U.S. Farm Policy: Certified Organic Agricultural Production

U.S. Farm Policy: Certified Organic Agricultural Production

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August 14, 2015
U.S. Farm Policy: Certified Organic Agricultural Production
Foods produced using recognized organic farming methods,
raise, and process USDA-certified organic products. Final
as certified by the U.S. Department of Agriculture (USDA)
regulations under OFPA were published in December 2000,
and bearing the “USDA Organic” seal (shown here),
and NOP became fully operational in October 2002.
account for a small but growing share of the U.S.
Regulations governing organic certification are in the Code
agricultural industry. Sales of organic foods
of Federal Regulations at 7 CFR 205.
totaled an estimated $35.9 billion in 2014,
representing nearly 5% of all retail food
NOP is administered by USDA’s Agricultural Marketing
sales in the United States (Figure 1).
Service (AMS). The National Organic Standards Board
(NOSB) is an advisory board that makes recommendations
What Is “Organic Agriculture”? USDA defines organic
to USDA on a range of organic production issues.
agriculture as a production system that is managed in
accordance with the Organic Foods Production Act (OFPA,
Figure 1.U.S. Organic Sales, 2000-2014
7 U.S.C. 6501 et seq.) and USDA regulations intended to
“respond to site-specific conditions by integrating cultural,
$million
biological, and mechanical practices that foster cycling of
45.0
resources, promote ecological balance, and conserve
40.0
35.0
biodiversity” (65 Federal Register 80550). USDA further
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defines organic agriculture as “using methods that preserve
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the environment and avoid most synthetic materials, such as
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pesticides and antibiotics.” USDA-approved “organic
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standards” describe the types of approved methods farmers
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and ranchers may use to grow crops and raise farm animals
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as well as which materials producers may use. These
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standards describe the specific requirements that must be
2000
2002
2004
2006
2008
2010
2012
2014
verified by a USDA-accredited certifying agent before
Food (Nominal)
Non-Food (Nominal)
Deflated-Total (Real)
products can be labeled “USDA Organic.”

Source: CRS from industry survey data reported by the Organic
Trade Association (OTA). Data are adjusted for inflation by CRS
USDA’s National Organic Program (NOP) is a
using the Consumer Price Index (CPI) for all products.
voluntary organic certification program for producers
and handlers of agricultural products that have been
Under NOP, USDA developed requirements and an
produced using certain approved organic methods.
accreditation process for certifying organic agents and
enforces these marketing and labeling requirements. USDA
Organic agriculture became increasingly popular in the
also has developed a process for reviewing the so-called
United States in the early 1900s. Following the industry’s
“National List of Prohibited Substances for Organic
own failed efforts to reach consensus on production and
Production,” which lists the exceptions to organic standards
certification standards, and USDA’s publication of a 1979
and allows for certain synthetic substances to be used when
study on how to improve and regulate organic production
producing organic products. The National List of allowed
(“Report and Recommendations on Organic Farming”),
and prohibited substances, methods, and ingredients for use
industry representatives petitioned Congress to draft
in organic production is at 7 CFR 205.105. Some
legislation to establish a certification program in the late
substances and processes are specifically not allowed. For
1980s. Among the goals of the program were: improve
example, genetically engineered ingredients are an
consumer confidence in the legitimacy of products sold as
“excluded method” (7 CFR 205.2).
organic; allow for legal action against those who use the
term fraudulently; increase the supply and variety of
What Is the Market for “USDA Organic” Products?
available organic products; and facilitate international trade
Organic agriculture is composed of both food and non-food
in organic products.
products, including personal care products, household
products, dietary supplements, pet foods, flowers, and
In 1990, Congress enacted OFPA as part of the 1990 farm
textile products. Data from the Organic Trade Association
bill (Food, Agriculture, Conservation, and Trade Act of
(OTA) indicate that U.S. organic retail sales totaled $39
1990, P.L. 101-624, Title XXI). OFPA authorized USDA to
billion in 2014, more than double the sales in 2004
establish the National Organic Program (NOP), which is a
(adjusting for price inflation, Figure 1). Food sales
voluntary organic certification program for producers and
comprise the bulk of retail organic sales, with between
handlers of agricultural products that have been produced
90%-95% of total annual sales. Major organic food
using certain approved organic methods. NOP specifies the
products include fruits and vegetables; milk and dairy
methods, practices, and materials that may be used to grow,
products; beverages; meat and poultry; and a range of
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U.S. Farm Policy: Certified Organic Agricultural Production
snacks and processed foods. Major non-food products
the National Organic Program and the Organic Data
include supplements, personal care products, and textiles.
Initiative. Some of these programs also received additional
authorized appropriations, or discretionary funding, which
USDA reports that U.S. organic product exports exceeded
requires annual appropriations action by Congress.
an estimated $0.5 billion in 2013, based on data tracked for
Appropriations for NOP were $9.1 million in FY2015.
mostly fruit and vegetable product categories. Exports to
Canada and Mexico account for about 80% of all tracked
In addition, in recent years, USDA has provided financial
products. The value of U.S. imports of these organic
assistance through USDA’s Organic Initiative as part of the
products totaled $1.4 billion in 2013, more than double U.S.
Environmental Quality Incentives Program (EQIP). This
exports. To promote U.S. exports, the United States has
program has assisted organic producers with implementing
established equivalency agreements with a number of
a broad range of conservation practices.
countries and nations, including Canada, Korea, Japan, the
European Union (EU), and Switzerland. The United States
Figure 2.Certified Organic Operations by State, 2014
also has recognition agreements with India, Israel, and New
Zealand, as well as export trade relations with Taiwan.
At the farm level, USDA reported there were an estimated
19,500 certified organic operations in 2014. This compares
to 2007, when there were fewer than 15,000 operations, and
2002, when there were fewer than 8,000 organic operations.
(These estimates include organic producers exempt from
certification, grossing less than $5,000 annually from
organic sales.) OTA further reports that there are currently
another 3,000 farms planning to transition to organic.
Leading organic production ranked by overall farm level
value include dairy and meat products; vegetables; field
crops; fruit and tree nuts; floriculture crops; and berries.

