> Statement of
>
> Caren Wilcox, Executive Director & CEO
>
> Organic Trade Association

###### Before the U.S. House of Representatives

###### Agriculture Committee's

###### Horticulture and Organic Agriculture Subcommittee

###### April 18, 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). We believe that this is the first
informational hearing on organic issues ever conducted by a
Congressional committee. Thank you.

OTA is the voice for the organic business community, and has had this
role for over twenty-two 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.

We appreciate the opportunity to provide this testimony about the
business climate for organic production, its history, and where OTA
believes we are headed. 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.

OTA also appreciates the fact that the subcommittee extended an
invitation to so many individuals steeped in the organic tradition and
practices to testify about their individual experiences with organic
production, transition, marketing and sales. As any executive of a trade
association will tell you, there is nothing like hearing from the
individuals who directly make their livings in the production and sale
of goods. 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. You will hear from
several farmers and business people today who represent that vision. And
you will hear today that organic production is a life experience
requiring attention to our environment, each crop or animal, and the
integrity of growing and distributing the product through to the
consumer.

Today I would like to tell you something about the current exciting
growth in the organic marketplace, and the laws, regulations and
practices that underlie that success. OTA provides private monitoring of
the growth, and has been involved with passage of the laws and
regulations for decades. At the end of this testimony I will cover some
of the issues we believe need to have attention so that organic can
continue to grow for consumers and for the benefit of the environment.

**[Organic In the U.S. Marketplace]{.underline}**

In the United States, the buzz about organic has become a steady hum.
Organic products are increasingly appearing in more and more new venues,
from ballparks and university cafeterias to local restaurants,
mainstream supermarkets, club stores, and mass-market retailers. At the
same time, U.S. college curriculums are beginning to add more courses
that focus on organic agriculture.

**U.S. Organic Sales**

The U.S. organic industry grew 17 percent overall to reach \$14.6
billion in retail sales in 2005, according to *The Organic Trade
Association's 2006 Manufacturer Survey*. Organic foods grew 16.2 percent
in 2005 and accounted for \$13.8 billion in sales. Organic foods' share
of total retail food sales is up to 2.5 percent. The fastest growing
food categories and their rates of growth over the previous year are
organic meat (55.4 percent -- from a very small sales base), organic
sauces and condiments (24.2 percent) and dairy products (23.5 percent).
The fastest-growing non-food categories are organic flowers (50
percent), pet food (46 percent), and fiber (44 percent).

Organic products can be found in grocery stores, cooperatives, specialty
stores, farmer's markets, farm stands, online, in many restaurants, and
many other outlets. Organic foods are increasingly sold in mainstream
retail establishments, which together represent roughly 46 percent of
sales. Large natural food chains, along with small natural food chains
or independent natural groceries and health food stores, represented
about 47 percent of organic food sales. About 4 percent of organic food
is sold through farmer's markets. (Source: The Organic Trade Association
(OTA) and [*Organic Trade Association's 2006 Manufacturer
Survey*](http://www.ota.com/bookstore/2.html))

While OTA is currently in the field with a new study according to the
OTA 2006 survey, sales of organic foods were expected to reach nearly
\$16 billion by the end of 2006.

Nonfood organic products (personal care products, nutritional
supplements, household cleaners, flowers, pet food, and clothing,
bedding and other products from organic fibers such as flax, wool, and
cotton) grew 32.5 percent, to total \$744 million in U.S. sales in 2005.

Sixty-one percent of respondents to the OTA Survey said they display the
USDA (U.S. Department of Agriculture) Organic seal on their products. Of
the 39 percent not currently using the seal, 53 percent intend to use
the USDA Organic seal in the future. Also, 55 percent of respondents
reported that the USDA labeling and certification programs had increased
their sales of organic products.

Because USDA does not yet do comprehensive market studies of organic
sales, as it does for conventional U.S. agriculture, OTA performs this
research on the industry for its members and the public.

Industry watchers agree that the organic industry is at a new tipping
point. Never before has it experienced the degree of acceptance and
interest from mainstream supermarkets and consumers. Many supermarkets,
in fact, have added private label organic lines to their offerings.

Not only do natural food stores and all of the major mainstream
retailers see organic as a growing category, but more and more
mainstream manufacturers are adding organic products to their
traditional brand lines. In addition, small product developers continue
to create the new products of their dreams.

Such heightened interest in organic is driving demand for raw materials.
In the OTA survey, fifty-two percent of respondents reported that a lack
of dependable supply of organic raw materials has restricted their
company from generating more sales of organic products. This highlights
the need for additional measures to increase the supply of organic
ingredients, and the opportunities for U.S. farmers to supply those
needs.

There are no up-to-date statistics available on U.S. imports or exports
of organic products. These statistics are not broken out from overall
conventional data by Customs or Commerce. The only figures are in a
February 2005 USDA report, which estimated the United States imported
\$1 billion to \$1.5 billion in organic products in 2002, and exported
somewhere between \$125 million and \$250 million. However, in a *Miami
Herald* article published Dec. 18, 2006, a spokesperson for the Center
for Fair and Alternative Trade Studies at Colorado State University
estimated organic exports to the United States from Latin America alone
would reach approximately \$250 million in 2006.

## **Consumer acceptance**

Almost three-quarters (73 percent) of the U.S. population buy organic
products at least occasionally, up from 55 percent in 2000, according to
The Hartman Group. Core buyers, who buy organic products at least
weekly, represent 23 percent of U.S. consumers, according to the report,
*Organic2006: Consumer Attitudes & Behavior, Five Years Later & Into the
Future*.

Meanwhile, The Natural Marketing Institute's (NMI's) *2005 Health and
Wellness Trends* study estimated 56 percent of consumers use organic
products in varying frequencies across six product categories. Household
penetration by category is as follows: fresh fruits and vegetables =
44%; packaged foods = 29%; dairy and milk = 24%; personal care = 21%;
beverages (excluding milk) = 20%; and clothing/linens = 7%.

More and more consumers report trying additional categories of private
label, natural and organic packaged foods, according to The Hartman
Group. Consumers are seeking out these products at channels associated
with middle-income shopping, such as Costco, Trader Joe's, Wal-Mart, and
mainstream grocers.

What draws consumers to want to purchase these products and farmers to
produce them?

# [Market Development: Strong, Steady Growth at Retail]{.underline}

Unlike the information that is developed almost on a daily basis for
conventional agriculture, organic has had to quantify the market size
and changes over time by compiling this consumer data privately, and
unfortunately because this is not the normal market data compiled by
USDA for conventional agriculture, this data may not be readily
available to America's farmers, who could benefit the most by taking
advantage of the opportunities revealed by the consumer data. We at OTA
work to make it available to them however.

It is important to note here that organic agriculture and processing
incorporates practices and avoids substances commonly perceived to
contribute adversely to the environment and to health. The National
Organic Program is a marketing program overseen by USDA and is not
marketed as a health program, but over the long debate about the impact
of such substances as persistent pesticides and herbicides, hormones,
anti-biotics as well as other health oriented debates, many consumers
have identified a preference to avoid these substances in their food,
textiles and personal care products. This preference is revealed when
organic consumers are studied by social scientists.

We would also like to call to the Subcommittee's attention the fact that
organic food products like all food products in the United States must
meet the requirements of national, state and local food safety laws.

### **U.S. Consumers** 

### Shoppers who chose organic products cross all demographic, geographic, and economic boundaries. There is no typical organic consumer anymore. What is clear is that more shoppers are choosing more organic products in more places, and the market for organic products continues it strong steady growth. According to *Organic 2006*, a report prepared by the Hartman Group, an independent market research firm, shoppers typically enter the organic category by beginning with fresh fruits and vegetables, and other products that help them avoid pesticides and hormones. As they become more involved in the category, they add more products, with fiber products and personal care products often being among the last they adopt.

Those most devoted to organic consumption reportedly have a high concern
for personal and planetary health. They are interested in fair trade,
prefer their foods to be either U.S. or locally grown and grown on farms
that practice sustainable agriculture. They want to relate to the
companies from which they purchase and look for those who are committed
to their communities and to corporate social responsibility.

**Who Are Organic Users?**

The Natural Marketing Institute (NMI) has identified three distinct
organic consumer segments: "Devoteds™" (27.8 million adults or 13
percent of primary grocery shoppers) are the most integrated and health
seeking organic users and have fully incorporated organic products into
their lifestyles. "Temperates™" (54.2 million adults or 25 percent of
primary grocery shoppers) are attitudinally disposed toward health in
general and towards organic in particular, but are attempting to fit
organic usage into their existing lifestyle, rather than changing their
lifestyle. Dabblers™ (41.9 million adults or 19 percent of primary
grocery shoppers) a disproportionately male group that is non-committal,
sprinkling a bit of organic usage into their lifestyle, and their usage
appears to be more about participating in a trend than other concerns.
Thus, according to NMI well over 50% of consumers have used organic
products in the past year to one degree or another. (Excerpted from an
article by Maryellen Molyneaux, The Natural Marketing Institute,
published in the September 2006 issue of *The Organic Report*)

### According to another researcher, The Hartman Group, as reflected in their study, *Organic 2006 Consumer Attitudes & Behavior, Five Years Later & Into the Future*, almost three-quarters (73%) of the U.S. population buys organic products at least occasionally, and almost one-quarter (23%) of U.S. consumers buy organic products on a regular (at least weekly) basis. Furthermore, "compared with 2000, more consumers are purchasing organic products on a weekly (9% in 2000 vs. 14% today) and occasional basis (34% in 2000 vs. 44% today).

