19740 Federal Register / Vol. 87, No. 65 / Tuesday, April 5, 2022 / Rules and Regulations 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 205 

[Doc. No. AMS–NOP–11–0009; NOP–21–04] 

RIN 0581–AD89 

National Organic Program; Origin of 

Livestock 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Final rule. 

SUMMARY: The U.S. Department of 

Agriculture’s (USDA) Agricultural 

Marketing Service (AMS) amends the 

origin of livestock requirements for 

dairy animals under the USDA organic 

regulations with this final rule. AMS is 

taking this action to increase uniformity 

in origin of livestock production 

practice for organic dairy animals, and 

reduce variance between the approaches 

taken by certifying agents. The policy 

choices in this rule align with practices 

that many certifiers and most organic 

operations already follow, and align 

with the public comments on the rule. 

This rule specifies that organic milk and 

milk products must be from animals 

that have been under continuous 

organic management from the last third 

of gestation onward, with an exception 

for newly certified organic livestock 

operations. 

DATES: 

Effective date: This rule is effective 

June 6, 2022. 

Compliance date: Certified organic 

operations must comply with all 

provisions of this final rule by April 5, 

2023. For more information, see the 

Compliance Date for These Regulations 

section of this document. 

FOR FURTHER INFORMATION CONTACT: Erin 

Healy, Director, Standards Division; 

Phone: (202) 720–3252, email: 

erin.healy@usda.gov. 

SUPPLEMENTARY INFORMATION: 

Executive Summary 

A. Purpose of Final Rule 

This final rule clarifies requirements 

related to organic dairy production 

under the USDA organic regulations, 

which dictate how and when 

nonorganic dairy animals may be 

transitioned, or converted, to organic 

production (7 CFR part 205). This action 

specifies that a nonorganic dairy may 

transition to organic production on a 

one-time basis, and once the transition 

is complete, the operation must not 

transition additional nonorganic 

animals to organic production or source 

transitioned animals. This action is 

intended to facilitate and improve 

compliance with and enforcement of the 

USDA organic regulations. 

The rule takes into account current 

practices and stakeholder input to 

ensure a policy option that minimizes 

disruptions, while protecting the value 

of the organic label. This final rule will 

improve AMS’s ability to effectively 

administer the National Organic 

Program (NOP) and improve AMS’s 

oversight of the USDA-accredited 

certifying agents that inspect and certify 

organic dairy operations. The final rule 

is also intended to maintain consumer 

trust in the organic seal by assuring 

consumers that organically produced 

products meet a consistent and uniform 

standard—a stated purpose of the 

Organic Foods Production Act of 1990 

(OFPA) (7 U.S.C. 6501 et seq.). 

AMS is making these changes, 

following consultation with the 

National Organic Standards Board 

(NOSB) and following notice and public 

comment, to provide additional details 

for the USDA organic regulations 

governing the production of organic 

livestock products, and at the direction 

of Congress (Further Consolidated 

Appropriations Act, 2020; Pub. L. 116– 

94), and as authorized under OFPA 

(Sections 6509(e)(2) and 6509(g)). 

B. Summary of Provisions 

This final rule updates the origin of 

livestock regulations, first published in 

December 2000 in the Federal Register 

(65 FR 80547), by explicitly requiring 

that milk or milk products labeled, sold, 

or represented as organic be from dairy 

animals organically managed from the 

last third of gestation onward, with a 

one-time exception for newly certified 

organic livestock operations to convert 

(or ‘‘transition’’) nonorganic dairy 

animals to organic milk production. 

This exception allows an eligible 

operation to transition nonorganic dairy 

animals to organic milk production one 

time by managing animals organically 

for 12-months rather than from the last 

third of gestation. The transition must 

occur over a single 12-month period and 

all transitioning animals must end the 

transition at the same time. 

After the transition to organic 

production is complete, an operation is 

not allowed to transition additional 

nonorganic animals to organic milk 

production, and the certified operation 

may not source animals transitioned by 

other operations. After the transition, an 

operation replacing culled dairy animals 

and/or expanding its number of dairy 

animals must add dairy animals that 

have been under continuous organic 

management from the last third of 

gestation. 

In this final rule, AMS clarifies that 

breeder stock must be managed 

organically during the period that 

breeder stock are nursing their organic 

offspring, from the last third of gestation 

through the end of the nursing period. 

Breeder stock that are not certified 

organic may not be sold, labeled, or 

represented as organic. The final rule 

reiterates that nonorganic breeder stock 

may be brought from a nonorganic 

operation onto an organic operation at 

any time, but they must be brought onto 

the organic operation no later than the 

last third of gestation if their offspring 

are to be raised as organic livestock. 

C. Regulatory Analysis (Costs and 

Impacts) 

AMS is taking this action to set origin 

of livestock production practice 

standards for organic dairy animals, and 

reduce variance between the approaches 

taken by certifying agents. AMS updated 

the analysis from the proposed rule (84 

FR 52041) using the most recent 

information about the dairy market, 

including the number of certified 

organic operations and the number of 

organic dairy animals. Updating the 

information with NASS 2019 data 

revises the estimated costs of the final 

rule to $615,000–$1,845,000. 

D. Compliance Date for These 

Regulations 

AMS is establishing a compliance 

date for this final rule of April 5, 2023, 

or ten months after the effective date of 

this final rule. This means that a 

certified operation may only add 

transitioned animals to their operation 

up to the compliance date of April 5, 

2023. Any certified operation may 

source or sell transitioned animals in 

the period prior to the compliance date, 

but certified operations may not start 

new transitions that would not be 

completed by April 5, 2023. Starting on 

the compliance date of April 5, 2023, all 

certified operations (i.e., operations 

certified as of the compliance date) must 

fully comply with the provisions of this 

final rule. 

I. General Information 

Does this action apply to me? 

You may be affected by this action if 

you are engaged in the dairy industry. 

Affected entities may include, but are 

not limited to: 

• Individuals or business entities that 

are considering owning or operating a 

new dairy farm and that plan to seek 

organic certification for that farm; 


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Federal Register / Vol. 87, No. 65 / Tuesday, April 5, 2022 / Rules and Regulations 19741 

1 7 CFR 205.238(c) and 7 CFR part 205 Subpart 

G. https://www.ecfr.gov/current/title-7/subtitle-B/ 

chapter-I/subchapter-M/part-205/subpart-G. 

2The July 2013 OIG audit report on organic milk 

operations may be accessed at the following 

website: http://www.usda.gov/oig/webdocs/01601- 

0002-32.pdf. 

• Dairy farms that are currently 

certified organic under the USDA 

organic regulations; 

• Organic farms engaged in raising 

heifers for sale to certified organic 

operations; 

• Nonorganic dairy farms that are 

considering converting their dairy farm 

to certified organic production; and/or 

• Certifying agents accredited under 

the USDA organic regulations to certify 

organic livestock operations. 

This listing is not intended to be 

exhaustive but rather provides a guide 

for readers regarding entities likely to be 

affected by this action. Other types of 

entities not listed in this section could 

also be affected. To determine whether 

you or your business may be affected by 

this action, you should carefully 

examine the regulatory text. If you have 

questions regarding the applicability of 

this action to a particular entity, consult 

the person listed under FOR FURTHER

INFORMATION CONTACT. 

II. Background 

AMS’s National Organic Program 

(NOP) is authorized by the Organic 

Foods Production Act of 1990 (OFPA) (7 

U.S.C. 6501–6524). Through the NOP, 

AMS establishes and oversees the 

implementation of national standards 

for the production and handling of 

organically produced agricultural 

products. Below, background is 

provided on the topics of dairy 

transition and breeder stock, describe 

general dairy production practices, and 

summarize the history of this 

rulemaking. 

A. Dairy Transition 

OFPA establishes that, in general, 

organic livestock must be organically 

managed from the last third of gestation 

onward (7 U.S.C. 6509(b)). For dairy 

animals, OFPA requires a minimum 

period of one year of organic 

management before milk from dairy 

animals can be sold as organic (7 U.S.C. 

6509(e)(2)). During the transition period, 

OFPA also allows dairy farms to feed 

dairy animals crops and forage from 

land on the dairy farm that is in its third 

year of organic management (Id.). 

The USDA organic regulations 

regarding the origin of livestock (7 CFR 

205.236) have required that all livestock 

products sold, labeled, or represented as 

organic must be from livestock under 

continuous organic management from 

the last third of gestation onward. For 

dairy animals, the USDA organic 

regulations have also provided an 

exception (§ 205.236(a)(2)) that allows 

for the transition of a dairy herd into 

organic production if animals are under 

continuous organic management for the 

one-year period prior to production of 

organic milk or milk products. During 

this one-year period, dairy animals may 

consume certified organic feeds and/or 

crops and forage from land that is in the 

third year of organic management and 

included in the organic system plan but 

has not yet been certified organic 

(§ 205.236(a)(2)(i)). Section 

205.236(a)(2)(iii) has required that once 

an ‘‘entire distinct herd’’ has 

transitioned to organic production, all 

dairy animals in that herd shall be 

organically managed from the last third 

of gestation. 

As USDA noted when promulgating 

the regulations that first implemented 

the NOP, ‘‘[t]he conversion provision 

. . . rewards producers for raising their 

own replacement animals while still 

allowing for the introduction of animals 

from off the farm that were organically 

raised from the last third of gestation.’’ 

65 FR 80570 (Dec. 21, 2000). USDA 

explained that ‘‘the conversion 

provision cannot be used routinely to 

bring nonorganically raised animals into 

an organic operation. It is a one-time 

opportunity for producers working with 

a certifying agent to implement a 

conversion strategy for an established, 

discrete dairy herd . . . .’’ Id. 

These provisions have established 

two different classes of organic animals 

that operations and their certifiers track, 

because there are implications in terms 

of the fate of the animal: Last third 

organic animals may be eligible for 

organic slaughter (if also not treated 

with synthetic parasiticides that appear 

on the National List 1), while 

transitioned animals (as well as last 

third animals that have received 

parasiticides) are ineligible for organic 

slaughter. 

The USDA organic regulations related 

to transition of dairy animals have been 

inconsistently applied, however, in part 

because while they have allowed for the 

transition of a nonorganic herd to 

organic milk production after one year 

of organic management, the regulations 

did not define an ‘‘entire distinct herd.’’ 

This has led to significant 

inconsistencies in the regulatory 

interpretation by certifying agents and 

farms. For example, some operations 

and certifying agents consider an entire 

distinct herd to include all the animals 

on the farm. In contrast, others have 

applied the rules differently, allowing 

smaller groups to be considered 

multiple distinct herds. Some certifying 

agents have allowed dairy farms to 

continually transition nonorganic dairy 

animals into organic production as new 

‘‘distinct’’ herds, while other dairy 

operations have been allowed to use the 

transition exception only once (i.e., 

when they initially converted their 

farm’s entire nonorganic ‘‘herd’’ to 

organic production). The inconsistent 

interpretation has led to unevenness in 

the marketplace. This final rule adopts 

the latter interpretation, and amends the 

regulations regarding dairy animals to 

clarify their requirements. As USDA 

first said more than twenty years ago, 

organic dairy operations may ‘‘rais[e] 

their own replacement animals’’ or 

‘‘introduce[e] . . . animals from off the 

farm that were organically raised from 

the last third of gestation.’’ 65 FR 80570. 

