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OTA proposes legislative language for an Organic Check-off

Where a 'technical correction' is not what it seems. Why don't we trust producers enough to allow them to choose whether to invest their check-off money dollars
in their own farm, their cooperative or organizations of their choice? Why
do we need a complicated federal program to dictate
how their check-off money is used?

By Ed Maltby, NODPA Executive Director

Added May 8, 2012. In 2011, the Organic Trade Association (OTA) spent $50,000 on a feasibility study in Phase 1 of their plan for an Organic Check Off as part of a Federal Research and Promotion Program (FRPP). In January 2012, after approval from their Board, OTA launched Phase 2 of their plan. Phase 2 included plans to hold town hall meetings across the country to help educate the organic community about their proposal and to gain reaction from stakeholders within the community before reaching any final decisions on next steps (see page 9 of March 2012 NODPA News).

In March 2012, on behalf of OTA, the DC-based Podesta Group lobbied Senators in Congress to sponsor legislation that would provide a technical correction to past regulation and also allow for the formation of an organic check-off program.

In April 2012 an amendment was introduced to the Senate version of the 2012 Farm Bill proposing an organic check-off program.

On April 26, 2012, the senate agriculture committee released their Farm Bill that required the Secretary of Agriculture to conduct a feasibility study on an organic industry check-off program that would mandate industry fees to fund marketing, promotion and research projects aimed at boosting the value of the sector.

This rapid movement from investigation to legislation was a surprise to most of the organic community, especially as the OTA-proposed program lacks any detail about who will be assessed and how the monies will be spent.

All of the organic community supports a technical correction of the law that will allow split operations that produce "any agricultural commodity that is certified as "organic" or "100% organic" to be able to exempt their organically certified product from paying into any existing (conventional) check-off program. While support for a technical correction is overwhelming, backing for regulatory language for establishing an organic commodity program needs further consideration and definition by the whole organic community before submitting it to Congress. Some have characterized it as 'not ready for prime time.' Farmers generally do not trust existing commodity programs. Existing check-off programs have not been shown to keep family farm producers (organic or conventional) in business and we have seen declining farm numbers and increasing concentration in agriculture, including organic, while commodity programs are in effect. For example the well-known 'Got Milk' campaign has done nothing to reverse the decrease in consumption of fluid milk and the loss of dairy farms across the country. Once we have industry wide support for an organic commodity program with clear, defining regulatory language and accountability to its contributors, the chance of obtaining congressional approval will improve. Any check-off should be voluntary; implemented by vote of organic stakeholders, including all producers; and subject to referendum renewal at least every 5 years or sooner but, not in perpetuity once initiated. Any referendum should be decided by one vote for each certified entity selling "organic" or "100% organic" products.

Technical correction

Most producers will support the first section of the regulatory language proposed by OTA that provides that correction and makes the process to opt out easier:

"(e) EXEMPTION OF CERTIFIED ORGANIC PRODUCTS FROM ASSESSMENTS-

"(1) IN GENERAL- Notwithstanding any provision of a commodity promotion law, a person that produces, handles, markets or imports organic products shall be exempt from the payment of an assessment under a commodity promotion law with respect to any agricultural commodity that is certified as "organic" or "100 percent organic" (as defined in Part 205 of Title 7 of the Code of Federal Regulations)(or a successor regulation).

"(2) APPROVAL - The Secretary shall approve the exemption of a person under this subsection if the person maintains a valid organic certificate issued under the Organic Foods Production Act of 1990 (7 U.S.C. 6501 et seq.)."

OTA has proposed that this language be included as part of the 2012 or 2013 Farm Bill and will need support within Congress to have it included in any final regulation. The proposed language is titled "to allow organic producers to participate in an organic promotion program." The provision for organic operations to opt out of conventional check-off programs already exists, so there will be little opposition to the technical correction from the non-organic community. However, it is widely anticipated that there will be widespread opposition from the existing conventional programs to an industry-wide organic check-off program. Combining the technical correction with a proposal to form an organic check-off program may well prevent the passage of the technical correction, especially with a title that does not mention the technical correction.