### 

Hartman also reports strong interest in organic products among Hispanic
and Asian American consumers.

### **How are U.S. Farmers Meeting This Demand From Consumers?**

**Production statistics**

As you will note in later testimony the National Organic Standards have
only been in place since late 2002. Of course, much organic land was in
production at that time, but without a national market with a certified
label, some farmers were not interested in becoming organic. In
addition, it takes three or more years to convert land previously
treated as conventional to be certified to produce organic food and
fiber.

We raise these factors to point out that not only has much data not been
collected by USDA, much production was not there to be measured until
the national rule was instituted.

Organic is growing in the United States, but not at a rate to meet the
consumer demand outlined above.

According to the latest available statistics for U.S. organic production
released in December 2006 by USDA's Economic Research Service (ERS),
there were - at least - 8,445 certified organic farm operations in the
United States in 2005, up from 8,035 certified organic farms in 2003.
The 2005 operations represented slightly more than 4 million acres under
organic management, up from 3 million acres in 2004 and nearly 2.2
million acres in 2003. For the first time, all 50 U.S. states had some
certified organic farmland.

Pointing out that farmers face a number of hurdles when considering
converting to organic production, ERS cited high managerial costs and
risks in shifting to a new way of farming, limited knowledge of organic
farming systems, lack of marketing and infrastructure, and inability to
capture marketing economies.

Nevertheless ERS also reports that "many U.S. producers are embracing
organic farming in order to lower input costs, conserve nonrenewable
resource, capture high-value markets, and boost farm income."

ERS data for 2005 showed 1,722,565 acres in organic cropland (about 0.51
percent of all U.S. cropland) and an additional 2,281,408 acres in
pasture and rangeland (about 0.5 percent of all U.S. pasture). Organic
cropland in 2005 was up from 1,451,601 acres in 2003, while organic
pasture grew substantially from the 745,273 acres recorded for 2003.

Livestock numbers in 2005 were up substantially from 2003, reflecting
the growing demand for organic milk and meat in the United States. The
number of organically raised milk cows grew from 74,435 in 2003 to
86,032 in 2005. The number of organic beef cattle grew from 27,285 in
2003 to 70,219 in 2005. In addition the number of organic hogs and pigs
grew from 6,564 in 2003 to 10,018 in 2005. Total livestock (which
included young stock and sheep) was up to 229,788 in 2005, from 124,346
in 2003. Total organic poultry---including layer hens, broilers and
turkeys---reached 13,373,270 in 2005, from 8,780,152 in 2003. According
to ERS, nearly one percent of dairy cows and 0.6 percent of layer hens
in the United States in 2005 were managed using certified organic
practices.

Despite surging retail sales, growth in organic farm acreage in the
United States is not keeping the same pace, creating a disparity between
the amount of U.S. farm acreage devoted to organic production and the
consumption of organic finished goods. While we do not know how much, we
do know that part of the market demand for organic goods is being filled
from imported agricultural products. (OTA certainly understands this
situation and also acknowledges that there are many products that cannot
be grown in the United States and which consumers want to acquire as
organic -- coffee, cocoa, certain fruits etc.) However, in many cases
U.S. farmers are missing an opportunity, and the U.S. is not reaping the
full environmental benefits of organic production.

**[The "USDA Organic" Label/Seal]{.underline}**

The Subcommittee Members have all seen the "USDA Organic" seal on
products. The standards for those seals are enforced by USDA and
products that are made from 95 percent to 100 percent organic
ingredients and are labeled according to the organic standards are as
"100% Organic" or "Organic" for the 95% category.

Products that contain at least 70 percent organic ingredients and are
handled according to the organic regulations can use the phrase "made
with organic. . ." on the front label, and then list up to three organic
ingredients or food groups such as vegetables or grains.

These are the labels that consumers use to identify U.S. organic
produced products and ingredients. And these are the labels that need
strong standards and enforcement behind them to retain consumer
confidence.

![](media/image1.wmf){width="1.46875in" height="1.46875in"}

Highlights of the regulations follow. For complete details, and the most
up-to-date regulations, see
[www.ams.usda.gov/nop](http://www.ams.usda.gov/nop).

**[Overview: What is Organic?]{.underline}**

Now we want to describe to you the philosophy, law, practices and
standards behind organic production in the United States.

Organic refers to the way agricultural products are grown and processed.
It includes a system of production, processing, distribution and sales
that assures consumers that the products maintain the organic integrity
that begins on the farm.

Building healthy soil is the foundation of organic agriculture. Organic
production is based on a system of farming that maintains and
replenishes soil fertility without the use of toxic and persistent
pesticides and fertilizers. Organic production views farms as part of
the ecology, and each component of the farm system affects all other
parts of the system.

Organically produced foods also must be produced [without the
use]{.underline} of antibiotics, synthetic hormones, genetic engineering
and other excluded practices, sewage sludge, or irradiation. Cloning
animals or using their products is considered inconsistent with organic
practices. Organic foods are minimally processed without artificial
ingredients or preservatives to maintain the integrity of the food, and
with a carefully reviewed and approved list of a few synthetic
ingredients such as baking soda, baking powder, and chlorine.

The following definition of \"organic\" was passed by the National
Organic Standards Board (NOSB) at its April 1995 meeting in Orlando, FL.
This board, comprised of citizens appointed by the U.S. Secretary of
Agriculture, advises the Secretary on issues concerning organic
production, and takes an active role in examining materials and methods
for their acceptability in every part of the organic system of
production. Within the NOSB definition of organic are key statements
which show that sustainability, especially how a healthy environment
relates to human health, is the very foundation of organic agriculture

> \"Organic agriculture is an 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.
>
> 'Organic' is a labeling term that denotes products produced under the
> authority of the Organic Foods Production Act. The principal
> guidelines for organic production are to use materials and practices
> that enhance the ecological balance of natural systems and that
> integrate the parts of the farming system into an ecological whole.
>
> Organic agriculture practices cannot ensure that products are
> completely free of residues; however, methods are used to minimize
> pollution from air, soil and water.
>
> Organic food handlers, processors and retailers adhere to standards
> that maintain the integrity of organic agricultural products. The
> primary goal of organic agriculture is to optimize the health and
> productivity of interdependent communities of soil life, plants,
> animals and people.\"

 

These statements are the framework for stringent standards put in place
to certify that specific practices are used to produce and process
organic agricultural ingredients used for food and non-food purposes.

# [Regulating a Philosophy: Codifying Certification and Accreditation]{.underline}

Use of the word organic to describe farm products is regulated in the
United States, thanks to enabling legislation passed by Congress in 1990
and the National Organic Program regulations, which were implemented in
October 2002.

Following the establishment of several voluntary and state standards for
organic production, the stage was set for U.S. National Organic
Standards, and the U.S. Congress adopted the Organic Foods Production
Act (OFPA) in 1990 as part of the 1990 Farm Bill. This action was
followed by over a decade of public input and discussion, which resulted
in a National Organic Program final rule published by the U.S.
Department of Agriculture (USDA) in December 2000 and implemented in
October 2002. This rule was, at the time, the most commented upon rule
in USDA history.

Organic production is practiced worldwide, and products sold as organic
in the United States must meet or exceed the U.S. regulations for
organic production no matter where those products are grown and
processed.

### **Organic Foods Production Act of 1990**

The Organic Foods Production Act's (OFPA) purpose was to establish
national standards for the production and handling of foods labeled as
\"organic.\"

Previous efforts to create private and State agencies certified organic
practices did not establish national uniformity in standards and
therefore there was no guarantee that \"organic\" meant the same thing
from state to state, or even locally from certifier to certifier. In
some key states, such as California, organic certification was not
required, and many states had no laws at all about organic production
and labeling.

National standards for organic products were desired by both producers
and consumers to clear up this confusion in the marketplace and to
protect against mislabeling or fraud, so the organic business community,
along with consumers and environmentalists pushed for this
ground-breaking enabling legislation.

OFPA established the National Organic Program (NOP) now located within
the Agricultural Marketing Service at USDA; The National Organic
Standards Board; mandatory certification; accreditation of certifiers;
labeling categories; and many of the principles that would later
comprise the regulations. Like many pieces of legislation, OFPA was not
perfect, but it did represent regulations that were both workable and
innovative.

OFPA allows for state standards that are more restrictive than the
federal standards, but they must be approved by the USDA. In addition,
states cannot discriminate against out-of-state products that meet the
federal standards.