Each state reports having certified organic operations, but
Source: USDA press release, April 15, 2015.
most operations are concentrated in the Western coastal
states, Northeast, and Midwest (Figure 2). California alone
Selected Organic Agriculture Provisions in
accounts for nearly 40% of all organic operations. Other
the 2014 Farm Bill (P.L. 113-79)
leading states with organic production include Washington,
Pennsylvania, Oregon, Texas, New York, and Wisconsin.
Conservation (Title II)
Under the NOP, organic certification programs may be

EQIP Organic Initiative (§2202)
implemented at the state level and allows a state to oversee
and enforce against its own production and handling
Trade (Title III)
operations, consistent with USDA regulations. State organic

Market Access Program (MAP) (§3102)
programs may add more restrictive requirements beyond
those required under NOP. The state of California operates
Research (Title VII)
its own organic program.

Organic Agric. Research and Extension Initiative
(§7211)
Does Organic Agriculture Receive Federal Support?
The 2008 farm bill (Food, Conservation, and Energy Act of

Integrated Research, Education, and Extension
2008, P.L. 110-246) represents the first time that programs
Competitive Grants—Organic Transitions (ORG)
supporting organic farming were formally included as part
(§7302)
of the periodic omnibus farm bill, aside from the 1990 farm
Horticulture and Organic Agriculture (Title X)
bill when OFPA was originally enacted. The 2014 farm bill
(Agricultural Act of 2014, P.L. 113-79) further reauthorized

Natl. Organic Certification Cost-Share §10004(d)-(f))
and expanded many of the 2008 farm bill provisions

Organic Prod’t. & Marketing Data Collection
supporting organic agriculture. Selected USDA programs
(§10004(c))
supporting organic production across many different titles

National Organic Program (§10004(b), §10005)
of the farm bill are shown in the text box.

Organic “Check-off" Program (§10004(b)-(f))

The 2014 farm bill provided about $34 million annually
Source: CRS Report R42771, Fruits, Vegetables, and Other
(FY2014-2018) in mandatory funds to be made available to
Specialty Crops: Selected Farm Bill and Federal Programs.
organic producers. Mandatory funds do not require annual
appropriations or subsequent action by Congress. Programs
receiving mandatory funding include the USDA’s Organic

Agriculture Research and Extension Initiative (OREI), with
$20 million annually, and the National Organic
Renée Johnson, Specialist in Agricultural Policy
Certification Cost Share Program, with $11.5 million
annually. Another $1 million annually is available for both
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U.S. Farm Policy: Certified Organic Agricultural Production

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