A Year Since USDA Certification:Organic Products Gain Momentum in U.S.

It has been a year since the national organic standards were fully implemented on Oct. 21, 2002. Although it is too soon to measure the long-term results, there are signs the organic sector is gaining momentum.

Certification agencies
Rather than reducing the number of certification agencies, national organic standards have encouraged additional companies to become accredited by the U.S. Department of Agriculture.

As of Oct. 15, 2003, the National Organic Program (NOP) had accredited 88 certification agencies. Of these, 53 were U.S-based certifiers, with the remaining 35 companies from around the world. In addition, as of Oct. 29, there were 13 other certification agencies under review and 28 agencies in the information stage.

In the legislative arena, there is now a formal Organic Caucus in the House and an informal organic working group in the Senate.

Wider picture
Although not directly linked to the national organic standards, other provisions are falling into place for organic players. Recognized as a viable form of agriculture, organic farms can now be covered under federal crop insurance. Cost-share provisions also are in place to help farmers defray the cost of certification. Meanwhile, USDAs Economic Research Service is starting to collect organic production and price data. To help with such data
collection, the 2002 Farm Census included two questions on organic agriculture (the number of certified organic crops harvested and the value of certified crops sold). In addition, as a result of having national organic standards in place, the United States has been in serious negotiations with other countries concerning equivalency agreements that will facilitate the international trade of organic products.

During the past year, there has been significant progress with the European Union. While the first year was spent chiefly trying to understand each others organic regulations, negotiators now are working on actual wording for a possible agreement. The national organic standards have also opened up the market for organic farmers and companies wishing to sell organic meat. As a result, the organic meat market is one of the fastest growing categories in the organic sector. The market research firm Datamonitor, for instance, projects U.S. organic sales to reach $30.7 billion by 2007, driven largely by double-digit growth in the meat and meat products industry. Datamonitor projections show the U.S. organic market will have a five-year compound annual growth rate of 21.4 percent between 2002 and 2007, with organic meat sales expected to grow from $547 million to $3.86 billion in 2007.

Opportunities for retailers
As more and more manufacturers release certified organic products bearing the USDA Organic seal, retailers are becoming more excited about displaying and including them in their stores. Overall, according to Supermarket News (Sept. 29, 2003), Retailers like the National Organic Program. Its been good for business. Supermarket News reporter Roseanne Harper points out that the publicity surrounding implementation of national organic standards may actually be the factor that got more consumers interested in organic products. Retailers she interviewed also said that such standards have instilled consumer confidence. Some stores, however, have struggled with whether to integrate or segregate organic products from their conventional counterparts. Depending on the store and the location, some are actually setting up stores within a store to have an organic or natural section, while others are integrating products, such as putting organic pasta and ketchup on shelves along side conventional counterparts.

Meanwhile, stores like Wegmans Food Markets, Price Chopper Supermarkets, Kroger Co., and Albertsons are offering more organic selections. Some are introducing their own private label organic products.

There is also a trend for retailers to seek organic certification for their operations even though the national organic standards do not require them to do so. In addition, more organic foods are being offered in foodservice operations on campuses. Hamburg patties from Organic Valley farmers, for instance, are now offered at University of Wisconsin Housing Food Service cafeterias. Also, United Natural Foods, Inc., recently announced it is partnering with Sodexho USA to distribute organic products to Sodexho USAs 6,000 institutional foodservice facilities throughout the United States.

Entry of major companies
The entry of major companies to the organic marketplace, although sometimes cited as a negative, can also be interpreted as a positive sign of the legitimacy of organic products. And, because there are national organic standards in place, the big players have to abide by the same rules as the small players, which means a big player cant cut corners or capitalize on the organic claim without meeting strict requirements.

And daily, other companies enter with new products. Archer Daniels Midland Co. and Campbells Soup have each introduced their first certified organic product. Ben and Jerrys Homemade Inc. is test-marketing a line of organic ice cream, while the 7-Eleven store chain has added organic chips and other organic offerings. Gift food marketing company Harry and David is offered a mixed medley of organic fruits for the December 2003 holiday season. And organic foods are part of the menu on Song, Delta Air Lines new air service.

Farmers opportunities
For farmers who already were certified organic, the changes needed to comply with national organic standards have not been onerous. In fact, the standards may have eliminated competition from farmers who were claiming they were organic, when in fact they werent. Farmers will also find there are manufacturing companies and restaurants that encourage small family farms to supply them with locally produced quality organic products. Meanwhile, Community Support Agriculture (CSA) ventures and farmers markets are blossoming throughout the country.

Challenges Ahead
Still, national organic standards for foods and beverages have made some industry players in segments other than food and beverages (such as personal care, cosmetics and fiber) anxious and eager for clear labeling guidelines for their products.

Organic agricultural ingredients in these product categories are covered under the requirements of the rule, but the end products arent. Anticipating this, the Organic Trade Association (OTA) has developed organic fiber processing standards, which are close to adoption by the industry. In addition, OTA has a Personal Care Task Force that is tackling some of the difficult questions still needing to be answered in this sector.

For some industry players and consumers, getting these issues resolved seems of utmost urgency. Realistically, however, it may take years to resolve these questions for other categories. Looming perhaps in the not-too-distant future will be an issue tied to a congressional mandate made this year, sparked by Sen. Ted Stevens of Alaska, that directs USDA to draw up a standard allowing wild fish to be labeled as organic.

Conclusion
With the national rule in place, the organic sector has been able to provide a guarantee to consumers that organic products that are marketed using the new labeling in fact mean that specific practices were followed. And if products are mislabeled or companies or individuals break the rules, there are consequences.

With concerns about global security and measures to protect food safety, traceability is becoming a key word in the entire food industry. The organic sector is already proving that there is a way to trace food from farm to the table, and showing how to do it successfully.

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FROM What’s News in Organic, a publication of the Organic Trade Association, a SustainableBusiness.com Content Partner