But they may not ‘‘routinely . . . bring 

nonorganically raised animals into an 

organic operation.’’ Id. When Congress 

amended 7 U.S.C. 6509(e)(2) in 2005, it 

did not disturb this understanding. 

In a 2006 rulemaking, USDA noted 

that some ‘‘commenters wanted the last 

third of gestation clause to apply to all 

dairy operations once the operation is 

certified as organic, regardless of the 

number of animals converted, or 

whether an entire, distinct herd is 

converted.’’ 71 FR 32804. USDA 

responded that those comments were 

beyond the scope of the present 

rulemaking, but recognized that its 

regulations left ‘‘two methods of 

replacement of dairy animals for organic 

dairy operations and that this is a matter 

of concern in the organic community.’’ 

Id. USDA suggested that it would 

undertake further rulemaking ‘‘[t]o 

address the issue of dairy replacement 

animals for all certified organic dairy 

operations.’’ Id. 

Differences in how certifying agents 

have interpreted the regulations were 

detailed in a July 2013 audit report 

published by the USDA Office of 

Inspector General (OIG).2 According to 

the OIG report, three of the six certifying 

agents interviewed by OIG allowed 

producers to continuously transition 

additional herds to organic milk 

production, while the other three 

certifying agents did not permit this 

practice. OIG recommended that a 

proposed rule be issued to clarify the 

standard and ensure that all certifying 

agents consistently apply and enforce 

the origin of livestock requirements. The 

National Organic Standards Board 

(NOSB) has also issued several 

recommendations that AMS revise the 

transition exception to clarify that each 

operation is entitled to a one-time 


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19742 Federal Register / Vol. 87, No. 65 / Tuesday, April 5, 2022 / Rules and Regulations 

3National Organic Standards Board April 2003 

Recommendation on Breeder Stock: Clarification of 

Rule. Available online at: https://

www.ams.usda.gov/rules-regulations/organic/nosb/ 

recommendations. 

transition per operation (see 

Development of Existing Standards 

below). This final rule responds to the 

OIG’s findings and the NOSB’s 

recommendations on this issue. It was 

also directed by Congress (Further 

Consolidated Appropriations Act, 2020). 

B. Breeder Stock 

OFPA states that breeder stock may be 

purchased from any source if such stock 

is not in the last third of gestation (7 

U.S.C. 6509(b)). The USDA organic 

regulations define breeder stock as 

female livestock whose offspring may be 

incorporated into an organic operation 

at the time of their birth (7 CFR 205.2). 

Nonorganic breeder stock may be used 

to raise organic offspring if certain 

conditions are met. The regulations 

specify that such breeder stock may be 

brought from a nonorganic operation 

onto an organic operation at any time (7 

CFR 205.236(a)(3)). If breeder stock are 

gestating and their offspring are to be 

raised as organic, the regulations require 

that the breeder stock be brought onto 

the facility and organically managed no 

later than the last third of gestation (7 

CFR 205.236(a)). 

Stakeholders, through public 

comment to the NOSB and comments to 

NOP, have expressed concern that some 

operations may bring breeder stock onto 

an organic operation, manage them 

organically for the last third of gestation 

so that the breeder stock can produce 

and nurse the organic offspring, and 

then return that breeder stock to 

nonorganic management. Some 

stakeholders, including the NOSB, have 

suggested that such a practice does not 

align with a regulatory provision that 

prohibits organic livestock removed 

from organic operations and 

subsequently managed on nonorganic 

operations to be sold, labeled, or 

represented as organically produced (7 

CFR 205.236(b)).3 To clarify these 

potentially conflicting regulations, this 

final rule addresses the use and 

management of breeder stock on organic 

operations. 

C. Overview of Organic Dairy 

Production 

This section provides a high-level 

overview of heifer (i.e., young female 

cows) raising practices. It also highlights 

the differences between organic and 

nonorganic practices for raising 

replacement dairy heifers (i.e., the 

animals brought onto a farm to replace 

the animals that die or that are removed 

from the farm for other reasons). 

Current dairy production and 

husbandry practices provide important 

context for this rulemaking. The 

practices described below are specific to 

raising dairy heifers but may be applied 

similarly to other species. However, the 

timing of events may differ depending 

on the animal. (e.g., a dairy goat may 

begin its first lactation at one year of age 

while a cow begins its first lactation at 

nearly two years of age). 

Nonorganic Heifer Development 

When a heifer calf (i.e., a young 

female cow) is born on a dairy farm, the 

producer ensures that the calf receives 

colostrum, either from a bottle or by 

nursing her female parent (‘‘dam’’ or 

‘‘mother’’). The heifer calf will often be 

separated from the dam and placed in 

single, pair, or group housing. Some 

dairy producers raise their own heifers 

from birth; others may contract with 

heifer growers to raise replacement 

heifers during different stages of their 

lives until they produce milk. Newborn 

calves are raised on a diet of milk or 

milk replacer, grains, and roughages. 

Once the calves reach a certain weight, 

they are weaned from milk to water and 

continue to eat grains and roughages. 

After weaning, the heifers are 

developed to grow at a moderate pace 

until they are ready to be bred. During 

this time, heifers may be fed pasture 

only; graze and be fed a supplemental 

feed ration; or be fed only a feed ration 

(depending on the operation’s grazing 

season). Once the heifers weigh about 

800 pounds (12–15 months old), they 

are bred, gestate for 9 months, and calve 

around 2 years of age. After calving, 

they begin producing milk (and are then 

referred to as cows). 

Organic Heifer Development 

Organic producers follow similar 

timelines as nonorganic producers but 

may use different practices in the 

feeding, health care, and breeding of 

heifers. These differing practices may 

affect production costs in each stage of 

organic heifer development. 

Organic producers must provide a 

feed ration comprised of certified 

organic feeds. Currently, there is very 

little certified organic milk replacer 

produced in the United States. As a 

result, organically raised dairy calves 

primarily rely on feeding certified 

organic milk. This makes the practice of 

sending newborn calves to heifer 

growers less feasible for organic 

producers, as heifer growers may not 

have access to certified organic milk. 

Certified organic animals (and animals 

undergoing a one-time transition to 

organic) must be fed an organic feed 

ration. Additionally, organic regulations 

require that all ruminants greater than 6 

months of age receive 30 percent of their 

dry matter intake from pasture during 

the grazing season. Nonorganic dairy 

heifers do not have a pasture 

requirement. 

Organic producers must also follow 

certain health care practices. For 

example, organic producers may not use 

antibiotics to prevent disease. Instead, 

organic producers must prevent the 

animals from getting sick using 

organically approved methods such as 

supportive therapy and vaccination 

programs. In the event an animal 

becomes sick, organic producers are 

required to use medication to restore the 

animal to health, even if the treatment 

will cause the animal to lose its organic 

status. Once an animal loses its organic 

status, the animal (and its products) 

cannot be represented as organic. This 

final rule clarifies that nonorganic 

animals—including animals that have 

lost organic status due to a veterinary 

treatment—may only be transitioned to 

organic by eligible operations as part of 

that operation’s one-time transition. 

Nonorganic breeding practices are less 

expensive than organic breeding 

practices. Nonorganic producers may 

use hormonal products to both initiate 

estrus and synchronize estrus among 

heifers to aid in conception, essentially 

promoting an earlier lactation. Organic 

producers may not use hormonal 

methods to synchronize estrus. 

These differences in production 

practices cause many certifying agents 

to prohibit continual transition, and as 

such, many operations already comply 

with the final rule. The 2013 OIG audit 

of the National Organic Program and 

organic milk operations (Audit Report 

01601–0002–32) found that half of the 

six certifiers interviewed allowed 

continuous transition at the time, while 

the other three did not. Prior to this 

final rule, dairy farms and heifer raising 

operations that were permitted by their 

certifying agent to continually transition 

dairy animals could reduce production 

costs by not managing their heifer calves 

under the USDA organic regulations for 

the first year of life. Alternatively, they 

could source less expensive year-old 

nonorganic heifers on a continual basis. 

The pre-weaning phase of life is the 

time in which heifer calf mortality is the 

highest and the diet is the most 

expensive on a per-calorie basis. 

Nonorganic practices reduce mortality 

and expenses during this pre-weaning 

phase by feeding heifers milk replacer 

and nonorganic feeds, and by using 

antibiotics to maintain health. By the 

time the dairy heifer reaches one year of 


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Federal Register / Vol. 87, No. 65 / Tuesday, April 5, 2022 / Rules and Regulations 19743 

4A complete listing of related documents and 

NOSB recommendations is found in Sections III 

and IV below. 

5NOSB Final Recommendation, June 2, 1994. 

Available online at: https://www.ams.usda.gov/ 

rules-regulations/organic/nosb/meetings. 

6 Due to the volume and content of public 

comments submitted in response to the 1997 

proposed rule, AMS withdrew the proposal and 

issued a second proposed rule prior to the final rule 

that established the National Organic Program 

(NOP) (published December 21, 2000). 

7NOSB Committee Report and Adopted 

Recommendations, 16 March 1998. Available 

online at: https://www.ams.usda.gov/rulesregulations/organic/nosb/meetings. 

8National Organic Standards Board May 2003 

Recommendation on Origin of Livestock: 

Recommendation for Rule Change (document dated 

April 2003). Available online at: https://

www.ams.usda.gov/rules-regulations/organic/nosb/ 

recommendations. 

9National Organic Standards Board May 2003 

Recommendation on Breeder Stock: 

Recommendation for Clarification of Rule 

(document dated April 2003). Available online at: 

https://www.ams.usda.gov/rules-regulations/ 

organic/nosb/recommendations. 

age, most health threats have passed and 

the animal is consuming a less 

expensive diet. 

D. Development of Existing Standards 

OFPA required the USDA to establish 

the NOSB to advise the USDA on the 

implementation of OFPA (7 U.S.C. 

6518). The NOSB held its first formal 

meetings in 1992. Between 1994 and 

2006, the NOSB made six 

recommendations regarding origin of 

dairy animals, including several 

recommendations on the management of 

breeder stock.4 Between 1997 and 2000, 

AMS issued two proposed rules (62 FR 

65850; 65 FR 13511) and a final rule (65 

FR 80547) regarding national standards 

for production and handling of organic 

products, including livestock and their 

products. AMS also issued a proposed 

rule and final rule in 2006 

implementing congressional 

amendments to OFPA regarding feed for 

transitioning dairy animals (71 FR 

24820; 71 FR 32803). The NOSB, as well 

as the public, commented on these 

rulemakings with regard to the origin of 

livestock and the exception for 

transition. Key points from these actions 

that led to the development of the 

existing standards on origin of livestock 

are summarized below. 

