franklin egan jeff milder yawen lu environmental ... 2003/module1/oaessay.pdfthe u.s. is the largest...

Organic Agricultural Certification in the U.S.

Franklin Egan

Jeff Milder

Yawen Lu

Environmental Strategies (NTRES 454)

Fall 2003

Sustainable Agriculture as an Environmental Strategy

Introduction The environmental impacts of conventional agriculture are severe and well-documented.

Large-scale conventional agriculture as practiced in the U.S. and many other nations relies heavily on

non-renewable resources, especially fossil fuels, which power machinery and are used to

manufacture synthetic fertilizers and biocides. Irrigation in U.S. is often an unsustainable practice

that “mines” groundwater aquifers faster than nature can replenish them, while diverting massive

amounts of water from natural ecosystems. Furthermore, conventional agriculture contributes to soil

erosion, nutrient runoff, and the accumulation of persistent toxins in the environment. Citing many

of these impacts, a recent Newsweek article characterized conventional agriculture as “a heavy

industry dominated by large corporations growing single crops on vast stretches of poisoned soil.”1

The long-term consequence of these impacts can be serious indeed: salinization and desertification

resulting from soil erosion and excessive irrigation can render land essentially worthless for

agriculture. This is not a hypothetical problem: salinization now affects an area of land in the U.S.

about the size of Nebraska.2

In response to these “agro-environmental” problems, a growing group of farmers,

consumers, and environmentalists have begun to advocate for more sustainable agricultural

practices. Sustainable agriculture is characterized by a sharp reduction in energy and chemical inputs,

elimination of non-assimilable farm wastes, and a farm management system that retains a variety of

natural ecological processes such as pest-predator relationships and nutrient cycling. Organic

agriculture is one approach to sustainable food production. Other approaches include “integrated”

agriculture—which combines elements of organic and conventional farming—and agro-

environmental policies such as regulations, taxes, and subsidies to reduce pesticide use or energy

1 Cowley, Geoffrey. 2002. “Certified Organic.” Newsweek, September 30, 2002, p. 55. 2 Natural Resources Conservation Service. 1996. America’s Private Land: A geography of hope. U.S. Department of Agriculture, Washington D.C., p. 33.


demand, for example. Although it constitutes just one aspect of a possible solution to the agro-

environmental crises, organic production is nonetheless a crucial component to consider, given its

growing popularity and continued pattern of market growth. Recently reorganized in the U.S. under

a uniform standard through the U.S. Department of Agriculture (USDA) National Organic

Program, organic farming will continue to play a significant role in U.S. agriculture.

This research brief presents an overview of the potential and limitations of certified organic

agriculture as an environmental strategy. The first section includes background on the history of

certification in the U.S. and provides a description of the details and logistics of the USDA national

standard. Next, the report examines aspects of the organic market and how they are likely to change

under the national certification program. Finally, our research brief concludes with an evaluation of

the environmental benefits of organic agriculture as practiced under the USDA standard.

Overview of Organic Certification and the USDA Standard

Organic agriculture in the U.S. initially developed from the ethically and ecologically

motivated response of certain groups of farmers to the growing environmental havoc caused by

modern conventional agriculture.3 Discovering a profit motive to complement their ideals, as

organic agriculture grew in popularity, producers found they could charge a substantial price

premium for their harvest by tapping into a niche market of mainly wealthy consumers sharing

similar environmental concerns. Over recent decades, organic agriculture has outgrown its earlier

status as an obscure niche through skyrocketing sales, increasing from $178 million in 1980 to $6.4

billion in 1999.4 During this period, rising organic production was accompanied with the necessary

development of organic product labels and certifying agencies. Similar to other eco-labeling

3 Klonsky, K et al. 1998. “Emergence of U.S. Organic Agriculture: Can we Compete?” Faculty Series 98-12, University of Georgia. 4 Vandeman, A.M., Hayden, B. 1997. New Law Paves Way for Expanding Organic Market. Food Review 20 (2), 28-32.


schemes, organic certification can be conceived as an environmental strategy designed to create

consumer confidence in the integrity of organically marketed foods and to motivate the continued

growth of the organic market while simultaneously encouraging the ecological benefits associated

with a transition from conventional agriculture. Attempting to execute this strategy and stimulate

market expansion, dozens of private certification services and 15 state agencies emerged over the

past two decades, each providing their own standard and packaging seal. Inconsistencies in

standards and definitions between labels and across state lines, however, resulted in a lack of

consumer awareness and confidence, created barriers to trade, and threatened to limit the promising

growth of organic agriculture. Many voices within the organic industry began to see the

establishment of a uniform national standard as the solution to these obstacles.