In order for the organic community to coalesce around a proposal for an organic check-off program and petition the Secretary of Agriculture to establish an organic research and promotion program there are many questions that need answering. The USDA, which administers the promotion programs, has a well-established procedure they follow when a commodity applies to establish a commodity program. The USDA procedures ensure that the constituency to be assessed is the one consulted in any referendum, and requires definition of the commodity's governance system. It relies on the commodity to define themselves and their goals for the program. The proposal for an Organic Check-Off program by OTA lacks specifics and raises many questions that need to be answered prior to writing any regulatory language.

Some of the areas that need further discussion can be summarized under the following headings:

Governance and accountability:

  1. How do we decide the geographic parameters of the program (state, regional, national) and the governance system? Who decides the criteria for using the money, who is eligible, and how is the governing committee chosen?
  2. How do we ensure that farmers have a decisive and effective role in decision making on the use of funds?
  3. How do we ensure timely and independent accountability of spending of funds – do we need an annual outside audit that is public, the ability for farmers to file complaints with an auditor, or something else?
  4. How does such a diverse sector respond to the varying needs for both promotion and research? Does money, or a proportion of that money, stay with the commodity or region to be used for specific regional research or commodity promotion? How much money goes to a national promotion campaign similar to the one now being run by OTA?
  5. Promotion and research in some sectors may lead to over-production and a reduction in pay price to the farmer.
  6. A large number of organic farmers are exempt from being certified because of low sales of organic product. The current language excludes them but will they be represented within the governance and fund allocation process as they are an important entry level for the next generation of organic farmers?

Who is the program for – producer, handler or everyone?

  1. The title of the proposed regulatory language talks of organic producers, whereas the exemption from paying into the conventional programs references producers, marketers, handlers and importers. Some information has been produced by OTA that says that producers would not be assessed. Whoever the program is for would be those voting for its adoption, for example if the program is only for handlers, only handlers would vote to petition the Secretary to set the program up.
  2. If it is only handlers and producers are exempted, farmers would inevitably be paying into the program 'by the back door' as the check-off cost would be an expense to handlers and buyers and would affect any potential price the farmer would be paid.
  3. Does it involve farmers who are not currently in commodity programs?
  4. The current language exempts importers from paying into the conventional program. Will an organic promotion program involve imports at the point of entry?

Where is the money deducted and for what?

  1. Existing commodity programs pay in either at the state, federal or handler level – what is the best level for the deduction to happen for organic?
  2. Will the level of deduction be uniform or commodity specific? (For conventional programs it is: $1 per head of cattle marketed to National Cattleman's Beef Association each time an animal is sold; 15 cents per cwt. of milk marketed; 10 cents/30 dozen eggs, .75 cents per pound of honey; soybeans, ½ of 1%; corn, .5-1.5 cents per bushel depending on state; wheat, up to ½ of 1% of sale price).
  3. Does the check-off get added at every level of processing and commerce, for example soy bean and soybean meal; added at cow calf operation-feeder-finish and slaughter auction?

OTA has presented a draft idea to the organic community and has promised more levels of investigation and discussion, which is transparent in its process and outcome. As part of its Phase 2 investigation, OTA needs to lead the Organic Industry as a whole in a discussion of different models for promotion programs rather than attempting to pre-determine an outcome based on the immediacy of a Farm Bill. Farmers from many commodities and parts of the country have questioned the need for an organic promotion program. The argument that 'we don't control our check-off money now so any improvement is better than the current situation' is not worthy of an organic industry that has redefined the farm and food system. Assessments need to come from all levels of the supply chain, and allocation of funds needs to be decided transparently and be responsive to the needs of all levels of the organic community. In the end, there are many ways that the organic industry can fund generic organic advertising, promotion and valuable research rather than enter into the long and costly struggle to set up a FRPP and have it administered through the Federal government.