(1) In June 1994, the NOSB 

recommended a series of provisions to 

address the source of livestock on 

organic farms. Within this 

recommendation, the NOSB stated that 

dairy stock should be fed certified 

organic feeds and raised under organic 

management practices for no less than 

12 months prior to the sale of their milk 

as organic.5

(2) On December 16, 1997, AMS 

responded to the June 1994 NOSB 

recommendation through publication of 

a proposed rule (62 FR 65850). The 

language contained in that proposed 

rule echoed the NOSB’s 1994 

recommendation. The proposal would 

have required that dairy animals must 

be on a certified organic facility 

beginning no later than 12 months prior 

to the production of milk or milk 

products sold, labeled, or represented as 

organic. The 1997 proposed rule also 

proposed that all feed provided to 

organic dairy livestock consist of 

organically produced and handled 

agricultural products, including pasture 

and forage. However, the proposed rule 

included a provision to allow 

nonorganic feed up to a maximum of 20 

percent of the animal’s diet. The 20- 

percent level was roughly representative 

of the nutrients provided from 

supplemental grain feeding, in addition 

to nutrients provided by pasture and 

forage. The proposed language also 

contained a provision that, if necessary, 

a herd of dairy livestock converting to 

organic management for the first time 

could be provided with nonorganic feed 

until 90 days prior to the production of 

organic milk or milk products. This 

proposed rule was never finalized.6

(3) In March 1998, the NOSB 

provided a second recommendation 

reaffirming its 1994 recommendation on 

the source of livestock.7 The March 

1998 NOSB recommendation also 

recommended that livestock comprising 

part of a mixed crop/livestock operation 

should qualify to be certified organic at 

the end of the transition period. 

(4) On March 13, 2000, AMS 

published a proposed rule (65 FR 

13511) that would establish the USDA 

organic regulations. Within this 

proposed rule, AMS responded to the 

NOSB’s March 1998 recommendation 

on the source of livestock. AMS 

proposed to require that livestock be 

under continuous organic management 

beginning no later than one year prior 

to the production of organic milk or 

milk products. Unlike AMS’s 1997 

proposal, the 2000 proposed rule did 

not include a provision for the 

allowance of nonorganic feed during the 

12-month transition period. 

(5) On June 12, 2000, the NOSB 

commented on the second proposed 

rule with respect to the origin of dairy 

livestock. The NOSB stated that 

livestock should be under organic 

management for one full year prior to 

the sale of organic milk with an 

exception for conversion of an entire, 

distinct herd into organic production. 

The NOSB laid out the following three 

conditions for conversion of a herd into 

organic production: 

• For the first 9 months of the final 

12-month dairy herd transition period, 

animals must be fed at least 80 percent 

feed that is either organic or self-raised 

transitional feed. The remaining 20 

percent could be nonorganic during 

those 9 months. 

• For the final 3 months, animals 

must be fed 100 percent organic feed. 

• Once a dairy operation has been 

converted to organic production, all 

dairy animals shall be under organic 

management from the last third of 

gestation, except that transitional feed 

raised on the farm may be fed to young 

stock up to 12 months prior to milk 

production. 

(6) On December 21, 2000, AMS 

published a final rule establishing the 

USDA organic regulations (65 FR 

80547). Through this action, AMS 

finalized the origin of livestock 

provision, including a requirement that 

organic milk be produced from animals 

under organic management beginning 

no later than one year prior to the 

production of milk or milk products 

sold, labeled, or represented as organic. 

The rule further incorporated the 

exceptions recommended by the NOSB 

by allowing 80 percent organic feed and 

20 percent nonorganic feed (i.e., the 

‘‘80/20’’ rule) for transitioned animals. 

AMS did not include NOSB’s 

recommendation allowing young stock 

to be fed transitional feeds. This rule 

went into effect on February 20, 2001, 

and was fully implemented on October 

21, 2002. 

(7) In October 2002, the NOSB 

recommended that all replacement and 

expansion dairy animals be raised as 

organic from the last third of gestation 

onward. The NOSB believed that this 

would ensure consistency with the 

current regulations at 

§ 205.236(a)(2)(iii). Its recommendation 

also included a provision requiring that 

breeder stock remain under organic 

management indefinitely after their 

introduction onto an organic farm; that 

is to say, the recommendation was to 

prohibit breeder stock from rotating in 

and out of organic management. 

(8) In May 2003, the NOSB 

recommended that following a 

transition, all dairy livestock, including 

replacement stock, remain under 

organic management from the last third 

of gestation onward.8 Concurrently, the 

NOSB made a separate recommendation 

regarding breeder stock.9 It 

recommended a requirement that 

operations continuously manage all 

breeder stock as organic if they were 

brought onto an organic farm to produce 

organic offspring. The NOSB further 


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19744 Federal Register / Vol. 87, No. 65 / Tuesday, April 5, 2022 / Rules and Regulations 

10National Organic Standards Board (October 

2004) Directive for Origin of Dairy Livestock. 

Available online at: https://www.ams.usda.gov/ 

rules-regulations/organic/nosb/recommendations. 

11Harvey v. Veneman, 297 F. Supp. 2d 334 (D. 

Maine 2004). 

12Harvey v. Veneman, 396 F. 3d 28 (1st Cir. 

2005). 

13Harvey v. Johanns. Civil No. 02–216–P–H. 

Consent Final Judgment and Order, 9 June 2005. 

14NOSB’s comment on the proposed rule is 

available from the NOP by request. 15National Organic Standards Board May 2003 

Recommendation on Origin of Livestock: 

Recommendation for Rule Change (document dated 

April 2003). Available online at: https://

www.ams.usda.gov/rules-regulations/organic/nosb/ 

recommendations. 

16NOP 5003 Dairy Animal Acquisition under the 

NOP Regulations (dated October 3, 2006). Available 

from NOP by request. 

advocated that the NOP issue guidance 

in the form of questions and answers to 

clarify the management of breeder stock 

to the industry. The NOSB reiterated its 

recommendations in October 2004.10

(9) In October 2003, a legal challenge 

was filed against USDA stating that, 

among other things, OFPA required 

organic dairy animals be fed 100 percent 

organic feeds during the 12-month 

transition, and thus, the 80/20 rule for 

the transition of dairy animals was in 

violation of the statute.11

(10) On January 26, 2005, the U.S. 

Court of Appeals for the First Circuit 

issued a decision in the case.12 The 

court upheld the USDA organic 

regulations in general, but remanded the 

case to the lower court, for, among other 

things, the entry of a declaratory 

judgment with respect to the 80/20 

dairy transition allowance, then 

codified in § 205.236(a)(2)(i) of the 

regulations. The lower court found the 

80/20 dairy transition provisions at 

§ 205.236(a)(2)(i) to be contrary to OFPA 

and in excess of the Secretary’s 

rulemaking authority.13

(11) On November 10, 2005, Congress 

amended OFPA to allow a special 

provision for transitioning dairy 

livestock to organic production (7 U.S.C. 

6509(e)(2)(B)). This amendment 

provided a new provision to allow crops 

and forage from land included in the 

organic system plan of a farm that was 

in the third year of organic management 

to be consumed by the dairy animals on 

the farm during the 12-month period 

immediately prior to the sale of organic 

milk and milk products. 

(12) On April 27, 2006, AMS 

published a proposed rule (71 FR 

24820) entitled ‘‘Revisions to Livestock 

Standards Based on Court Order’’ to 

address the November 2005 

amendments to OFPA. AMS received 

nearly 12,400 comments on the issue of 

dairy animal replacement during the 

comment period for this proposed rule. 

Additionally, in response to the April 

13, 2006, advanced notice of proposed 

rulemaking on access to pasture (71 FR 

19131), AMS received over 325 

comments on the issue of dairy animal 

replacement. Neither of these actions 

intended to address the dairy 

replacement or transition issue as an 

objective. Accordingly, the comments 

were not a part of subsequent 

rulemaking for either action, as they 

were beyond the scope of these rules. 

They are, however, acknowledged and 

discussed in this final rule. 

(13) On May 12, 2006, the NOSB 

provided a comment on the April 2006 

proposed rule (71 FR 24820).14 In its 

comment, the NOSB offered 

modifications to its May 2003 dairy 

replacement recommendation 15 for the 

regulatory text to read: ‘‘Once a dairy 

operation has been converted to organic 

production, all dairy animals, including 

all young stock whether born on or 

brought onto the operation, shall be 

under organic management from the last 

third of the mother’s gestation.’’ The 

modification was intended to clarify 

that any animal brought onto an organic 

operation, after conversion, should be 

under organic management from the last 

third of gestation (i.e., purchase of 

animals transitioned by other operations 

should not be permitted). The revised 

text also intended to clarify that an 

operation (as opposed to herd) is 

entitled to the one-time opportunity to 

convert to organic production. 

(14) On June 7, 2006, AMS published 

a final rule entitled ‘‘Revisions to 

Livestock Standards Based on Court 

Order’’ (71 FR 32803) to implement the 

November 2005 statutory change. The 

amendments reflected the new OFPA 

allowance permitting transitioning dairy 

animals to be fed feedstuffs from 

transitioning lands in the last year of the 

3-year transition period (7 CFR 

205.236(a)(2)(i)), as well as setting a 

termination date of June 9, 2007, for the 

existing 80/20 feed conversion rule (7 

CFR 205.236(a)(2)(ii)). In the preamble 

to the 2006 final rule, AMS noted that 

additional clarity could be provided 

regarding the transition of dairy animals 

into organic production. 

(15) In October 2006, NOP published 

guidelines meant to clarify the existing 

origin of livestock rule.16 The guidelines 

allowed organic milk operations that 

were certified organic prior to October 

21, 2002, or that transitioned their cattle 

by feeding them 100 percent organic 

feed during conversion, to acquire 

additional conventional (or 

‘‘nonorganic’’) cattle and transition 

them to an organic status. The 

guidelines prohibited organic milk 

operations that transitioned their cattle 

using the 80/20 exemption from 

transitioning additional cattle. This 

guidance document was archived by 

AMS on January 31, 2011, in 

anticipation of rulemaking to clarify the 

origin of livestock rule. 

(16) On April 28, 2015, AMS 

published a proposed rule titled ‘‘Origin 

of Livestock’’ (80 FR 23455) to propose 

changes to the exception allowing 

nonorganic dairy animals to transition 

to organic milk production after one 

year of organic management. This action 

proposed that each producer (e.g., 

individual or business entity) would be 

allowed to transition nonorganic dairy 

animals to organic milk production only 

one time. After the transition is 

completed, a producer could transition 

dairy animals in the future only if the 

producer, through its certifying agent, 

requests an exemption due to a natural 

disaster or damage caused by drought, 

wind, flood, excessive moisture, hail, 

tornado, earthquake, fire, or other 

business interruption, in accordance 

with 7 CFR 205.290. The comment 

period for the proposed rule was opened 

on April 28, 2015, for 60 days, during 

which time AMS received 1,371 public 

comments. 