**\
The National Organic Standards Board**

Under OFPA, a National Organic Standards Board (NOSB) was created to
advise the Secretary of Agriculture in setting the standards on which
the USDA's National Organic Program is based. The NOSB wanted their
recommendations to be based on industry consensus. They asked for and
received an unprecedented amount of public input from farmers,
businesses and consumers during every step of their decision-making
process. After considering the recommendations of the NOSB, the
Secretary has final authority in determining the regulations.

Appointments to the NOSB are made by the Secretary of Agriculture for
five year terms, and must include: four farmers, two
handlers/processors, one retailer, one scientist (with expertise in
toxicology, ecology or biochemistry), three consumer/public interest
advocates, and three environmentalists.

In addition to making recommendations on the national standards, the
NOSB is authorized to convene Technical Advisory Panels to advise on
materials to be included on a National List of materials allowed for use
in organic production.

**National Organic Program Implementation**

After more than a decade of public discussion, consensus-building, two
rounds of public comment which generated a record-breaking number of
public comments for the USDA, national organic standards were
implemented in October 2002.

The standards detail the organic certification process, how certifiers
are accredited, what methods and materials are allowed and prohibited in
organic farming and processing. The standards are comprehensive in that
they cover farming methods for every type of farm product---fresh fruits
and vegetables, grains, eggs, poultry, beef, dairy, cotton, wool, oils,
flowers, and anything else that can be grown on a land-based farm. The
processing of all food and beverage products is covered as well. When
the rules were implemented, it was expected that there would be changes
and additions as additional sectors of the organic market developed,
such as organic cotton products, personal care products, pet foods, and
any other products that might include components that could be grown on
organic farms. Although the organic business community has grown
tremendously, in many ways it is still a very nascent sector, and, as
innovations occur, there will be a need for the regulations to evolve as
well.

Fortunately, the regulations were set up to evolve as the industry
grows. For example, there are sunset provisions to reexamine materials
allowed and prohibited in organic production, so that as more
environmentally sound materials become available, the use of less
environmentally sound materials can be phased out.

Some key elements of the U.S. organic regulations include annual
inspections of organic farms and food processing facilities to ensure
they are following the regulations; farms must not have used any
prohibited materials for at least 3 years before crops can be sold as
organic; livestock must have access to the outdoors; dairy cows must
have organic feed for at least one year before milk can be sold as
organic and poultry and beef cattle must have only organic feed. The use
of genetically engineered seeds and growth hormones is prohibited, as is
the use of sewage sludge as fertilizer, and irradiation. Cloned animals
and their progeny are not compatible with organic production, either.

Because soil rehabilitation and development is at the core of organic
farm production, there are provisions and practices to enhance soil, as
well as to protect the soil.

The organic standards are the only place where animal manure is overseen
as an input to agriculture. The U.S. regulations for organic production
impose strict requirements for the use of animal manure if it is used on
the farm. The regulations require that raw animal manure must be
composted unless it is applied to land used for a crop not intended for
human consumption; or is incorporated into the soil not less than 120
days prior to the harvest of a product whose edible portion has direct
contact with soil; or is incorporated into the soil not less than 90
days prior to the harvest of a product whose edible portion does not
have direct contact with the soil surface or soil particles. See 7 CFR
205.203 (c)(1) and (2). \
\
The requirements for making compost are regulated as well, and are
designed to encourage soil health while minimizing risks to human health
or the environment.   The National Organic Program Rule's defines
compost (7 CFR 205.2) as follows:

> > **Compost**: The product of a managed process through which
> > microorganisms break down plant and animal materials into more
> > available forms suitable for application to the soil. Compost must
> > be produced through a process that combines plant and animal
> > materials with an initial Carbon:Nitrogen ratio of between 25:1 and
> > 40:1. Producers using an in-vessel or static aerated pile system
> > must maintain the composting materials at a temperature between 131
> > deg. F and 170 deg. F for 3 days. Producers using a windrow system
> > must maintain the composting materials at a temperature between 131
> > deg. F and 170 deg. F for 15 days, during which time, the materials
> > must be turned a minimum of five times.  

The organic process does not stop at the farm gate. The standards cover
all aspects of farming for all kinds of farm products, and covers
processing and handling of food and beverage products after they leave
the farm, which makes these standards far-reaching and complex to
characterize simply.

For food and beverage products, the regulations cover both growing and
processing, and every business that produces more than \$5000 of organic
foods must be certified in order to sell the product as "organic". Farms
that sell less than \$5000 worth of organic goods, and sell only direct
to consumers or direct to retail establishments do not need to be
certified, but they must follow all other aspects of the organic
regulations in order to call the products organic. Growers falling under
this \"Small Farm Exemption\" may not use the term \"certified organic\"
when marketing their crops, and may market through direct sales only
(i.e. farm stands, farmers' markets, or direct sales to a retailer). At
present, distributors and retailers are not required to be certified,
although they may voluntarily become certified.

[**Organic Labeling, Processing, and Handling**\
]{.underline}Standards for the processing, handling and labeling of
organic food and beverage products cover all steps in the process from
receiving organic raw materials, acceptable processing aids and
ingredients, appropriate packaging materials and labeling, to cleaning
methods, waste disposal and pest management at processing facilities.

The following highlights address some of the questions most frequently
asked about the organic processing, handling & labeling standards*.*

**Standards Behind the Labeling of Organic Products**

A product must either be one hundred percent (100%) organic ingredients
to be labeled as such or it must have at least ninety-five percent (95%)
of the ingredients in a processed product must be organically produced
and the processor must be a certified organic handler in order for the
finished product to be labeled as "USDA Organic". The five percent (5%)
non-organic ingredient criteria is determined by the total weight of the
finished product, not including salt or water. Water used in organic
processing must meet all requirements of the Safe Drinking Water Act.

Special provisions allow labeling to state that a product **contains
organic ingredients.** Products with **more than seventy percent (70%)**
organic ingredients may display this information on the front label;
those with **less than seventy percent (70%)** organic ingredients must
display this information in the ingredient listing panel.

Some examples: A label which reads \"Organic Vegetable Soup\" would be
stating that ninety-five percent of the **total ingredients** of that
soup (by weight) are certified as organic. Alternately, a soup label
might read \"Vegetable Soup\" and include the phrase \"Made with Organic
Vegetables\" on the front panel, indicating that the primary ingredients
are organic and make up more than seventy percent of the total
ingredients by weight. Another label might read simply \"Vegetable
Soup\" and include the word \"organic\" to identify specific items in
the ingredient listing panel --- as in \"Potatoes, carrots and organic
kidney beans.\"

Consumers can look for the "USDA Organic" seal or other approved
labeling, and for the name of the certifier on the label of the products
they consider for purchase. Products labeled "100% Organic" and carrying
the "USDA Organic" seal are just that -- they contain all organically
produced ingredients. Products that are made from at least 95% organic
ingredients, and have remaining ingredients that are approved for use in
organic products may also carry the "USDA Organic" seal, although the
use of the seal is not required. In addition, products that contain at
least 70% organic ingredients may label those on the ingredient listing.
Producers and processors voluntarily use these labels, and may use
organic ingredients without being required to label them.

 

For more information from USDA on labeling and other issues go to
<http://www.ams.usda.gov/nop/Consumers/brochure.html>.

**Organic Crop Production Standards**

Organically produced crops must be grown on land which has been free of
prohibited substances for **three years prior to harvest**. Crops grown
on land which is \"in conversion\" to organic (during the first three
years after switching from conventional farming, for instance) cannot be
labeled as organic. Neither OFPA nor the regulations make any provision
for a USDA-sanctioned \"transitional organic\" label. (Such labels do
exist in other countries for production under the standards of those
countries -- not U.S. standards.)

The standards cover organic agricultural methods and materials in great
detail, including managing soil fertility, restrictions on when and how
manure may be applied to crops, crop rotation, and composting. Use of
municipal solid waste and sewage sludge are prohibited, as are the use
of genetic engineering, and irradiation.

Prevention is considered a grower's first approach to **pest
management**, but the Act establishes a *National List* of acceptable
and prohibited materials, which includes pest control treatments as well
as other agricultural inputs such as fertilizers and seed treatments.
Many organic farmers study life cycles of known pests and manage to time
their crops to avoid certain pests.

All agricultural inputs are evaluated as to their long-term affect on
the environment --- not simply on whether they are synthetic or natural.

**Organic Livestock Production**\
Standards for organic livestock production are meant to assure both an
organic product to the consumer and living conditions for farm animals
which limit stress and promote good health. They address substances used
in health care and feeding, as well as herd or flock management and
housing.

\"Livestock\" includes cattle, sheep, goats, swine, poultry,
domesticated game and horses raised for slaughter or used as draft
animals. Regardless of whether they are raised as breeding stock, as
dairy animals, or for slaughter, all livestock is covered, although the
regulations for each type may vary.

Because the livestock market was less developed when the regulations
were developed, this is one area of the regulations where refinements,
including adequate public input and discussion, are expected. Some of
the areas that need attention include the definition of pasture, and how
much is required to meet the standards, how to bring new animals into
the organic system, and how to include aquatic species in the
regulations designed for land-based agriculture.

