Growing Organic Industry Forces Farms to Pay to Play
By Charlene Oldham
Organic food has spread from hippie food co-ops in the 1970s to the shelves of Wal-Mart today. National standards for what is “organic” have necessitated a certification process. But organic certification exacts a price—from sometimes hefty fees to annual inspections and arduous recordkeeping—and some organic farmers say they aren’t willing to pay it.
Paul Krautmann operates Bellews Creek Farm with his family in Hillsboro, Mo. In his novice days as an organic farmer twenty-some years ago, Krautmann prepared for annual inspections and submitted reams of reports necessary to earn official certification from Organic Crop Improvement Association International, one of the oldest organic certification agencies in the industry.
“Early on, I thought it was a really good thing because it forced me to think about what it means to be organic,” he said of the annual renewal process and extensive inspections. “And it also holds your feet to the fire.”
But since 2002, when the U.S. Department of Agriculture’s National Organic Program took over from states as the official certifying body, debate has swirled in the organics community around the labeling standards of organic food. Some cried foul that more stringent standards had been watered down for a national model; others that the increasing bureaucracy of certification was impractical, or that big agriculture was gaining too much influence in a movement started by small farms. The shift to oversight by a federal agency has prompted a number of farmers like Krautmann to opt out of the certification process for a variety of political, practical, or pocketbook-driven reasons.
“What I’d have to say about the USDA taking over the ‘O word’ is, how easy is it to sway USDA policies with money and politics?” said Krautmann, adding that early OCIA standards were more stringent than current rules.
To qualify for organic certification from the USDA, farmers must use sustainable soil enrichment techniques and natural weed and pest control in lieu of genetically modified organisms, synthetic chemicals, and fertilizers that many conventional farmers rely on to boost yields. Organic livestock farmers also must raise their animals without hormones or antibiotics, among other requirements.
“USDA Organic certification ensures the integrity of organic products around the world,” said USDA spokesperson Sam Jones-Ellard. “Under the USDA organic rules, organic farmers must demonstrate they are protecting the environment, supporting animal health and welfare, and producing their products without the use of prohibited substances.”
Farmers who qualify are rewarded with the “certified USDA organic” label and can garner premium prices in the fast-growing organics market. Official certification comes with standards lacking for organic products labeled with vague marketing terms like “natural” or “local.” (Read “The Nature of Marketing” to learn more about natural food marketing.)
“Consumers can have confidence that products labeled as “USDA organic” meet a government standard, one that is evenly applied. This helps clarify what ‘organic’ stands for in the market,” says Bu Nygrens, co-owner and purchasing manager at Veritable Vegetable, a San Francisco-based organic produce distributor. Nygrens’ company participated in developing the rules for the National Organic Program. “We know the growth in acceptance of the term would not have had the same trajectory if the USDA did not play a role. It would have remained a niche market and had little effect on mainstream food systems.”
And organics is going mainstream. The U.S. organic industry accounted for $31.5 billion in sales in 2011, representing a year-over-year growth rate of 9.5 percent. Of that, the organic food and beverage market accounted for $29.2 billion. For many farmers, official certification is worth the work.
“All the farmers that I have worked with who were interested in certification did it because certification provides a premium over the conventional product and they were willing to produce their crops organically to get that premium,” said Molly Hamilton, coordinator for North Carolina State University’s Organic Grain Project, which supports local grain farmers in their move to organics. “The benefit was a much higher profit, and that outweighed any concern over paperwork and cost.”
One side effect of organics moving from niche to mainstream is that, increasingly the loudest voices in the politics of certification belong to large organic producers and mega farms. The official organic seal is a necessity for farmers and food handlers (those who distribute organic produce but don’t grow it themselves, such as The FruitGuys) who sell organic products nationwide, or globally.
Many small farms, which gave birth to the organics movement, are being increasingly squeezed out by resource demands, politics, and certification standards that for some don’t go far enough. That means many farmers market stands and Community Supported Agriculture (CSA) farm shares may not bear a USDA organic seal, even if the farmers that supply them adhere to organic practices.