(17) On October 1, 2019, AMS 

reopened the comment period on the 

April 28, 2015, proposed rule (84 FR 

52041). The comment period was 

reopened for 60 days during which time 

AMS received 746 public comments. 

(18) On December 20, 2019, Congress 

instructed AMS to finalize rulemaking 

within 180 days in the Further 

Consolidated Appropriations Act, 2020 

(Pub. L. 116–94, div. B, title VII, section 

756, Dec. 20, 2019, 133 Stat. 2654), 

stating ‘‘the Secretary of Agriculture 

shall issue a final rule based on the 

proposed rule entitled ‘National Organic 

Program; Origin of Livestock,’ . . . 

Provided, That the final rule shall 

incorporate public comments submitted 

in response to the proposed rule.’’ 

(19) On May 12, 2021, AMS reopened 

the comment period (86 FR 25961) on 

the 2015 proposed rule. AMS requested 

comments on specific topics, including 

whether AMS should prohibit the 

movement of transitioned cows, and 

whether AMS should use the term 

‘‘operation’’ or ‘‘producer’’ to describe 

the regulated entity. The 2021 comment 

period was reopened for 60 days, during 

which time AMS received 486 public 

comments. 

III. Overview of Comments 

This section provides a summary of 

the comments AMS received on issues 

related to this final rule. First, 

comments received on this topic prior to 


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17Summarized in the National Organic Standards 

Board Recommendation on Origin of Livestock: 

Recommendation for Rule Change (document dated 

April 29, 2003). Available online at: https://

www.ams.usda.gov/rules-regulations/organic/nosb/ 

recommendations. 

2015 are discussed, as they informed the 

development of the 2015 proposed rule 

and this final rule. AMS then 

summarizes comments received since 

the publication of the 2015 proposed 

rule over the course of three comment 

periods in 2015, 2019, and 2021. 

Finally, AMS responds to specific 

comments in the description of this rule 

and in the Regulatory Impact Analysis. 

A. Discussion of Comments Received 

Prior to 2015 

In general, the approximately 12,725 

combined comments received on the 

April 2006 proposed rule addressing the 

court order and the April 2006 

advanced notice of proposed 

rulemaking on access to pasture 

requested greater clarity on the 

parameters for transitioning dairy 

animals into organic production and 

called for elimination of the ‘‘two-track’’ 

system. The ‘‘two-track’’ system refers to 

an April 2003 NOP statement that once 

an entire, distinct herd transitioned 

using the 80/20 provision (20 percent 

nonorganic feed in the 12 months before 

milking), all offspring then had to be 

managed organically and no 

transitioned replacements could be 

purchased.17 The NOP also stated that, 

for those producers that did not use the 

80/20 provision, the dairy animals only 

needed to be under continuous organic 

management starting no later than 12 

months prior to production (i.e., 

producers could continue to transition 

animals into organic over time). 

The majority of commenters stated 

that the ‘‘two-track’’ system could be 

addressed by conveying that, once a 

dairy operation is certified organic, 

regardless of how that operation 

transitioned into organic, all new dairy 

animals added to that operation should 

be managed organically from the last 

third of gestation. Commenters stated 

that this principle should apply to those 

animals born on the farm and those 

purchased as replacement and 

expansion animals to increase herd size. 

Commenters stated that allowing 

organic dairy operations to add only 

animals who have been managed 

organically since the last third of 

gestation supports consumer confidence 

in the organic milk sector. They 

reiterated that consumers expect that 

organic milk is produced without the 

use of excluded methods and substances 

prohibited under the regulations (i.e., 

hormones, antibiotics, and certain 

animal medications), and believe that 

greater clarity on how animals can 

transition into organic production is 

needed. Some commenters stressed that 

organic dairy products were keystone 

products for consumer confidence and a 

major stepping-stone to additional 

organic purchases. 

Commenters stated that continued 

transition of nonorganic animals 

increases the supply of animals able to 

produce organic milk, depresses the 

value of organic heifers, and limits the 

incentives to produce organic 

replacement animals. They also stated 

that the allowance to transition a large 

number of animals, rather than 

purchasing or raising animals as organic 

from last third of gestation, results in 

surplus organic heifer calves being sold 

into the conventional market. Some 

commenters stated that the practice of 

allowing some operations to transition 

nonorganic animals on a regular basis 

encouraged transitional heifer 

development farms (an operation that 

raises heifers before they reach 

production age). They stated that it is 

easier and less expensive to purchase 

transitioned animals from heifer 

development farms than it is to raise 

animals that are organic from birth. 

Commenters estimated that raising 

organic dairy animals is twice as 

expensive as raising nonorganic dairy 

animals during their first year of life. 

They contended that producers who sell 

organic calves and replace them with 

transitioned nonorganically raised 

heifers have an economic advantage 

over those who raise animals 

organically from birth, due to the lower 

cost of nonorganic feed and nonorganic 

management. Commenters believed that 

for the organic heifer market to develop, 

and for there to be more organic stock 

available at an appropriate market 

value, greater clarity is needed in the 

regulations to convey that organic 

heifers are required in every case, 

except for the one-time initial transition 

of a dairy operation. 

Commenters stated that at least nine 

U.S.-based certifying agents were 

requiring the dairy operations they 

certified (approximately 1,100 certified 

and 150 transitioning operations) to 

manage all replacement dairy animals 

organically from the last third of 

gestation. This accounted for roughly 50 

percent of the organic dairy operations 

at that time. Other certifying agents 

were allowing the other approximately 

50 percent of dairy operations to 

transition nonorganic animals to organic 

on a continual basis. Commenters 

stressed that a main purpose of OFPA is 

consumer assurance that organically 

produced products meet a consistent 

standard and that the current origin of 

livestock standard needs further 

specificity to meet that purpose. 

B. Discussion of Comments Received on 

2015 Proposed Rule 

AMS received 1,371 comments during 

the first comment period for the 2015 

proposed rule on Origin of Livestock 

(April 28, 2015, to July 27, 2015). 

Commenters included private citizens 

and consumers, producers, consumer 

groups, organic certifying agents, 

producer groups, trade organizations, 

milk handlers, and foreign and state 

governments. The majority of comments 

(1,305 comments) were submitted by 

private citizens and consumers. AMS 

identified approximately 1,110 form 

letter submissions out of the 1,371 

submissions. During the second 

comment period (October 1, 2019 to 

December 2, 2019), AMS received 746 

comments, which included 198 

comments identified as form letters. 

During the third comment period (May 

12, 2021 to July 12, 2021), AMS 

received 486 comments, which included 

374 comments identified as form letters. 

A general summary of comments 

follows. Detailed discussion of specific 

comments follows in the description of 

the final rule. All comments on the 2015 

proposed rule can be accessed at https:// 

www.regulations.gov via Docket ID 

AMS–NOP–11–0009. 

Of the comments received in 2015, 

most commenters supported the 

proposed rule because they felt the 

proposed regulatory text was intended 

to close loopholes that allowed 

operations to continuously bring 

nonorganic animals into organic milk 

production. Comments that expressed 

general support for the rule included 

private citizens and consumers; dairy 

farmers; certifying agents; producer 

groups; consumer groups; a trade 

organization; handlers and academics/ 

specialists. 

Other comments received in 2015 

expressed general opposition to the 

proposed rule. These commenters were 

mostly concerned that the proposed rule 

would, for example: Weaken organic 

standards by creating loopholes, make 

organic milk or food less healthy, or 

favor large corporations and ‘‘factory’’ 

farms over small farms and consumers. 

Some commenters were not aware 

USDA regulations allow for 

transitioning nonorganic animals to 

organic production and were opposed to 

this practice altogether. A commenter 

who supported continuous transition 

questioned whether AMS had the 

authority to restrict the origin of 

livestock as proposed. AMS responds to 

these comments below. 


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In 2019, AMS received comments in 

support of the rule, as well as a few 

comments in opposition to the proposed 

rule. These commenters outlined 

arguments similar to those submitted in 

2015, and specifically emphasized that 

changing the rule to allow only one 

transition to organic per producer 

would be restrictive and beyond the 

scope of AMS’s legal authority, among 

other concerns. 

In 2021, AMS reopened the proposed 

rule’s comment period to seek comment 

on several specific topics, including 

whether AMS should prohibit the 

movement of transitioned dairy animals 

in organic dairy production as part of 

the final rule, and whether AMS should 

regulate ‘‘producers’’ or ‘‘operations.’’ 

Commenters urged AMS to finalize the 

rule without further delay, believing it 

would ensure dairy farms operate on a 

level playing field and that animals are 

consistently raised using organic 

practices. Commenters also responded 

to AMS’s specific requests, and those 

are discussed by topic below. A 

comment asserted that USDA did not 

have the statutory authority to prohibit 

certified operations that have completed 

their one-time transition from acquiring 

transitioned animals for organic 

production. 

IV. Overview of Amendments and 

Responses to Comments 

The requirements of the final rule are 

discussed below. For each section of the 

final rule, we describe comments that 

AMS received and revisions from the 

proposed to final rule. AMS then 

discusses the comments we received but 

did not incorporate into the final rule. 

Comments received on the costs and 

benefits of the rule are discussed in the 

Regulatory Impact Analysis. The final 

regulatory text is available, in its 

entirety, at the bottom of this document. 

This final rule clarifies a regulation 

that has been in effect for twenty years. 

AMS considers the requirements for 

organic livestock in 7 U.S.C. 6509(b), 

(c), and (d) to be applicable to all 

organic livestock. Section 6509(e)(2) 

requires organic management of dairy 

animals ‘‘for not less than the 12-month 

period immediately prior’’ to the sale of 

organic milk or milk products. AMS has 

interpreted this provision to be the 

minimum 12-month period of organic 

management and that the Secretary may 

establish a longer period for dairy 

operations. AMS had determined that 

the appropriate period under which 

dairy animals must be under organic 

management is from last third of 

gestation except during the one-time 

transition when a new organic dairy 

operation is being certified or when a 

nonorganic dairy operation is 

transitioning to organic production. 

This final rule elaborates on the original 

7 CFR 205.236(a)(2)(iii), under which 

organic dairy operations may ‘‘rais[e] 

their own replacement animals’’ or 

‘‘introduce[e] . . . animals from off the 

farm that were organically raised from 

the last third of gestation,’’ but may not 

‘‘routinely . . . bring nonorganically 

raised animals into an organic 

operation.’’ 65 FR 80570. AMS allowed 

the minimum period of 12 months for 

new operation or transitioning 

operations to assist new entrants into 

the organic market as a one-time event. 