By 1990, proponents had managed to successfully petition Congress to pass the Organic

Foods Production Act (OFPA), which mandated the USDA to develop a universal standard

governing the production, processing, and marketing of all foods sold in the U.S. as organic.5 The

USDA subsequently appointed the National Organic Standards Board (NOSB), a 15 member

committee representing various organic industry members, to develop the National Organic

Program (NOP). The NOSB spent the next seven years drafting the initial version of the NOP

standards, which were released in December 1997. The standard received more attention than any

USDA policy to date and was greeted with public backlash of more than 275,000 petitions for its

acceptance of genetically modified organisms (GMOs), sewage sludge fertilizers, and irradiation

preservatives under its definitions of organic production and processing.6 The standard was revised

and reviewed once more before the NOP final rule was released in December 2000. The NOP

standard and seal became national policy in October 2002.

5 Olsson, F., and Weeda, P.C. 2001. A Primer on the U.S. Department of Agriculture National Organic Program. The Food Institute. 6 Lee, M. 2003. “Organic food industry wins fight on U.S. standards” Sacramento Bee, April 18 2003.


Following the release of the final rule, secretary of agriculture Dan Glickman referred to the

NOP as “the strongest and most comprehensive organic standard in the world.”7 This confidence

reflects a final rule that was responsive to the criticisms of consumers and organic industry

representatives. Among other details, the standard requires that crops must be grown for at least

three years under organic methods before they can be sold as organic. Livestock, dairy, and eggs

must be organically cared for from “the last third of gestation or hatching.” Buffer zones must

surround organic fields to prevent the spread of chemicals and genetic material from adjacent non-

organic fields. Organically grown seed must be used whenever commercially available. Tillage

practices must “maintain or improve the physical, chemical, and biological condition of the soil and

minimize erosion.” Crop rotation is mandatory. GMOs, sewage sludge fertilizers, and irradiation

are banned. Compost and natural fertilizers must meet specific requirements for C:N ratio,

temperature, and frequency of rotation. In addition, all fertilizers, pesticides, and inputs must

comply with the National List, which prohibits most synthetic substances and many harmful

naturally occurring compounds. Food processing facilities and warehouses involved in the handling

of organic goods must also comply with the final rule and may use only approved preservatives and

processing chemicals.8

Through the jurisdiction of the final rule, the previously existing 44 private and 15 state

government certifying agencies will be absorbed under the NOP. Interested farmers and handlers

must contact a USDA accredited agency to draft an “organic system plan” and have their operation

certified. State governments have the option of drafting a State Organic Plan enforcing regulations

at least as strict as the NOP. Through the OFPA, the USDA now essentially own the word

“organic,” and a $10,000 fine can be issued to anyone knowingly distributing food as organic

7 Olsson, F., and Weeda, P.C. 2001. A Primer on the U.S. Department of Agriculture National Organic Program. The Food Institute. 8 The USDA National Organic Program, http://www.ams.usda.gov/nop/


http://www.ams.usda.gov/nop/

without accompanying certification. Operations generating less than $5,000 per year are exempted

from this requirement.

Products made with certified organic foods can fall into one of four labeling categories.

“100% organic” goods are made with all ingredients produced and handled by the NOP standards

and may display the USDA organic seal. “Organic” products are made with 95% organic

ingredients and may also display the organic seal. Products “made with organic” ingredients contain

70-95% organic ingredients that are specified on the label. These products may display the seal of

the certifying agency but not the USDA seal. GMOs and sewage sludge are prohibited production

practices for the remaining ingredients. Products with less than 70% organic ingredients may list

organic ingredients on the label but cannot display the certifier’s or USDA seal or advertise as

“organic” anywhere on the packaging. In this category, there are no restrictions on the remaining

non-organic components. Products bearing these labels are now being sold at retail stores

throughout the country, and the appearance of a single national label will certainly have considerable

impacts on the organic industry.

Socioeconomic Analysis of the National Organic Program Organic Market and Economic Viability

Organic agriculture products, if certified, now attract a premium price on the world markets.

