Organic Checkoff Program Advances
Can industry funds help the organic industry strengthen and clarify its brand for confused consumers?
The U.S. Department of Agriculture (USDA) today released a proposal intended to get more organic food onto shopping lists and dinner plates across the country by pooling money from organic farmers, handlers, and processors to promote the sector, educate consumers, and conduct research on organic production methods. Once up and running, the program could invest more than $30 million annually, according to estimates by the Organic Trade Association (OTA).
“We’re really pleased the USDA is moving forward this well vetted proposal,” said Laura Batcha, CEO and executive director of the OTA. “It is an industry self-investment that makes a lot of sense now and will make a lot of sense in the new administration as well.”
The proposal appeared on the Federal Register today, and it’s a big step in a process that has already taken over two years of collaboration by multiple stakeholders. It also arrives at a critical moment for the organic industry. Though organic food is increasingly popular—sales were up 11 percent to $43.5 billion in 2015—U.S.-grown supply isn’t keeping up with demand. Despite the growing market, the complicated and costly process of becoming a certified organic grower keeps many farmers from attempting the transition. At the same time, labels like “natural” and “non-GMO” are sowing confusion with consumers about the true meaning and value of the organic designation.
The proposed program is designed to address these challenges.
Similar plans—called “checkoff” programs—have long existed for commodities such as milk, beef, and eggs. Producers are required to pay into a central fund, and the money goes to education, research, and promotions—think “Got Milk?” or “Pork: The Other White Meat.”
In 2014, a new Farm Bill was signed into law. The legislation allowed organic producers to opt out of conventional commodity checkoffs and called for the creation of an organic program if there was sufficient interest. For the first time, a checkoff program could be defined by how a food is produced rather than by what it is. OTA then submitted an application in May 2015 to the USDA to get the process started.
Here’s how it would work, according to the current proposal: The program, called GRO Organic (Generic Research and Promotion Order for Organic), would be run by a 17-member board of directors, independent of the OTA. Any larger business with an organic certification—from the farmer who grows the organic cucumbers to the processor who turns them into organic pickles—would contribute, unless it already belongs to another checkoff program and chooses to stay with that group. Small businesses—those with less than $250,000 in revenue—are not required to join but can opt in. The board will be made up of a split between farmers and handlers.
“The entire value chain is inextricably linked,” Batcha said. “Acknowledging that, the program is built so that everybody participates.”
Supporters of the proposal include leaders of Organic Valley’s dairy cooperative, Stonyfield Farm, Pete and Gerry’s Organic Eggs, and Late July Snacks.
The board would run educational initiatives and promotional campaigns intended to boost demand by helping consumers understand the benefits of organic foods. Growing demand, in turn, should help lure more farmers into making the leap from conventional agriculture.
According to the checkoff’s supporters, farmers and processors wouldn’t be the only ones to benefit, however. Together, greater supply and more efficient farming should make organic a more affordable option, said Ken Cook, president of the Environmental Working Group.
“Over time, real prices should fall,” said Cook. “That’s a positive thing for consumers.”
At the same time, the program would conduct research into areas such as farming technology and more effective pest control techniques, making production more efficient. At least 25 percent of the GRO Organic funds would go to local and regional research. These funds would also support technical assistance, helping organic farmers improve their growing practices.
Support for the proposal, however, is far from universal.
“The concern we have is checkoffs have not done what they are designed to do,” said John Bobbe, executive director of the Organic Farmers’ Agency for Relationship Marketing, which opposes the proposed program.
Checkoff organizations have a long history of mismanagement and abuse, he said, pointing for example to recent allegations that the American Egg Board illegally used funds to conspire against the vegan mayonnaise company Hampton Creek. Furthermore, he worries that the needs of processors and handlers could override the interests of farmers—who have traditionally received a small portion of the profit from the $40 billion-and-growing organic market.
Batcha stresses that the proposal is designed to avoid the pitfalls that have plagued some conventional commodity checkoffs. Board members are limited to two three-year terms to prevent any one person from accumulating too much influence. In addition, members of the program would have to vote on whether to continue the checkoff every seven years, to hold the organization accountable to those it represents, Batcha said.
“Stakeholders paying in have the comfort that they get to evaluate every seven years whether it’s working,” she said.
Still, some are skeptical of any program overseen by the government. Checkoffs overseen by the USDA are not allowed to disparage other products; some wonder whether it makes sense to promote organic foods without claiming that they are healthier or safer than their less-pricey conventional alternatives.
“You can be more flexible with your messaging and even more efficient with the dollars if you’re not tied to the government,” said Harriet Behar, senior organic specialist with the Midwest Organic and Sustainable Education Service (MOSES).
And there are alternatives to going through the USDA, she noted. Pistachio growers, for example, have formed a voluntary, independent checkoff that is not subject to the same governmental restrictions.
The proposal released today will be open for public comment for 60 days. Supporters are hoping the incoming administration won’t do anything to interfere with the program.
“This is an industry that came to Washington and said, ‘We want regulation so we can grow,’” Cook said. “That kind of entrepreneurial zeal should not be discouraged.”
Once the proposal has been finalized, organic farmers and processors will get to vote on whether to make the program a reality.
“A yes vote in this referendum would begin this grand seven-year experiment, to see whether industry coordination can make a difference,” Batcha said.