In 2005, Congress amended section 

6509(e)(2) to add subsection (B). It left 

undisturbed subsection (A), which 

USDA had implemented in 7 CFR 

205.236(a)(2)(iii). Additionally, in the 

further Consolidated Appropriations 

Act of 2020, Congress instructed the 

Secretary to ‘‘issue a final rule based on 

the proposed rule entitled ‘National 

Organic Program; Origin of Livestock,’ 

published in the Federal Register on 

April 28, 2015 (80 FR 23455): Provided, 

That the final rule shall incorporate 

public comments submitted in response 

to the proposed rule.’’ 7 U.S.C. 6509 

note. Having incorporated the public 

comments on the proposed rule and 

considered the need for consistency 

between certifying agents, the need to 

consider the expectations of consumers 

and organic producers, the need to be 

able to implement and enforce the rule 

effectively, and the statutory provisions 

included in OFPA, the Secretary now 

issues that final rule. 

The proposed rule in 2015 stated that 

it would not prohibit the movement of 

transitioned animals, a practice in 

which some operations are currently 

engaged. In 2021, AMS reopened the 

comment period to seek comment on 

whether the final rule should do so. 

With this final rule, AMS is limiting the 

movement of transitioned animals. AMS 

views the different parts of this final 

rule as working together: The one-time 

transition allowance at the operation 

level will more effectively work in the 

real world if we also limit the 

movement of transitioned animals. The 

second part of the rule will facilitate the 

first part of the rule. 

A. Definitions (§ 205.2) 

This section of the final rule defines 

terms that appear in the final rule and/ 

or existing USDA organic regulations. 

The final rule adds three terms to 

organic regulations. ‘‘Organic 

management’’ is defined as: 

‘‘management of a production or 

handling operation in compliance with 

all applicable provisions under this 

part.’’ The term ‘‘third-year transitional 

crop,’’ is defined as, ‘‘crops and forage 

from land included in the organic 

system plan of a producer’s operation 

that is not certified organic but is in the 

third year of organic management and is 

eligible for organic certification in one 

year or less.’’ Finally, the term 

‘‘transitioned animal’’ is defined as, ‘‘A 

dairy animal converted to organic milk 

production in accordance with 

§ 205.236(a)(2) that has not been under 

continuous organic management from 

the last third of gestation; offspring born 

to a transitioned animal that, during its 

last third of gestation, consumes thirdyear transitional crops; and offspring 

born during the one-time transition 

exception that themselves consume 

third-year transitional crops.’’ Below we 

describe the final rule and respond to 

comments received on the proposed 

definitions. 

i. Definitions—Comments and Revisions 

This section (§ 205.2) differs from the 

2015 proposed rule as follows: 

‘‘Dairy farm’’: AMS received many 

comments on AMS’s proposed 

definition of a dairy farm. That proposal 

would have defined a dairy farm as, ‘‘A 

premises with a milking parlor where at 

least one lactating animal is milked.’’ 

Commenters were concerned that the 

proposed definition of ‘‘dairy farm’’ 

required an operation to milk only one 

animal to meet the definition of a dairy 

farm. Since any new dairy farm could 

transition animals on a one-time basis, 

some commenters were concerned that 

a producer would continuously create 

new dairy farms for the purpose of 

producing transitioned animals, 

defeating the purpose of the rule. Public 

comments argued this interpretation 

would be relatively easy to make, 

because the dairy farm definition 

requires that only one animal be milked. 

These transitioned animals would then 

presumably be sold to other organic 

dairies, thereby allowing operations to 

continuously add transitioned animals 

to their operations and failing to 

establish consistency across operations. 

These commenters suggested that 

AMS modify the definition of a ‘‘dairy 

farm’’ to close the potential loophole by 

requiring that a dairy farm be a 

functioning ‘commercial dairy’ that is 

inspected and permitted by the state in 

which it operates, has a relationship 

with a licensed milk handler, and has 

operated for no less than 180 days. 

Other comments were concerned that 

legitimate dairies would be excluded by 

our proposed definition, as AMS 

defined a dairy farm as a premise with 

a milking parlor. They noted that dairy 

farms do not always have a milking 


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parlor, for example, when dairies are 

starting transition with non-milking 

animals (e.g., heifers). Another 

commenter pointed out that some 

dairies use portable or mobile 

equipment for collecting milk and that 

it was unclear if these operations would 

be considered dairy farms under the 

rule. Another commenter stated that a 

‘‘dairy farm’’ definition was not 

necessary and recommended that AMS 

delete the definition in the final rule. 

AMS has not included a definition for 

‘‘dairy farm’’ in the final rule. AMS 

concluded that the proposed term 

would not have included certain 

legitimate dairy operations (i.e., dairy 

operations that do not have a milking 

parlor) and would have included 

operations that should not be 

considered dairy operations for the 

purposes of the rule (i.e., noncommercial dairy operations). 

The final regulatory text does not 

include this term, as AMS determined it 

is not necessary and is an ordinary term 

that does not require definition. The 

proposed rule articulated the definition 

of ‘‘dairy farm’’ as a way to establish the 

eligibility requirements to transition 

animals. AMS concluded an alternative 

approach was preferred in the final rule 

to limit continual transition by organic 

operations, as suggested by commenters. 

This decision was a logical outgrowth of 

the proposed rule, based on the rule’s 

articulated purpose. In the final rule, the 

definition of a dairy farm is not 

necessary to implement the final rule or 

achieve our regulatory objective. For 

additional discussion, see the section on 

Dairy Transition (§ 205.236(a)(2)) below. 

‘‘Organic management’’: In the 

proposed rule, AMS defined organic 

management as, ‘‘Management of a 

production or handling operation in 

compliance with all applicable 

production and handling provisions 

under this part.’’ AMS is revising the 

proposed definition of ‘‘organic 

management’’ in this final rule to 

simplify the wording and improve 

readability. The change is not intended 

to alter the meaning of the term. The 

final rule defines organic management 

more simply as, ‘‘Management of a 

production or handling operation in 

compliance with all applicable 

provisions under this part.’’ This does 

not broaden, nor does it intend to 

broaden the rule, as the only applicable 

provisions are the production and 

handling provisions. 

‘‘Third-year transitional crop’’: AMS 

received a comment that AMS’s 

proposed definition for ‘‘third-year 

transitional crop’’ referred only to 

prohibited materials as the determining 

factor for evaluating whether crops 

produced on the land could be 

considered transitional. The commenter 

noted ‘‘there is more to land transition 

than not applying prohibited materials.’’ 

AMS agrees that organic land 

management includes a range of 

practices and requirements, only one of 

which is the absence of prohibited 

materials. AMS has revised the 

definition to clarify that third-year 

transitional crops are crops and forage 

harvested from land that is in its third 

year of organic management and thus is 

eligible for organic certification in one 

year or less. 

‘‘Transitional crop’’: AMS received 

comments that the definition of 

‘‘transitional crop’’ was unnecessary, as 

neither the current regulations nor the 

proposed rule refer to ‘‘transitional 

crop’’ and this term would not be 

needed to enforce the regulations. The 

commenter argued that land is 

transitioning for three years and that it 

could be considered ‘‘transitional’’ at 

any time during the three-year period, 

including the time during the first year 

of transition. 

AMS agrees that a definition for 

‘‘transitional crop’’ is unnecessary, and 

we have removed the definition from 

the final rule. The term is not used in 

the regulations outside of the term 

‘‘third-year transitional crop,’’ and that 

term is separately defined in the final 

rule. Furthermore, AMS does not 

establish requirements for certification 

of transitional crops and does not intend 

to do so through this rulemaking. 

‘‘Transitioned animal’’: AMS received 

a comment on the definition of a 

transitioned animal. This comment 

recommended removing the language 

‘‘sold, labeled, or represented as organic 

slaughter stock or for the purpose of 

organic fiber’’ from the definition of a 

transitioned animal and incorporating it 

into § 205.236(a)(2)(vii). 

AMS revised this definition to remove 

language that transitioned animals 

cannot be sold, labeled, or represented 

as organic slaughter stock or for the 

purpose of organic fiber. AMS is 

removing this language, which was a 

requirement within the definition. The 

final rule clearly states transitioned 

animals must not be used for organic 

livestock products other than organic 

milk and milk products 

(§ 205.236(a)(2)(vii)). Additionally, AMS 

added language to the definition to 

reiterate that transitioned animals are 

animals that have not been under 

continuous organic management from 

the last third of gestation, and we 

revised the spelling of ‘‘borne’’ to 

‘‘born’’. 

ii. Definitions—Changes Requested But 

Not Made 

‘‘Transitioned animal’’: A commenter 

was opposed to AMS’s inclusion of 

‘‘offspring’’ in this definition. It argued 

that the OFPA provision that allows 

transitioning animals to be fed thirdyear transitional crops ‘‘applies to the 

animals of the farm that are being 

transitioned. It does not apply to 

offspring born to the transitioning 

animals.’’ AMS disagrees that OFPA 

limits use of third-year transitional 

crops to any specific class, or age, of 

livestock during the transition. 

AMS also received comments 

requesting we include fiber-bearing 

animals in the definition of a 

transitioned animal to allow nonorganic 

fiber animals to transition to organic. 

AMS has not adopted this suggestion, as 

OFPA does not include an allowance for 

fiber animals to transition. For a 

discussion of this topic, please see the 

section below titled ‘‘J. Other 

Amendments Considered.’’ 

‘‘Person’’ and ‘‘Producer’’: AMS did 

not propose to change the definition of 

‘‘person’’ or ‘‘producer’’ in the proposed 

rule, but these two terms are defined in 

the current regulations at § 205.2, and 

AMS received comments about how 

those definitions could affect the 

implementation of our rule. Comments 

primarily expressed concern that a 

producer could continuously transition 

by repeatedly creating new or separate 

legal entities or that eligibility 

requirements would be difficult to 

verify. Another comment stated that an 

operation may have numerous 

individuals conducting business on the 

premises, and the proposed rule 

language does not explicitly define 

which of these individuals should be 

considered the producer for purposes of 

the one-time transition allowance. 

AMS has not revised the definitions 

for either term, as the final rule does not 

rely on these terms to establish who 

may transition animals. For a discussion 

of changes made by AMS to address 

comments about who is eligible to 

transition, see the discussion below on 

Dairy Transition. 

B. Dairy Transition (§ 205.236(a)(2)) 

This section of the final rule specifies 

who is eligible to transition nonorganic 

animals to organic production and the 

requirements and conditions of the 

transition period. The section also 

prohibits organic livestock operations 

from sourcing transitioned animals, 

except in specific and limited cases 

where the Administrator may grant a 

variance. Table 1 outlines the 

restrictions by dairy animal type. 


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TABLE 1—RESTRICTIONS FOR TRANSITIONED AND LAST THIRD ORGANIC DAIRY ANIMALS

Last third organic animals Transitioned animals 

May move between organic operations ................................................... May not move between organic operations, except in case of Administrator-approved variance at 205.236(d). 

May be eligible for organic slaughter (if also not treated with synthetic 

parasiticides that appear on the National List).

Not eligible for organic slaughter. 

