Organic Foods and the Proposed Federal
Certification and Labeling Program

Jean M. Rawson
Specialist in Agricultural Policy
Environment and Natural Resources Division

Updated September 8, 1998

98-264 ENR

Background

The National Organic Standards Board of the U.S. Department of Agriculture (USDA) defines organic agriculture as "ecological production management system that promotes and enhances biodiversity, biological cycles and soil biological activity. It is based on minimal use of off-farm inputs and on management practices that restore, maintain and enhance ecological harmony." 2 According to this definition, organic agriculture is both an approach to food production based on biological methods that avoid the use of synthetic crop or livestock production inputs, and a broadly defined philosophical approach to farming that puts value on ecological harmony, resource efficiency, and non-intensive animal husbandry practices. examples of some of the practices and materials not accepted in organic agriculture are industrially synthesized fertilizer and pesticides, confinement livestock operations, routine use of growth-enhancing animal drugs, genetically modified crop varieties (commonly called GMOs), and irradiation of organically produced foods for preservation or decontamination purposes.)

Interest in organic fanning emerged in both the United States and Europe in the early 1900s. Beginning in the 1950s, as the U.S. public became more concerned about the potential adverse environmental and public health effects of agricultural chemicals and so-called "factory farming" methods, private research organizations, such as the Rodale Research Institute in Pennsylvania, began to conduct scientific investigations into non-chemical and non-intensive farming techniques. Farmers - particularly small farmers -increasingly began experimenting with and adopting organic production practices.

By the 1980s, the organic production sector was small, but measurable, with annual sales of around $200 million. Beginning in 1989, sales of organic products took off, growing on average more than 20% per year, according to industry sources. Total retail organic food sales in the United States rose from $1 billion in 1990 to $3.5 billion in 1996. 3 (Conventional food store sales in 1996 were $423.3 billion. 4) Industry sources estimate annual export sales of about $200 million of organic products, primarily to European Union (EU) countries and Japan. Industry analysts credit the marketing success of a greater number and variety of retail outlets for organic food and non-food products
- which coincided with heightened consumer concerns about chemical residues on foods
- for the substantial growth of the industry. USDA estimates that there now are 6,000 organic farming operations in the United States.

For most of its history, the organic industry has established its own organizations to set standards and to certify that producers, processors, and handlers adhere to them. There are currently 33 private certification operations, according to USDA. In addition, 12 states have established their own organic standards and certification programs. Although there is general agreement among these entities on the basic principles of organic food production, the standards differ from each other in the details.

The issuance of the proposed rule and the expected implementation of the National Organic Program marks the first major effort by USDA to promote organic farming. Except for a brief period, USDA has not operated any programs to support the organic sector of the U.S. food and fiber system. In the 1977 farm act (P.L. 95-113, the Food and Agriculture Act of 1977) Congress commissioned USDA to do a study on potential uses of organic wastes. 5 In 1980, USDA, under its own initiative, published a Report and Recommendations on Organic Farming. In follow-up to one of the report's recommendations, the Department established an Office of Organic Resources Coordinator, also in 1980. The Reagan Administration abolished the position in 1981 and organic agriculture disappeared as an official research area for USDA. Recently, however, Congress authorized a new competitive grant program to support research and extension activities on organic production, processing and international marketing. Section 244 of the Agricultural Research, Extension, and Education Reform Act of 1998 P.L. 105-185 (amends the Food, Agriculture, Conservation, and Trade Act of 1990 P.L. 101-624, the 1990 farm bill) to establish the matching grant program and authorize the appropriation of "such sums as may be necessary." Neither the House nor the Senate agriculture appropriations measure for FY1999 contains funds for the program, however.

