Order Code RL31595
CRS Report for Congress
Received through the CRS Web
Organic Agriculture in the United States:
Program and Policy Issues
Updated September 15, 2006
Jean M. Rawson
Specialist in Agricultural Policy
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress
Organic Agriculture in the United States:
Program and Policy Issues
Summary
Congress passed the Organic Foods Production Act (OFPA) in 1990 as part of
a larger law governing U.S. Department of Agriculture (USDA) programs from 1990
through 1996 (P.L. 101-624, the Food, Agriculture, Conservation, and Trade Act of
1990). The act authorized the creation of a National Organic Program (NOP) within
USDA to establish standards for producers and processors of organic foods, and
permit such operations to label their products with a “USDA Organic” seal after
being officially certified by USDA-accredited agents. The purpose of the program,
which was implemented in October 2002, is to give consumers confidence in the
legitimacy of products sold as organic, permit legal action against those who use the
term fraudulently, increase the supply and variety of available organic products, and
facilitate international trade in organic products.
Policy issues affecting the National Organic Program since implementation
largely reflect the differences in interpretation among stakeholders of the language
and intent of OFPA and the actual operation of the program under the final rule. The
NOP was challenged in 2003 by a lawsuit claiming that many of the regulations were
more lenient than the original statute permitted. A resulting court order issued in
June 2005 required USDA to rewrite regulations concerning the use of certain
synthetic ingredients in organic-labeled foods and the conversion of dairy herds to
organic production. Subsequently, however, conferees on the FY2006 USDA
appropriations bill attached a provision that amended the OFPA in a way that largely
permits the regulations on synthetics to stand as they were before the court decision.
USDA published the final rule reflecting both the court order and the OFPA
amendments in June 2006. Further rulemaking is necessary on the dairy herd
conversion issue.
A second issue concerns USDA’s efforts to write a new regulation governing
access to pasture for organic dairy cows (and other ruminants). Tight supplies of
certain organic commodities, particularly dairy products, and the entry into the
market of major grocery retailers wanting to sell organic foods are adding pressure
to this debate. Critics charge that large organic dairy operations are not abiding by
the intent of OFPA by feeding organic grain to cows in feedlots, and that the
principle of grazing is central to consumers’ concept of organic milk. Supporters of
existing regulations point to the need for flexibility in order to maintain an organic
dairy sector that can meet growing demand.
There is wide consensus that no further amendments to the OFPA are necessary
at this time. Nonetheless, some major industry groups would like Congress to
consider other related policy matters when it takes up consideration of new, omnibus
farm legislation in 2007. Among the policy recommendations that various groups
have begun to draft are proposals to establish a National Organic Agriculture
Initiative to provide policy direction for the industry, and to improve organic
producers’ access to and benefits from federal crop insurance.
This report will be revised as events warrant.
Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Organic Sector Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Organic Foods Production Act of 1990 . . . . . . . . . . . . . . . . . . . . . . . . . 3
Organic Provisions in the 2002 Farm Bill . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Cost-Sharing Start-Up Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Value-Added Producer Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Exemption from Check-Off Programs . . . . . . . . . . . . . . . . . . . . . . . . . . 6
USDA Regulatory Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Interpretive Issue Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
“Access to Pasture” Controversy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Harvey v. Veneman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Current Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Previewing Organic Agriculture Issues in the 2007 Farm Bill . . . . . . . . . . 12
Organic Agriculture in the United States:
Program and Policy Issues
Background
Organic farming, as defined in the final rule establishing the USDA National
Organic Program (NOP), is “a production system that is managed in accordance with
the [Organic Foods Production] Act and regulations ... to respond to site-specific
conditions by integrating cultural, biological, and mechanical practices that foster
cycling of resources, promote ecological balance, and conserve biodiversity.”1 This
definition indicates that organic agriculture is both an approach to food production
based on biological methods that avoid the use of synthetic crop or livestock
production inputs (spelled out in detail in the December 2000 rule), and a broadly
defined philosophical approach to farming that puts value on resource efficiency and
ecological harmony.