The U.S. is the largest market for organic products, with retail sales estimated at $4.2 billion in 1997,

representing about 40% of the world market. In the U.S. in 1997, the market share of organic sales

was 1.25% and the annual growth rate of the organic market was projected to be 20-30% (Table 1).9

9 Department of Economic and Social Affairs, Division of Sustainable Development. “Changing Consumption and Production Pattern: Organic Agriculture.” Commission on Sustainable Development Eighth Session, 24 April - 5 May 2000, New York.


Table 1. Sales of organic foods (1997)10

According to the USDA, the amount of certified organic cropland doubled between 1992

and 1997 and retail sales of organic products have increased at least 20% each year since 1990.11 A

trade publication, the Natural Foods Merchandiser (NFM), reported estimates of total U.S. retail sales of

organic foods for 1990 through 1996. NFM estimated total organic sales through all marketing

outlets rose steadily from about $1 billion in 1990 to $3.3 billion in 1996. Since 1999, Packaged

Facts, a market research firm, has been reporting organic food sales. According to Packaged Facts,

organic food sales totaled $6.5 billion in 1999 and $7.8 billion in 2000.”12 U.S. retail sales of organic

10 Source: Preliminary estimates from ITC (International Trade Centre UNCTAD/WTO). 11 Reicks, M., P. Splett, and A. Fishman. 1997. Shelf labeling of organic foods : effects on customer perceptions and sales. The Retail Food Industry Center, University of Minnesota, p12. 12 Dimitri, C. and C. Greene. 2002. “Recent Growth Patterns in the US Organic Foods Market.” ERS Agriculture Information Bulletin No. AIB777. September 2002. pp 42. US Department of Agriculture. Economic Research Service. http://www.ers.usda.gov/.


http://www.ers.usda.gov/

products were estimated to have reached slightly more than $11 billion during 2002, accounting for

2% of overall U.S. retail food sales.13

The issuance of the USDA/NOP final rule in 2002 brought intense media coverage of

organic agriculture and products, making more consumers aware of these offerings not only at

farmers’ markets, natural food markets and health stores, but also in mainstream supermarkets. The

U.S. organic foods market is expected to continue to grow, particularly with full implementation of

national organic standards.

Characteristics of Organic Consumption In 1997, a comprehensive survey of American consumers looking at the organic market was

conducted by Hartman and New Hope. The survey polled 1,000 Americans in a nationally

representative sample. By asking the respondents their level of agreement or disagreement with the

statement “I am not very interested in buying organic products,” the poll concluded that 40% of

consumers can be considered “uninterested” and 60% “interested” in organic products. Comparing

this to the current 2% market share of organic food sales means that many people interested in

organic foods have never purchased organic products and that organic foods represent only a small

part of many consumers’ food purchases. In this sense, there is a great potential to grow the organic

market in the future.

The Hartman and New Hope poll also divided “Organic Interested” consumers into three

market segments: the Organic Engaged (10%), Organic Attracted (22%), and Organic Borderline

(28%), based on the respondents’ response to buying interest; unassisted mentions of products

purchased, and reported reasons for purchasing organic. “Organic Engaged” consumers have the

strongest interest in purchasing organic products and could mention about three purchases in the

13 The Organic Trade Association website, http://www.ota.com.


http://www.ota.com/

last year. The “Organic Attracted” had purchased fewer organic products even though they showed

strong interest in organic products. Interestingly, although the “Organic Uninterested” either agreed

or strongly agreed that they were not interested in buying organic products, about one third of them

could name at least one organic product that they had purchased in the last year. Both the “Organic

Engaged” and “Organic Attracted” market segments considered health and environmental attributes

over price. As for the “Organic Borderline” and “Organic Uninterested,” they ranked health, price

and availability above the environmental considerations as purchase criteria (Table 2).14

Table 2. Characteristics of U.S. Organic Market Segments15

Organic Engaged

Organic Attracted

Organic Borderline

Organic Uninterested

Percent of consumers 10 22 28 40 Degree of purchase interest Very high Moderate Weak None Average number of organic products purchased within year 2.7 1.1 0.3 0.4

Environmental focus for buying organics Highest High Moderate Low

Health focus for buying organics Highest High High Moderate

Information Asymmetries

The organic label serves a vital function in the market, decreasing transactions costs for

consumers who prefer this kind of food. Certification encourages efficiency by reducing

information asymmetry between producers and consumers.16 Without such a process, the only way

a consumer can guarantee he or she is consuming organic food is either to grow all his/her own

