall of 2016 and then more comprehensive Organic Certifier Census estimates in December of 2016. https://www.ams.usda.gov/press-­‐release/usda-­‐reports-­‐record-­‐growth-­‐us-­‐organic-­‐producers-­‐1-­‐billion-­‐usda-­‐investments-­‐boost 4 https://apps.ams.usda.gov/Integrity/Reports/DataHistory.aspx; https://www.ams.usda.gov/press-­‐release/usda-­‐reports-­‐record-­‐growth-­‐
us-­‐organic-­‐producers-­‐1-­‐billion-­‐usda-­‐investments-­‐boost 3
Annual Growth in U.S. Organic Sales (2005-­‐2015) 20.0 Annual growth (percent) 15.0 10.0 5.0 -­‐ 2005 e= estimated
2006 2007 2008 2009 2010 2011 2012 2013 2014e 2015e Source: USDA, Economic Research Service using data from Nutrition Business Journal, 2015.
According to the Organic Trade Association, total U.S. organic sales (food and non-­‐food) reached $43 billion in 2015.5 For some subsectors for the organic market, these growth trends are even more pronounced. For example, sales of organic fluid milk tripled from 2007 through 2014, and now command over 5 percent of the fluid milk market. Chronic shortages of U.S. organic grains for dairy production have limited this growth, and resulted in increases in imported organic grains, as well as shortages of organic milk on store shelves. In contrast, sales for conventional fluid milk have consistently declined. 6 U.S. market penetration of organic milk, 2007-­‐2015 Organic advocates take great pride in those consumer growth figures, but what do we really know about why consumers continue to ramp up their purchases of organic foods? Consumer 5
2016 Organic Industry Survey, Organic Trade Association
Greene, Catherine, and William McBride, “Consumer Demand for Organic Milk Continues to Expand – Can the U.S. Dairy Sector Catch Up?, Choices, AAEA, 1st Q. 2015, http://www.choicesmagazine.org/choices-­‐magazine/theme-­‐articles/theme-­‐overview/consumer-­‐demand-­‐for-­‐
organic-­‐milk-­‐continues-­‐to-­‐expandcan-­‐the-­‐us-­‐dairy-­‐sector-­‐catch-­‐up. and USDA-­‐ Agricultural Marketing Service-­‐ Market News; Greene and McBride (2015) 6
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polling data tells us that consumers set very high standards when they buy food at the grocery store. A Consumer Reports consumer survey poll from December 20157 shows that consumers have strong opinions about what they want from their food. Consumer Reports Survey Question: “When purchasing food, how important is each of the following as an objective for you?” Consumer Reports also conducted a very similar survey in 2014. When comparing the survey results from 2014 to 2015, there was a notable increase in the percentage of consumers that say each objective is very important. This trend appeared to be driven by consumers shifting from important to very important. 7 http://www.consumerreports.org/content/dam/cro/magazine-­‐
articles/2016/March/Consumer_Reports_Natural_Food_Labels_Survey_2015.pdf 5
These data suggest that consumers in greater numbers and with greater intensity are demanding food that meets certain environmental, safety and social objectives. Further analysis of the survey data from Consumer Reports suggest that significantly higher percentages of consumers who buy organic food also say that each of these objectives is “very important” to them, relative to all respondents. While this paper is more focused on the production challenges faced by U.S. organic farmers, and how to address those challenges to more fully meet demand with domestic production, it is important to understand the consumer demand trends as well. U.S. farmers interested in making the transition to organic production, or beginning farmers considering organic certification, need to know that the consumer demand for organic products will continue to expand and not stagnate just as they enter the market. Producers also need to understand the market demand trends by product or crop, not just general demand for organic products as a broad category. For example, while organic represents 5 percent of all U.S. food and beverage sales, organic fruits and vegetables sales (as a percentage of all sales of US fruits and vegetables) represent 13 percent of the market, and organic dairy is just over 5 percent, with a much lower percentage in the meat and poultry categories. These variations are reflected in sector percentages of total organic sales, where, according to USDA ERS, “produce (fruits and vegetables) and dairy are still the top two organic food categories, accounting for 43 and 15 percent of total organic sales in 2012;...Packaged foods, beverages (including soymilk), and breads/grains have 9-­‐11 percent market shares, down slightly from a decade ago. The meat, fish, and poultry category, which is dominated by poultry sales, gained the most over the last decade but still represents just 3 percent of total organic sales.”8 Currently, the most acute imbalance between demand and domestic supply is in organic grain production. While organic sales have reached 5% of U.S. food and beverage sales, U.S. acreage devoted to organic agriculture is less than one percent of total U.S. cropland.9 Organic fruit and vegetable acreage climbed 39 percent between 2011 and 2014, but certified organic field crop acreage only increased 9 percent in that same period.10 Recent trends have shown a significant surge in U.S. imports of organic feed grains, most of which is used as feed for organic dairy, poultry and other livestock operations. For example, the value of imports of organic soybeans increased by 266 percent from 2012 to 2015, and the value imports of organic field corn (yellow dent corn) increased by 307 percent from 2013 to 2015. 11In comparison, imports of conventional corn fell by 77 percent during the period of January 2013 to December 2014.12 http://www.ers.usda.gov/amber-­‐waves/2013-­‐october/growth-­‐patterns-­‐in-­‐the-­‐us-­‐organic-­‐industry.aspx#.VwEhufkrJD8 http://ota.com/sites/default/files/indexed_files/StateOfOrganicIndustry_0.pdf 10 Greene, Catherine, ERS “The Outlook for Organic Agriculture”, 92nd Annual USDA Agricultural Outlook Forum, Arlington VA, Feb. 25, 2016 11
http://apps.fas.usda.gov/gats/ExpressQuery1.aspx 12 Jaenicke, Edward C. and Iryna Demko, Report to the Organic Trade Association: Preliminary Analysis of USDA’s Organic Trade Data: 2011 to 2014, April 2015, pp. 59, 85 8
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Organic Soybean and Field Corn Import Trends (by annual value, in thousands of dollars) 2011 2012 2013 2014 2015 Jan-­‐July 2015 Jan-­‐July 2016 Product Category Organic Yellow Dent Corn, Except Seed (tracking started in 2013) Organic Soybeans, Except Seed % change; first 6 months of 2015 vs. 2016 0 0 36,620 35,700 112,712 65,852 107,029 63 percent 41,790 90,177 110,237 184,168 240,175 156,156 146,357 -­‐6 percent Source: USDA Foreign Agriculture Service, Global Agricultural Trade System website13 With the surge in imported organic grains, some have raised concerns about the inability of USDA and the U.S. Customs and Border Patrol (CBP) to ensure that all imported product is meeting U.S. organic standards.14 The U.S. Customs and Border Patrol is instituting a new automated system for reporting and tracking imports and exports, called Automated Commercial Environment (ACE).15 There may be opportunities to use that new system to build in mechanisms that more fully and consistently track compliance of organic imports with U.S. standards. The Challenges Limiting Domestic Organic Production Given those data, it is not surprise that the hottest topic in the organic sector currently is the need to increase domestic production of organic crops, meat and animal products to meet the steady, double-­‐digit growth in organic demand. 16 This paper seeks to add to that evolving dialogue, and will focus both on discussing proposed solutions to the challenges as well as asking questions to foster further discussion. Unique Costs that Organic Producers Face Relative to their Conventional Counterparts Data from USDA’s National Agriculture Statistics Service (NASS) show that while organic farmers spend less on purchased inputs than conventional farmers, their labor and feed costs are much higher.17 13
http://apps.fas.usda.gov/gats/ExpressQuery1.aspx
http://www.ofarm.coop/single-post/2016/09/18/Press-Release-OFARM-and-Food-Water-Watch-Request-Audit-of-Imported-Organic-Grain
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https://www.cbp.gov/trade/automated
16 This is anecdotal evidence pointing to a jump in domestic organic acreage in 2015. But those figures will not be conclusive until NASS publishes 2015 survey estimates in the fall of 2016, and the more comprehensive Organic Certifier Survey results are expected in Dec of 2016. 17 http://www.agcensus.usda.gov/Publications/Organic_Survey/2014%20Organic%20Survey%20Release%20Briefing.pdf http://www.agcensus.usda.gov/Publications/2012/Online_Resources/Organics/organics_1_020_020.pdf http://www.agcensus.usda.gov/Publications/2012/Full_Report/Volume_1,_Chapter_1_US/st99_1_004_005.pdf 14
