By Fran Howard
“Consumer demand, which is growing by double-digits, is driving the organic market, and we have programs and services to promote that growth,” says Sam Jones-Ellard, spokesperson for the National Organic Program (NOP).
U.S. sales of organic products climbed to $35.1 billion in 2013, up 11.5 percent from the previous year’s $31.5 billion, the fastest rate of growth in five years and the fastest growing segment in U.S. agriculture, according to Jones-Ellard.
The vast majority of organic sales that year — roughly 92 percent, or $32.3 billion — were food products, according to the Organic Trade Association (OTA). Yet, organic food sales account for just over 4 percent of total food sales, and the farmer’s share of the organic food dollar is substantially smaller.Organic farmers reported $3.12 billion in sales in 2012, up from $1.7 billion in 2007, which means organic producers receive only about 10 percent of the total spent on finished organic products. And while organic farm sales are growing, they account for just 0.8 percent of the total value of U.S. agricultural production.
To aid growth in the organic industry, the 2014 farm bill increased mandatory spending and opened the door for an industry-wide organic promotion program. Mandatory spending on organic agriculture has increased in each of the past three farm bills, rising from about $20 million in 2002 to about $170 million by 2014.
The largest program for organic producers is the National Organic Certification Cost Share Program. Mandatory spending on this program more than doubled from the 2008 farm bill to $57.5 million in 2014 in an effort to entice small-scale producers to the industry. This program provides cost sharing on up to 75 percent or $750 of the total cost for a producer or handler to become certified under the NOP.
The recent farm bill also expands research funding to $100 million and provides about $15 million to NOP for increased enforcement and to upgrade the NOP database and technology systems.
According to the 2012 Census of Agriculture, there were 16,525 farms classified as organic (either certified or exempt), or roughly 0.7 percent of all farms in the U.S (2,109,303). Thus, the farm bill provides an average of $10,287 in subsidies per organic producer over the life of the legislation.
The possibility of a checkoff program for organic products could boost sales even more and OTA is preparing a proposal for such a checkoff, which must be submitted to USDA and then be approved in a referendum.
“It’s a very complex process, and we’re getting closer,” said OTA spokeswoman Maggie McNeil, who added that the association is hoping to have the proposal finished within the next several weeks.
But the checkoff plan is not without opponents. The Northeast Organic Dairy Producers Alliance, which represents 836 independent organic producers, is against an organic checkoff, noting that marketing within the industry is now product-specific, and often brand-specific.
While an organic checkoff program directed at consumer education is one way to help build the organic industry, it would be costly and complicated to execute, says Elizabeth Burrichter, with the Cornell Small Farms Program, which assists small producers in New York State. Moreover, all promotion would need to be generic, she notes.
Others, however, say that a checkoff could boost demand for all organic products. “By and large, economists have seen positive growth from commodity checkoff programs,” says Catherine Greene, an economist with USDA’s Economic Research Service specializing in organic agriculture. “I’m excited about the possibility of it. Existing programs target single commodities. This would target every single (organic) commodity, every crop and livestock sector, and every state.”
As with conventional agriculture, organic farms continue to get larger. In 2008, about one-fourth of organic producers had sales of $50,000 or more; today one-third of them have sales that high. Likewise, in 2008 two-thirds of organic producers had less than $10,000 in annual income, compared to only one-third today. Still, organic operations continue to have a relatively small footprint in U.S. agriculture. In 2011, about 5.5 million acres of farmland, including pastures and rangeland, was certified organic. While that’s up from 2.95 million in 2006, the total acreage still pales when compared with total U.S. farmland, including pasture, of 916 million acres in 2012.
Overseas sales of U.S. organic products could also grow moving forward. The Obama administration has passed four equivalency agreements, with the European Union, Canada, Japan, and South Korea. According to USDA, “an equivalency agreement is an agreement between two countries that allows products that are produced and certified according to one country’s organic standards to be sold and represented as organic in the other country.”
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