The following highlights address some of the questions most frequently
asked about the NOSB recommendations for organic livestock standards*.*

**Feeding Organic Livestock[\
]{.underline}**Quite simply, organic livestock must be fed organic feed.
Growth promoters and hormones, and plastic pellets for roughage in feed
are prohibited.\
\
**Housing and Health Care for Organic Livestock**\
Healthy living conditions and attentive care are considered first steps
in the prevention of illness. Therefore, animals must not be
overcrowded, and must be allowed periodic access to the outdoors and
direct sunlight. Antibiotics are not used to treat organically raised
animals in the United States, and if, for humane reasons, an animal must
be treated with an antibiotic then it is removed to a conventional herd,
and not returned to organic status.

**Recordkeeping for Organic Livestock**[\
]{.underline}Records must be kept on all feeding and health care
practices for each animal or flock, and there must be a **verifiable
audit trail** to trace any animal or flock back to the farm.

**[Other General Standards]{.underline}**

**Packaging Materials**\
Organic products can not be packaged in materials, storage containers or
bins that contain synthetic fungicides, preservatives or fumigants. The
reuse of containers which have been in contact with any prohibited
substance is not allowed.

**Imported Products**[\
]{.underline}Imported products described as organic must meet the U.S.
regulations in order to be sold in the United States.

**[Organic Certification]{.underline}**

Certification is important to the National Organic Program. It assures
that organic growers and handlers are, in fact, adhering to the law. The
certification process focuses on *the methods and materials used in
production.* There are three main requirements:

1.  The methods and materials used in production must meet organic
    standards.

2.  There must be clear and ongoing documentation of these methods and
    materials.

3.  There must be a paper trail to trace a product back to its
    production site, in order to verify the methods and materials used
    in its production.

**Who Must Be Certified\
**Almost everyone who wants to sell products labeled as \"organic\" must
be certified. This includes producers of organic livestock, food and
fiber crops, and \"handlers\" of organic products. (Only very small
farmers who sell less than \$5000 worth of products per year do not need
to be formally certified, but must still follow all regulatory steps for
organic production. They also are restricted to only sell directly to a
consumer via farm stands or farmer's markets.)

**How The Certification Process Works**\
A grower or handler seeking organic certification submits an **Organic
Farm Plan** or an **Organic Handling Plan** to a USDA-accredited private
or state certification program.

A **\"handler\"** is any operation that \"receives, processes, packages,
or stores agricultural products.\" Some examples: a processing company
that buys organic tomatoes and makes canned spaghetti sauce; or any
distributor who \"substantially transforms, repacks or relabels organic
agricultural products.\" This last distinction is meant to exclude
brokering, warehousing or trucking operations that merely store or move
finished processed products from place to place without altering them in
any way.

**The Organic Plan** must detail all current growing or handling methods
and any materials which will be used. The Plan also covers future
intentions and improvements to all areas of production.

**Five years of records** must be kept of all management practices and
materials used in organic production.

In addition to assessing the Organic Plan, the certification agency
performs **annual on-site inspections** of each farm or handling
operation participating in its program. Certification is then either
awarded or denied. User fees are collected from each grower or handler
to cover the cost of the certification program.

**Allowance for a Split Operation**\
The regulations do allow for only part of a farm or handling operation
to be certified. The organic and conventional parts of the operation
**must be kept separate** --- whether by physical boundaries and buffer
zones, in the case of a farm, or by proper cleaning and management of
facilities and machinery, in the case of a handler. **Separate records**
must be kept for each part of a split operation.

**Accreditation of Certifying Agents**\
Only USDA-accredited agencies can act as certifiers. Certifying agencies
can be either state or private, but they must have expertise in organic
farming and handling techniques. They must be able to fully implement
all aspects of the certification program, including hiring an adequate
number of inspectors to carry out on-site inspections. Accreditation may
be granted by the USDA for a period **not to exceed five years**, and
may be renewed. **User fees** are collected from each certifying agency
to cover the cost of the accreditation program. Certifying agents must
keep ten-year records of all of their activities. The USDA also conducts
**on-site audits** of records. The USDA can **suspend accreditation** if
a certifier is not in compliance.

It is important to note that USDA does accredit certifiers who operate
outside U.S. borders to certify organic products that will be exported
to the United States and will bear the USDA Organic seal.

**Conflict of Interest\
**Any employee of a certifying agency who has a **commercial interest**
--- including consultancy --- in a farm or other operation being
considered for certification must be isolated from the decision-making
process. Payment (other than certification fees), gifts or favors of any
kind cannot be accepted from businesses being certified.

**Enforcement and Penalties\
Mislabeling and False Statements**: Any person who **knowingly
mislabels** a product as organic can be fined a maximum of \$11,000 and
may be disbarred from the Organic Program for five years. Persons who
make **false statements** to the Secretary of Agriculture, a state
official or a certifying agent are subject to penalties under Federal
law, and may be disbarred from the program for five years.

**Violations by Certifying Agencies**: A certifying agency that violates
the provisions of the program or falsely or negligently certifies any
operation shall lose accreditation and shall not be eligible for
re-accreditation for three years.

[The National List]{.underline}

As described above national organic standards set out the methods,
practices and substances used in producing and handling crops, livestock
and processed agricultural products. The standards include a National
List of Allowed and Prohibited Substances, which includes approved
synthetic and natural, and prohibited non-synthetic, substances. See
<http://www.ota.com/listbackground05.html> for more details.

A uniform \"National List\" of materials was mandated by Congress as
part of the Organic Foods Production Act of 1990 (OFPA). Its purpose is
to make clear which materials can and cannot be used in organic
production, processing and handling in the United States.

In order to call a product organic, the ingredients must come from an
organic farm. In addition, any processing of those ingredients must meet
the conditions in the national organic regulations. In general, the
national organic regulations allow the use of natural materials and
prohibit the use of synthetics in food production. There are a few
exceptions, however.

** **

**What Is the National List?**

The National List of Allowed and Prohibited Substances is the list of
exceptions to the general requirement that natural materials are allowed
and synthetic materials are prohibited. In other words, the National
List is a list of prohibited natural materials (such as arsenic), and
allowed synthetics (such as baking powder, one form of pectin and
Vitamin C). Even though a synthetic may be allowed for one purpose that
does not mean that it is allowed for every possible use, so
manufacturers need to pay careful attention to the usage restrictions
mentioned in the regulations.

** **

**Who Defines the National List?**

The National Organic Standards Board (NOSB), a group of fifteen citizens
appointed to advise the Secretary of Agriculture, is responsible for
recommending to the Secretary which materials will be on the list. The
Secretary makes the final determination. A Techni­cal Advisory Panel
(TAP) gathers and evaluates the scientific data and makes
recommendations to the board based on seven review criteria:

> 1\) Effect on human health.
>
> 2\) Effect on the farm ecosystem.
>
> 3\) Toxicity and mode of action.
>
> 4\) Availability of gentler alternatives.
>
> 5\) Probability of environmental contamination during manufacture, use
> and disposal.
>
> 6\) Potential for interactions with other materials used.
>
> 7\) Overall compatibility with a system of sustainable agriculture.

In 1995, the NOSB completed a massive review of the materials in use by
organic producers, and those recommendations became the base for the
National List. The procedure is ongoing, as new materials are reviewed
for inclusion or prohibition. Any business or person can petition for a
materials review.\
\
In addition to the list above the national organic standards require
that synthetic processing aids must meet the following:

1)  It cannot be produced from a natural source and there are no organic
    ingredients available;

2)  Its manufacture, use, and disposal do not have adverse effects on
    the environment and are done in a manner compatible with organic
    handling as described in section 6513 of the OFPA;

3)  The nutritional quality of the food is maintained and the material
    itself or its breakdown products do not have adverse effects on
    human health as defined by applicable Federal regulations.

4)  Its primary purpose is not as a preservative, nor is it used only to
    recreate/improve flavors, colors, textures, or nutritive value lost
    during processing except in the latter case as required by law.

5)  It is Generally Recognized as Safe (GRAS) by FDA when used in
    accordance with Good Manufacturing Practices (GMP) and contains no
    residues of heavy metals or other contaminants in excess of FDA
    tolerances.

6)  Its use is compatible with the principles of organic handling.

7)  There is no other way to produce a similar product without its use
    and it is used in the minimum quantity required to achieve the
    process.

**How Is The National List structured?\
**The National List is part of the national organic regulations
available at [www.ams.usda.gov/nop](http://www.ams.usda.gov/nop), and is
divided into six parts. (Examples used here are as illustrations only.
See the regulations for complete details.)

1)  Synthetic substances [allowed]{.underline} for use in organic crop
    production (section 205.601). Some examples include: sticky traps
    and newspapers for mulch.

2)  Non-synthetic substances [prohibited]{.underline} for use in organic
    crop production (section 205.602) Some examples include: arsenic,
    tobacco dust, and ash from burning manure.