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However, the positive relationship between productivity and financial return from organic farming is outlined in a 2012 article in the Journal, Pediatrics 18: “The largest prospective farming study to date is a comparative trial of more than 20 years’ duration conducted by researchers from Cornell University. This study, conducted in Pennsylvania, compared various conventional and organic farming approaches in a controlled prospective design in which confounding influences such as weather and moisture were similar in the different systems. Over 20 years of observation, the organic fields had productivity that was generally comparable to the conventional fields, while avoiding environmental pollution with herbicides and pesticides and reducing fossil fuel consumption by 30%. Although costs were higher primarily because of increased labor costs (15%), the return for the organic plots was higher because of the higher prices commanded at the marketplace.” Not only is organic production more labor intensive, but also it is also more management intensive. For example, organic production requires an intricate base of scientific knowledge about soil biology, ecology, and in some cases, animal science. Where conventional crop farming systems require an understanding of how to apply off-­‐farm inputs such as pesticides and fertilizers to maximize production, this is often done based on very clear application guidelines provided by the product manufacturer or readily available advice from USDA extension agents. In contrast, an organic crop farmer must have a full understanding of organic systems that relate to their unique, site-­‐specific needs, including: • managing elaborate crop rotations to build soil fertility and break pest cycles; • encouraging beneficial insects to combat insects that can damage crops; • using tillage practices to combat weeds without encouraging erosion; • getting access to seeds that are ideally suited to their cropping systems, soils, and changing climates; And, as required by regulation: • maintaining and improving the natural resources of the operation, including soil and water quality19; and, • conserving biodiversity on their farms20. In organic livestock production, organic standards require ruminant livestock to have access to pasture for grazing requirements, so organic farmers must have a great deal of knowledge about grazing management for their specific soils, pest conditions and climates. In addition, 18 Forman and Silverstein, 2012, “Organic Foods: Health and Environmental Advantages and Disadvantages”, Pediatrics 2012;130:e1406–
e1415; p. e1412; and Pimentel D, Hepperly P, Hanson J, Douds D, Seidel R. Environmental, energetic and economic comparisons of organic and conventional farming systems. Bioscience, 2005; 55(7): 573-­‐582 19 7 CFR §205.200 of USDA’s Organic Rule 20 Preamble to USDA’s Organic Rule; 7 CFR § 205.200; and https://www.ams.usda.gov/sites/default/files/media/NOP%205020%20Biodiversity%20Guidance%20Rev01%20%28Final%29.pdf 8
since organic standards do not allow for use of antibiotics, organic farmers must also have a very elaborate understanding of animal health and holistic approaches to animal disease prevention and treatment. Some resources exist to help organic farmers build this base of knowledge. However, organic farmers must often rely on trial-­‐and-­‐error approaches to address production challenges, or depend on an expanding network of organic farmers who have faced similar challenges. Federal programs such as USDA’s Sustainable Agriculture Research and Education (SARE) program provide funding for farmer-­‐led on-­‐farm research that can be very helpful to organic farmers. The ATTRA (Appropriate Technology Transfer for Rural Areas) program, also funded though USDA provides a valuable hotline and information clearing-­‐house for farmers who have practical questions about production challenges on their farms. In some areas, USDA Extension Service and National Resource Conservation Service personnel are knowledgeable about organic production, but often that is not the case. In recent years, USDA has made a concerted and impressive effort to improve basic understanding of organic agriculture throughout the agency, by providing an Organic Literacy Initiative on-­‐line course that has been taken by over 30,000 USDA employees.21 Impediments to Domestic Production of Organic Feed Grains When you talk to farmers about what would motivate them or other farmers to transition to organic or to scale up their production, one of the frequent (and perhaps obvious) responses is pay price. In other words, if farmers are convinced that the pay price for their crops or product will be sufficient and sustainable enough to reward them for the extra costs they face in organic production, farmers will be willing to make the shift. This is a logical conclusion. However, the huge spread in pay price between organic grains and conventional grains has unfortunately not resulted in a big increase in U.S. production of organic grains.22 Even after the cost of production is factored in, examples of returns on organic corn could be $51-­‐$66 per acre over conventional corn production, and organic soybeans at $22 to $41 per acre over conventional soybeans production.23 21 According to a USDA “Organic Agriculture” fact sheet, the “…Organic Literacy Initiative [is] a training and outreach program to help USDA employees better understand and serve organic operators. By spring of 2014, over 30,000 USDA employees had taken the "Organic 101" course and nearly 23,000 had taken the "201" course. The training is also available to the industry and consumers on the web at www.ams.usda.gov/services/organic-­‐certification/is-­‐it-­‐an-­‐option.” http://www.usda.gov/wps/portal/usda/usdahome?contentidonly=true&contentid=usda-­‐results-­‐organic-­‐agriculture.html 22 McBride, Wiklliam D., Catherine Greene, Linda Foreman, and Mir Ali, The Profit Potential of Certified Organic Field Crop Production, USDA/ERS, ERS Rpt. No. 188, July 2015. 23
Cooke, Bryce, Organic Grains Markets: Supply, Demand and the role of imports, Presentation for OFARM, Feb. 25, 2016, USDA ERS. 9
Source: Organic prices (food-­‐grade and feed grade) from USDA Agricultural Marketing Service; conventional prices (all uses) from USDA National Agricultural Statistics Service; in Cooke, Bryce, Organic Grains Markets: Supply, Demand and the role of imports, Presentation for OFARM, Feb. 25, 2016, USDA ERS. 10
Despite these figures, overall adoption of organic corn, soybeans, and wheat remains low, standing at less than 1 percent of the total acreage of each crop in 2015.24 This suggests that there is something more complicated at play than simple pay price differences. One suggestion has been made that while the price premium for organic corn and soybeans may be significant, the markets and price premiums for other crops in an elaborate organic crop rotation may be less certain, or even non-­‐existent. A corn and soybean rotation is common in a conventional system. However, organic cropping systems often involve rotations of 6 or more crops. Some of the crops in an organic rotation are not marketed at all, but are turned into the soil to build fertility, organic matter, and promote healthy biological activity in the soil. Therefore, it is not sufficient to look only at the price premium for one or two of the crops in the rotation. The income potential for shifting from a conventional cropping system to an organic system must be viewed across the life of the full rotation.25 In a recent examination of global data, there is indication that even when rotations are optimized, “organic agriculture is more profitable… and has higher benefit/cost ratios… than conventional agriculture.”26 If the marketing challenges for the full spectrum of crops involved in the elaborate organic rotations can be addressed, the benefits of these rotations can be quite significant from the perspective of soil fertility, pest management, and even risk management. This is described in the article “Economics of Organic Production,” on the USDA Sustainable Agriculture Research and Education (SARE) website27: Fred Kirschenmann, director of the Leopold Center in Iowa and a long-­‐time North Dakota organic farmer, believes that the nature of organic farming and its reliance on crop rotation provides protection against vulnerability. "Diversity spreads out risks and vulnerabilities," he explains in the introduction to Cereal-­‐Legume Cropping Systems. "If you have one or two crops, you are vulnerable to market and natural adversities of that narrow band of crops. That makes farming a high-­‐risk venture. As diversity on the farm increases, growing risks get spread out and market opportunities increase." Other questions have arisen about why it has been so difficult to encourage farmers to move into organic grain production, even when the organic price premium for organic corn and soybeans are so significant. Another likely factor is the high capital cost associated with grain production in comparison to produce production, for example. Grain production often requires a much bigger land base and greater investment in machinery and equipment. For beginning farmers looking to get into organic production, these costs can be daunting. 24 U.S. Department of Agriculture, National Agricultural Statistics Service. Various issues. (Certified Organic Survey, 2015 Summary, published September 2016 and Crop Production 2015 Summary, published January 2016). 25 http://www.sare.org/Learning-­‐Center/Books/Crop-­‐Rotation-­‐on-­‐Organic-­‐Farms 26 Crowder, D. and J. Reganold. 2015. Financial competitiveness of organic agriculture on a global scale. PNAS, v.112; No. 24 pp. 7613-­‐14, June 16, 2015. 27 http://www.sare.org/Learning-­‐Center/Bulletins/Transitioning-­‐to-­‐Organic-­‐Production/Text-­‐Version/Economics-­‐of-­‐Organic-­‐
Production/Economics-­‐of-­‐Organic-­‐Production-­‐Page-­‐2 11