Interest in organic farming migrated from Europe to the United States 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
began to conduct scientific investigations into non-chemical and non-intensive
farming techniques, and a small but slowly increasing number of farmers began to
adopt organic production practices. Except for a brief period from about 1978 to
1981, USDA did not conduct any activities in support of organic agriculture until
OFPA required the Department to begin rulemaking to establish the National Organic
Program in 1990.
Organic Sector Statistics2
The annual rate of market growth for organic foods and other products has
remained steady at the 20% rate it achieved beginning in 1990, although analysts
generally expect it to moderate over the next decade. The Nutrition Business Journal
estimates that by 2010, sales of organic foods could reach $23.8 billion, or 3.5% of
total U.S. retail food sales (sales were $10.4 billion in 2003, about 2% of total sales).
About 47% of organic foods are sold through conventional retailers, 44% through
natural food stores, and 9% through farmers’ markets, restaurants, exports, and other
1 7CFR205.2.
2 USDA, Economic Research Service. Recent Growth Patterns in the U.S. Organic Foods
Market. Report No. AIB777. September 2002. Available online at
[http://www.ers.usda.gov/publications/aib777/].
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marketing channels.3 Various sources of export data estimated U.S. exports of
organic foods at between $125 million and $300 million in the 2000-2002 period.4
The biggest export market is Canada; other major markets are Japan, the European
Union, and other countries in Asia.
The number of acres of certified organic cropland and pasture/rangeland was 2.2
million in 2003 (most recent available), according to USDA. The number of certified
crop, livestock, and handling operations was estimated to be 11,400 in 2004.
Fresh produce is the largest sector of the organic industry, with California,
Washington, and Colorado having the greatest number of acres devoted to organic
fruit and vegetable production (see map below). Colorado, Texas, and Montana have
the most acreage of organic pasture for livestock. In the Northeast, Southeast, and
Upper Midwest, small-scale growers of organic fruits, vegetables, herbs, and flowers
are a significant component of individual states’ agriculture industries.5
3 USDA. Economic Research Service. Price premiums hold on as U.S. organic produce
market expands. Report VGS-308-01. May 2005. Available online at [http://www.ers.
usda.gov].
4 Ibid.
5 For a detailed graphic representation of the distribution of organic crop and pasture acreage
and number of operations per state, see [http://www.ers.usda.gov/Amberwaves/Feb03/
pdf/indicators.pdf].
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The high growth rate in sales of organic products can be attributed in part to the
higher prices that organic producers and processors receive for their products,
according to USDA’s Economic Research Service (ERS). ERS economists speculate
that part of the price premium may be due to higher production costs and to higher
demand relative to supply. For the 2000-2004 period, the annual average farmgate
price premiums for fresh organic broccoli and carrots fluctuated from 75% to 133%
above the prices of conventionally grown broccoli and carrots, according to ERS.
Price premiums for the two vegetables at the wholesale level never went below 125%
in the same period.6 The ERS study goes on to say that:
Laws of supply and demand, however, make it unlikely that price premiums
contributing to higher profits and market growth can coexist over the long run:
as long as higher profits exist, new suppliers will enter the market, and once
market supply increases faster than demand, price premiums and the
commensurate level of higher profits are likely to decline.... Many organic
industry participants and observers believe that the price premiums ... need to
decrease if organic foods are to penetrate much beyond the 2- to 3-percent level
into the mainstream.7
The consumer studies that ERS reviewed did not permit any clear estimate of
future demand for organic products. The studies showed that price, size, packaging,
appearance, and concerns about health and nutrition, taste, food safety, and the
environment all play varying roles in consumer decisions to buy organic food.