3)  Synthetic substances [allowed]{.underline} for use in organic
    livestock production (section 205.603). Some examples include:
    aspirin, chlorine for disinfecting equipment and sanitizing
    facilities, glycerin.

4)  Non-synthetic substances [prohibited]{.underline} for use in organic
    livestock production (section 205.604). Only one substance is listed
    as of Dec. 2004: strychnine.

5)  Nonagricultural (non-organic) substances [allowed]{.underline} as
    ingredients in or on processed products labeled as "organic" or
    "made with organic (specified ingredients or food group(s))."
    (Section 205.605). This section of the regulations is further
    divided into "Non-synthetics allowed" and "Synthetics allowed." Some
    examples of non-synthetics allowed include dairy cultures, potassium
    chloride, carnauba wax, yeast. Some examples of synthetics
    [allowed]{.underline} include ascorbic acid (Vitamin C), carbon
    dioxide, lecithin, tocopherols (Vitamin E).

6)  Non-organically produced agricultural products [allowed]{.underline}
    as ingredients in or on processed products labeled as "organic" or
    "made with organic (specified ingredients or food group(s))."
    (section 205.606) This section lists materials which may be used if
    an organic version is not commercially available. The list includes:
    cornstarch (native), gums (water extracted only; arabic, guar,
    locust bean, and carob bean), kelp for use only as a thickener and
    dietary supplement, unbleached lecithin, and high-methoxy pectin. As
    a result of a recent clarification of the Rule, the National Organic
    Standards Board has recently recommended the list be updated to
    include a number of agricultural products, including colors.

>  

These lists contain the relatively few exceptions to the basic
understanding within the organic industry that organically grown and
handled foods are produced with solely organic materials. This may seem
like an unusual structure. However, it avoids the problem of trying to
list every natural material organic growers might use.

 

**Why Are There Exceptions?**

Organic production systems encourage a healthy environment with as few
inputs as possible. The NOSB recommends that cultural, biological and
other management tools be sought to replace material inputs --- whether
synthetic or natural.

 

Congress, in passing the Organic Foods Production Act, recognized that
it will take time for organic producers and handlers to achieve the long
term goals expressed in the Act. The National List was meant to reflect
realistic organic practices, and to take into account current obstacles
to ideal organic production. Therefore, some synthetics are allowed if
the review process shows that they are:

-   Not harmful to human health or the environment;

-   Necessary to production because of unavailability of natural
    products;

-   Consistent with organic ideals.

Likewise, the law provides for prohibition of natural materials that may
be harmful to human health or the environment, and inconsistent with
organic ideals.

 

**Why Are There Non-Organic Ingredients in Some Organic Food?**

If you were to make organic cookies at home you would naturally use
organic flour, sugar, oil, eggs, raisins, etc. But what about the baking
powder and baking soda? Because they are non-agricultural products,
neither of these ingredients meets the definition of organic. Processors
of many kinds of organic foods face the same dilemma. In addi­tion,
nutritional fortification is sometimes required by regulation or
professional guidelines, but not available in natural form.

 

Thus the NOSB recommends that the National List include synthetic
processing aids and natural products such as minerals that are not
agricultural. For the finished food to be called "organic," these
ingredients may not comprise more than 5% of the total product, by
weight. For the finished product to be called "made with organic
(specified food or food group(s))," these ingredients may not comprise
more than 30% of the product total by weight. Products that are composed
of wholly organic ingredients may be identified as 100% organic.

**[National Standards Bolster Public Confidence]{.underline}**

Now that the national standards are in effect, all agricultural products
labeled \"organic\" must be in compliance with the U.S. organic law. The
word \"organic\" on U.S. products means that the ingredients and
production methods have been verified by an accredited certification
agency as meeting or exceeding USDA standards for organic production. In
short, consumers have the assurance that products labeled as \"organic\"
adhere to the standards set forth by USDA.

New standards for emerging industries are also under development for
products such as fiber and textile processing, pet food, aquaculture, as
well as personal care products, and other non-food products, OTA works
on these issues as well as providing guidance on good organic retail
practices.

Just as the initial standards development and regulations were generated
at the urging of those in the organic business community, new standards
development will also spring from further innovations in that community
as well. There is work going forward to develop consensus standards
taking into account all parts of the supply chain, and what will work
for all parties involved. Since organic production is an interconnected
system, this broad point of view is necessary to workable stringent
standards, and is a good way to balance the desire for perfection with
what is practical.

### **Research**

In the years since passage of OFPA there have been consistent calls for
parity in research efforts for organic at a level that would provide a
fair share as contrasted with the hundreds of millions devoted to
research on conventional and biotechnology agriculture. However, most of
the research has been defined and carried out via private sources and by
organic farmers and processors themselves. That is gradually changing.

# Although research money for projects centering on organic agriculture still is quite limited, there are some programs available. For instance, in September, USDA announced it was awarding slightly more than \$4.6 million in research grants administered through its Integrated Organic Program and Cooperative State Research, Education and Extension Service (CSREES) to address organic agricultural issues and priorities, including global competitiveness.

The ten grants to universities in 12 states will focus on two areas:
improving the competitiveness of organic producers, and assisting
producers and processors who have already adopted organic standards to
grow and market high quality organic agricultural products.

In addition, several universities have announced they are stepping up
educational programs concerning organic agriculture**.** For example,
the University of Florida at Gainesville established a new organic
agriculture undergraduate degree program, beginning with the Fall 2006
term. The new major was created as a result of growing student interest
in such a program. The university has offered various organic classes
since 1990, and has had a minor program of study in organic agriculture
for the past two years.

Colorado State University and Washington State University both began
offering similar programs during the Fall 2006 semester. In addition,
Michigan State University has said it will start a one-year certificate
program in organic farming in January 2007. In addition, beginning in
the Spring 2007 semester, Delaware Valley College in Doylestown, PA,
will offer a course entitled "Organic Crop Science." The course will
provide working knowledge and hands-on experience for those interested
in careers in certification, production and marketing. An organic dairy
has been established at the University of New Hampshire for research and
teaching purposes.

Meanwhile, the University of Nebraska at Lincoln has announced that one
of its four plots to be used by researchers to study production
challenges on organic farms has been certified by the Organic Crop
Improvement Association International. The certified land at the High
Plains Agricultural Lab near Sidney will be used to grow organic wheat,
peas, forage and other crops.

**[Current Challenges to Organic Agriculture and
Production]{.underline}**

Organic agriculture and production has managed to provide almost 3% of
the U.S. retail food supply largely by its own efforts to develop
voluntary standards, support state and then a federal standard for
organic agriculture and products, develop 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 question is should this continue as almost a solely private sector
effort, raising important competitive questions about the disadvantages
to organic farmers and processors who need to compete in the marketplace
without parity against conventional and biotechnology based agriculture?
OTA believes the answer to that question is, "No." Organic agriculture
and its processors should not be disadvantaged against their neighbors
in access to and use of technical assistance, capital, research,
marketing and insurance. We should not have to struggle for data
collection distinctions so that we -- and the Congress - can understand
the organic marketplace.

Over the past decade the Organic Trade Association has consistently
supported the implementation of the National Organic Program. Having
consistent market standards and a program to enforce regulations
stabilizes the market place, stimulates market development and
facilitates future expansion of organic agriculture and the products it
generates. The increasing pressure of the market demand for organic
products, both nationally and internationally, necessitates improved
government encouragement for organic production and labeling, and
programs that facilitate conversion to organic production.

Now that organic agriculture has achieved growth into the billions of
dollars of sales, and widespread consumer acceptance there are excellent
reasons for Congress to help organic agriculture to move to another
level of performance.

First, U.S. organic agriculture is not the only place that farmers are
turning to growing organic. While the U.S. is the fastest growing market
for organic, the European Union is not far behind in growth. And farmers
in many countries are moving to fill that demand on both "developed"
continents.

At the same time there are increasing efforts to identify ecological
steps that will reduce air emissions that contribute to advancing carbon
dioxide levels in the atmosphere. The organic process reduces the use of
petroleum based pesticides and fertilizers, and at the same time organic
soils absorb carbon dioxide at the estimated rate on some farms of 3,670
pounds per acre.

By increasing organic farming in the United States consumers will be
provided with domestically grown, and in many cases local products,
emissions are reduced and water quality is also greatly improved.

**Challenges to the National Organic Program**

Furthermore, because the capability to certify to the National Organic
Program (NOP) is available around the world it is important to keep that
program strong and capable to keep up with the needs of certified
products that are growing in double digit percentages per year, and are
projected to do so for the next several years. To best protect the
integrity of the organic label that consumers have come to trust, NOP
needs to be able to accredit and have inspection oversight resources
both domestically and internationally. Congress' support of these
oversight and inspection functions of the NOP goes a long way toward
meeting the needs of organic shoppers at home.

As of Oct. 31, 2006, there were 95 agencies accredited by USDA to
certify farms, processing and handling operations as meeting national
organic standards. Of those, 55 were based in the United States, and the
remaining 40 certifying agencies were from other parts of the world.