Below we describe the final rule, 

including the variance request 

procedures and criteria, and respond to 

comments received on the proposed 

rule. 

i. Dairy Transition—Comments and 

Revisions 

Section 205.236(a)(2)— 

AMS made two important revisions to 

this section in response to comments. 

First, AMS revised the regulated entity 

from ‘‘producer’’ to ‘‘operation,’’ to be 

consistent with the current regulations. 

Second, AMS prohibited certified 

organic operations from sourcing 

transitioned animals from other organic 

operations. These two changes work in 

tandem to result in a rule that meets 

AMS policy goals, best responds to 

public comment, and can be clearly 

implemented and enforced by certifying 

agents and AMS. Based on public 

comments, AMS is confident that the 

policy choices in this rule align with 

practices that many certifiers and most 

organic operations already follow, and 

align with public comments on the rule. 

The revisions and final requirements 

are discussed in more detail below. 

Operation as regulated entity 

(§ 205.236(a)(2)): AMS received many 

comments on the appropriate regulated 

entity (e.g., producer, operation, owner, 

etc.) that should be eligible for the onetime transition. In 2021, AMS 

specifically requested comments on this 

topic. Comments were received from 

producers, certifying agents, consumers/ 

citizens, producer groups, consumer 

groups, trade associations, handlers, and 

a foreign government. 

The regulated entity establishes who 

is eligible to transition dairy animals to 

organic production. The USDA organic 

regulations consider the certified 

operation to be the regulatory unit. In 

the proposed rule, however, AMS 

selected ‘‘producer’’ as the regulatory 

unit. Few commenters supported that 

option. Most comments recommended 

changing the regulatory unit to 

‘‘operation’’ or a variation such as 

‘‘certified operation’’ or ‘‘dairy 

operation.’’ 

Others recommended AMS prohibit 

‘‘persons responsibly connected’’ to a 

transitioned dairy from ever 

transitioning animals in the future. The 

term ‘‘responsibly connected’’ is 

currently defined in the regulations 

(§ 205.2) as ‘‘any person who is a 

partner, officer, director, holder, 

manager or owner of 10 percent or more 

of the voting stock of an applicant or a 

recipient of certification or 

accreditation.’’ A subset of the 

comments that recommended the 

aforementioned prohibition on ‘‘persons 

responsibly connected’’ also 

recommended revising the definition of 

that term to include persons with at 

least a 20 percent ownership share in 

the operation, rather than 10 percent. 

Finally, several commenters wanted a 

less stringent regulatory unit to allow 

organic operations to continually 

transition dairy animals, as needed, into 

organic production. 

AMS revised the language for this 

final rule in response to comments and 

to clarify the existing USDA organic 

regulations. The final rule specifies that 

an operation (rather than a producer in 

the proposed rule) has one opportunity 

to transition animals. This definition of 

‘‘operation’’ best captures the more 

expansive understanding of an ‘‘entire, 

distinct herd’’ in the current regulations, 

under which dairy operations have been 

allowed to use the transition exception 

only once (i.e., when they initially 

converted their farm’s entire nonorganic 

‘‘herd’’ to organic production). AMS 

adopted ‘‘operation’’ as the regulated 

unit for the following additional 

reasons: 

1. As noted, the term ‘‘operation’’ is 

consistent with how the organic 

regulations are currently administered 

by AMS and certifying agents. For 

example, certifying agents issue adverse 

actions (notices of noncompliance, etc.) 

to certified operations. The term 

‘‘operation’’ aligns with the term used in 

NOSB’s most recent 2006 

recommendation and it reflects common 

usage by industry. 

2. Comments received indicate that 

the term ‘‘producer’’ can be interpreted 

in different ways. For example, the 

definition of ‘‘producer’’ in § 205.2 

includes the word ‘‘person.’’ 

Commenters took this to mean different 

things, with some understanding it to 

mean an individual human (i.e., a 

natural person) while others understood 

it to mean a ‘‘person’’ as separately 

defined at § 205.2. The definition of 

‘‘person’’ at § 205.2 is not limited to 

individuals and includes various types 

of business entities. AMS determined 

that different interpretations of the term 

‘‘producer’’ would lead to differences in 

how certifying agents enforce the 

requirements, and this would be an 

unacceptable outcome of the 

rulemaking. 

3. Certifying agents argued that it 

would be simpler to verify an 

operation’s eligibility (as opposed to a 

producer’s eligibility) to transition 

animals. Certifying agents are 

responsible for verifying eligibility 

during the application process. AMS 

has revised the regulated entity to 

ensure the certification process remains 

straightforward and that the 

requirements are enforceable. 

4. Many comments noted that 

regulating ‘‘producers,’’ as proposed, 

could restrict people associated with a 

dairy from starting their own dairies. 

This could include business partners, 

managers, and family members. AMS 

determined that ‘‘operation’’ as the 

regulated entity most simply allows 

people who might be associated with a 

certified dairy to go out and start their 

own organic dairy operation by allowing 

them to transition nonorganic animals 

to organic production. 

5. AMS recognizes there are multiple 

scenarios where producers that 

previously operated an organic dairy 

may wish to start a new dairy operation. 

For example, dairies may go out of 

business or be sold entirely, and the 

same people may later wish to start new 

operations. The final rule permits only 

operations that are both (1) not certified 

for livestock production and (2) have 

never transitioned animals to use the 

one-time exception for transitioning 

animals. 

6. AMS did not select a stricter 

regulatory unit, such as ‘‘persons 

responsibly connected,’’ that is stricter 

than an organic dairy that has 

transitioned, for several reasons. AMS 

was concerned the requirement could 

not be easily verified by certifying 

agents and/or that it could create delays 

and/or unnecessary obstacles in the 

certification process. AMS was also 

concerned that it could prevent people 


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from using the exception in cases where 

it would be reasonable. 

Another overarching reason for 

selecting ‘‘operation’’ as the regulated 

entity is that this final rule prohibits the 

movement of transitioned animals 

between organic operations. This 

revision supports our intent to prohibit 

any certified organic operation from 

continually sourcing transitioned 

animals. For implementation and 

oversight purposes, this aligns well with 

the policy choice to select a simpler 

regulatory unit (‘‘operation’’) that aligns 

with the rest of the USDA organic 

regulations and the existing framework 

for certification and oversight. New 

operations may transition animals into 

organic management; existing organic 

operations may not. These revisions are 

discussed further below. 

Prohibition on sourcing transitioned 

animals (§ 205.236(a)(2)): AMS specifies 

in this section that organic operations 

may not source transitioned animals, 

except in the case of variances granted 

by the Administrator. Prohibiting the 

sourcing of transitioned animals is 

intended to prevent new heifer 

replacement operations from being 

repeatedly established to provide an 

ongoing source of transitioned animals. 

Otherwise, the movement of 

transitioned animals could allow 

operations to use just transitioned dairy 

animals to bypass the restrictions and 

purpose of the one-time transition 

period. 

This policy choice is consistent with 

public comments on this rule. The 

demand induced by allowing certified 

farms to continually source transitioned 

animals would produce a corresponding 

incentive for other businesses to 

continually open new organic 

operations to provide transitioned cows 

into the market. This is not the original 

intent of our regulations, nor the desired 

policy outcome. As such, AMS is 

making the policy choice to achieve the 

policy goal of having more organic 

animals under organic management for 

their full lives. 

Without preventing the sourcing of 

transitioned animals, AMS would 

expect an influx of transitioned animals, 

as some organic dairies would pursue 

the practice of purchasing transitioned 

animals from newly created heifer 

replacement operations. Given the 

policy choice to limit transitions in the 

market to new operations only, with a 

limited variance process, AMS believes 

that limiting the transition between 

operations to better manage supply and 

demand dynamics, and removing 

incentives for continuous transition 

practices to continue would better 

support that policy. 

AMS received many comments on 

this topic over the three comment 

periods, starting in 2015. In 2021, AMS 

specifically requested comments on 

whether the final rule should prohibit 

organic dairy operations from acquiring 

transitioned animals. AMS received 

many comments supporting this choice, 

as well as comments opposing it. 

Ultimately, AMS agrees with comments 

that a prohibition on the movement of 

transitioned animals between organic 

operations facilitates achieving our 

regulatory objective to increase the 

number of livestock that are managed as 

organic throughout their lives. In the 

final rule, AMS included this provision 

in § 205.236(a)(2) and removed the two 

proposed sections 205.236(viii) and (ix) 

that would have allowed transitioned 

animals to move between organic 

operations. Certified operations may 

request a variance from the prohibition 

on the movement of transitioned 

animals for specific circumstances, as 

described in § 205.236(d). 

The rule is not intended to restrict 

entry of legitimate new participants into 

the organic market, and transitions 

continue to be allowed for new 

operations after not less than a 12- 

month period of organic management. 

Transitions would also be allowed if a 

variance is granted (explained further 

below). These transition allowances 

reduce the costs of converting to organic 

production, and will continue to be an 

important incentive for eligible 

nonorganic dairy farms to convert to 

organic. However, once established, the 

certified organic farm would then need 

to use organic dairy animals that have 

been organically managed from the last 

third of gestation. 

Examples of Rule Implementation. 

Several examples are provided below to 

clarify the final rule’s requirements at 

§ 205.236(a)(2), and to explain how 

cows may be transferred between 

operations: 

• Organic dairy animals (organically 

managed from the last third of gestation) 

may be transferred between new and 

existing organic operations at any time. 

A certified dairy operation that cannot 

raise enough organic animals 

(organically managed from the last third 

of gestation) on-farm to maintain its 

herd may source animals managed 

organically from the last third of 

gestation from other organic operations. 

• A new farmer or conventional 

operation may apply for both crops and 

livestock certification and use the 

transition allowance to start a dairy. 

Further, a certified crop operation that 

has never transitioned animals may add 

a dairy to its certification and use the 

transition allowance to start the dairy. 

• For example, if a certified dairy 

farmer wants to pass transitioned 

animals to a family member, that family 

member could apply for organic 

certification as a new certified 

operation, and bring the transitioned 

animals into that operation under the 

one-time transition allowance. 

• Another option for facilitating 

intergenerational transfers of 

transitioned animals would be for a 

family member to join an existing 

certified organic dairy with transitioned 

animals. The establishment of the 

regulatory unit as the ‘‘operation’’ 

allows family members to join in the 

ownership and operation of an existing 

organic operation, allowing the 

receiving generation to receive the cows 

that were transitioned by the giving 

generation, because they are part of the 

operation that transitioned the animals. 

• Two (or more) operations will not 

generally produce organic milk on the 

same premises (i.e., use the same land 

and milking parlor). More than one 

operation owned by the same person(s) 

and producing milk at the same location 

(with each transitioning a group of 

animals) goes against the intent of this 

final rule. However, multiple people 

(like parent/child family members) can 

be responsible parties for a single 

operation and new responsible parties 

to an operation can be added over time. 