Surveys on race, ethnicity, and income levels showed significant diversity.8
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; the
1990 farm bill) with widespread support from organic industry groups, the National
Association of State Departments of Agriculture, and other farm and consumer
groups. The organic industry petitioned Congress to draft the act in the late 1980s,
after it had been frustrated in its attempts to come to an internal consensus on
production and certification standards. The industry maintained that federal
standards would reduce consumer confusion over the many different state and private
standards then in use, and would promote confidence in the integrity of organic
products over the long term. Manufacturers of multi-ingredient organic food
products stated that uniform standards would facilitate labeling. Others held that
regulations would help the organic industry expand product lines and increase
marketing opportunities. Industry analysts asserted that a consistent U.S. organic
standard would facilitate access to a potentially lucrative international organic
market.
The Organic Foods Production Act of 1990 authorized a National Organic
Program to be administered by USDA’s Agricultural Marketing Service (AMS). The
6 Ibid.
7 Ibid.
8 Ibid.
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act established a 15-member National Organic Standards Board (NOSB) to “assist
in the development of standards for substances to be used in organic production”
(referred to as the “National List”) and to “provide recommendations to the Secretary
regarding implementation.”
Under the program, producers, processors and handlers who wish to market their
products as organic are required to follow production practices as spelled out in detail
in regulations (7 CFR 205). USDA accredits private and state certification agents,
who visit producers, processors, and handlers to certify that their operations abide by
the standards; they conduct annual reviews to verify continued compliance. It is
illegal for anyone to use the word “organic” on a product if it does not meet the
standards set in the law and regulations.9 The presence of the “USDA Organic” seal
on a product means it is 95% or more organic. Labels on products having 70% to
95% organic content can say “made with organic (specified ingredients or food
groups),” but cannot carry the seal. Foreign organic producers and handlers wishing
to export products to the United States may be certified by a USDA-accredited
certification agent in their own country, if there is one; or USDA may accept
certification by agents accredited by a foreign government; or, USDA may negotiate
an equivalency agreement with another nation’s organic program.10
The regulations under the OFPA are intended to set uniform minimum standards
for organic production. States may adopt additional requirements after review and
approval by USDA. Furthermore, private organic organizations are permitted to affix
their own labels in addition to the USDA label, indicating that the product meets their
standards as well as the national ones. The private label may indicate only that the
organization’s standards are in addition to (but not superior to) the national standards.
AMS reviews certification agents for re-accreditation every five years. AMS
enforces the regulations by revoking or suspending a producer’s certification or an
agent’s accreditation if a satisfactory solution to a program violation cannot be found.
The NOP final rule became effective on February 21, 2001; the program itself
became fully operational on October 21, 2002. In the first step toward
implementation, USDA accredited private and state certification agents, who in turn
began to certify organic producers and handlers according to the standards found in
7 CFR 205. After October 21, 2002, all products sold as organic had to be in
compliance with the regulations and carry the “USDA Organic” seal.
9 Farms and handling operations that sell less than $5,000 a year in organic agricultural
products are exempt from certification; however, these producers and handlers must abide
by the national standards for organic products and may label their products as organic.
10 A July 2005 audit by the USDA Office of Inspector General (OIG) states that USDA had
41 accredited certification agents in foreign countries. The report also found that as of
August 2004, AMS had negotiated only one equivalency agreement with a foreign country
(Japan). The OIG recommends implementation of internal operating procedures “to assure
that the NOP is achieving its intended objectives to ensure that organic products meet
consistent, uniform standards.” The audit report is available online by going to
[http://www.usda.gov/oig/audits.htm] and following the links from “View Audit Reports and
News Releases,” to the listing by “Agency Subject of Report.” It is under the Agricultural
Marketing Service, July 2005.
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Organic Provisions in the 2002 Farm Bill
Cost-Sharing Start-Up Costs. Although the OFPA requires the cost of the
National Organic Program to be fully supported by user fees collected for USDA
accreditation and certification services, Congress has appropriated funds on several
occasions to help the program in its initial stages. The FY2001 USDA appropriations
act (P.L. 106-387) contained $639,000 to cover accreditation costs. In FY2002,
under the Agricultural Management Assistance Program authorized by the Federal
Crop Insurance Act (P.L. 106-224), Congress made $1 million available to state
agriculture departments in 15 designated states to help defray the costs of
certification for small-scale producers and processors.