During 2006, USDA's Agricultural Marketing Service determined that the
organic assessment program of Israel's Ministry of Agriculture and Rural
Development, Plant Production, and Inspection Services conform to the
organic standards overseen by USDA's National Organic Program. As a
result, certification organizations recognized by the Israel Ministry do
not need to be accredited directly by USDA but can certify operations as
meeting NOP standards.

Organic assessment programs of other foreign governments recognized by
USDA include New Zealand, the United Kingdom, Quebec, Denmark, British
Columbia, India, and the Standards Council of Canada.

##### As these recognition programs expand NOP will need to be able to assure consumers that they are continuously well run, and at the same time they need to directly accredit certifiers to perform these functions in countries that are not recognized. So far no equivalency agreements have been reached between the United States and any other country with its own organic certification program.

##### The NOP and New Standards Development

Much discussion during 2006 centered on U.S. organic dairy operations
and the possible need to spell out more clearly pasture requirements and
the process for converting a dairy herd to gain organic certification
and to supply replacement animals. As a first step, the National Organic
Program (NOP) during 2006 issued an advanced noticed of proposed
rulemaking for pasture requirements, but this issue is still unresolved.

In addition to a proposed rule on pasture requirements and regulations
concerning dairy animal replacement, NOP in October 2006 said it was
focusing on a handful of other priorities. These include:

-   Addressing the five-year sunset rule, requiring all materials listed
    on the National List of Accepted and Prohibited Materials in 2002 be
    reviewed in order to be retained on the list, or be removed by June
    2007.

-   Moving forward with Section 606 petition review and rule changes
    covering materials, including refining the definition of
    "agricultural" and "non-agricultural" substances.

-   Renewing accreditation of certifying agents.

-   Continuing to improve its quality systems management.

-   Publishing guidance on commercial availability, grower group
    certification and inspection issues, and identifying certifiers of
    final handlers on labels.

**[Potential Remedies in the 2007 Farm Bill]{.underline}**

In its recommendations relative to the Farm Bill, OTA is seeking to
ensure that organic farmers have access to all resources available to
other farmers through USDA. For example, there currently is little
federal data or market research available about organic farms.

With little or no government support for being organic, little
knowledgeable technical assistance or research it is difficult to
encourage U.S. growers to convert to organic farming, particularly with
the hurdles of the three-year conversion period. For those growing
organic livestock, there is the high cost of organic feed, which often
costs three to four times as much as conventional grain.

Organic farmers report various impediments to converting more land to
organic.

-   Access to technical assistance is rare and usually only available
    from other organic farmers;

-   Access to capital is often denied via the traditional agricultural
    banking systems because data is not collected separately for organic
    production and therefore credit granting agencies lack access to
    data based credit reports usually available to conventional farmers
    for the use of their bankers.

-   Access to crop insurance was finally made available, but at a
    disadvantageous rate: organic farmers 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. Again this is
    attributed by crop insurers and RMA to the fact that actuarial data
    is not available to insurers.

-   The three year transition period is considered essential to create a
    working organic farm system through establishing effective crop
    rotations and rebuilding soil fertility, including allowing a
    reduction in activity in longer-lived formerly applied toxics and
    petroleum based pesticides and herbicides.  However, this process is
    a challenge for a\
    farmer also newly dealing with rotation of crops and other organic
    learning challenges.

-   Organic farmers who are growing crops that are covered by Marketing
    Orders are also disadvantaged. Unless their farm is 100% organic,
    they are responsible to pay into the marketing order, but these
    orders rarely if ever pay special attention to marketing organic
    products. (Many farms are only partially organic, or are in
    transition, and therefore are not 100% organic.)

Some steps are underway within the organic business community and at the
state, county and local levels to enhance the ability of farmers to
choose to go organic successfully. Many processor members of OTA report
privately encouraging conversion/transition of land in order to acquire
more organic product in the United States. However, since these
businesses are also in need of capital themselves this private system is
strained and certainly cannot provide growth at the rate that might be
expected were parity access to USDA resources granted to them.

There are other efforts going forward at the state and local levels. In
some states specific experts are assigned to work on developing organic
production using both state and any federal resources they can identify.

As you will hear in the testimony, during 2005 officials in Woodbury
County in Iowa adopted a policy to offer tax incentives to farmers who
switch from conventional to organic production. Woodbury County
Supervisors voted to provide property tax rebates for those converting
from conventional to organic farming practices. Under its "Organics
Conversion Policy," the county now grants property tax rebates of up to
\$50,000 each year for five years for farms that convert from farming
techniques using pesticides to organic farming practices that comply
with USDA's National Organic Program.

During 2006, officials in Cherokee County, Iowa, voted to offer farmers
property tax incentives to convert to organic farming practices in a
policy similar to the one enacted in Woodbury County.

OTA has publicized these local efforts to provide them as a model for
local and county governments across America.

Meanwhile, on a national level, other programs are being undertaken to
encourage more farmers to choose organic practices, and to help provide
resources so that they may do so. For instance, organic-oriented
programs received slightly more than \$2 million of the \$25 million
allocated for U.S. Department of Agriculture's Risk Management Agency
(RMA) partnership agreement funding in fiscal year 2005. This included
\$555,000 for community outreach and assistance agreements, \$19,264 for
small sessions programs, and \$1,461,841 for research and development
agreements. A few states are using EQIP to ease conversion to organic
practices by providing specific equipment for the effort.

A Memorandum of Understanding is in existence between RMA and AMS to
start studies of price studies for some organic products.

These data collection efforts are way overdue and comprehensive
economic, pricing and commercial information that is gathered on a
regular basis for conventional agricultural products and processed goods
needs to be gathered for organic insurance eligibility, for eligibility
for loans, and for disaster payments. Data is also needed in order for
farmers to know which crops to plant in a nationally competitive
environment, to develop marketing plans and to provide information to
processors.

**[A Farm To Table Strategy for the 2007 Farm Bill]{.underline}**

To remedy as many of these disadvantages OTA has developed a Farm to
Table strategy for organic in the 2007 Farm Bill. The OTA plan focuses
on four priorities:

Specifically, OTA is recommending that Congress provide USDA with
authority and funds to:

**1) Foster conversion/transition to organic agriculture and trade** by
providing **technical assistance** to aid in converting farm systems
from conventional to organic production. Farmers need help formulating
business plans, marketing and credit plans as they shift into organic
production. Converting farm systems from conventional to organic takes
three years. Farmers working to become organic also require technical
assistance to guide them through the often daunting certification
process. In addition, farmers need transition aid for a limited period
of time, and cost share funding for certification.

Conventional farmers turn to USDA for in-depth market and production
data, which helps them determine what to plant and how much to plant.
Such resources do not exist for organic crops. USDA does not even
produce a specific list of organic farming and processing operations, or
detailed organic crop reports -- greatly impeding the business of
organic agriculture. OTA wants USDA to close these serious information
gaps.

2\) **Eliminate Hurdles to Organic Agriculture and Trade** by creating
appropriate risk management tools and developing an organic export
policy and strategy.  Organic producers who now have crop insurance and
incur losses only receive payments for their losses equal to
conventional prices for crops \-- rather than the higher level of prices
that organic products command. The reason for this is a lack
of actuarial data on crop prices received by organic producers. Why?
USDA does not collect much pricing information on organic products.
Therefore, the crop insurance companies will not pay above conventional
prices for losses. 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. OTA wants to fix that.

3\) **Initiate and Fund Organic Agriculture and Economic Research.**
USDA is respected around the world as a leader in agriculture research.
Yet, very few of these resources are applied to organic agriculture. OTA
proposes integrating organic agriculture into the three main areas of
USDA research: agronomy, economics and demographics, and marketing.

4\) **Maintain and Enhance Current Agency Programs** so that the
National Organic Program (NOP) can keep pace with the growing organic
sector. We are lucky that the NOP staff is dedicated and hard-working.
However there is not enough staff to write the new rules, and to review
an ever expanding worldwide certification system. Reportedly, AMS only
has two compliance officers specializing in organic agriculture. Organic
accreditation and certification is a world-wide program; they need a
world-wide staff. And, funding an international travel budget would be a
good start.

 

**[Private and Public Efforts to Grow the Market]{.underline}**

OTA's membership directory, [*The Organic Pages
Online*](http://www.theorganicpages.com/topo/index.html), is a fully
searchable directory on the web
([www.theorganicpages.com](http://www.theorganicpages.com/)) with
comprehensive indexing and twice monthly updates. It is a virtual
organic marketplace, connecting buyers and sellers of organic products
and services, from farm to retail. OTA also publishes an online [Export
Directory](http://www.usorganicproducts.com/) for international buyers
interested in purchasing U.S. Organic Products.\
\
Of course, the [All Things Organic™](http://www.organicexpo.com/)
Conference and Trade Show (www.organicexpo.com) is the premier venue for
introducing new organic products, meeting business partners from around
the world, and celebrating the successes and challenges facing the
organic business community. 