• Nothing in the rule prevents 

transitioned animals from being sold to 

other farms as conventional animals; a 

transitioned animal started life as a 

conventional animal and can return to 

conventional production if an organic 

farm with transitioned animals wishes 

to sell its herd. Organic dairy animals 

(organically managed from the last third 

of gestation) may be transferred as 

organic to other organic farms (new or 

established). This reflects the difference 

in economic investment in the 

transitioned animal compared with the 

‘‘organic for life’’ animal. 

• The term ‘‘source’’ at § 205.236(a)(2) 

is intended to have a meaning that is 

broader than ‘‘purchase.’’ For example, 

the term ‘‘source’’ would include 

acquisition of animals when the 

transaction does do not include a 

financial exchange (e.g., transfers). 

• Additionally, an organic livestock 

operation could not source transitioned 

animals under a scheme where 

transitioned animals are milked but not 

owned by that organic operation, as a 

means of continually bringing 

transitioned animals into milk 

production. For example, Operation A 

could not source transitioned animals 

from Operation B, Operation C, 

Operation D (etc.), even if Operation A 

does not own the transitioned animals 


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19750 Federal Register / Vol. 87, No. 65 / Tuesday, April 5, 2022 / Rules and Regulations 

18McDonald, J.M., Law, J., & Mosheim, R. (2020). 

Consolidation in US dairy farming (USDA ERS. No. 

1473–2020–607). 

19Using the Organic Integrity Database, AMS 

identified dairy cattle operations with listed organic 

animals that were surrendered their organic dairy 

certification between 2016–2021 that would have 

been labeled a small business under 13 CFR part 

121. 

20The Administrator includes a ‘‘representative 

to whom authority has been delegated to act in the 

stead of the Administrator’’ which could be the 

NOP Program Manager, i.e. the NOP Deputy 

Administrator. 

21NOP Program Handbook, NOP 2606 

Instruction: Temporary Variances. Available at: 

https://www.ams.usda.gov/sites/default/files/ 

media/Program%20Handbk_TOC.pdf. 

from Operation B, Operation C, (etc.). 

Certifying agents must review an 

applicant’s organic system plan (and 

annually thereafter) to ensure that no 

operation, once certified, sources 

transitioned animals. 

• A heifer-raising operation, like a 

dairy, may not continually transition 

nonorganic animals. Once an eligible 

(e.g., nonorganic) heifer-raising 

operation transitions animals under the 

one-time exception, it may source only 

organic animals (organically managed 

from the last third of gestation). Heiferraising operations may not provide 

transitioned animals to an already 

certified organic operation that has 

completed its one-time transition. 

Administrator Variances for Movement 

of Transitioned Animals (§ 205.236(d)) 

In the final rule, AMS is providing for 

a variance request process that is 

specific to the prohibition on the 

movement of transitioned animals. In 

the proposed rule, AMS asked whether 

any exceptions or variances should be 

granted. Many comments noted existing 

sections of the organic regulations that 

already provide for temporary variances 

in the case of extreme weather events or 

disease, for example (§§ 205.290 and 

205.672). 

However, a few commenters noted 

some movement of transitioned animals 

between farms would be appropriate 

and could happen without undermining 

the intent of the rule to limit operations 

from continually transitioning animals. 

These comments either noted that a 

transitioned animal producing organic 

milk on one farm should be allowed to 

produce on any organic farm, or noted 

that there were ‘‘common sense’’ 

situations where movement of 

transitioned animals would not run 

counter to the intent of the rule. 

One comment noted that prohibiting 

sale of transitioned animals could hurt 

family farmers, and as noted above, 

another argued that while there should 

be strict requirements on herd 

conversions, there should also be 

flexibility for ‘‘reasonable’’ or ‘‘common 

sense’’ movement of transitioned 

animals to allow an operation to capture 

the value of the animal and/or to allow 

an organic (transitioned) animal to 

continue to produce organic milk on a 

different organic farm. 

AMS believes that a prohibition on 

the movement of transitioned animals is 

necessary to prevent ongoing creation of 

organic operations (e.g., heifer 

replacement operations) that would 

supply organic dairies with transitioned 

animals in an ongoing manner. AMS has 

discussed the reasons for this 

prohibition throughout this final rule. 

However, AMS also recognizes that 

there are certain limited, legitimate, and 

reasonable situations where movement 

of transitioned animals between 

operations is warranted. Sections 

205.290 and 205.672 of the existing 

regulations allow all operations to use 

variances in extreme or unexpected 

conditions. Section 205.272 allows for 

the re-transitioning of dairy animals 

(over 12 months) in cases of Federal or 

State emergency disease treatments. 

Section 205.290 allows variances from 

portions of the regulations (but would 

not permit the use of prohibited 

substances or nonorganic feed) in the 

case of natural disasters, damage from 

weather, fires, or other business 

interruptions. 

However, these sections do not 

sufficiently meet the needs of the 

situations pointed out in public 

comments, like bankruptcy, insolvency, 

and intergenerational transfer. Small 

dairy farmers who are more vulnerable 

to financial stress may need relief in 

these situations.18 The Organic Integrity 

Database listings that include data at the 

dairy animal level indicate that, since 

2016, operations that have surrendered 

their organic dairy certification have 

been small organic dairies as defined by 

the Small Business Administration 

(SBA) in 13 CFR part 121.19 AMS seeks 

to ensure operations are not unduly 

impacted by the prohibition on the 

movement of transitioned animals, 

especially in times of financial hardship 

or intergenerational transfer. 

In the final rule, AMS has included 

provisions that allow the 

Administrator 20 to issue a variance and 

allow the movement of transitioned 

animals between operations. This 

variance request process is specific to 

the Origin of Livestock provisions, but 

mirrors the existing temporary variance 

provisions in the regulations at 

§ 205.290. Under the process described 

in the NOP Program Handbook,21 the 

operation must submit their request for 

a temporary variance in writing to their 

certifying agent and include supporting 

documentation justifying the need for 

the temporary variance. The certifying 

agent reviews the request to determine 

whether the request comports with the 

reasons listed at § 205.290(a), and 

whether the documentation provided by 

the operation justifies the need for the 

temporary variance. The certifying agent 

submits the request to AMS, including 

the original request and supporting 

documentation, and recommends either 

granting or denying the temporary 

variance along with the reasons for their 

recommendation, and includes any 

additional documentation that supports 

their recommendation. A list of 

temporary variances that are in effect 

and that were denied are available to the 

public at https://www.ams.usda.gov/ 

rules-regulations/organic. Temporary 

variance denial decisions are not 

appealable; however, an operation can 

appeal a proposed adverse action if they 

are not able to meet the regulatory 

requirements because a temporary 

variance has been denied. 

AMS considered allowing certifying 

agents to decide variance requests but 

decided to retain those decisions at the 

Administrator level similar to the 

existing temporary variance process at 

§ 205.290. By requiring operations to 

seek approval from the Administrator 

rather than individual certifying agents, 

AMS believes that the process will 

result in more consistent decisionmaking. AMS is best positioned to make 

these decisions (vs. certifiers) because it 

can most easily request information 

from any accredited certifier. AMS 

anticipates that it may need to obtain or 

verify information from more than one 

certifier to assess the variance request. 

AMS is also best positioned to track 

whether any one operation is making 

multiple variance requests as a means to 

continually source transitioned animals. 

The new Origin of Livestock 

paragraph describing this type of 

variance identifies the scenarios for 

which a variance could be granted and 

describes the process for requesting a 

variance. The limited circumstances in 

which a variance may be granted will 

prevent this process from being used as 

a mechanism for an operation to 

continually source transitioned animals. 

The variance must be submitted to NOP 

through a certifier and will be 

considered by the Administrator against 

the limited circumstances listed in the 

regulation in § 205.236(d)(1). 

Variances will be made only for 

businesses that are ‘‘small,’’ as 

determined by the Small Business 

Administration (SBA) in the small 

business size regulations (13 CFR part 

121). Those regulations currently 

establish that a dairy cattle operation is 


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a small business if it takes in less than 

one million dollars in annual receipts. 

AMS is limiting variances to small 

businesses only to minimize adverse 

economic impact on small entities, as 

directed by the Regulatory Flexibility 

Act. 

The variance requestor must provide 

documentation to support the request 

(e.g., contracts, evidence of forced/sale 

closure, family records, wills or trusts, 

bankruptcy filings, tax documentation, 

records to support size standard). This 

variance is specifically crafted to 

address concerns about 

intergenerational transfers, forced sale 

or bankruptcy proceedings, and 

liquidity needs of dairy operations 

ceasing operations that may be 

hampered by the restriction on the 

sourcing of transitioned animals. AMS 

does not intend for these variances to 

become an avenue for operations to use 

out of convenience or to create a market 

for transitioned animals. 

Section 205.236(a)(2)(i)— 

In the final rule, this paragraph 

specifies that the transition period must 

be continuous and must last at least 12 

months. AMS moved a portion of the 

language included at § 205.236(a)(2) and 

combined it with similar text in 

§ 205.236(a)(2)(i) to reduce regulatory 

language and increase clarity. AMS also 

added language to clarify that an 

operation using the one-time transition 

must be certified before it may represent 

or sell products as organic. 

Section 205.236(a)(2)(ii)— 

In this section of the final rule, AMS 

added requirements for an operation to 

describe its transition plan in its organic 

system plan, including the actual or 

anticipated start date of the 12-month 

transition period and the identity (e.g., 

ear tag numbers) of animals to 

transition. The means of identifying 

animals may vary by operation but must 

be reviewed and approved by the 

certifying agent. AMS believes this 

information is necessary for certifying 

agents to determine compliance and to 

provide for traceability of transitioned 

animals. Certifying agents may also 

require any additional information 

about the transition that they deem 

necessary to determine compliance. 

AMS also revised this paragraph to 

reflect the timing for when an operation 

must apply for certification. An 

operation must submit an application to 

begin the certification process, and an 

operation must be certified before it can 

legally sell, label, or represent product 

as organic. This means that the 

transition period may exceed 12 months 

if the operation has applied for 

certification but is not yet certified after 

12 months has passed. In this case, the 

animals would continue to be 

transitioning under continuous organic 

management until certification is 

complete. See below for further 

discussion of changes requested but not 

made by AMS (‘‘Applying for 

Certification—Timeline’’). 

Section 205.236(a)(2)(iii)— 

Some commenters requested that 

AMS clarify that third-year transitional 

crops may be consumed by dairy 

animals during their transition only if 

those third-year transitional crops are 

produced by the operation transitioning 

to organic. 

AMS agrees that the OFPA transition 

requirements (7 U.S.C. 6509(e)(2)(B)) 

limit transitioning operations’ use of 

third-year transitional crops to their 

own operation. AMS has revised the 

final rule, § 205.236(a)(2)(iii), to more 

clearly align with OFPA by clarifying 

transitioning dairy animals may 

consume third-year transitional crops 

grown by the operation only. Allowed 

third-year transitional crops include 

those grown by the operation on land 

that is leased or rented and included in 

the organic system plan of the 

transitioning operation. AMS has also 

clarified that certified organic feed is to 

be fed during the 12-month transition, 

in addition to third-year transitional 

crops. 