Although organic agriculture per se has not been on USDA's agenda for some time, the Department since about 1990 has shown gradually increasing support for a related alternative farming concept known as sustainable agriculture, which includes a focus on reducing, but not necessarily eliminating, chemical inputs. Both USDA's in-house research agency (the Agricultural Research Service) and state agricultural experiment stations (through USDA grants) do scientific work in this area. Some of the approaches being researched are common in organic farming - crop rotations, green manure crops, biological pest control, for example. The foods produced using "sustainable" practices, however, do not meet the standards on production methods that the organic foods industry currently imposes. 6

The Organic Foods Production Act of 1990

Congress passed the Organic Foods Production Act (OFPA) of 1990 (Title 21 of P.L. 101-624, the Food, Agriculture, Conservation, and Trade Act of 1990) in response to requests and petitions from several organic industry groups as well as from the National Association of State Departments of Agriculture, the American Farm Bureau Federation, and the Center for Science in the Public Interest. These groups gave a variety of reasons for seeking federal regulation. First, the organic industry is concerned that the multiplicity of standards might cause consumer confusion and undermine confidence in the integrity of organic products over the long term. Second, manufacturers of multi-ingredient organic food products reported labeling and marketing difficulties due to the differences among standards. Third, in the absence of federal organic standards for meat, poultry, and seafood, USDA's Food Safety and Inspection Service (which is responsible for meat and poultry inspection) and the Food and Drug Administration (which is responsible for seafood inspection) do not permit these products to be labeled as organically produced, thus limiting consumer choice and the industry's market opportunities. Finally, industry analysts assert that the lack of a consistent U.S. organic standard is complicating and slowing access to a potentially lucrative international organic market.

The Organic Foods Production Act authorizes a National Organic Program (NOP) to be administered by USDA's Agricultural Marketing Service (AMS). The program will be based on federal regulations that define standard organic farming practices and on a National List of acceptable organic production inputs. Private and state certifiers will visit producers, processors, and handlers to certify' that their operations abide by the standards. Once certified, these operations may affix a label on their product stating that it "Meets USDA Organic Requirements." It will be illegal for anyone to use the word "organic" on a product if it does not meet the standards set in the law and regulations. The regulations under the OFPA are intended to set uniform minimum standards for organic production. However, states may adopt additional requirements after review and approval by USDA. AMS will reaccredit certifying agents every 5 years, maintain federal oversight to assure truth in labeling, and provide assurance that imported organic products have been produced under standards that are equivalent to the U.S. standards.

The act called for the establishment of a 15-member National Organic Standards Board (NOSB) to "assist in the development of standards for substances to be used in organic production" (i.e., the National List) and to "provide recommendations to the Secretary regarding implementation" of the act. Congress expected implementation to be complete and the program in operation by October 1, 1993. However, the Board was hampered at the beginning by a lack of funds, among other factors. Neither departmental nor appropriated funds were available in FY1991; in FY1992 and FY1993, USDA made $120,000 available under the Federal Advisory Committee Act. Beginning in FY1994, Congress appropriated ft~nds for AMS's National Organic Program activities at about $500,000 annually. The FY1999 Administration budget requests slightly more than $1 million to assist the implementation of the new program. The OFPA stipulates that the costs of the program, once fully operational, will be paid for entirely by fees collected from producers, certifying agents, and handlers.

During the period from June 1994 to September 1996, the NOSB submitted its recommendations for national standards and the National List to USDA's National Organic Program staff The staff drafted the proposed rule based on the Board's recommendations but not in complete conformity with them. The proposed rule appeared in the Federal Register on December 16, 1997. Because of the heavy response to the proposal, USDA extended the comment period from mid-March through the end of April, 1998.

Organic Agriculture and USDA

In addition to budgetary constraints, several other factors explain the length of time elapsing between the enactment of the 1990 OFPA and USDA's December 1997 issuance of proposed regulations for the NOP. By law, USDA serves all of U.S. agriculture, but the characteristics of the Department's constituency have changed over the decades, especially since the end of World War II. In the 1950s and 1960s most farmers eagerly adopted the stream of new technologies that flowed from the research labs of the land grant colleges of agriculture and from private agribusiness firms (then primarily farm equipment companies). Significant advances in plant breeding created new crop varieties that performed better with applications of synthetic fertilizers and pesticides. These practices and technologies came to characterize mainstream agriculture and users of them became the majority of USDA's constituency. USDA, along with the Food and Drug

Administration and the Environmental Protection Agency, became a part of the federal regulatory structure charged with the responsibility of assuring that foods produced with agricultural chemicals meet U.S. environmental and food safety standards. This role puts pressure on USDA to write organic standards that characterize the avoidance of synthetic inputs as merely different, without creating any implications that the substances are unsafe.