OTA also runs the Organic Export Program, an international marketing
program and public/private effort funded through the Market Access
Program (MAP) of the Foreign Agricultural Service of USDA with industry
help. Its goal is to promote U.S. organic products to the worldwide
market. It cooperates with regional and state promotion agencies to
ensure that the newest products are shown worldwide. Examples of
programs include:

-   Organic pavilions at international trade shows

-   Opportunities for international buyers to meet in the United States
    with organic suppliers

-   Exporter educational programs

-   U. S. organic market educational pieces for foreign buyers,
    including a booklet and video on buying U.S. organic products. The
    booklet is available for viewing at
    [www.usorganicproducts.com](http://www.usorganicproducts.com/).

-   OTA's Organic Export Directory Online
    ([www.usorganicproducts.com](http://www.usorganicproducts.com/))

Activities listed and those planned are joint strategic efforts between
OTA and industry representatives selected from across the United States.

**[What Lies Ahead?]{.underline}**

As part of its 20th anniversary celebrations in 2005, OTA asked industry
visionaries and researchers to look forward 20 years to the year 2025,
and what might be likely to happen with organic agriculture and
products. The results of this informal poll demonstrate the potential
organic agriculture has to bring improvement to our lives.

The following are a few of the predictions and expectations:

-   The organic industry can be expected to continue to grow and thrive
    at a sturdy rate over the next 20 years, but at a slower pace than
    the current 17 to 20 percent average annual growth in sales.

-   The average consumer household in 2025 will buy organic products on
    a regular basis. These will include food items as well as organic
    clothing, household cleaning products, and personal care items.

-   Increased sales in restaurants can be expected.

-   Increases in organic sales and acceptance will result in increased
    U.S. organic acreage, as well as supplies from overseas.

-   Younger shoppers will continue to be interested in organic foods,
    particularly as Gen Xers pass down their belief systems. Ethnic
    shoppers, including Asian Americans and Hispanic Americans, will
    continue to be more likely to buy organic products in proportion to
    their representation in the general population.

-   Government support of organic agriculture will be crucial to
    maintain the industry\'s growth potential. The U.S. government will
    need to support farmers in their transition to organic production,
    and to enforce the standards to minimize consumer confusion.

**What Types of Organic Foods Will Be Most Popular?**\
In 2025, organic meat, dairy products, alcohol, and \"stage of life\"
foods (those consumed during pregnancy, nursing, infancy, puberty, and
senior years) will be most popular, according to survey respondents.
Because hectic lifestyles will continue to be the norm, convenience,
ready-to-eat and prepared foods will proliferate. Survey respondents
also predicted growing interest in organic items that mimic conventional
food brands and in organic products perceived by consumers as providing
health benefits.

**Predicted Challenges Ahead[\
]{.underline}**Among the challenges ahead are consumer confusion about
definitions around the organic labels, unbalanced governmental support
and promotion of conventional farming methods at the expense of organic
agriculture, competition for land with energy generating acreage, and
the acceptance of the value of organic packaged products versus
perishables in the marketplace.

 

**[On To An Even Brighter Future]{.underline}\
**We look forward to working with the Subcommittee to build a healthy
future for organic agriculture and processing**.** Through both strong
consumer and government support in parity with other agriculture, the
organic industry can continue to thrive and grow in the innovative and
unique way that\'s all its own.

Today, millions of consumers purchase organic products regularly, and
their choice is based largely on the success of the organic industry\'s
and USDA's ability to promote and guarantee the integrity of the organic
label.  When buying organic products, consumers are showing support for
organic farmers and practices that help build healthy soil and a
healthier environment for the planet. Let's build organic together.
Thank you.

**[Reports Cited:]{.underline}**

1)  *The Organic Trade Association's 2006 Manufacturer Survey*, June
    2006, researched and produced for the Organic Trade Association
    under contract by *Nutrition Business Journal*.

2)  United States Department of Agriculture, "U.S. Market Profile for
    Organic Food Products," February 22, 2005.

3)  Tyler Bridges, "Going Organic: Latin American farmers can thank
    health-conscious U.S. consumers for a booming export business," *The
    Miami Herald*, Dec. 18, 2006.

4)  *Organic 2006: Consumer Attitudes & Behavior Five Years Later & Into
    The Future*, The Hartman Group.

5)  *The Natural Marketing Institute's 2005 Health and Wellness Trends
    Database*, Natural Marketing Institute
    ([www.NMIsolutions.com](http://www.NMIsolutions.com/)).

6)  Catherine Greene, U.S. Department of Agriculture's Economic Research
    Service, "U.S. Organic Agriculture in the U.S., 1992-2005," December
    2006, www.ers.usda.gov/Data/Organic/index.htm.

7)  U.S. Department of Agriculture's National Organic Program web site
    ([www.ams.usda.gov/nop](http://www.ams.usda.gov/nop)).

8)  The Organic Trade Association, *The Organic Report*, July 2006.

9)  Dimitri, Carolyn and Lydia Oberholtzer, EU and U.S. Organic Markets
    Face Strong Demand Under Different Policies, *Amber Waves*, February
    2006.

**Glossary of Terms and Abbreviations**

**Accreditation** A determination made by the Secretary that authorizes
a private, foreign, or State entity to conduct certification activities
as a certifying agent under this part. This process is used by USDA to
ensure that each certifying agent is competent, independent of financial
concern in the operations it certifies, and maintaining the legal
standard for organic production.

**AMS/TMD** The Agricultural Marketing Service, Transportation and
Marketing Division of the USDA. The National Organic Program falls
within this division.

**Botanicals** Pesticides derived from plants. These may be quite high
in natural toxicity or may upset the predator-prey balance. Therefore
their use is restricted.

**Buffer zone** An area located between a certified production operation
or portion of a production operation and an adjacent land area that is
not maintained under organic management. A buffer zone must be
sufficient in size or other features (e.g., windbreaks or a diversion
ditch) to prevent the possibility of unintended contact by prohibited
substances applied to adjacent land areas with an area that is part of a
certified operation.

**Certification** A determination made by a certifying agent that a
production or handling operation is in compliance with the Act and the
regulations in the National Organic Program rule, which is documented by
a certificate of organic operation. Certification always includes
on-site inspection of the production operation.

**Certifying agent (or agency)** Any entity accredited by the Secretary
as a certifying agent for the purpose of certifying a production or
handling operation as a certified production or handling operation. A
certifying agent may not have any financial or personal interest in the
producer.

**Compost** The carefully managed process in which crop or animal
residues and other vegetable by-products are digested by microbial
action, defined in the NOP Rule as "The product of a managed process
through which microorganisms break down plant and animal materials into
more available forms suitable for application to the soil. Compost must
be produced through a process that combines plant and animal materials
with an initial C:N ratio of between 25:1 and 40:1. Producers using an
in-vessel or static aerated pile system must maintain the composting
materials at a temperature between 131F and 170F for 3 days. Producers
using a windrow system must maintain the composting materials at a
temperature between 131 F and 170 F for 15 days, during which time, the
materials must be turned a minimum of five times."

**Cover crop** A crop grown on idle land for soil conservation purposes,
not for sale.

**Cultural methods** Mechanical and management techniques that
contribute to pest control. These may include early planting or
harvesting, variety selection, plant spacing, companion planting,
clean-up of crop debris. Defined in the NOP Rule as methods used to
enhance crop health and prevent weed, pest, or disease problems without
the use of substances; examples include the selection of appropriate
varieties and planting sites; proper timing and density of plantings;
irrigation; and extending a growing season by manipulating the
microclimate with green houses, cold frames, or wind breaks.

**Green manure** A crop grown for its fertilizer and soil conditioning
value. Green manure crops are plowed or tilled into the soil, not
harvested.

**Handler** Any operation (or part of one) that \"receives, processes,
packages, or stores agricultural products.\" Includes food processors
and distributors who \"substantially alter\" organic agricultural
products. Defined in the NOP Rule as any person engaged in the business
of handling agricultural products, including producers who handle crops
or livestock of their own production, except such term shall not include
final retailers of agricultural products that do not process
agricultural products.

**Inspector** A person independent from the certifying agent's
decision-making process who visits the grower, processor or handler
being certified. The inspector interviews the producer, observes all
areas of production, and reviews record-keeping for completeness and
accuracy. Defined in the NOP Rule as any person retained or used by a
certifying agent to conduct inspections of certification applicants or
certified production or handling operations.

**Micronutrients** Nutrients required by food crops in small amounts.
For example: boron, zinc, iron and manganese.

**Natural** From a plant, animal or mineral source which has not been
altered except by chopping, grinding, separating, drying, freezing,
heating, or fermentation.

**NOP** The National Organic Program. The NOP and its office were
established to implement the Organic Foods Production Act of 1990. It
uses state and private agencies to administer some of its programmatic
responsibilities such as certification, with the NOP/USDA being
accreditation and rule oversight. This term is often used to refer to
the organic regulations as well.

**NOSB** National Organic Standards Board. A USDA advisory board
established to help develop the organic standards. Also responsible for
convening Technical Advisory Panels (TAPs) to evaluate materials for the
*National List*. Appointments are made by the Secretary of Agriculture.