There may be social factors at play as well. For new farmers, there may be more attraction to “getting their feet wet” in organic production by starting in small-­‐or-­‐medium-­‐scale organic fruit and vegetable production, particularly on the urban fringe. While per-­‐acre land prices in those areas are high, it is possible to start production on a small plot without making a huge investment. For young farmers eager for a social network in an urban area, organic produce production may be a more attractive option, even if organic grain production could be more lucrative in the long term. One exception to this may be for small-­‐scale grain production for direct-­‐to-­‐consumer value-­‐ added sales into urban markets, such as in the Northeast. For example, the Greenmarkets network of farmers markets in New York City strongly encourage vendors selling baked goods in those farmers markets to use regionally grown grains in those baked goods.28 In theory, this is an attractive market for organic farmers in Upstate New York, but access to grain seeds that are adapted to the soils and climates of that area is very limited. Currently, conventional farmers, not organic, are capturing this market niche for small-­‐scale regional grain production. Sustainable Pay Price to Farmers Without a sustainable pay price, US producers will not be encouraged to grow their production to meet the escalating demand. The term “sustainable pay price” refers to the farmgate price above the cost of production and at a level which allows the farmer and their workers to make a reasonable living, as well as to invest in the growth of the farm. Issues around pay price touch on contracts and contract fairness, market concentration and buyer power, the structure of agriculture payments in the US food and agriculture complex, food assistance programs, as well as policies around ‘cheap food’ in the US. Organic has enjoyed a prolonged period of a sustainable pay price in many sectors, but the surge in imports and current disconnect between supply and demand may actually lead to a drop in pay price for domestic producers. These and many other questions must be addressed in the continuing conversation regarding pay price. The buyer consolidation trends seen in the conventional food and agriculture sector have taken hold in organic sector as well. Large conventional food companies, many of which are themselves merging, have purchased many of the smaller organic brands that were pioneers in the organic sector. When there are fewer buyers competing for the products that farmers are selling, the bargaining power of organic farmers is negatively impacted. The infographic below, developed by Professor Phil Howard at Michigan State University, shows the very tangled web of ownership of organic brands by large conventional food companies. 28
http://www.grownyc.org/greenmarket
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For many early organic farmers, the attraction of organic production was the ability to be independent and escape the woes of conventional production, however they were perceived. While organic remains distinct from conventional agriculture in many ways, the market consolidation has limited the independence and niche-­‐market ethos so often sought by early organic farmers, at the same time as it has given organic farmers greater access to national and global markets. One of the trends that has accompanied the consolidation of organic brands and buyers is the increased use of written contracts. In 2012, the Farmers Legal Action Group (FLAG) published an extensive analysis of organic contracts that discusses the pros and cons of written contracts from a producer standpoint, including words of caution about contract terms that are used by some buyers to shift risk to farmers.29 If large organic buyers are able to use their market power to impose unbalanced contract terms on organic farmers, it could discourage new and existing farmers from entering organic markets all together and further our nation’s reliance on imports to serve our domestic markets. 29
http://www.flaginc.org/publication/farmers-guide-to-organic-contracts/
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Lack of Access to Land and Capital Access to land and capital is a challenge for many beginning farmers. But the challenge is even more acute for new farmers who want to farm organically, or even for existing conventional farmers seeking to convert to organic. USDA organic standards require land to be managed organically for 3 years prior to certification, meaning that no prohibited substances (no synthetic fertilizers, pesticides or GMOs) can be applied to the land. To buy land that has already gone through this transition is very expensive. However, for a farmer to transition the land themselves is also costly, because the crops or livestock from the operation cannot be certified and sold as organic until the land has been fully transitioned, even though the operation is incurring the higher costs of managing the land organically. Younger farmers without access to capital may opt to lease land instead of purchasing it, with plans to work with the landowner to transition the land to organic. However, in doing so, it is critical that the lease term be long enough in duration to allow the farmer to reap the reward once the 3-­‐year transition period is completed and their products can be sold as certified organic. In addition, some of the agronomic values (such as increased fertility or resistance to disease/pests) do not really begin to “pay off” (biologically) until 5-­‐10 years into organic production. Some organizations, such as the Midwest Organic and Sustainable Education Service (MOSES) in Wisconsin, have educational facts sheets about ways to structure lease agreements that fully address the needs of both parties in an organic land lease. 30 MOSES has also established Land Link-­‐Up programs to connect younger farmers eager to farm organically with landowners eager to have their land managed organically. 31 These programs are examples of private sector initiatives to make land more accessible for organic production. Many states have land-­‐link programs, but need to add assistance for the unique needs of organic producers. In addition, there are some public sector initiatives targeted at easing the expense of converting land to organic production. For example, the Transition Incentive Program option under USDA’s Conservation Reserve Program’s (CRP) offers a special 2-­‐year extra payment incentive to owners of land currently enrolled in the CRP, but returning to production. Owners must rent or sell the land to eligible farmers who will: use sustainable grazing practices or resource-­‐conserving cropping systems, or transition the land to organic production. USDA’s Environmental Quality Incentive Program (EQIP), which provides cost share assistance for implementing conservation practices on working farms, includes an Organic Initiative providing cost share assistance for conservation practices for organic farmers and those transitioning to organic. Because organic certification requires farmers to maintain and 30
https://mosesorganic.org/wp-content/uploads/Publications/Fact_Sheets/LandRentalAgreement.pdf
31
https://mosesorganic.org/farming/land-link-up/
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improve the natural resources of their operation, and to conserve biodiversity, the EQIP cost share assistance can be very helpful for farmers transitioning their land to organic. Unfortunately, the payment caps established by statute for the Organic Initiative are very low ($20K annually, or $80K over any 6-­‐year period) compared to the larger EQIP program ($450,000 over 5-­‐year period). The payment inequities have limited the effectiveness of the Organic Initiative, and must be equalized for the program to reach its full potential as a tool to help increase U.S. organic production. Lack of Control over Off-­‐Farm Contaminants that Interfere with Organic Production and Markets One of the unique challenges facing organic farmers and potentially limiting domestic organic production growth is the farmers’ lack of control over off-­‐farm contaminants that interfere with organic production. The two biggest examples of the problem are genetic drift from genetically engineered (GE) crops planted on neighboring farms, and pesticide drift from neighboring farms. A 2013 survey of organic grain farmers in 17 states conducted by Food & Water Watch in partnership with the Organic Farmers’ Agency for Relationship Marketing (OFARM) showed genetic drift from GE crops to be a major concern for organic farmers. The survey highlights32 include: • Nearly half of respondents are skeptical that GE and non-­‐GE crop production can coexist. • Over two-­‐thirds do not think good stewardship alone is enough to protect organic and non-­‐GE farmers from contamination. • Five out of six responding farmers are concerned about GE contamination impacting their farm, with 60 percent saying they are extremely concerned. • One out of three responding farmers have dealt with GE contamination on their farm. Of those contaminated farmers, over half have been rejected by their buyers for that reason. They reported a median cost of a rejected semi load (approximately 1,000 bushels) of $4,500. • Nearly half of responding farmers would not choose to purchase crop insurance to cover losses associated with GE contamination. Those who would purchase insurance, three out of four reported that GE patent holders, GE users or both of those entities should bear the liability burden for any economic loss associated with GE contamination. Because of the prevalence of GE crop plantings, particularly in the Midwest, many U.S. processors of “non-­‐GMO” and organic grains struggle to find U.S. sources of organic and non-­‐
