“One of the biggest challenges facing the organic market going forward is the supply crunch for retailers involved in fresh produce, ingredients and food products that are certified organic,” Batcha said at a briefing in Washington, DC, Dec. 16.
“We have seen demand for organic continue to accelerate” with sales of organic food climbing 11% to $35.9 billion in 2014 from the previous year, and household penetration of organic in 2014 ranged from the high 70th percentile to the upper 80th percentile, she said. But, she added, the adoption of acres dedicated to producing organic has not kept pace with demand – creating an “overall pinch.”
“In 2015, we tried to break apart and understand the issue … and bring to the table some long-term solutions” to the supply shortage, and OTA believes several of those options will become “institutionalized in 2016,” Batcha said.
Specifically, she said, OTA expects progress in the New Year on a USDA Process Verified Program that will create a certified transition program or industry-facing label that could ease the financial burden on farmers of transitioning to organic. She also expects to move forward on the organic checkoff program and an amendment to the federal milk marketing order system to address an imbalance of benefits between organic and conventional producers.
Lowering barriers for transitioning to organic
An OTA tasks force will submit to the USDA Process Verified Program an application to create an accreditation model that will certify when producers and farmers are transitioning to organic.
To become certified organic, farmers must meet organic standards for three years, during which they likely will see lower yields than conventional farming but currently cannot demand the higher price premium of organic. This creates a disincentive for farmers to switch to organic, which in turn hinders the industry’s ability to meet demand.
Creating a USDA Process Verified Program that can certify transitional farmers meet organic requirements could facilitate long-term contracts between transitioning farmers and suppliers by providing assurances that if suppliers pay a modest premium during the transition they can lock in a steady supply of organic once the certification is approved.
Batcha recognized that some private certifiers already offer this option, but a USDA Process Verified accreditation program would harmonize the current different standards and apply across commodities and companies.
The accreditation program also could open the door for transitioning farmers to qualify for federal agriculture grants as well, which currently are difficult to obtain for lack of proof of transition, Batcha added.
She noted that while the transitional certification would be voluntary, it would be structured so that farmers could not “dip in and out” during the three year period.
Checking off boxes for a checkoff program
After years of research, outreach and discussion, OTA expects its application to establish an organic checkoff to move to a referendum and vote in 2016.
The organization submitted to USDA in May a petition to launch an organic checkoff campaign that, if approved, could raise more than $30 million annually to support the industry. Since then, USDA reviewed the submission and OTA has continued to solicit and demonstrate support for the program across the value chain, Batcha said.
She emphasized the program’s potential, including an option to provide matching funds necessary to create more staff positioned dedicated to organic at the National Resource Conservation Service.
“Currently, we have one dedicated staff person to organic at NRCS” for the entire country, but USDA said it would match industry funds to create additional positions, Batcha said. A checkoff program is an easy way to aggregate from industry the $2 million a year necessary to create this position for every state, she said.
Funds from the checkoff also would go towards organic specific research to improve yields and control pests, which currently deter some farmers from switching to organic, she added.
Amending the Federal Milk Marketing order
OTA also anticipates USDA will hold a hearing in 2016 to address the association’s request to amend the federal milk marketing order system to recognize organic dairy as a separate and distinct supply chain.
If approved, the amendment would reduce – but not exempt – the amount of money organic dairy farmers contribute to services that ensure the price paid for milk is fair and there is adequate supply. The funds could then be reinvested in organic dairy production to help meet demand.
Batcha says the amendment is necessary because the program currently combines organic and conventional milk – making it impossible for organic farmers to draw from the pool during shortages. As a result, they are paying the same as conventional farmers, but not reaping the same benefits.
The process to win the amendment has multiple steps and will take several months at the discretion of USDA, according to the association.
With these and other goals set for the New Year, OTA is expecting a busy 2016, but is hopeful that it will mark the reduction of several barriers to production and ultimately start to bring supply better in line with demand.