“I think most farmers don’t go through the certification because of the costs and the jumping through hoops required,” said Sara Hale, co-founder of Fair Shares CCSA, St. Louis CSA program that draws from multiple local farms and producers. “We don’t require our growers to be organically certified. If they are organically certified, we pay a higher price for their produce to account for the certification costs.”
Some frustrated farmers have created alternative programs, such as the Certified Naturally Grown program, which bills itself as the “grassroots alternative to certified organic.” CNG relies on farmer-to-farmer inspections that encourage area growers to work together to find environmentally friendly solutions to local challenges, says CNG executive director Alice Varon. The number of CNG-certified farms has increased considerably since 2006, when there were fewer than 500 farms participating. Today there are more than 800 farms and beekeepers
“I think many farmers are drawn to CNG for positive reasons,” Varon said. “They like the grassroots nature of the organization. They really appreciate the peer-inspection model, the opportunity to connect to other farmers in their area, and the opportunity to build a local farmers network and learn from other farmers who are also working in this typically very isolating—but knowledge-intensive—occupation.”
But CNG farmers can’t market their crops as organic without the USDA-certification. Produce handlers who sell organic boxes have had to let go of some longtime farm vendors because they cannot include fruits, vegetables, or other foods in exclusively organic product packages that bear the USDA seal. Under current rules, knowingly selling or labeling a product that doesn’t meet official certification requirements as an organic product can lead to suspension or loss of organic certification and a civil penalty of up to $11,000 per violation.
“As a certified organic handler, we cannot sell product that is not clearly labeled,” says Veritable Vegetable’s Nygrens. Because it specializes in organic offerings, Veritable Vegetable generally only buys from non-certified producers if they are in the process of becoming certified by a USDA-approved certification agency, making sure to label such products as “in transition to organic,” Nygrens says.
Pay to play?
Depending on which USDA-authorized certification agency the farmer chooses, initial application fees can be hundreds of dollars while annual renewal and inspection fees are assessed based on factors such as a farm’s organic production value, acreage, and inspectors’ travel cost. According to California Certified Organic Farmers, an international certification agency based in Santa Cruz, CA, small farms can get certified for around $300 to $500 after their first year, while the largest producers and food handlers might pay $35,000 annually.
For the most part, these fees go toward operation costs, education, and outreach by certification agencies, which are often run by state departments of agriculture, universities, or non-profit cooperatives, according to Organic Grain Project’s Hamilton. And the USDA offers reimbursements to farmers and food handlers that cover 75 percent of certification fees up to $750. However, some farmers and food handlers say the true cost of certification is the hours of effort it requires, making the process impractical or impossible for small farmers already stretched to their financial and workload limits.
Detailed documentation is required to prove guidelines are followed for soil enrichment, pest control, avoiding GMO contamination, and more. Food handlers who earn official certification must show that organic products don’t mix with conventional products and are not exposed to synthetic chemicals or anything else prohibited under organic rules during the handling process. (See “Handling Organics” to hear about The FruitGuys experience becoming a certified organic food handler.) All paperwork must be meticulously maintained and annual inspections can take hours, or days, for large farms or handling operations.
“I have had a few farmers concerned about paperwork, but not cost, and I have suggested they hire someone to deal with paperwork and record keeping if they wish to become certified,” said Hamilton, who works with large and mid-sized growers in North Carolina. “Often the recordkeeping helps farmers understand their operations more thoroughly—how much they are doing for pest management and how successful they are with different strategies, how their yields change from year to year and field to field.”
While the formerly organic certified Krautmann agrees such information is valuable, particularly for those new to organic farming, hiring someone to keep track of compliance paperwork and facilitate annual inspections is not practical for him or many other smaller organic producers. These days, he relies on regular customers to do their own on-site inspections, which is easy since they all live within driving distance of his farm.
“You can come out here and see how I farm. Ask as many questions and come out here as many times as you want to satisfy yourself,” he said. “I don’t sell to anybody I don’t shake hands with. In effect, you are giving me your personal certification.”
Charlene Oldham is a St. Louis, MO-based journalist.