**Off Farm Inputs** Materials such as fertilizers or pest control
treatments which are bought from outside sources to be used in growing
crops. (To contrast, many growers produce some \"inputs\", such as
compost, on-farm.)

**OFPA** The Organic Foods Production Act. This act, which was Title XXI
of the 1990 Farm Bill, mandated the establishing of national standards
for the production and handling of foods labeled as \"organic.\"

**Organic Farm or Handling Plan** A written document which sets forth
the producer's current methods, future intentions, and plan for
improvement in all areas of production. Defined in the NOP Rule as a
plan of management of an organic production or handling operation that
has been agreed to by the producer or handler and the certifying agent
and that includes written plans concerning all aspects of agricultural
production or handling described in the Act \[OFPA\] and the regulations
in subpart C \[of the NOP rule\].

**OTA** Organic Trade Association. An umbrella organization for the
organic industry. Includes organic growers, processors, distributors,
suppliers, brokers, retailers, certifiers, and non-profit organizations
and individuals from the U.S. and Canada. The OTA offers information
services, educational resources, legislative representation, government
liaison, and promotional programs to its members. Learn more at
www.ota.com.

**Pesticide/fertilizer drift** Pesticides or fertilizers applied to
neighboring land which are carried by wind or water to an organic field.

**Synthetics** Defined in the NOP Rule as a substance that is formulated
or manufactured by a chemical process or by a process that chemically
changes a substance extracted from naturally occurring plant, animal, or
mineral sources, except that such term shall not apply to substances
created by naturally occurring biological processes.

**TAP** Technical Advisory Panel. A panel of experts convened by the
NOSB to evaluate scientific data on materials being considered for the
*National List.*

**Transition** A time period in which a farm or other operation moves
toward organic certification by improving soil fertility, eliminating
use of prohibited materials, and developing and implementing an organic
plan. (It is important to note that this is not a legal term in the
United States, and there are no products that can be officially
identified as "transitional organic")

**What is the Organic Trade Association?**

The Organic Trade Association (OTA) is the membership-based business
association for the organic industry in North America. OTA's mission is
to promote and protect organic trade to benefit the environment,
farmers, the public, and the economy. OTA envisions organic products
becoming a significant part of everyday life, enhancing people\'s lives
and the environment.  OTA has grown to represent about 1600 members in
North America. Since its inception, the association has been a key
player in shaping both the regulatory and market environment for organic
products.

The OTA was established in 1985 as the Organic Foods Production
Association of North America (OFPANA). In 1994, OFPANA changed its name
to the Organic Trade Association (OTA) to more accurately reflect the
association's mission to include all types of organic products---food
and non-food alike.

OTA works with Congress, USDA, certifiers, the NOSB, and, of course, its
members to see that the implementation of the rule maintains the
integrity of the organic industry.  Over time, OTA expects the rule to
evolve and the standards to become more refined, just as organic
standards have evolved to reflect best practices over the past several
decades.  OTA also advocates for federal resources to allow USDA to work
to the best of its ability in maintaining strict and consistent national
standards and a tough but fair enforcement program, and to provide
organic producers with the same advantages enjoyed by conventional
producers.

OTA draws together all segments of the organic business community to
share information, create standards of excellence and promote organic
products. Like the organic business community at large, OTA's membership
is highly diverse. There are sole proprietor businesses, publicly held
companies, and every possible structure in between.

A very small number of OTA's members -- like Whole Foods, Wild Oats,
Hain-Celestial or United Natural Foods \-- have grown from tiny
start-ups and are now publicly traded. Others have been purchased by
traditional food companies. And, now our members are purchasing each
other; this spring Whole Foods announced a merger with Wild Oats.

But the majority of Organic Trade Association members are still small or
very small businesses - 60% of whom declare annual revenues from organic
sales of less than \$100,000. By and large, these companies were founded
by men and women for whom organic is more than a business plan \-- it's
what they believe.

Unlike many trade associations, OTA's board of directors is elected by
the membership. A list of current board members is attached.

**[Promoting and Protecting Organic]{.underline}**

OTA's activities include education, policy development, and business
development and marketing. OTA is the founder of the [All Things
Organic™](http://www.organicexpo.com/) Conference and Trade Show, the
largest business-to-business trade show and conference in North America
focusing exclusively on organic products and organic trade issues.

In addition, OTA informs members about best practices, and offers fact
sheets about many topics about organic and production on its web site,
[www.ota.com](http://www.ota.com/).

**[Public Policy Development]{.underline}**

OTA is a leader in advocating and protecting [organic
standards](http://www.ota.com/standards.html) so that consumers can have
confidence in certified organic products, and so they will be as
predictable as possible for farmers and processors.  With input from its
diverse membership, OTA continues to develop and refine organic
standards for emerging product areas. OTA serves as the industry monitor
of government agencies, takes positions on legislation that affects
organic agriculture and products, and represents the industry to
regulators, elected-officials, and international bodies.  OTA strives to
foster constant improvement in public policies, and business practices,
concerning organic agriculture and production.

Because of its history and membership, the Organic Trade Association is
uniquely qualified to comment on organic standards and regulation. Many
of the members of the OTA are the creators of the organic industry and
the first consensus organic standards, and organic certification
procedures. OTA's members have built the market identity for organic.
From the very first discussion of federal standards for organic
production and labeling, the Association has been actively involved. As
the organic business community works in partnership with the federal
government, we ask that our creation, our contract with our customers,
be treated respectfully.

4/2007

**[Organic Trade Association Board of the Directors
2006/2007]{.underline}**

Jesse Singerman

Prairie Ventures, Iowa City, IA -- President

Julia Sabin

Smucker Quality Beverages, Inc., Chico, CA -- Vice President, USA

Helene Bouvier

Organic Ranchers/MOMA Trade Pool Inc., Winnipeg, MB, Canada -- Vice
President, Canada

Chuck Marcy

Healthy Food Holdings, Longmont, CO -- Treasurer

Luis Acuna

CF Fresh, Sedro-Woolley, WA - Secretary

Lynn Clarkson

Clarkson Grain Co., Inc., Cerro Gordo, IL

Dave DeCou

Organic Materials Review Institute (OMRI), Eugene, OR

Dag Falck

Nature's Path Foods, Inc., Salmon Arm, BC, Canada

Todd Linsky

Cal Organic/Grimmway Farm, Lamont, CA

Phil Margolis

Neshaminy Valley Natural Foods Distributor, Ltd., Ivyland, PA

Theresa Marquez

Organic Valley/CROPP Cooperative, LaFarge, WI

Matthew C. McLean

Uncle Matt's Organic Inc., Clermont, FL

Marty Mesh

Florida Certified Organic Growers and Consumers, Inc., Gainesville, FL

Maria Morgan

Small Planet Foods, Inc., Minneapolis, MN

Mary Mulry

FoodWise, Inc. San Antonio, TX

**Witness Biography:**

**Caren Wilcox**\
**Executive Director & CEO**

**Organic Trade Association (OTA)**

** **

Caren Wilcox has served as Executive Director of the Organic Trade
Association since March 1, 2006. She brings to OTA a wealth of
experience in the world of agriculture. She is experienced at managing
domestic and international programs, and has served in both the
executive and legislative branches of the U.S. government. Attentive to
the needs of consumers, Wilcox has skills in developing effective
communications and public policy programs for government, business and
academia; association membership development; and strategic planning.
She has handled food safety and quality issues, rural development and
environmental issues throughout her career. Wilcox has worked with a
diverse cross-section of individuals from the agriculture, business and
academic sectors, as well as with local, state and federal elected and
appointed officials and their respective offices.

 

Wilcox was the first Deputy Under Secretary for Food Safety at the U.S.
Department of Agriculture from 1997 to 2001, overseeing the Food Safety
and Inspection Service (FSIS), and leading several departmental and
interdepartmental committees and councils. She led the U.S. food
delegations to meetings of the Trans-Atlantic Consumer Dialogue, and was
head of delegation to discussions on food issues among the \"Quad
Countries\" - Canada, New Zealand, Australia and the United States.

Prior to coming to OTA, she served as a senior advisor to Congresswoman
Rosa DeLauro, when she was the Ranking Member on the Agriculture, Rural
Development, Food and Drug Administration and Related Agencies
Subcommittee of the U.S. House Appropriations Committee. Wilcox worked
on such issues as agriculture appropriations, food safety,
pharmaceuticals, sustainability, food security, specialty crops, and
water and energy. 

 

While operating her own firm, Caren Wilcox & Associates LLC, from 2001
to 2004, she and her colleagues provided advice on various strategic
issues to several land grant universities as well as to World Health
Organization\'s Codex Alimentarius officials.  She also was the first
director of government relations for Hershey Foods Corporation in
Hershey, PA.

 

Wilcox is a graduate of Wellesley College and holds an M.A. in
international relations from the University of Pennsylvania. She resides
in Washington, DC and commutes to OTA's offices in Greenfield, MA
monthly.

 4/07