GE corn and soybeans that do not show some level of GE contamination as a result of genetic drift, even though the farmers selling the crops planted non-­‐GE seeds. This has resulted in a loss of organic corn and soybean markets to other countries were GE crops are less prevalent. This is described further by Cathy Greene and Katherine Smith of USDA’s Economic Research Service: 32
http://www.foodandwaterwatch.org/news/survey-organic-farmers-pay-price-gmo-contamination
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U.S. organic soybean acreage has remained relatively flat since the early 2000s despite increasing demand for organic feed grains and consumer products such as soymilk, and U.S. feed grain distributors and soy product manufacturers report sourcing organic soybeans from other countries. Meeting government and private standards for non-­‐GE crops is easier for farmers in many countries outside the United States where adoption of GE crops is low. 33 Although organic farmers do not lose their organic certification as a result of genetic contamination from off-­‐farm sources, they can still lose markets if their buyers test the product and reject the shipment based on GE presence, however unintended it may be. Therefore, many organic corn, soybean and cotton farmers incur significant costs to prevent genetic drift of GMO traits from off-­‐farm sources, by establishing broad buffer zones along the borders of their farm, delaying planting to avoid the most vulnerable times for genetic drift relative to their neighbor’s planting schedule, and testing their crops prior to shipment to avoid rejection by their buyers. The costs associated with these prevention measures can be very significant, and create an additional hassle factor that may discourage farmers from making the conversion to organic grain production. In February 2016, USDA announced a new option under the Continuous Conservation Reserve Program (CCRP) to assist farmers with the cost of establishing up to 20,000 acres of new conservation buffers and other practices on and near farms that produce organic crops. 34 This could be beneficial by allowing organic farmers and their neighbors to reap some economic benefit from the land that they take out of crop production to reduce the risk of GE genetic drift and pesticide drift onto organic crops. However, it is likely that the costs of GE and pesticide drift will far outweigh the rental rates from the new CCRP option. Solutions to the Challenges Because the challenges facing the U.S. organic sector in terms of growing U.S. organic production are multi-­‐faceted, so too must be the solutions to these challenges. Research Research can be part of the solution to the slow growth trends in domestic organic production, because research topics often relate to challenges faced by organic farmers. In fact, the National Organic Standards Board (NOSB), USDA’s advisory committee for organic agriculture, annually issues a list of unmet organic research needs and priorities. Many of the research needs identified by the NOSB would address production challenges faced by U.S. organic producers. 35 See more at: http://www.choicesmagazine.org/magazine/article.php?article=131#sthash.mtwYMmt5.dpuf USDA/FSA USDA Financial Assistance Available to Help Organic Farmers Create Conservation Buffers, Release No. 0020.16 http://www.fsa.usda.gov/news-­‐room/news-­‐releases/2016/nr_20160226_rel_0020 35 https://www.ams.usda.gov/sites/default/files/media/MS%202015%20NOSB%20Research%20Priorities_final%20rec.pdf 33
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Unfortunately, during the 5-­‐year period of 2010-­‐2014, USDA expenditures on competitive grant research related to organic agriculture have stagnated, while overall USDA competitive grant research expenditures have grown significantly. The Organic-­‐Specific USDA Research Programs The two USDA organic-­‐specific research programs, the Organic Agriculture Research and Extension (OREI) Program and the Organic Transitions Program (ORG), are extremely important, but their funding has been level at best in recent years. In contrast, the larger competitive grant research programs at USDA that could be funding organic research, such as the Agriculture and Food Research Initiative (AFRI), and the Specialty Crop Research Initiative (SCRI), have experienced significant growth in recent years. Yet the percentage of these programs dedicated to organic research is miniscule. USDA Competitive Grant Research Program Funding Trends (Fiscal Years 2010-­‐2016) Agriculture and Food Research Initiative (AFRI) Both USDA and Congress have prioritized funding for AFRI, the flagship competitive research grant for agriculture, in order to enhance U.S. agricultural competitiveness. From fiscal years 2011-­‐2015, funding for the AFRI program increased by 23 percent, from $265 million in fiscal year 2011 to $325 million in 2015, even in the face of tightening federal budgets. Yet according to USDA’s own data, AFRI funding dedicated to organic research has averaged about two-­‐tenths of one percent (0.2 percent) annually. 17
Organic funding in Agriculture and Food Research Initiative (AFRI) 2011–2015 (%) Data Source: USDA-­‐NIFA Specialty Crop Research Similarly, the Specialty Crop Research Initiative (SCRI) has received significant increases in funding in recent years. This should be good news for organic research, because about 13 percent of fruit and vegetable sales are for organic products.36 But according to USDA’s own data, less than 2 percent of the SCRI program was spent on organic research over the 2010-­‐
2014 timeframe. Organic Research within Specialty Crop Research Initiative (SCRI) 2010-­‐2014 (%) Source: USDA-­‐NIFA figures Funding to address a growing list of unmet organic research needs has been stagnant in recent year. Overall funding limitations for the various USDA competitive grants research programs are certainly part of the problem, but may not be the full story. 36
2016 Organic Industry Survey, Organic Trade Association
18
Various eligibility and term-­‐limit criteria for the relevant USDA competitive grant research programs could be influencing their effectiveness in addressing organic research needs and attracting organic research proposals. For instance, in response to the concerns raised about the lack of funding for organic research within the AFRI program, USDA added new language to the AFRI Request for Application (RFA) starting in Fiscal Year 2014 to invite organic research proposals, but did not receive many grant proposals on organic research topics.37 One possible explanation offered by USDA for this problem is that the success rate for AFRI grant proposals is relatively low (11 percent) given the high number of proposals received.38 Often, researchers with organic research topics find it more attractive to submit their proposals to the organic-­‐specific competitive grants programs-­‐-­‐ the Organic Agriculture Research and Extension Initiative (OREI) and Organic Transitions Program—where the success rates have historically been higher. In contrast to the low success rate for the AFRI program, the success rate for grant proposals submitted to the Organic Transitions Program (ORG) was 38 percent in fiscal year 2015. On the surface, this high success rate would normally attract more organic research proposals. However, it may be that the current structure and funding limitations of the program discourage researchers from applying. For example, the ORG program operates within the statutory eligibility criteria of the Section 406 Integrated Research, Education and Extension Competitive Grants Programs, which limits funding eligibility to colleges and universities, although non-­‐profits and farmers can be co-­‐investigators in a project, as long as the majority of the funding is going to the college or university principal investor on the project. The primary focus of the ORG program in recent years has been on environmental topics related to organic production. The fiscal year 2016 Request for Applications describes the ORG priorities as being: 1) environmental services provided by organic farming systems in the area of soil conservation, pollinator health, and climate change mitigation, including greenhouse gases (GHG); 2) development of education tools for Cooperative Extension personnel and other agricultural professionals who advise producers on organic practices; 3) development of cultural practices and other allowable alternatives to substances recommended for removal from that National Organic Program’s National List of Allowed and Prohibited Substances. 37
The language that USDA added to the AFRI grant invitation language in Fiscal Year 2014 to encourage more organic research grant applications
for the plant and animal areas is below (emphasis added):
Plant Health and Production
Increased knowledge of plant systems and the various factors that affect plant productivity will allow U.S. agriculture to face critical challenges in
areas such as food security, sustainability, bioenergy, climate change, multiple cropping, organic production, loss of agricultural land, and increasing
global competition. The choice of organism or system must be justified in terms of importance to agriculture. Understudied organisms and systems
(e.g., alfalfa, forages and organic systems) are also appropriate for this program.
Animal Health and Production
This information is required to develop better management strategies for both conventional and organic production systems to enhance production
efficiency and animal well-being, improve animal health, and develop healthy animal products for human use.
38
Success rate figure is from fiscal year 2014. The new figure for FY 2015 is expected to be available in Dec 2016.