The 2002 farm bill (P.L. 107-171, the Farm Security and Rural Investment Act),
which was enacted in May 2002, also provided additional funds to support program
start-up. Title X of the farm act gave USDA authority to continue to defray the costs
of producers and handlers seeking organic certification through FY2007, and
authorized a one-time, mandatory transfer of $5 million from the Commodity Credit
Corporation (CCC) to establish a national organic certification cost-share program
under the NOP. Federal funds may not cover more than 75% ($500 maximum) of
a producer’s or handler’s costs for becoming certified. The transfer occurred in
FY2002 and remained available until fully expended, which was earlier in 2006.11
Value-Added Producer Grants. The rural development title of the 2002
farm bill established a competitive grant program to promote research on the
development and marketing of value-added agricultural products, to be funded
through an annual transfer of $40 million from the CCC to USDA through FY2006.
Projects on organically produced commodities are eligible for these grants. Congress
authorized $40 million in mandatory CCC funds to be made available each year
through FY2007, but the actual funding levels so far have been volatile. The
program received $50 million in mandatory funds in FY2003, consisting of $40
million in unspent funds from the first CCC transfer in FY2002 and $10 million of
the $40 million CCC transfer for FY2003. In each year from FY2004 to FY2006,
appropriators prohibited the spending of the mandatory funds, Instead, Congress
appropriated about $15 million annually in FY2004-FY2005 for making grants, and
$20.5 million for FY2006.
Research. The research title of the 2002 farm bill renewed expiring authority
for a competitive grant program to support research and extension activities on
organic production, processing, and international marketing. The conference report
also added language calling for an emphasis on classical and advanced research on
11 The CCC is a wholly owned government financing institution for USDA agencies that
administer mandatory programs, such as the farm commodity price and income support
programs for wheat, cotton, rice, and certain other crops; agricultural export subsidies; and
certain conservation and trade programs. CCC funds are considered mandatory funds that
must be made available for the purposes authorized. In practice, however, appropriators
sometimes prohibit or place restrictions on funding for mandatory programs in the annual
appropriations bill.
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genetics to improve organic crops; research to identify the marketing and policy
constraints on the organic industry; and expanded on-farm research. The act
authorized $3 million to be transferred annually from the U.S. Treasury to USDA,
beginning in FY2003, to support this research.12 Other provisions in the research
title: (1) require USDA’s Economic Research Service (ERS) to gather and maintain
segregated data on the production and marketing of organic agriculture; and (2)
require ERS and the National Agricultural Library to make it easier for U.S. organic
producers, researchers and extension professionals to obtain the results of organic
research conducted in foreign countries.13
Concerning the availability of production and marketing data on organic
agriculture, an official of the Organic Trade Association (OTA) states that many gaps
exist, and that the Economic Research Service still is relying extensively on external
data sources for much of its information. As of September 2006, a comprehensive
USDA survey of the entire organic sector, authorized in the 2002 farm bill, has not
been conducted. USDA’s Agricultural Marketing Service has not yet begun to
provide market news on the organic sector, which would permit up-to-date price
discovery. Separate export and import data for organic products are not being
collected at the borders. These deficiencies hamper business planning and
expansion, complicate crop insurance premium-setting and loss payments, among
other issues, according to OTA.
Exemption from Check-Off Programs. The 2002 farm bill contained a
provision concerning issues related to the organic industry and USDA commodity
research and promotion programs. These are programs that support generic
advertising to promote an agricultural product (e.g., the milk mustache ads). They
are funded by assessments that producers, processors, other handlers, and frequently
importers, are required to deduct from revenue at the time of sale (thus they usually
are called “check-off” programs). Congress has passed many laws authorizing
national check-off programs for various farm commodities; there currently are 15 in
operation. (For more information on check-off programs, see CRS Report 95-353,
Federal Farm Promotion (“Check-off”) Programs.)