14 G. Allard, C. David, and J. Henning, eds. 2000. Organic agriculture faces its development : the future issues. Institut national de la recherche agronomique, Paris. pp. 233-236. 15 Source: Hartman and New Hope (1997). 16 Lohr, L. 1998. “Implications of Organic Certification for Market Structure and Trade.” American Journal of Agricultural Economics 80 (5):1125-1129.


food or be present at every stage of production for every food item he/she buys. Both of these

options entail prohibitively high costs for most consumers.17

For organic certification to work, consumers must trust the certification process, and thus

trust the information conveyed on the label. Mislabeling is most likely to occur by certified organic

producers who can produce conventional products and resell them as organically grown and/or by

producers of both organic and conventional products who can misrepresent (part of) their

conventional products as organically grown. In the U.S., certifying agents and governing state

officials have the authority to penalize those caught misrepresenting conventional food as organic

through suspension and decertification for a period of up to five years. However, testing every unit

of product claiming to be organic requires resources. Enforcing producer compliance is costly both

because of the volume of production and because of the difficulty in verifying the origin of organic-

labeled produce. Even though inspectors reserve the right to investigate organic claims at any time,

program enforcement is far from strict. There remains a danger that lax enforcement will create

economic incentives for mislabeling.

The effectiveness of labeling depends on the level of product type misrepresentation.

Consumer deception through mislabeling affects consumer trust in the labeling process and can

have detrimental consequences for market acceptance of organic products. Price premiums will

persist only as long as consumers have confidence in the organic industry and its certifying bodies.

When extensive mislabeling occurs, the value of labeling is undermined and the organic food market

fails.18

17 D. Conner, and R. Christy, 2002. “Consumer preferences for organic standards: guiding demand-expansion strategies for organic food.” Journal of Food Distribution Research 33 (1):46-51.18 K. Giannakas. 2002. “Information asymmetries and consumption decisions in organic food product markets.” Canadian Journal of Agricultural Economics 50 (1):35-50.


Organic Certification Costs

NOP regulations require that agricultural products labeled as organic originate from farms or

processing facilities that have been certified by a state or private entity accredited by the USDA.

These accredited certifying agents, not the USDA, will establish and collect certification fees.

Certification costs can be expected to rise under the NOP final rule because certifiers must now bear

the added costs of USDA accreditation. In some instances, certifying bodies have had to undergo

serious reorganization to continue providing certification services. These costs will be passed on to

producers and handlers in the form of higher fees. The NOP initially estimated that certification

costs would average approximately $750 per farm. However, fees charged for certification vary

from certifier to certifier: some charge a flat fee, but it is more common to charge both an annual

fee and an assessment based on gross sales. Fees also vary with the size and complexity of the farm

operation, the costs of inspection, and other factors. The following example gives a sense of the

range of fees and the ways in which they are calculated.

The largest independent certifier in California is California Certified Organic Farmers

(CCOF). In 1992, of the six agencies that certified organic operations, CCOF certified

approximately 91% of the certified organic farms in the state. CCOF’s annual certification fee is

$137.50 plus 0.5% of total farm revenue plus the cost of the annual on-site inspection (including the

inspector’s travel expenses). There is also a one-time fee of $250 during the first year. In addition,

there is the significant implicit cost related to the extensive paperwork required, including the

development of a lengthy and detailed “Organic System Plan.”19

The 2002 U.S. farm bill has set aside funds for a national organic certification cost-share

program to help producers and handlers of organic products to obtain certification. The National

19 Buck, D., Getz, C., and Guthman, J. 1996. “Consolidating the Commodity Chain: Organic Farming and Agribusiness in Northern California.” Institute for Food and Development Policy.


Organic Certification Share Program is funded at $5 million over the 6-year life of the farm bill. The

bill allows a maximum federal cost share if 75% of the cost of certification, with a maximum

payment of $500 made to a producer or handler under this provision.

Impact of USDA/NOP on Small Farms There are significant reporting requirements to maintain organic certification under the

NOP, particularly for diversified vegetable operations. Farmers are required to submit paperwork

for each individual crop that details when it is planted and harvested, how it is managed, what

amendments are added to the soil or fed to the plant, and how weeds and pests are controlled. For

the small-scale organic farm that grows 40 to 50 different varieties of vegetables year-round for

direct markets, this presents an onerous and time-consuming requirement. Unlike larger-scale

operations, small farms often do not have the staff or capacity to handle such paperwork. Small

farms will find the cost of certification more significant than larger operations both because of their

higher average cost of production and because of the demands that certification puts on small-scale

owner-operator farmers.20

Due to the cost of organic certification as well as the lengthy reporting requirements, a

significant number of formerly organic certified small farms will likely change their business strategy.