19
All ORG proposals are required to have activities and impact in at least two of the three following areas: research, education and extension. In addition to the funding eligibility and priority limitations of the ORG, there are some significant funding and term limitations to the program that may also be discouraging applications. Since funding for the ORG program has been basically flat at roughly $4 million for the past 6 years, USDA has implemented a low grant limitation of $500,000 for the life of the grant, and eligible projects are limited to 1-­‐3 year terms. The funding, eligibility, term and thematic priority limitations of the ORG could be significant factors in limiting the attractiveness of that program for many organic researchers, who often prefer to apply to the Organic Agriculture Research and Extension Initiative (OREI) instead. The Organic Agriculture Research and Extension Initiative (OREI) has a much broader list of eligible entitles, including colleges, universities. Unlike ORG, the OREI also allows for non-­‐
profit organizations to be principal investigators on grant applications. In addition, the funding and term limits for OREI grants are much higher than under ORG, with maximum grant limits being as high as $2 million for some multi-­‐regional proposals, and term limits ranging from 1-­‐4 years, with the potential for some continuation grants. The additional funding flexibility of OREI is related in part to the greater amount of funding provided for the program, which is statutorily slated to receive $20 million in mandatory funding through fiscal year 2018. For fiscal year 2015, 24 percent of OREI grant proposals were funded.39 Organic Certification Cost Share Assistance One of the unique challenges facing organic farmers is the cost of annual organic certification. Because of the complexity and intensity of maintaining a quality third-­‐party organic certification system, the annual fees that organic farmers and handlers pay can be significant. For some farmers and handlers, particularly small-­‐and-­‐medium scale operations, the organic certification cost share assistance provided through USDA is very helpful in defraying a significant portion of those costs.40 Fortunately, Congress renewed and expanded the funding commitment to these programs with mandatory funding provided through the 2014 Farm Bill. Some have suggested that the rules for the National Organic Certification Cost Share Program (NOCCSP) could be modified to cover a broader range of fees incurred by existing organic operations as well as those transitioning to organic. For instance, USDA could allow for the reimbursement of state certification fees, such as those charged by the California, which operates a State Organic Certification Program. In addition, USDA could also modify the NOCCSP rules to allow for reimbursement of fees charged by certifiers to operations whom the certifier is assisting in the process of transitioning to organic. These changes would be consistent with the statutory requirements of the NOCCSP, and could help reduce some of the costs that have been barriers to transitioning new operations to organic. 39
Anecdotal evidence suggests a surge in funding applications for ORG and OREI in FY 2016 that may result in reduced success rate figures for
those two programs, but those data are not yet available.
40
Certification Cost Share is provided through two USDA programs: the National Organic Certification Cost Share Program (NOCCSP) and the
Agricultural Marketing Assistance (AMA) Act.
20
Access to Regionally Adapted Seeds, Bred For Organic Farming Systems Another challenge facing organic farmers is lack of access to the germplasm suited to their needs. Specifically, organic farmers lack a diverse set of seed and animal breed options to meet the needs of their farming systems, soils, and changing climates as well as consumer demands. In fact, this is a challenge faced by many conventional farmers as well. In recent decades, USDA funding for public plant and animal breeding has dwindled, while resources have shifted toward a more narrow set of major crops and breeds. This shift has significantly curtailed farmers’ access to public plant and animal germplasm, and limited the diversity of locally adapted seed and breed choices for farmers. The problem is particularly acute for organic, sustainable and local food systems where it is of paramount importance that farmers have access to seeds and breeds that are well suited to their unique cropping systems and their local environments. Farmers in many regions of the country are relying on seeds and breeds that are adapted for other regions or farming systems, or no longer meet the changing climatic conditions of their regions. Without renewed funding for development of publicly available cultivars that are locally adapted, organic farmers will always be at a competitive disadvantage, as will entire regions of the country that do not have access to regionally adapted seeds and breeds. Current resource trends in plant and animal breeding have led to a less-­‐diverse agricultural system, with farmers having fewer choices of seeds and breeds to meet a growing list of challenges. Less diversity in our food system means less resilience in the event of blight or other major disruption, less ability to respond to changing climates, less ability to meet consumer demands for local and regionally adapted foods, and higher seed costs to farmers. These trends towards a reduction in biodiversity collectively raise significant concerns about our food security. One of the significant impacts of the shift in USDA funding away from classical plant and animal breeding and the development and release of publicly available cultivars has been a atrophy in the public breeding programs at our nation’s Land Grant Institutions. As described in the Proceeding for the 2014 Summit on Seeds and Breeds for 21st Century Agriculture: Inadequate funding for competitive grants at USDA and other agencies targeted for public cultivar development, along with the concomitant loss of Land Grant University (LGU) capacity funding, has caused a significant decline in LGU ability to maintain meaningful support for public cultivar development. This will lead to the loss of future generations of public plant breeders due to the lack of well-­‐funded and institutionalized career paths within the LGU system.41 As highlighted during the 2014 Seeds and Breeds Summit in Washington D.C., over the 20 year period from 1994 through 2014, 33 percent of the public plant breeding programs in the U.S. 41
http://rafiusa.org/docs/2014SummitProceedings.pdf, page 13 21
have been lost. This loss of seeds in the public domain reduces farmers’ seed choices far into the future, and comprises our national food security. Below is a regional breakdown of the loss in public plant breeding programs.42 Classical plant breeding and cultivar development programs are the best way to provide future breeders with skills the marketplace demands. A 2011 article in the journal Crop Science details a survey of breeding professionals in the public sector, the private sector, and in the developing world about the traits they sought in graduate students. The skills most in demand among all three groups were practical skills in field-­‐based breeding. While molecular breeding contributes to graduate students’ education, classical plant breeding and cultivar development provide a skill set required in their careers, regardless of the sector of plant breeding they enter. 43 Risk Management Options for Organic and Transitioning Farmers Organic Price Elections Federal crop insurance programs have historically discriminated against organic farmers. Until 2014, USDA’s Risk Management Agency (RMA) charged a 5 percent surcharge on organic farmers and farmers transitioning to organic, based on the presumption that organic farming practices were more risky than conventional practices. Fortunately, the surcharge is now history and RMA no longer views organic agriculture to be more risky. However, one of the big remaining challenges is to ensure that all organic crops have “organic price elections.” Without price elections for all organic crops, it is not possible for organic farmers to insure all of their organic crops at the organic value. The 2014 Farm Bill included language to require USDA to have price elections for all organic crops by 2015. RMA has made significant strides toward this goal, growing from a meager 4 organic price elections offered in 2011 to now 51 price elections available for 2016 crop year. In addition the agency has 42
43
Carter, Tracy, et al, What is the State of Public Cultivar Development, 2014 Seeds And Breeds Summit, RAFI-­‐USA. Repinski, et al., Crop Science, Vol . 51, Nov. – Dec. 2011 22
announced plans to add organic price elections for 6 citrus crops in 2017.44 While this is significant progress, RMA still offers organic price elections on only 68 percent of the crops for which conventional policies are offered.45 Whole Farm Revenue Insurance The importance of providing organic farmers access to a full suite of risk management options cannot be stressed enough. Many organic farmers seek to diversify their farm operations by growing a wide range of crops and raising livestock as a way to spread their risk over a wide array of products. But even diversified farms need tools to help manage their risk. One such tool is Whole Farm Revenue Insurance. This risk management option is detailed on the RMA website: Whole-­‐Farm Revenue Protection (WFRP) provides a risk management safety net for all commodities on the farm under one insurance policy and is available in all counties nationwide. This insurance plan is tailored for any farm with up to $8.5 million in insured revenue, including farms with specialty or organic commodities (both crops and livestock), or those marketing to local, regional, farm-­‐identity preserved, specialty, or direct markets.46 Crop Insurance Option for Farmers Transitioning to Organic On February 18, 2016, USDA’s Risk Management Agency announced the availability of a new Contract Price Addendum (CPA) to allow farmers transitioning to organic the ability to receive coverage that reflects their product’s actual value. Previously, transitioning farmers could only insure their crops at the conventional rate. This CPA could prove to be a useful tool in the future. Currently however there are very few buyers who are paying a higher price for crops or other agricultural products during the transition period. Maintaining Integrity of Organic Standards The success of organic agriculture is built on the trust of consumers in the organic label, and their willingness to recognize the additional value of organic products, as well as to pay a price premium for them. Some have suggested that one way to encourage more domestic organic production to meet the explosive growth in demand is to relax the stringent organic standards to make it easier to produce organically. For instance, if only two years were required instead of three to convert land to organic, or if the list of synthetic materials that could be used in organic production was greatly expanded, it might make U.S. organic production much easier. While relaxing organic standards might make organic production easier, it would be grossly counter-­‐productive in several ways. First and foremost it would run the risk of undermining consumer confidence in the organic label. The double-­‐digit growth in organic sales should not be taken for granted because that growth could erode very quickly if consumers no longer http://www.rma.usda.gov/news/2015/09/organics.pdf http://www.rma.usda.gov/pubs/rme/2016organicsfactsheet.pdf