The Senate version of the 2002 farm bill (S. 1731) would have established a
check-off program for organic commodities, but the provision was not adopted in
conference. The enacted bill instead included language exempting producers and
handlers who have a certified 100% organic operation from having to pay
assessments under any existing commodity check-off programs in which they
currently participate. For example, a producer who grows peaches on an entirely
organic farm that has been certified under the NOP would be eligible to be exempted
12 Information on Integrated Organic Program research grants are available on the
Cooperative State Research, Education, and Extension Service website at [http://www.
csrees.usda.gov/fo/funding.cfm].
13 ERS published a paper in August 2005 entitled, “Market-Led Growth vs. Government-
Facilitated Growth: Development of the U.S. and EU Organic Agriculture Sectors.”
Available online at [http://www.ers.usda.gov/Briefing/Organic/]. Congress has not
appropriated funds to date for a National Agricultural Library International Organic
Research Collaboration.
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from paying an assessment under the marketing order for peaches and nectarines,
when he sells his crop to a wholesaler or other handler. The proposed rule on the
exemption for producers appeared in the Federal Register in April 2004 (69 FR
22690). Final rules for both producers and handlers of organic commodities were
published in January 2005 and became effective in February 2005 (70 FR 2744 and
2763, respectively).
USDA Regulatory Activity
Interpretive Issue Statements. In April 2004, the National Organic
Program headquarters in USDA released “issue statements,” i.e., guidelines for
interpretation of program regulations in four areas. These were livestock feed,
livestock health, inert ingredients in approved organic pesticides, and the inclusion
of non-food items like lotions and cosmetics within the scope of the NOP. AMS
issued the statements administratively (rather than through the Federal Register).
Many program participants were immediately critical of the Department for not
giving the issue statements to the National Organic Standards Board for advance
review, since the critics viewed them as revisions of the regulations, not simply as
clarifications. USDA rescinded the issue statements in May 2004, and asked the
Board to provide feedback on them, which it did in October 2004.
Subsequently, on August 23, 2005, the Department issued a memorandum
reversing its original position on the “scope of program” issue.14 The memorandum
states that, if all standards for organic agricultural ingredients are met, then the
organic seal can be used on personal care products, supplements, and pet foods. This
reversal was prompted by a lawsuit that was brought against USDA after it released
the issue statement in April 2004 saying that nonfood organic products could not
carry the “USDA Organic” seal.
The underlying issue here concerns the compatibility of the National Organic
Program, whose regulations are quite prescriptive regarding production and
manufacturing practices, with the operating procedures of AMS, which is
accustomed to administering programs that deal with the marketing-related
characteristics of products rather than with the practices by which they were
achieved. It arguably could be expected that officials of a new program might on
occasion take administrative action without thinking it necessary to consult the
National Organic Standards Board, or might differ with the Board on the form and
substance of a proposed regulation. From the perspective of the National Organic
Standards Board and industry stakeholders, AMS’s failure to consult the Board on
how certain regulations should be interpreted arguably could appear to be dismissive
of their input. These fundamental differences in approach played a significant role
in why it took 11 years to publish a final NOP rule after the OFPA was enacted in
1990.
14 Available online at [http://www.ams.usda.gov/nop/TodaysNews.html]; see August 24,
2005.
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An audit report on the NOP released in July 2005 by USDA’s Office of
Inspector General (OIG) directly addressed these concerns.15 The report found that
“AMS has not established protocols for working with the National Organic Standards
Board or resolving conflicts with them,” and recommended that the NOP “establish
procedures for receiving, reviewing, and implementing recommendations from the
Board.” The report stated that “AMS also needs to improve management controls for
administering the NOP,” and recommended that AMS “resolve and implement
internal operating procedures for such things as the resolution of complaints to
govern program operations.” The OIG made 10 recommendations in all. AMS has
submitted draft procedures addressing all the recommendations to the OIG for
approval.16
“Access to Pasture” Controversy
In January 2005 a newspaper article about a Colorado organic dairy operation
shed light on a major controversy within the organic industry and certain consumer
groups.17 The article focused on a 5,300-cow organic farm where the animals were
fed almost exclusively on grain and allowed outdoors into a feedlot for air and
exercise.