Another concern is trade. The United States is the world's leading agricultural exporter, and the Department is continually involved in negotiations with foreign countries to assure that conventionally produced U.S. agricultural products are accepted in international markets. For example, for most of this decade USDA has been working with officials of the European Union (EU) to gain their acceptance of imports of genetically modified U.S. soybeans and corn (referred to as genetically modified organisms, or GMOs). The Department bases its arguments on research that it maintains proves that the long-term environmental and health effects of GMOs are no different from non-GMO varieties. This would make it difficult for the Department to promulgate regulations adopting an anti-GMO position for a domestic program like the NOP while seeking to validate a pro-GMO position for U.S.-EU trade.

Status of the Rule and Key Points of Contention

AMS posted the comments received on the proposed rule on the National Organic Program Internet home page http://www.ams.usda.gov/nop/index.htm. By the end of the extended comment period on April 30, 1998, the agency had received more than 200,000 comments, predominantly from within the organic community. A consistent concern even stressed in statements from the major industry association - the Organic Trade Association (OTA) and others, was that USDA had blurred the distinction between conventional and organic agriculture throughout the proposed rule.

The OTA review of the proposed rule mentions nine specific problem areas. The majority of comments received also reflected these concerns. Comments contend that the proposed rule would: (1) eliminate key concepts such as ecosystem health and biodiversity from the definition of organic agriculture; (2) undermine the authority of the NOSB by substituting USDA recommendations on organic practices and materials for those of the Board; (3) permit the use of genetically engineered crops and organisms in organic agriculture; (4) permit ionizing radiation (irradiation) of organically produced food; (5) permit the use of potentially toxic municipal sewage sludge as fertilizer; (6) be too lax in many areas of organic livestock production standards; (7) create unnecessary loopholes that would allow the use of synthetic materials in organic production that have never been permitted before; (8) give USDA the sole authority to decertify growers, processors and manufacturers, leading to long delays that could undermine the integrity of the organic label; and (9) permit some unacceptably contaminated soils to be considered appropriate for organic production because USDA is not requiring a land history as part of its certification requirements.

On May 8, 1998, Secretary Glickman announced that USDA would make fundamental revisions to its proposed national organic standards as a result of the comments received. The Secretary specified that GMOs, irradiation, and use of sewage sludge would not be permitted in the revised proposal, and that the Department would follow the NOSB's recommendations on other issues of concern. The revised proposal could be published in the Federal Register by the end of 1998. Industry officials are now speculating that the National Organic Program could be implemented by the year 2000.

Conclusion

The difference between USDA's definition of organic agriculture as it appeared in the December 1997 Federal Register notice, and the National Organic Standards Board's definition of organic agriculture that it adopted in a meeting in April 1995, illustrates the approach that USDA took in developing the proposed rule:

We have defined a system of organic farming and handling to be: a system that is designed and mailed to produce agricultural products by the use of methods and substances that maintain the integrity of organic agricultural products until they reach the consumer. This is accomplished by using, where possible, cultural, biological, and mechanical methods, as opposed to using substances, to fulfill any specific flucation within the system so as to: maintain long-term soil biological activity; ensure effective peek management; recycle wastes to return nutrients to the land; provide attentive care for farm animals; and handle the agricultural products without the use of extraneous synthetic additives or processing in accordance with the act and the regulations in this part.

The Department's approach in the initial proposed regulation was to establish marketing standards based exclusively on the farming practices that it asserts characterize organic agriculture and to avoid standards based on such terms as ecology, biodiversity and biological cycles, which infer a more philosophical approach. This fundamental difference in point of view between the organic industry and USDA underlies the controversy that erupted over the details of the first proposed rule. It remains to be seen if the revised rule will represent an acceptable compromise between the two parties that will permit eventual implementation of the National Organic Program.

References

1 Federal Register, Vol.62, No.241, Tuesday, December 16, 1997. p.65868.

2 The National Organic Standards Board passed this definition at its April 1995 meeting. The definition that appears in the proposed rule for the National Organic Program puts greater emphasis on the practices that distinguish organic from conventional agriculture (see page 5).

3 Natural Foods Merchandiser, June 1997.

4 U. S. Department of Commerce, Bureau of the Census. Combined Annual and Monthly Revised Retail Trade, 1996.

5 improving Soils with Organic Wastes, U.S. Department of Agriculture, 1978.

6 For further information, see CRS Report 95-1062, Sustainable Agriculture.