46 http://www.rma.usda.gov/policies/wfrp.html 44
45
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trust the organic label and the USDA standards that undergird the label. In addition, if the standards for U.S. organic production were relaxed, it would also apply to imported organic products, so little is gained from the standpoint of gaining greater organic market share for U.S. farmers. Other Solutions Proposed by the Organic Sector Organic Transitional Label In May of 2016, the Organic Trade Association (OTA) submitted a proposal requesting that USDA’s Quality System Assessment Program develop a program for certifying farms that are transitioning to organic production. 47 The proposal is an effort to create links between Accredited Certifying Agents (ACAs) and producers that will help facilitate a smooth transition to organic certification. Private transitional labels are problematic if they do not have provisions in place to prevent producers from cycling in and out of a transitional program or do not have adequate provisions to require producers to follow all of the production standards in the USDA National Organic Program. Having multiple transitional programs also increases the potential for confusion in the marketplace that could undermine consumer confidence in the USDA organic label itself. The OTA proposal is an effort to create a single transitional labeling program to address these concerns. In addition to the benefits, some of the challenges facing this proposal are: • unlike the process used for setting and revising USDA organic standards, as well as the federal rulemaking process overall, the USDA Quality System Assessment Program does not require any public process as part of the USDA approval process; • as currently structured, the transitional label could be used to certify foreign producers and imported organic products, which is problematic since the focus of the proposal is to help build the pipeline for more domestically produced organic products. • the difficulty of creating a transitional label that is welcoming enough to encourage farmers to participate, without displacing organic sales in a way that undermines the economic opportunities for farmers once they are fully certified as organic. California Certified Organic Farmers (CCOF) Certified Transition Program As an accredited organic certifier agency, California Certified Organic Farmers (CCOF) offers a Certified Transition program, described on their website as a program: “… for growers who are transitioning their crops and/or land from non-­‐organic to organic. An operation or parcel must be inspected and demonstrate compliance with all certified organic production requirements, except the three-­‐year transition time, to become CCOF Certified Transitional. Farm operations must have completed one year of 47
http://www.thepacker.com/news/ota-­‐readies-­‐proposal-­‐certify-­‐transitional-­‐organic-­‐acreage 24
transition from use of prohibited materials. When an operation is in the CCOF Certified Transitional program, that farm or crop is pending organic certification until full requirements are met.”48 Farmland Purchase by Nature’s Path Foods In May of 2014, Canada organic cereal manufacturer Nature’s Path announced its “…purchase of 2,760 acres in northern Montana that will help increase organic farmland, attract and educate new farmers, as well as meet the growing demand for organic grains and legumes.”49 In taking this step, the company cited USDA data showing that “…[t]he need for organic farmland has increased as the demand continues to grow at an expected rate of 14 percent through 2018. At the same time, the number of farmers is declining, down 4 percent since 2007, as older farmers retire without enough new farmers to take their place.”50 Private Sector Funding for Organic Research In the face of stagnating federal research dollars for organic research, the organic sector has been good at putting its money where it mouth is by contributing substantial resources to help address the challenges facing U.S. organic farmers. Organic Farming Research Foundation (OFRF) The Organic Farming Research Foundation (OFRF) is a non-­‐profit organization founded in 1990 with the goal of advancing organic agriculture through scientific research. In addition to advocating for federal resources for organic research, OFRF has its own private research grant program that has funded nearly $1.5 million in organic research grants over the period of 2006-­‐2014. 51 Clif Bar and Organic Valley In June of 2015, food manufacturer Clif Bar announced its plans to fund $10 million for 5 faculty endowed chairs in organic agricultural research, and kicked off the initiative by partnering with organic dairy cooperative Organic Valley for a joint $1 million gift to the University of Wisconsin-­‐Madison to establish the Clif Bar and Organic Valley Chair in Plant Breeding for Organic Agriculture. The gift, which was matched by UW graduates John and Tashia Morgridge, will fund research to develop crop varieties adapted to organic systems. Professor William Tracy, a UW-­‐Madison sweet corn breeder in the Department of Agronomy was named as the recipient of the endowed chair. Dr. Tracy not only has a long track record of mentoring students in the discipline of organic cultivar development, but has also been a leader in the public policy arena regarding this and related topics.52 https://www.ccof.org/certification/ccof-­‐certified-­‐transitional-­‐program http://us.naturespath.com/press-­‐release/natures-­‐path-­‐invests-­‐sustainable-­‐future-­‐purchase-­‐2760-­‐acres-­‐organic-­‐farmland 50 Ibid. 51 http://ofrf.org/sites/ofrf.org/files/staff/OFRF%20Executive%20Summary.10.15.v3.8.5x11.pdf 52 http://www.clifbar.com/newsroom/clif-­‐bar-­‐spearheads-­‐10-­‐million-­‐investment-­‐to-­‐fund-­‐five-­‐endowed-­‐chairs-­‐focused-­‐on-­‐organic-­‐
agricultural-­‐research http://www.organicvalley.coop/newsroom/press-­‐releases/details/article/clif-­‐bar-­‐company-­‐and-­‐organic-­‐valley-­‐name-­‐inaugural-­‐recipient-­‐
of-­‐2-­‐million-­‐endowment/ 48
49
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National Organic Coalition Policy Recommendations There is no panacea that will magically bring domestic organic production in direct line with domestic consumption. But there are many areas where changes or advances in federal policy would help to bring those trends together. The jobs and environmental benefits associated with organic agriculture can be significant in this country, but active steps need to be taken to ensure that our country and citizens reaps those benefits. If we continue to rely on increased imports of organic products to meet growing consumer demand, we are being negligent by undercutting U.S. organic farmers and relinquishing those economic and environmental benefits to other nations. Organic Research-­‐ The list of critical research topics to address production challenges facing organic farmers continues to grow, yet funding for organic research has been stagnant at the same time that overall USDA competitive grant research budgets continue to grow. To address these trends, the following actions should be taken: 1. USDA should make a formal policy commitment to increase organic research dedicated to addressing production challenges faced by organic farmers, as well as impediments to transitioning to organic production. 2. USDA should hold a webinar with the organic research community to solicit input about ways to make the Agriculture and Food Research Initiative (AFRI) and Specialty Crop Research Initiative (SCRI) more available and accessible for organic research. 3. Current matching grant requirements established by the 2014 Farm Bill for many USDA competitive grant research programs apply to non-­‐governmental organizations (NGO’s), but exempt Land Grant Universities. Congress should remove these discriminatory matching grant requirements in order to foster greater participation by NGOs with relevant expertise. Organic Transitions Program (ORG) 4. For the Administration’s fiscal year 2018 Budget Request to Congress, the USDA funding request for the ORG should be increased to $5 million, to restore to the level provided in fiscal year 2010. 5. USDA should make the following reforms to the ORG to increase its effectiveness and encourage greater utilization: 4a. Specifically, increase the grant limits from $500,000 per grant to $750,000 in key areas of concern. 4b. A new focus should be added to foster research into better understanding the impediments to U.S. organic production of grain crops, both for animal feed and human consumption. This research should also address questions about market 26