Some will choose to focus on direct marketing, others will stop marketing their produce as organic

(since it would be considered fraudulent to do so), some may attempt to market their product by

implying that it is uncertified organic (for example, “no spray” or “naturally grown”), and some may

go out of business entirely. As a result of these changes, there will be an increase in both the

average acreage and gross annual income of organic vegetable farms.

20 Feomartz, S. “Small organic farmers pull up stakes.” New York Times. October 12, 2002. and “Small farmers complain about high costs of USDA organic certification.” http:www.organicts.com.


Evaluation of Organic Certification as an Environmental Strategy This section of the report examines the value of organic agriculture, as practiced in the U.S.

under the new USDA organic standard, as an environmental strategy for meeting agro-

environmental goals. The analysis first examines the effect of the USDA standard on three types of

agro-environmental impacts: biodiversity, energy usage, and input demand/waste generation. Based

on these findings, the report then presents conclusions and recommendations about the USDA

organic certification program as an environmental strategy.

Biodiversity In 2000, the Soil Association, an organic agriculture advocacy and certification group in the

U.K., conducted a literature review of studies evaluating the effects on biodiversity of organic versus

conventional farming systems.21 Most of the 42 studies found both greater numbers and a greater

diversity of plants and animals on organic farms than conventional farms: for example, five times

more wild plants and 57% more species were documented on organic farms. Common organic

farming practices that promote biodiversity include:

• Reduced use of biocides such as herbicides and pesticides allows a variety of plants and

insects to survive in cropped fields, which in turn supports populations of other animals.

Organic farms avoid wide-spectrum biocides such as methyl bromide, which kill below-

ground as well as above-ground life forms.

• Cover crops and fallows create a spatial matrix of different habitat types, which can

increase on-farm biodiversity.

21 The Soil Association. 2000. The Biodiversity Benefits of Organic Farming.


• Intercropping also increases habitat diversity by introducing a greater range of plant

and/or animal species.

• Hedgerows and unfarmed margins provide “edge” habitat for birds, mammals, and

other species.

Of these four practices, the USDA organic standard only promotes the first. The other three

practices are not required by the USDA standard, and there is evidence that they are not consistently

practiced on U.S. organic farms. For example, an assessment of California organic farms found that

cover crops are often omitted because they require fields to be taken out of production for at least

four months.22 Hedgerows and other non-farmed areas not always provided on large organic

operations, though they are common on small farms and marginal farmlands. Crop rotation is

mandated by the USDA standard and thus practiced even on the largest farms, but intercropping

(i.e., the integration of multiple annual and/or perennial crops, and/or animals) is rarely found on

the larger farms. According to the same California study, “farms that incorporate near-ideal

polycultures are few and far between” and most are small subscription farms.23 Thus, although all

organic farms in California implement at least some biodiversity-enhancing practices (relative to

conventional farms), many are doing far less than they could, and perhaps far less than organic

consumers might expect.

Energy Organic agriculture generally uses fewer energy-intensive chemical inputs than conventional

agriculture, but, as shown in Table 3, these chemical inputs may only account for a small portion of

farm energy usage (20% for the apple production system in this example). Fuel, machinery, and

22 Guthman, J. 2000. Raising organic: An agro-ecological assessment of grower practices in California. Agriculture and Human Values 17:257-266. 23 Guthman, 2000.


infrastructure account for a far greater share of farm energy usage, and these are often similar on

organic and conventional farms. In fact, some organic farms rely heavily on tractors and other

machinery for mechanical weeding, which is used in lieu of herbicides.

Table 3. Energy Usage on Organic and Convention Apple Farms, Washington, USA24

Farm Component Conventional System Gigajoules/ha (% of total)

Organic System % of Conventional Usage

Machinery 74 (14%) 101%

Fuel 183 (35%) 95%

Electricity 11 (2%) 100%

Fertilizer 16 (3%) 2%

Biocides 87 (17%) 46%

Infrastructure 144 (28%) 100%

TOTAL 516 86%

Thus, with energy usage, as with biodiversity, a significant portion of organic farms, and

most of the large ones, provide modest environmental benefits relative to conventional farms. And,

aside from the limitations on chemical fertilizers and biocides, the USDA standards do little to

promote less energy-intensive farm operations. Some organic farms undoubtedly achieve a much

greater reduction in energy usage than the 14% shown in the previous table. For example, it is likely

that the Norths’ sheep farm uses far less fuel and machinery per unit production than a conventional

sheep farm because of its reliance on human and animal labor, among other factors.