The NOP regulation at the core of the dispute is 7 CFR 205.239(a)(1-2): “The
producer of an organic livestock operation must establish and maintain livestock
living conditions which accommodate the health and natural behavior of animals,
including (1)Access to the outdoors, shade, shelter, exercise areas, fresh air, and
direct sunlight suitable to the species, its stage of production, the climate, and the
environment; (2) Access to pasture for ruminants[.]”
The news article cited organic dairy producers who argued that the regulation
means that organic cattle must get some of their nutrition, as well as fresh air and
exercise, from grazing on pasture. The Colorado operator maintained that his
animals have outdoor access, but that in an arid state like Colorado, providing
sufficient pasturage for all his cows to graze would be an insurmountable
requirement.
This issue is illustrative of the underlying tension between the National Organic
Program as a system of production and AMS’s administration of the NOP as a
marketing program. Those in the industry who hold that organic farming practices
are an integral part of the meaning of the term “organic,” particularly with respect to
standards for the treatment and feeding of livestock, argue that if the pasturage in
15 USDA, Office of Inspector General. Audit Report: Agricultural Marketing Service’s
National Organic Program. The audit report is available online by going to
[http://www.usda.gov/oig/audits.htm] and following the links from “View Audit Reports and
News Releases,” to the listing by “Agency Subject of Report.” It is under the Agricultural
Marketing Service, July 2005.
16 Conversation with Mark Bradley, NOP Administrator, September 8, 2006.
17 “Organic Milk Debate; Dairies dispute ‘organic’ values; Ex-hippie farmers contest
practices of big producers,” Chicago Tribune, January 10, 2005. See
[http://www.organicconsumers.org/organic/milk011105.cfm].
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certain parts of the nation can support only small dairy or beef cattle herds, or none
at all, then such farms should be small or nonexistent in those areas. AMS officials
and some of the larger organic producers are concerned lest the regulations become
so prescriptive that they deprive producers and processors of the opportunity to
benefit from the expanding market for organic products. The recent entry into the
organic market of some large supermarket chains is putting pressure on the industry
to meet demand, particularly for organic dairy products.
At a February 2005 meeting of the National Organic Standards Board, members
discussed and recommended new language for 7 CFR 205.239, which it forwarded
to National Organic Program officials for approval.18 The emphasis in the revised
language was on allowing cows at the appropriate “stage of life” to graze pasture
“during the pasture’s normal growing season.” At the August 2005 Board meeting,
the NOP staff rejected the recommendation saying it lacked a “clear and concise
regulatory objective,” and asked the Board to rework it.19
On April 13, 2006, AMS published an advanced notice of proposed rulemaking
asking stakeholders to respond to a number of questions concerning access to pasture,
including questions concerning whether consumers consider pasturing to be essential
to organic milk production, and whether there is science-based information on
ruminant animal nutrition and minimum pasture requirements, among other things.20
NOP officials estimate that it could be early 2007 before the comments are evaluated
and a proposed rule is published. A guidance document that the Board posted on its
website for comment in March 2005 is serving unofficially as an interim
interpretation of the current “access to pasture” requirement until a proposed revised
standard can be published.21
Harvey v. Veneman
In June 2005, a First Circuit Court sided with an organic farmer who filed suit
against USDA claiming that several provisions of the final NOP rule were more
lenient than the underlying statutory language allowed.22
Specifically, the court determined that certain “natural” substances not
commercially available in organic form had to be individually reviewed to determine
their status for the National List of Approved and Prohibited Substances before they
could be used in organic-labeled products. Second, the court determined that
synthetic substances that heretofore had been approved in the regulations and used
18 Minutes of February 28-March 3, 2005, NOSB meeting available online at
[http://www.ams.usda.gov/nosb/meetings/meetings.html].