opportunities for all crops in a diverse organic crop rotation, not just corn and soybeans. 6. USDA should include more explicit language in the ORG Request for Applications (RFAs) to clarify that NGOs are eligible to be co-­‐investigators on ORG projects, in partnership with a University or College researcher who is the principal investigator. Organic Agriculture Research and Education Initiative (OREI) 7. USDA should submit a request to the House and Senate Agriculture Committees to significantly increase funding for OREI in the next Farm Bill cycle. 8. Congress should significantly increase funding for OREI in the next Farm Bill. 9. USDA should solicit OREI grant proposals to undertake a survey to help better understand conventional farmers’ attitudes toward organic agriculture and converting/transitioning to organic. The survey should also poll students in agriculture-­‐related college and graduate programs about their attitudes regarding organic farming. USDA Organic Data Collection and Analysis: Without consistent, annual data on U.S. organic farm numbers, acreage, value of production, and import/export figures, it is very difficult to track trends that would assist the organic community and the federal government in assessing the progress of our efforts to bolster domestic organic production. 10. The Organic Certifier Survey should be conducted by USDA annually, and the methodology should be standardized and consistent to ensure reliable trend data. Gaps in funding for this survey have limited the accuracy for organic sector trend analysis. 11. USDA should commit to a full-­‐scale follow-­‐on Organic Production Survey of certified and exempt organic farmers every five years, in the year immediately following the Census of Agriculture, consistently asking the same broad list of questions to allow for trend data on those data sets. In the 4 intervening years, USDA should conduct the more limited Certified Organic Production Survey (only certified organic farmers). 12. In the 2014 Organic Production Survey (OPS) and the 2015 Certified Organic Survey, NASS asked respondents whether or not they had experienced financial losses as a result of genetic drift from GMO crops. However, to get the full picture of economic harm that GMO crops pose to organic farmers, the new OPS should include questions related to costs incurred by organic farmers to prevent GMO contamination, such as delayed planting, buffer setbacks from neighbor’s field, and testing prior to marketing their crops. 13. Currently, it is very difficult to get access to consistent baseline and trend data about key domestic organic production figures. In theory, USDA’s organic integrity database should be a good source of historical and current data about the number of U.S. organic farms in any given year. However, even a simple query such as that is very difficult using the integrity database. Further modifications should be made by USDA to the database to make it more user-­‐friendly. 27
14. USDA’s Economic Research Service should undertake an analysis of marketing options for U.S. organic grain producers who may not have ready markets for all of the crops in their diverse crop rotations. How can organic buyers do a better job of making products that use a more diverse set of organic crops in order to make it more economically viable for domestic production of organic grains? 15. Seeds and Breeds Initiative Summary: Increased support, coordination, and stakeholder engagement is needed within USDA’s research, education, and extension agencies to address the crisis within our nation’s public breeding infrastructure. 15a. Seeds and Breeds Research Coordination Direct USDA’s Research, Education, and Extension Office to coordinate and track public plant and animal breeding research activities within and between REE agencies and in close coordination with the recently re-­‐established National Genetic Resources Advisory Committee (NGRAC). Appoint a dedicated program manager to track and ensure priority on public cultivar development within NIFA’s competitive grants, including AFRI, SCRI, OREI, and SARE, and ensure balanced funding by region, breed, commodity and constituencies. 15b. Public Cultivar Development Funding Require that $50 million per year in total NIFA research funding support public cultivar development research. Increase Hatch Funds, Evans-­‐Allen and all other such Land-­‐Grant University capacity funds by 10 percent with the explicit charge of supporting public cultivar development and the training and retention of next generation of public cultivar developers. 15c. Plant Variety Protections to Support Farmers and Breeders All cultivars and animal breeds developed with public funds shall ensure farmers’ rights to save and use and breeders’ rights to share and improve. Whatever intellectual property mechanisms are used, the rights of farmers and breeders to use the germplasm for further innovation should be clearly stipulated. 15d. National Genetics Resources Program Reauthorize the National Genetics Resources Program with the specific charge of establishing a national strategic germplasm collection assessment and utilization plan. Increase funding by 20 percent to address significant backlog of existing accessions deemed critical to preserve viability and public access. Expand duties of NGRAC to provide guidance to the Secretary on USDA funding for public cultivar development, the state of our crop genetic diversity, and resources needed to sustain the next generation of public cultivar developers. Add four (4) new council members who have 28
expertise in public cultivar and animal breed development from the farm, academic, non-­‐profit and private sectors. 15e. Seed Breeding Conservation Standards Establish on-­‐farm varietal selection, seed saving and breeding criteria for recognition as a Practice Standard and/or Conservation Enhancement Activities under EQIP, CSP, and RCPP. 15f. Stakeholder Engagement Require the Secretary to convene regular stakeholder listening sessions to provide recommendations on national and regional priorities for public cultivar development and NIFA competitive grant programs. 16. Organic Certification Cost Share Assistance Currently, two programs provide organic certification cost share assistance. • The Agricultural Management Assistance (AMA), enacted as part of the Federal Crop Insurance Act, provides certification cost share assistance for organic farmers (but not handlers) in 16 states. The AMA program also provides risk management and conservation grants to producers in those states as well. • The National Organic Certification Cost Share Program (NOCCSP), enacted as Section 10606 of the 2002 Farm Bill and reauthorized through the 2008 and 2014 Farm Bills, provides organic certification cost share for organic farmers in states not covered by the above-­‐mentioned AMA program, and for organic handlers in all States. The program has operated through State Departments of Agriculture. 16a. In some cases, farmers pay a fee to work directly with an accredited organic certifier agency (ACA) to undertake the 3-­‐year process of transitioning their land and operation to organic. The two cost share programs should be expanded to allow for reimbursement of the fees associated with transitioning to organic. 16b. USDA should allow for the reimbursement of state certification fees, such as those charged by the California, which operates a State Organic Certification Program. The changes proposed in recommendations 16a and 16b would be consistent with the statutory requirements of the NOCCSP, and could help reduce some of the costs that have been barriers to transitioning new operations to organic. 17. As part of the Organic Systems Plans (OSP) that organic farmers are required to implement on their farms to be certified as organic, many organic farmers are required to institute preventative measures to minimize the risk of crop damage from off-­‐farm contaminants from neighbor’s fields (such as genetic and pesticide drift). Since the cost of these measures is directly related to organic certification, the two organic certification cost share programs should reimburse farmers for these costs as well as direct certification fees. 29
Compensation for Damage to Organic Crops from Off-­‐Farm Sources Organic crops can be easily damaged by genetic drift from GE crops planted on neighboring fields and pesticide drift from spraying on neighboring fields. Currently the cost of this damage is borne by the organic farmer, including the costs of preventing such damage. The lack of control over the integrity of their own crops can be one factor that discourages existing farmers from making the transition to organic production. Manufacturers of genetically engineered seeds commercialize their products knowing two things: (a) The genetically engineered seeds, traits or crops often cannot be contained within their intended place or crop of use; and (b) When the seeds, traits or crops get into places where they are specifically not intended, the result will likely be economic damage to the farmer whose crop is affected by the unintended GE presence, or processors selling into the organic or non-­‐
GE market. Understanding these problems, GE seed manufacturers’ business model is often to shift the burden of liability for such damages to farmers either through seed contracts or by forcing market recognition of “co-­‐existence” (i.e. tolerance levels). Therefore, a mechanism should be established so that farmers suffering economic and other losses from contamination with genetically engineered material are able to recoup their losses from the manufacturers of genetically engineered seeds. 18. Specifically, Federal legislation should be established to: • Codify a defined cause of action so that farmers that are contaminated are assured of a legal means to pursue genetically engineered seed manufacturers for injuries that include economic loss; • Prevent genetically engineered seed manufacturers from using their inequitable bargaining power to shift all liability for contamination onto farmers who purchase genetically engineered through seed technology use contracts; • Shield a contaminated farmer whose crops are affected by unintended GE contamination from any liability for economic losses that may result for subsequent contamination originating from his or her farm; • Prevent genetically engineered seed manufacturers from using their seeds’ inherent ability to contaminate as a reason to bring patent infringement suits against farmers whose crops are contaminated with unintended GE presence. • Establish an independent National Fund that creates monies for immediate relief due to losses from GE contamination through fees set on GE products, which are paid for by 30
the patent-­‐holders, while fully preserving all rights for those harmed to seek additional legal actions, as necessary, to be made whole. This would include rights to address both perpetual and reputational harms due to such contamination. •