Inputs and Wastes The agro-ecological ideal of organic farming is a system that recycles its wastes, importing

only natural elements such as sunlight energy, CO2, and N2, while exporting mainly farm products.

24 Reganold, J.P., J.D. Glover, P.K. Andrews, and H.R. Hinman. 2001. Sustainability of three apple production systems. Nature 410: 926-930.


To approach this ideal, a farmer must create a complex and knowledge-intensive agroecosystem that

contains plants as well as animals, probably several species of each. In this system, manure and

excess plant materials are composted to feed the soil and recycle wastes; leguminous cover crops are

planted to harvest nitrogen from the atmosphere; and desired balances of different plant and animal

species are maintained through a deep understanding and careful management of the farm’s ecology.

Unsurprisingly, this ideal is difficult to achieve, even for committed and knowledgeable

organic farmers. What is surprising is the extent to which U.S. organic farmers appear to rely on

“input substitution”—the practice of using allowed substances (such as non-synthetic fertilizers and

biocides) from off-farm sources instead of relying on on-farm solutions, which often require more

labor and knowledge to implement. For example, “Many growers spurn the use of compost and

cover crops altogether” and rely instead on purchased soil enhancers such as bone and blood meal,

fish products, seabird guano, and poultry products.25 Many organic farmers do compost, but for all

but the smallest operations, compostable materials are usually brought in; for example, Earthbound

Farms uses cotton by-products from a nearby cotton gin26, while other growers compost municipal

yard clippings. Not all use of off-farm soil enhancers is bad for the environment: in many cases,

organic farmers help recycle agricultural and municipal wastes that might not otherwise be properly

recycled. But many organic consumers would be dismayed to learn that their organic carrots were

fertilized with chicken manure from a factory farm, a practice allowed under the USDA standard.27

More problematic is that enhancers such as fish products might be as energy-intensive as chemical

fertilizers, while also affecting fish stocks.

Weed control on organic farms is characterized by a combination of “ideal” organic farming

practices and less environmentally beneficial input substitutions. For example, growers in dry areas 25 Guthman, 2000. 26 Earthbound Farm website, http://www.ebfarm.com, accessed October 26, 2003. 27 According to the USDA standard, manure must either be composted prior to its application to the crop, or, if applied “raw” must be applied at least 90-120 days before harvest, depending on the crop.


http://www.ebfarm.com/

commonly use drip irrigation instead of broadcast irrigation so that only the crop plants—not the

weeds—are watered. This practice has a double environmental benefit of reducing water usage and

reducing the need for herbicides or mechanical weeding. Other weed control measures used on

organic farms include hand or mechanical weeding and the use of mulches. Of these, farmers tend

to prefer the less labor intensive, though less environmentally beneficial, use of mechanical weeding

(by tractor) and use of black plastic “mulch.”28 Mechanical weeding not only requires fossil fuels; it

also disturbs the soil profile and kills much of the soil biota that organic practices are supposed to

protect.

The USDA standard is relatively strong in its restriction of sodium nitrate, a naturally

occurring form of soluble nitrate that can be mined and applied as a fertilizer. Because it is soluble,

sodium nitrate poses the same threats of groundwater pollution and fresh water eutrophication as

manufactured nitrate fertilizers. In the past, sodium nitrate has been popular among organic

growers in desert areas of southern California,29 but, under the USDA standard, it is now restricted

to no more than 20% of a crop’s total nitrogen requirement.30

Overall, organic farms can dramatically reduce the use of external inputs and the production

of farm waste, and some do. But the minimum requirements of the USDA standard result in only a

modest reduction in the use of inputs, and many organic farms, especially the larger ones in

California, generally prefer the less labor-intensive and more predictable methods of input

substitution.31

28 Guthman, 2000. 29 Guthman, 2000. 30 USDA National Organic Program, The National List in the Final Rule, Section 205.602. Accessed at http://www.ams.usda.gov/nop/NationalList/FinalRule.html, October 26, 2003. 31 Guthman, 2000.


http://www.ams.usda.gov/nop/NationalList/FinalRule.html

Analysis

One conclusion to be drawn from our analysis is that it is very difficult, if not impossible, to

codify sustainable agricultural practices given the differences between crops and growing regions and

the complexity of agroecosystems. The USDA standard succeeds in doing so in some respects, but

fails in others. For this reason, the USDA organic certification process is problematic as a market-

based environmental strategy because the “USDA Organic” label does not let consumers know

whether they are benefiting the environment greatly or only marginally by purchasing the product.