19 Minutes of August 15-17, 2005, NOSB meeting available online at
[http://www.ams.usda.gov/nosb/meetings/meetings.html].
20 71 FR 19131.
21 “NOSB Livestock Committee Recommendations for Guidance; Pasture Requirements for
the National Organic Program,” National Organic Standards Board, March 2, 2005.
Available online at [http://www.ams.usda.gov/nosb/meetings/meetings.html].
22 Harvey v. Veneman, 396 F.3d 28 (1st Cir. 2005).
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in commerce could not be used in the processing or handling of organic-labeled
products. And third, it ruled that the USDA regulation on converting a dairy herd
from conventional to organic production did not in any way reflect the statutory
language and was thus invalid. The District Court in this case set a one-year time
frame for USDA to develop new regulations and allowed another year beyond that
(until June 2007) for the industry to come into compliance.
Stark differences of opinion within the organic industry on the impact of the
court judgement became immediately apparent. Representatives of consumer groups
and some food retailing groups welcomed the decision. They maintained that
consumers consider the organic label to mean the absence of synthetic ingredients
and that the new, stricter regulations would reconfirm consumer confidence in the
OFPA as enacted. The consumer groups expressed strong opposition to resolving the
court decision issue by amending the OFPA.
Conversely, a large number of organic food manufacturers were apprehensive
that the ultimate outcome of the court decision would be to force the discontinuation
of hundreds of existing, organic-labeled food and beverage products, and/or end
manufacturers’ ability to use the “USDA Organic” seal, which commands premium
prices in the marketplace. These stakeholders supported the efforts of the Organic
Trade Association to have Congress effect a legislative solution to the issues raised
by the court decision.
In late September 2005, during floor debate on its version of the FY2006 USDA
spending bill (H.R. 2744), the Senate adopted an amendment requiring the Secretary
to conduct a survey to determine the impact of the decision and of various
approaches to addressing it, including amending the OFPA to effectively undo the
court’s action.
In late October 2005, conferees on the FY2006 agriculture appropriations bill
adopted a second provision in committee. In effect, this provision, which was in the
USDA appropriations act that the President signed on November 10, 2005, changed
the original statute to reduce the practical significance of two of the three court
holdings. Specifically, the provision amended the OFPA (1) to allow “natural” but
non-organic products to be used as long as they are subject to the National List
evaluation process; and additionally, to permit USDA to develop an expedited
procedure for approving the addition of such products to the National List for a
limited time period; (2) to remove the original language that generally prohibits the
inclusion of synthetic substances on the National List (although there are other
requirements that must be met); and (3) to provide a statutory basis for a new
regulation on converting dairy herds to organic that is related to on-farm production
of organic feed and forage.23
Despite the rulemaking process that has begun to implement the results of the
court ruling and OFPA amendments, continued legal activity concerning Harvey v.
Veneman is likely, according to NOP officials.
23 For a legal analysis of the court decision and the OFPA amendments, see CRS Report
RS22318, Harvey v. Veneman and the National Organic Program: A Legal Analysis.
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Current Status. USDA published the final rule complying with the court
order and partially reflecting the OFPA amendments on June 7, 2006.24 The final
rule revises 7 CFR 205.236 to eliminate the use of up to 20% non-organically
produced feed during the first nine months of the conversion of a whole dairy herd
from conventional to organic production. Instead, it permits whole herds undergoing
conversion to consume feed produced from cropland (or graze on pasture) in its third
year of organic management. According to the explanatory material accompanying
the rule, “[i]n providing the transition language, entry into organic dairying may
become easier.... Certainly it should help smaller dairy farmers ... who may be faced
with having to purchase higher priced organic feed, by allowing them to graze dairy
livestock on their land that is being transitioned to organic certification.”25
Although the revised rule complies with the court holding concerning
conversion of whole herds from conventional to organic, and also reflects the
amendment to OFPA in that area, further rulemaking will be necessary. The existing
regulation still permits individual animals that are purchased as replacement cows
to be fed less than 100% organic feed in the year leading up to their going into
organic production, a situation that is at variance with the court’s ruling. USDA has
stated that it will initiate the Federal Register process for solving this situation, but
it has not given a timetable for doing so.
