Statement of

Caren Wilcox, Executive Director & CEO

Organic Trade Association

Greenfield, Massachusetts

(www.ota.com)

Before the U. S. House of Representatives

Agriculture Committee's

General Farm Commodities and Risk Management Subcommittee

May 14, 2007

Mr. Chairman, Ranking Member, and Members of the Subcommittee, I am
Caren Wilcox, Executive Director of the Organic Trade Association (OTA),
the membership-based business association for organic agriculture and
products in North America. I am here today speaking on behalf of the
Organic Trade Association (OTA).

OTA is the voice for the organic business community, and has had this
role for over twenty years, since its founding in 1985. Since that time,
OTA membership has grown more than eightfold, and now encompasses
approximately 1600 members across all parts of the organic farming,
processing, distribution, and retailing supply chain for food, organic
textiles, and personal care products.

Organic agriculture forms the basis of a fast growing part of the
agricultural economy, and offers hope to farms and shoppers alike, while
contributing to the improvement of our land, air, and water resources.
Many farm businesses involved with organic production have started with
a vision of changing agriculture for the better, and have grown over the
years to become well-known products.

On April 18, 2007, before the Horticulture and Organic Agriculture
Subcommittee, I provided extensive testimony on the state of the
industry and the exciting growth taking place in the organic
marketplace. I also outlined the laws, regulations, and practices that
underlie that success. OTA provides private monitoring of the industry's
growth, and has been involved with passage of the laws and regulations
governing the industry. Also, during that testimony, I outlined OTA's
2007 Farm Bill agenda -- its potential remedies to the various
impediments faced by organic farmers. In particular, in the case of crop
insurance there is a lack of data collection by USDA that for other
segments of agriculture is collected. Today I would like to focus on one
particular impediment -- the lack of adequate crop insurance.

One of the major impediments to converting more farm land to certified
organic status has been the type of crop insurance available.
Originally, organic farmers were not considered eligible for federal
crop insurance. The Agricultural Risk Protection Act of 2002 (ARPA)
provides that organic farming practices be recognized as good farming
practices. Prior to this ruling, crop insurance policies may not have
covered production losses when organic insect, disease, and/or weed
control measures were used and such measures were not effective.

However, the newly available federal crop insurance was presented at a
disadvantageous rate. Organic farms pay a 5% additional premium and in
the event of a crop loss they only receive compensation at a
conventional price level for their organic crop. This is attributed by
crop insurers and RMA to the fact that actuarial data is not available
to insurers. While this is changing, it is important for RMA to use
collected data to enable an insurance product to be developed promptly
to help organic farmers. Some price and loss data is finally being
collected by USDA, and this should be helpful in creating valid
insurance products.

In order to address the inadequacy of available crop insurance, OTA has
developed legislative language that would amend the Federal Crop
Insurance Act by adding a new subsection entitled "Contracts for organic
production coverage improvements."

If this legislation were to be enacted, within six months the
Corporation would be instructed to enter into one or more contracts for
the development of improvements in federal crop insurance policies
covering crops grown in compliance with USDA's own national organic
standards. This development research would include:

1.  A review of the underwriting, risk, and loss experience of organic
    crops covered by the Corporation, as compared with the same crops
    grown in the same counties and during the same crop years using
    non-organic methods. The review should be designed to allow the
    Corporation to determine whether significant, consistent, or
    systemic variations in loss history exist between organic and
    non-organic production, and shall include the widest available range
    of data, including but not limited to loss history under existing
    crop insurance policies, collected by the National Agricultural
    Statistics Service, and other sources of information determined to
    be reliable and relevant.

> Unless this review documents the existence of such significant,
> consistent, and systemic variations in loss history between organic
> and conventional crops, either collectively or on individual crops,
> the Corporation shall eliminate the 5% premium surcharge that it
> currently charges for coverage for organic crops on such crops. The
> review shall be conducted on an ongoing basis, at least annually,
> beginning with the 2008 crop year and for each crop year thereafter as
> annual data is accumulated by the Corporation, so that the Corporation
> may make the determinations and eliminate the surcharge in a timely
> manner as the review deems appropriate.

2.  The development of a procedure, including any associated changes in
    policy terms or materials required for its implementation, to offer
    producers of organic crops (including dairy and livestock) an
    additional price election that would reflect the actual retail or
    wholesale prices, as appropriate, received by organic producers for
    their crops, as established using data collected and maintained by
    the Agricultural Marketing Service or other sources. The development
    of this procedure shall be completed in time to allow the
    Corporation to begin offering the additional price election for
    organic crops with sufficient data for the 2009 crop years, and to
    expand it thereafter as the AMS expands its data collection and
    availability for organic crop prices.

3.  The development of an insurance coverage that would protect the
    producer of an organic crop against the risk of that crop (including
    dairy and livestock) becoming contaminated, through no fault of the
    producer, in a manner that would cause that crop to lose its access
    to organic markets and prices.

The OTA legislative proposal also would require that the Corporation
continue and expand its interagency agreement with AMS to facilitate the
collection and dissemination of segregated retail and wholesale price
information for organic production at relevant shopping points, points
of entry, wholesale markets, and retail markets, including the funding
of all phases of the pilot and implementation stages of this project
until the resulting price collection facility has been established on a
nationwide basis.

Finally, OTA's legislative proposal would require that the Corporation
report annually to the House Committee on Agriculture and to the Senate
Committee on Agriculture, Nutrition, and Forestry on its progress in
developing and improving federal crop insurance for crops grown in
compliance with standards issued by the Department of Agriculture
providing for the certification of such crops under the National Organic
Program, including the numbers and varieties of organic crops insured,
the development of new crop insurance approaches, and the progress of
the initiatives mandated under this proposal. The annual report will
also include the Corporation's recommendations on how it can continue to
improve this insurance coverage.

OTA's most recent market survey has preliminary results that indicate
that organic agriculture and production have managed to provide almost
3% of the U.S. retail food and beverage supply in 2006. The organic
community has accomplished this largely by its own efforts to develop
voluntary standards, support state and then a federal standard for
organic agriculture and producers. The community also has developed
methods, academic knowledge, and technologies that have built the
success of organic. This has been accomplished with very little help
from the federal government, certainly none similar in quantity and
quality to that provided to other parts of agriculture.

The crop insurance proposal we put before you today is drafted to avoid
generating a budget score. Instead, the organic projects will share in
the \$25 million fund authorized each year for spending on contracts and
partnerships by RMA under section 522(e) of the Act. We would suggest
backing up this approach with Committee Report language that urges RMA
to ensure that organic projects receive their fair share of the fund,
particularly during the early years of the new Farm Bill when they will
be the most expensive.

We believe that this proposal, if enacted, would go a long way toward
reducing the impediments faced by current certified organic farmers, and
will act as an encouragement to farmers who wish to transition all or
part of their farms to organic production.

Mr. Chairman, OTA thanks you for this opportunity to testify on behalf
of the organic community on this important topic and looks forward to
working with you on solutions.