Ensure through an affirmative defense that GE seed manufacturers are not punished for instances where contamination occurs because of a farmer’s gross negligence. 19. To address harm to farmers from pesticide drift, a sensitive crop registry should be established to give farmers access to information about when their spraying practices may negatively affect neighboring farms. 20. A funding mechanism, such as a fee on pesticide sales, should be established by Congress to compensate farmers whose crops are damaged from pesticide or herbicide drift from a neighboring farm. Compensation should account for the direct loss of sales from the incident, but also for the longer-­‐term reputational damage suffered by the farmer whose customers may start to question their ability to provide product free of pesticide/herbicide residues. USDA Conservation Program Reform One of the central tenets of organic certification is protection of natural resources. USDA has taken steps to recognize the environmental and conservation benefits of organic farming through many existing conservation programs, such as the Environmental Quality Incentives Program, the Conservation Security Program, and the Conservation Reserve Program. However, there are a few key conservation policy changes that are critical for organic farmers: 21. The structure of the EQIP Organic Initiative (OI) should be reformed to focus on the needs of farmers transitioning to organic. In recent years, the number of certified organic producers participating in the OI has declined while the number of transitioning farmers has remained relatively steady. Under the leadership of the National Sustainable Agriculture Coalition (NSAC), many organizations, including NOC, are encouraging NRCS to make reforms to EQIP to allow only transitioning farmers to participate in the Organic Initiative, and to create a more distinct opportunity for existing organic producers within the general EQIP pool. This shift not only reinforces a trend already taking place within the EQIP program, but also recognizes the need to bring more U.S. organic farmers into production to help meet growing organic demand. 22. Payment Limit Inequities for Organic Farmers within the Environmental Quality Incentive Program (EQIP) should be addressed. Based on language in the 2008 Farm Bill, USDA’s Natural Resources Conservation Service (NRCS) established the Organic Initiative (OI) within EQIP to provide financial assistance for organic farmers and farmers transitioning to organic to implement conservation practices on their farms. While the OI has been very useful to many farmers, one of the major impediments to its use is the fact that the payment limit for the OI is $80,000 over 6 years, whereas the payment limit 31
for farmers participating in the general EQIP pool is $450,000 over 6 years. This has discouraged participation in the OI, and many organic farmers are choosing to compete in the general EQIP pool instead. Therefore, Congress should equalize the payment limit levels between the OI and the general EQIP pool. 23. The designated Farm Service Agency (FSA) and Natural Resources Conservation Service (NRCS) Organic specialists in each State office should be required to collaborate closely, through a formal Memorandum of Understanding (MOU) between the two agencies. One of the major complaints that organic farmers have in working with USDA is the lack of understanding of organic agriculture by USDA personnel at the State and County office level. In partial response to these concerns, USDA has made a policy decision to have an Organic Specialist designated by each NRCS and FSA State office to be a central resource of knowledge about the agency’s programs and how they relate organic farmers, and to help train County office staff to better assist organic farmers in that State. Because there are some programs, such as the Conservation Reserve Program, where both FSA and NRCS play an important role, there should be an MOU between the two agencies to require the Organic Specialists of the two agencies to work closely together to minimize bureaucratic hurdles and delays in assisting organic farmers. USDA Risk Management Programs The 2014 Farm Bill required USDA to offer price elections for all organic crops by 2015. While RMA has made significant strides toward this goal, RMA still offers organic price elections on only 68 percent of the crops for which conventional policies are offered. 53 24. USDA should offer organic price elections on all organic crops, as required by the 2014 Farm Bill. 25. The following reforms should be made in the Whole Farm Revenue Program (WFRP) to enhance its benefits and accessibility for organic farmers. (These recommendations are adapted from recommendations made by the National Sustainable Agriculture Coalition). 25a. The WFRP currently requires 4 years of historical revenue records. This timeframe should be reduced to make the program more accessible to beginning organic farmers. 25b. Compensation rates for insurance agents administering the WRFP should be increased, in recognition of the fact that these policies are more complex and time-­‐
consuming to write and administer. 53
http://www.rma.usda.gov/pubs/rme/2016organicsfactsheet.pdf
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25c. USDA should continue to streamline their paperwork requirements for the program to make it more accessible for farmers whose production and markets are highly diversified. Access to Land and Capital for Beginning Organic Farmers Lack of access to land and capital is a major impediment for farmers transitioning to organic, particularly beginning farmers. Beginning farmers are much more likely to consider going into organic production than farmers who are already in business and farming conventionally. Therefore, programs that assist young and beginning farmers are likely to help in the effort bring new organic farmers into business as well. (These recommendations are adapted from those of the National Young Farmers Coalition.) 54 26. Congress and USDA should work together to make FSA loan programs more accessible for young and beginning organic farmers. FSA loans are critical for many young and beginning farmers. Capital is one of the biggest barriers to starting a farming career, particularly for young farmers who want to farm organically. The FSA direct loan program requires borrowers to have 3 years of farming experience to be eligible. The direct farm ownership loan experience requirement should be reduced to two years, and USDA should be given the authority to increase the loan limits for direct farm ownership loans in areas of the country with higher real estate prices, or for the purchase of farmland that has been managed organically. The current loan limit is $300,000, which doesn’t go very far in many regions, especially for farmland that has been managed organically. Lastly, in competitive real estate markets, the FSA loan making process is likely to take too long for growers to purchase land. The current application process can take longer than 30 days, and funds may not be available for months. FSA should be authorized to pre-­‐approve Direct Farm Ownership loans. 27. Congress should provide student loan forgiveness for young people who enter agricultural careers. Two-­‐thirds of college graduates have student loan debt when they graduate. Farming is a vital and in-­‐demand career, and the Federal Government should provide incentives to young people interested in pursuing organic agriculture, as is the case in other careers that are critical to our nation’s well being. As one option, full-­‐time farm workers, farm owners and farm apprentices could be added to the Public Service Loan Forgiveness Program (PSLF), now offered to physicians, teachers and government employees. 28. Congress should expand the Beginning Farmer and Rancher Development Program (BFRDP) to improve training and mentorship opportunities for new organic farmers. The Beginning Farmer and Rancher Development Program (BFRDP) was initiated in the 2008 Farm Bill and is one of the most successful programs to date helping young and beginning 54
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farmers. BFRDP provides competitive grants to non-­‐profits and universities for beginning farmer-­‐training opportunities. This program provides an important foundation for farmer training and should be renewed and expanded in the next Farm Bill to make organic farmer training a priority, including supporting organic farmer-­‐to-­‐farmer mentorship and apprenticeship programs. 29. Congress should establish tax credits for selling or leasing land to a beginning organic farmer. In Nebraska and Iowa, landowners are offered tax incentives for selling or leasing land to a beginning farmer. A similar program should be initiated at the federal level to encourage property owners to sell or lease their land to qualifying beginning farmers, with a higher level of tax credit in the purchaser makes a binding commitment to become certified as organic. Provisions to ensure that the beginning farmers are making a majority of their income in farming should be put in place. Standards and Enforcement for Organic Contracts 30. USDA’s Agricultural Marketing Service should publish on it’s website the Farmers Guide to Organic Contract by the Farmers Legal Action Group (FLAG),55 so that organic farmers who are considering signing a production or marketing contract can be fully informed about the pros and cons of doing so. 31. The federal prohibitions that currently exist against the use of certain confidentiality clauses in livestock and poultry contracts should also be broadened by Congress to include organic contracts as well. Transparency about prices paid to organic farmers and terms of production help to foster a more competitive market and allow farmers greater access to information about all of the marketing options open to them. Organic Imports 32. Currently, the U.S. government only tracks the value and quantity of organic imports in 40 product categories.56 The Global Agricultural Trade System (GATS) operated by USDA’s Foreign Agriculture Service should be updated to track imports of all organic products. 33. Organic products entering the U.S. are required to meet U.S. organic standards for production and handling. However, mechanisms for ensuring compliance and inspection must be enhanced to ensure that consumer expectations are met, and that U.S. organic producers are not disadvantaged by unfair competition from products that do not meet U.S. organic standards. One possible mechanism for ensuring compliance of organic imports with U.S. organic standards would be to build organic-­‐specific fields and questions into the U.S. Customs and Border Patrol (CPB)’a new automated import/export tracking system, Automated Commercial Environment (ACE).57 USDA’s National Organic Program should conduct a feasibility study, in conjunction with the CPB, to analyze the potential for using the ACE system in this manner. 55
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http://www.flaginc.org/publication/farmers-guide-to-organic-contracts/
http://apps.fas.usda.gov/gats/ExpressQuery1.aspx
https://www.cbp.gov/trade/automated
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34. When there is a surge in imports of an individual organic product category, it should trigger an automatic audit through the National Organic Program and the U.S. Customs Service to ensure the products are in compliance with U.S. organic standards. 35