The June 2006 final rule also revises 7CFR 205.606 to clarify that the regulation
does not establish a blanket exemption concerning the use of non-organic cornstarch,
water-extracted gums, kelp, lecithin, and pectin in foods labeled as organic. Non-
organic versions of these five ingredients may only be used in accordance with
certain restrictions, and only when they are not commercially available in organic
form. The amendments to OFPA also authorized the Secretary to develop an
expedited process for placing additional ingredients that are not commercially
available in organic form on the list of permitted substances on an emergency basis,
for a period of not more than 12 months. USDA has not begun the rulemaking
process to implement this amendment.
The final rule is silent on the court’s holding concerning 7 CFR 205.605, the
regulation that allows processed products to be labeled as organic even if up to 5%
of their content is not organic. The OFPA amendments added language to the statute
that supports 7 CFR 205.605 as it appears in the final NOP rule issued in November
2001, and USDA states that no further rulemaking is necessary.
USDA reviewed the potential impacts of Harvey v. Veneman as required by the
earlier provision added to the FY2006 USDA appropriations bill, and released a
report in March 2006.26 It cites a number of ERS and outside sources in support of
the position that full compliance with the court ruling would have been costly to the
industry and that “the amendments passed by Congress effectively restored order to
24 71 FR 32803.
25 71 FR 32806.
26 Available online at [http://www.ams.usda.gov/nop/indexIE.htm], under “Publications.”
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the organic business community ... by eliminating uncertainty over labeling and other
regulatory changes....”
Previewing Organic Agriculture Issues in the 2007 Farm Bill
There is consensus among a broad range of stakeholders that no further
amendments to the OFPA are necessary or desirable at this point. Instead, a number
of interest groups have begun drafting policy recommendations to address other
issues, particularly those related to helping the industry keep pace with growing
demand. The groups are calling on Congress to consider these provisions for
inclusion in a separate organic title in new, omnibus legislation to replace the 2002
farm bill, which expires toward the end of 2007.27
Some of the draft proposals recommend making mandatory funds available to
implement certain 2002 farm bill provisions that have not become fully operational,
such as (1) the AMS program to provide regular nationwide reporting of wholesale
market prices for organic products; (2) the ERS effort to collect data on the organic
sector; and (3) the authority for USDA’s Agricultural Research Service (ARS) to
facilitate access to research on organic production and processing conducted outside
the United States.
The proposals also recommend increasing support, with mandatory funds, for
federal organic agricultural research, and for state research and extension programs
related to organic agriculture and to the development of new public plant varieties
derived from traditional plant breeding practices. Additional proposals concern
making conservation, risk management, and crop insurance programs more amenable
to organic producers.
The organic industry’s leading organization, the Organic Trade Association, has
made public a more general statement of proposals that calls for an organic title in
the upcoming farm bill to contain (1) a National Organic Agriculture Initiative to
provide overall policy direction for the U.S. sector; (2) authority for an Organic
Production Office within USDA to coordinate efforts across agencies; (3) provisions
to increase and enhance existing authorities in OFPA and the 2002 farm bill; and (4)
a provision to incorporate an organic focus into other USDA programs.28
27 National Campaign for Sustainable Agriculture, “Draft NCSA 2007 Farm Bill for
Organic.” Available at [http://www.sustainableagriculture.net/RAFINCSAJoint.php]; and
Organic Farming Research Foundation, “Initial Concepts for the 2007 Farm Bill.” Available
at [http://www.ofrf.org/policy/Federal%20Legislation/2007farmbillconcepts.html].
28 Organic Trade Association. “Organic Trade Association seeks organic title within next
Farm Bill.” Available at [http://www.organicnewsroom.com/].