Some organic growers are fully committed to the principles and practice of sustainable, low-

impact agriculture whereas others merely follow the letter of the law for USDA certification,

resulting in a system that is quite similar to a conventional farm in many respects. Since “eco-

labeling” is premised on the idea of providing consumers with accurate environmental information

so they can make environmentally responsible purchasing decisions, USDA certification would seem

to be a relatively poor example of eco-labeling. On the other hand, USDA certification is a good

example of “health labeling” since there is an excellent correlation between organic growing

practices and the elimination or sharp reduction of biocide residues on food. Since “health” is by

far the top motivator for organic purchases by U.S. consumers32, the effectiveness of USDA

certification as a health label adequately justifies the continuation of this program.

Conclusions

Based on our research and analysis, we offer three recommendations for promoting more

sustainable farming systems in the U.S. First, an environmentally-based agriculture certification

standard should be developed, or the USDA standard should be modified, to better reflect the actual

32 A poll by the Hartman Group, Bellevue, Washington, found that 66% of U.S. consumers cited health as a top motivator for purchasing organic, compared to 38% citing flavor and 26% citing the environment. Poll reported in Cowley, Geoffrey. 2002. “Certified Organic.” Newsweek, September 30, 2002, pp. 50-55.


environmental impact of food production. One approach would be to make this a “performance

standard” under which the certifier would verify that the grower is meeting various environmental

targets—for example, a 50% reduction in energy usage versus the average usage for the crop and/or

region. This performance-based approach might have higher administrative costs but greater

effectiveness than the essentially command-and-control tactic of the current USDA standard. Given

the higher administrative costs, the performance based standard could perhaps be applied only to

larger operations, where the greatest environmental benefits can be gained and the proportional

administrative costs are lower.

Second, organic certification must be supplemented by other agro-environmental policies at

the national level. Organic agriculture helps to internalize some (though far from all) of the external

environmental costs of food production, but only for the 0.23%33 of the U.S. farmland that is

organic. Even if organic farming grows to 10% of total farmland in the future—a very optimistic

scenario—the total environmental benefit for the nation as a whole would be modest. To achieve

significant progress toward agro-environmental goals, all agricultural production must be made more

sustainable by establishing national regulation, taxation, and subsidy policies that promote

“integrated agriculture”—a system that is less costly than organic but curtails or eliminates the worst

environmental problems of conventional agriculture.34 With such national policies, agro-

environmental impacts could be reduced significantly with relatively little cost premium to the

consumer.35

Third, from the standpoint of socioeconomic impacts, further work is needed to mitigate the

impact of the new NOP on small farms. For example, research is necessary to determine at what

33 Yussefi, M. and H. Willer, eds. 2003. The World of Organic Agriculture 2003 – Statistics and Future Prospects. International Federation of Organic Agriculture Movements, www.ifoam.org, accessed October 16, 2003. 34 Trewavas, A. 2001. Urban myths of organic farming. Nature 410: 409-410. 35 Elliot, S.L. and J.D. Mumford. 2002. Organic, integrated and conventional apple production: why not consider the middle ground? Crop Protection 21(5): 427-429.


http://www.ifoam.org/

point and in what markets it makes economic sense for small-scale farms to pay the significant costs

of organic certification. Other research could examine how to amend the NOP or develop public

policy that eases or consolidates the reporting requirements for diversified organic vegetable farms

and reduces barriers to organic certification for small scale farms. This is particularly important

given that organic farming has been the one way for many small farmers to survive in an increasingly

bleak agricultural market. If this option is eliminated, then many of these farms are likely to

disappear as well.


References (* represents selected materials included in the binder.)

1 * Anonymous, “Organic certification cost defrayed in 15 U.S. states.” The New Farm.

October 6, 2003. http://www.newfarm.org.

2 * Anonymous, “Small farmers complain about high costs of USDA organic certification.”

http://www.organicts.com.

3 Allard, G., C. David, and J. Henning, eds. 2000. Organic agriculture faces its development: the future

issues. Institut national de la recherche agronomique, Paris. pp. 233-236.

4 Buck, D., C. Getz, and J. Guthman. 1996. “Consolidating the Commodity Chain: Organic

Farming and Agribusiness in Northern California.” Institute for Food and Development

Policy.

