How Much Is Organic Certification Worth?
The organic farming industry is booming. Since the U.S. Department of Agriculture launched its federal organic certification program in 2002, the number of organic farms has more than doubled.
U.S. organic food sales have also grown from $1 billion in 1990 to $31.5 billion in 2011, according to the Organic Trade Association.
To help ensure that consumers get what they generally pay extra for, the USDA next month will enforce closer oversight over these farms. But for some small family farms, the cost and time that go into securing that USDA organic label are coming into question.
In the chilly, fluorescent-lit produce section of the Columbia, Mo.,-Schnuck’s grocery store, Dave Guthrie, the grocery’s tall, soft-spoken produce manager, took a break from unpacking potatoes to walk the length of the store’s lettuce cooler. He paused in front of a wall of plastic containers bursting with triple-washed greens from a group of Salinas Valley, Calif., farms. Stickers wrapping the organicgirl arugulas, spinaches and kales bear the round “U.S.D.A. Organic” seal.
“When I first started as produce manager, we only carried about a 2-foot area of this organicgirl product,” said Guthrie, who has had this job since 1995. “But the demand has really increased on it. And now we’ve expanded out to 8-foot and the varieties have gone from a couple varieties all the way up to eight varieties.”
Guthrie said the same is true for organic apples – he remembers just organic red and gold delicious were available 17 years ago and now Schnuck’s carries six varieties of organic apples – and for organic berries. Back then only organic strawberries were available. Now there are organic raspberries, blueberries and blackberries for sale.
Across the U.S., 17,281 farms produce organic food on 5 million acres, according to the USDA.California has the most certified organic farms – over 2,800 – followed by Wisconsin, which has 1,016 farms. Combined, the Midwestern states of Iowa, Illinois, Missouri and Nebraska have roughly 1,200 organic operations. Most of them are small family farms, but food giants like Kraft and Kellogg own organic companies and actually dominate the market.
Big operations don’t have a problem paying for the extra recordkeeping and inspections that go along with organic certification. But for small operations like Chert Hollow Farm in Columbia, Mo., the organic label is a significant investment.
The certification process
Wearing a baseball cap and flannel shirt, Eric Reuter, who owns Chert Hollow Farm with his wife, Joanna, feeds organic lettuce to his goats and hogs. For the past four years, this lettuce and all the fruits, vegetables and mushrooms grown here have been certified organic.
To be a certified produce operation, farms must first prove that their fields have been free of chemical applications for three years. After that, not one pesticide or chemical can get used on the fields. No genetically-modified seeds may be used. Anything the Reuters do to the land must be documented.
“Annually, we submit a ream of paperwork that documents both our organic systems plan -- meaning all the methods and skills and knowledge we use to run this farm organically – as well as records that track our produce from seed to sale for every type of produce we grow,” Eric Reuter said. “That’s about 150 varieties that we grow.”
Because this is a diversified farm, Chert Hollow Farm’s certification documentation is more extensive than that of other farms producing just one product. This year, the Reuters paid their organic certifier close to $700, and that fee will go up next year.
Annual costs of organic certification are set by the certifier and are based on what kinds of products – whether it be fruit, vegetables, beef, pork, chicken, eggs or milk – are produced. Up to 75 percent of that annual fee not to exceed $750 is subsidized by the National Organic Certification Cost-Share Program. That’s federal funding administered through state agriculture departments and is part of the Farm Bill.
Shelling out for organic certification is a chunk of change upfront for small farms. And should Farm Bill funding not be renewed, Reuter said he will ask customers who buy food from them through their Community Supported Agriculture (CSA) program if they want to pay for the organic certification.
“We actually did a survey of our CSA members this year and a far higher percentage of them said they valued our organic methods than valued our organic certification,” he said. “So you have to think about: ‘Are you getting your money’s worth and your time’s worth from using the 'O' word versus just marketing yourself as a sustainable farm?’”
For now, Reuter says they’ll stick with the organic certification, in part because it can be difficult to explain what Chert Hollow Farm does to a non-farm customer.
“The benefit of organic is that for better or for worse, it is a certain set of things that customers understand,” Reuter said, “… that’s something that we value, warts and all.”
More trouble than its worth?
Sixty miles southeast of Chert Hollow Farm in Tebbetts, Mo., sits a small bucolic livestock operation called JJR Family Farm, which John Rice bought with his wife Julie in the 1980s. For six years, JJR was certified organic, which meant, among other things, Rice didn’t give antibiotics to his cattle, hogs or chickens; he let them graze in open pasture and that he got his pastures, hay and livestock vaccines certified organic.
But while driving his truck to load some square bales of hay, the wiry mustachioed farmer said his operation dropped the certification this summer because they just couldn’t sell enough organic beef to make it worth it.
“I was producing more than I could sell,” Rice said. ”And the same with hogs … and chickens. And eggs -- sometimes I got hung on eggs.”
Because there was no source for organic feed in Missouri, Rice said he had to drive to Kansas or Iowa to buy organic grain to feed his livestock. The closest organic-certified slaughtering house was 600 miles away in Illinois. (To produce organic meat, every stage of food production from birth to slaughter and sale must be certified organic.) Add to that the cost of organic feed and organic hay, which were twice the cost of conventional grain and hay, and organic processing and labeling, which also cost more than $500 more per cow.
“I was pricing my stuff at $8-$9 a pound at these grain prices because of my transportation costs,” Rice said, looking at a chart of soaring U.S.D.A. organic grain prices on the iPhone he shares with his wife. “And when these grain prices shot up to that, my wife and I said, ‘There’s no sense in continuing on with it.’”
Although he’s now back to being a conventional livestock producer, Rice still sticks to some of the practices he used as a certified organic operation. His cattle graze in open pastures and are not indiscriminately treated with antibiotics. Using this ranching method, what he calls sustainably raising his livestock, he has no problem selling meat at the market.
Random inspections ahead
The USDA first started drafting federal organic certification rules back in 1990. But the final rules were not passed into law by the department’s National Organic Program until 2002.
The new certification regulations that go into effect in January will make pesticide testing uniform among certifiers and will require that at least 5 percent of organic farms every year be randomly tested for pesticide residues. Farms found violating the rules can be fined up to $11,000 per violation and lose their certification.
Sue Baird, who is the executive director of the Missouri Organic Association and is hired by USDA licensed certifiers to inspect organic farms, is a proponent of the USDA’s new organic certification provisions. She says they will provide closer oversight over organic farms and may keep people from violating the federal standards. Take for example, Peter Townsley, the former owner of California Liquid Fertilizer who recently admitted to fraudulently selling more than $6.5 million of a non-compliant fertilizer.
“Any time there is opportunity to make money there are people who will push the limit all the way. It’s grown from a culture of people who believe in organic to a big business,” she said. “So as a result, we’ve had to become more restrictive and prescriptive to these organizations who might want to push it right to the limit.”
Of course, Baird’s business depends on there being local organic farms to inspect. But her point is that consumers won’t continue to pay extra for organic food if they don’t believe that these products are really pesticide, antibiotic and genetically-modified-organism-free.
“Because of our economy, consumers really want to know what they’re paying for,” Baird said. “And if they’re paying for organic and a premium price then they want to be sure they’re receiving the value for the product they’re paying for.”
She still believes that producing organic foods can make small farms extra profit – sometimes the extra profit they need to stay in business.
“We’re seeing communities lost because we’re losing our family farms,” Baird said in her easy Arkansas drawl. “USDA stats said an organic farm nets $20,000 more than the same size conventional farm. If you add $20,000 to a family farm, that sometimes is the difference between the farmer being able to stay on the farm.”
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