5 Conner, D., and R. Christy, 2002. “Consumer preferences for organic standards: guiding

demand-expansion strategies for organic food.” Journal of Food Distribution Research 33(1):

46-51.

6 Cowley, Geoffrey. 2002. “Certified Organic.” Newsweek. September 30, 2002, pp. 50-55.

7 * Cummins, R. 2000. “Organic standards revisited.” Small Farm Today 33(3): 69-71.

8 Dappert, Stephan. 2003. “Organic agriculture and sustainability: environmental aspects. In

Organization for Economic Co-operation and Development.” Organic Agriculture:

Sustainability, Markets, and Policies, CABI Publishing, Wallingford, U.K., pp. 51-64.

9 * Department of Economic and Social Affairs, Division of Sustainable Development.

“Changing Consumption and Production Pattern: Organic Agriculture.” Commission on

Sustainable Development Eighth Session, 24 April - 5 May 2000, New York


10 * Dimitri, C. and C. Greene. 2002. “Recent Growth Patterns in the US Organic Foods

Market.” ERS Agriculture Information Bulletin No. AIB777. September 2002. pp 42. US

Department of Agriculture. Economic Research Service, http://www.ers.usda.gov/.

11 Earthbound Farm website, http://www.ebfarm.com, accessed October 26, 2003.

12 * Elliot, S.L. and J.D. Mumford. 2002. “Organic, integrated and conventional apple

production: why not consider the middle ground?” Crop Protection 21(5): 427-429.

13 * Feomartz, S. 2002. “Small organic farmers pull up stakes.” New York Times. October 14,

2002.

14 * Food and Agriculture Organization of the United Nations. “Evaluating the potential

contribution of organic agriculture to sustainability goals.” FAO’s technical contribution to

IFOAM’s Scientific Conference, Mar del Plata, Argentina, 16-19 November 1998.

http://www.fao.org/DOCREP/003/AC116E/AC116E00.HTM

15 Giannakas, K. 2002. “Information asymmetries and consumption decisions in organic

food product markets.” Canadian Journal of Agricultural Economics 50(1): 35-50.

16 * Guthman, J. 2000. “Raising organic: An agro-ecological assessment of grower practices in

California.” Agriculture and Human Values 17: 257-266.

17 Klonsky, L., L. Tourte, G.D. Thompson, L. Lohr, and B. Krissoff. 1998. “Emergence of

U.S. Organic Agriculture: Can we Compete?” Faculty Series 98-12, University of Georgia.

18 * Lee, M. 2003. “Organic food industry wins fight on U.S. standard.” Sacramento Bee. April

18, 2003.

19 Lohr, L. 1998. “Implications of Organic Certification for Market Structure and Trade.”

American Journal of Agricultural Economics 80(5): 1125-1129.

20 Natural Resources Conservation Service. 1996. America’s Private Land: A geography of hope.

U.S. Department of Agriculture, Washington D.C., p. 33.


21 Olsson, F. and P.C. Weeda. 2001. A Primer on the U.S. Department of Agriculture National

Organic Program. The Food Institute.

22 * Reganold, J.P., J.D. Glover, P.K. Andrews, and H.R. Hinman. 2001. “Sustainability of

three apple production systems.” Nature 410: 926-930.

23 Reicks, M., P. Splett, and A. Fishman. 1997. Shelf labeling of organic foods : effects on customer

perceptions and sales. The Retail Food Industry Center, University of Minnesota.

24 The Organic Trade Association website, http://www.ota.com.

25 * The Soil Association. 2000. How Organic Farming Delivers Biodiversity.

http://www.soilassociation.org/, accessed October 25, 2003.

26 * The Soil Association. 2000. The Biodiversity Benefits of Organic Farming. [Selected pages

included in the binder.]

27 * Trewavas, A. 2001. “Urban myths of organic farming.” Nature 410: 409-410.

28 * USDA National Organic Program Standards Production and Handling – Regulatory Text;

Production and Handling – Preamble; and The National List Final Rule. Available at

http://www.ams.usda.gov/nop/NOP/standards.html.

29 * Vandeman, A.M. and B. Hayden. 1997. “New law paves way for expanding organic

market.” Food Review 20(2): 28-32.

30 Yussefi, M. and H. Willer, eds. 2003. The World of Organic Agriculture 2003 – Statistics

and Future Prospects. International Federation of Organic Agriculture Movements,

www.ifoam.org, accessed October 16, 2003.


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