Section 205.236(a)(2)(iv) 

AMS made a minor change to this 

section between the proposed 

regulations and the final rule to clarify 

our meaning. See discussion below of 

Dairy Transition—Changes Requested 

but Not Made. 

Section 205.236(a)(2)(v)— 

In the final rule, AMS made minor 

revisions to this paragraph in response 

to a comment that transitioned animals 

are a class of ‘‘organic’’ animal. In the 

proposed rule, AMS had used the term 

‘‘organic’’ to mean animals that are 

under organic management from the last 

third of gestation. The final rule revises 

the language to clarify that these 

animals are the same as any animal 

managed organically from the last third 

of gestation. 

Section 205.236(a)(2)(vi)— 

This paragraph sets the requirement 

that all dairy animals must end the 

transition at the same time. This 

reiterates that the transition exception is 

a distinct opportunity with a definitive 

end. Once the transition is complete, an 

operation may not add additional 

transitioned animals to its operation. 

The requirement that all animals end 

the transition at the same time prevents 

operations from sourcing additional 

nonorganic animals after they have 

begun their one-time 12-month 

transition period (unless they wish to 

restart the 12-month transition period 

for the entire group). 

This requirement is not intended to 

limit animals born during the transition 

period to transitioning animals (dams) 

from joining the organic herd. In some 

scenarios (e.g., operations that transition 

animals using third-year transitional 

feeds), animals born during the 12- 

month transition period may not 

complete 12 months of organic 

management by the end of the transition 

period. For example, transitioning 

animals bred after the start of the 

transition may birth animals toward the 

end of the 12-month transition period. 

These animals still may be added to the 

operation’s herd. Animals born during 

the transition must be under continuous 

organic management from birth and for 

no less than 12 months immediately 

prior to the production of organic milk 

to qualify for organic certification. 

Certifying agents will need to ensure 

that operations correctly classify 

animals as transitioned animals (as 

opposed to organically managed from 

the last third of gestation), as these 

animals do not meet the requirements 

for organic slaughter stock and may not 

be sourced by organic dairies 

(§ 205.236(a)(2)). An example is 

provided below to clarify how to 

classify animals born to transitioning 

animals during the transition period. 

For example (this example assumes 

the operation does not feed third-year 

transitional crops during transition but, 

rather, feeds certified organic feed and 

pasture): The offspring of a pregnant 

cow that calves within the first three 

months of the transition cannot be 

considered organic from the last third of 

gestation (assume a gestation time of 9 

months for this discussion). In this case, 

the heifer calf is considered a 

transitioned animal. Its transition will 

be completed after 12-months, at the 

same time its mother completes 

transition (i.e., the organic management 

of the pregnant mother during the last 

third of gestation also counts toward the 

12-month transition of the offspring). In 

contrast, offspring born after the first 

three months of the transition period 

will be considered organically managed 

from the last third of gestation (i.e., the 

mother is under organic management 

during the entire last third of gestation). 

This aligns with the requirement for 

nonorganic breeder stock (i.e., the 

requirements are no stricter). 


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22Hughner, R.S., McDonagh, P., Prothero, A., 

Shultz, C.J., & Stanton, J. (2007) Who are organic 

food consumers? A compilation and review of why 

people purchase organic food. Journal of Consumer 

Behaviour: An International Research Review, 

6(2–3), 94–110. 

23Wemette, M., Safi, A.G., Wolverton, A.K., 

Beauvais, W., Shapiro, M., Moroni, P., . . . & 

Ivanek, R. (2021). Public perceptions of antibiotic 

use on dairy farms in the United States. Journal of 

Dairy Science, 104(3), 2807–2821. 

24 Dangi, N., Gupta, S.K., & Narula, S.A. (2020). 

Consumer buying behaviour and purchase intention 

of organic food: a conceptual framework. 

Management of Environmental Quality: An 

International Journal. 

Section 205.236(a)(vii)— 

One commenter suggested that AMS 

include ‘‘milk products’’ in addition to 

‘‘milk’’ in § 205.236(a)(2)(vii) to clarify 

that products other than milk can be 

produced by transitioned animals. AMS 

agrees and we have revised this section 

in the final rule to refer to both milk and 

milk products and to clarify our 

meaning. 

Sections 205.236(a)(2)(viii) and (ix)— 

The final rule prohibits certified 

operations from sourcing transitioned 

animals after completing the one-time 

transition (§ 205.236(a)(2)), except in the 

case of variances granted by the 

Administrator (§ 205.236(d)). 

The proposed rule would have 

allowed transitioned animals to produce 

organic milk on any organic farm. In 

effect, this would have allowed certified 

operations to purchase transitioned 

animals for organic milk production. In 

2015, AMS received 989 comments in 

support of changing the final rule to ban 

the sale of transitioned animals between 

organic operations. Commenters 

included consumers, producers, 

certifying agents, producer groups, 

consumer groups, and trade 

associations. In 2019, AMS received 

additional comments that transitioned 

animals should not be sold to organic 

operations for organic milk production. 

AMS specifically sought comments on 

this topic in 2021, with most 

commenters in support of transitioned 

animals losing organic status if sold, 

transferred, given, or otherwise moved 

to another operation, or if included as 

part of a merger of organic operations in 

which ownership remains with the 

original certified operation but there is 

common management. A few 

commenters were opposed to limiting 

the movement or sale of transitioned 

animals under the one-time allowance, 

citing a potential burden on family 

farms, a lack of rationale for the 

prohibition, and a lack of oversight 

necessary to enforce this prohibition. 

Other commenters were concerned 

that by allowing sales of transitioned 

animals between operations, AMS’s rule 

would not effectively stop operations 

from continually acquiring transitioned 

animals. If organic operations could find 

loopholes to continue to produce 

transitioned animals, there would be a 

market for those transitioned animals. 

To prevent this activity, many 

commenters suggested that AMS 

prohibit the sale of transitioned animals 

between operations altogether. 

AMS considered different options to 

ensure the final rule is clear and 

enforceable. AMS determined that 

prohibiting certified operations from 

sourcing transitioned animals (with 

limited exceptions at § 205.236(d)) best 

supports the policy goal. This policy 

choice is consistent with public 

comments advocating for this rule. 

For example, based on public 

comments, academic literature, and the 

existing regulations, AMS believes that 

consumers expect that organic animals 

have not been treated with antibiotics; 

however, a transitioned cow producing 

organic milk may have been treated 

with antibiotics early in life, before the 

transition began.22 23 Beef labeled as 

organic must have been produced from 

an animal that had been organic for its 

whole life. It is reasonable to conclude 

that a consumer would prefer milk from 

cows (or goats, etc.) that had never been 

treated with antibiotics given that 

prohibition with other forms of 

livestock; while still allowing for the 

one-time transition allowed under 

OFPA. Another example is outdoor 

access; AMS believes that consumers 

generally prefer that organic animals 

have access to outdoors throughout their 

lives, as per the existing regulations; 

however, transitioned animals do not 

manifest a full life of these benefits.24

Constraining the movement of 

transitioned cows between operations is 

expected to decrease the overall number 

of transitioned animals industry-wide 

over time 

AMS removed § 205.236(a)(2)(viii) 

and (ix) and included the revised 

requirement at § 205.236(a)(2). Section 

205.236(a)(2) of this final rule specifies 

that once an eligible, newly-certified 

organic livestock operation completes 

the one-time minimum 12-month 

transition to organic, it may not source 

any transitioned animals. For additional 

discussion about sourcing animals, see 

OPERATION AS REGULATED ENTITY 

(§ 205.236(a)(2)). 

Certified organic dairy operations that 

purchase animals, individually or as an 

entire herd, may not purchase any 

transitioned animals for organic milk 

production beginning on the 

compliance date. Livestock must be 

under continuous organic management 

from the last third of gestation 

(§§ 205.236(a) and 205.236(a)(2)). The 

final rule does not limit certified organic 

dairy operations from purchasing 

animals that have been organically 

managed from the last third of gestation. 

Nor does the final rule prohibit 

operations from raising and selling 

organic replacement animals to certified 

dairy operations. Such animals must be 

organically managed from the last third 

of gestation to be sourced by organic 

operations (§§ 205.236(a) and 

205.236(a)(2)). 

AMS received a comment that some 

nonorganic dairies convert to organic 

production by purchasing certified 

organic dairy cows while transitioning 

nonorganic animals. A dairy may wish 

to do this to keep some of its own 

nonorganic animals (to transition) while 

generating income from the organic 

cows. The final rule requires that all 

transitioning animals complete the 

transition at the same time (i.e., at the 

end of a single 12-month period) at 

§ 205.236(a)(2)(vi). It also prohibits the 

sourcing of transitioned animals after 

the one-time transition is complete 

(§ 205.236(a)(2)), but it does not 

explicitly discuss sourcing of organic 

animals during the transition. AMS will 

allow certifiers to determine if a 

transitioning operation may source 

organic animals during the transition, as 

site-specific and other conditions will 

need to be evaluated to determine if an 

operation could comply with all 

requirements. For example, if an 

operation purchases lactating organic 

dairy animals during the transition 

period but also manages lactating 

transitioning animals, very specific 

practices would be required to keep 

nonorganic milk (from transitioning 

animals) segregated from organic milk 

until the transition period is complete. 

ii. Dairy Transition—Changes Requested 

But Not Made 

(1) Prohibit Transition Entirely 

(§ 205.236) 

AMS received many comments 

opposed to allowing any transition of 

nonorganic animals to organic 

production. Generally, the commenters 

thought any products labeled as organic 

should be organically managed from 

birth or from the last third of gestation 

and that any allowance for transitioning 

nonorganic animals is unwarranted. 

AMS has not prohibited transition 

altogether in the final rule. AMS 

believes that the one-time transition 

allowance provides an important and 

reasonable incentive for new dairies and 

existing nonorganic dairies to seek 

organic certification. Many currently 


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25See Audit Report 01601–03–Hy. 

26See AMS–NOP–11–0009–2799. 

certified organic dairy operations 

transitioned their operations to enter the 

organic market, and this final rule 

preserves the same opportunity for new 

and nonorganic operations pursuing 

organic certification. For additional 

analysis of alternatives, see the 

Regulatory Impact Analysis (RIA) 

below. 

(2) Allow Continuous Transition—Do 

Not Restrict to One-Time Event 

(§ 205.236) 

For additional discussion of this 

alternative regulatory approach, see the 

ALTERNATIVES CONSIDERED section 

of the Regulatory Impact Analysis (RIA) 

below. 

Several commenters felt that limiting 

producers to one transition was 

unnecessarily restrictive and would 

create undue hardship for organic dairy 

farmers. The commenters preferred that 

operations be allowed to transition 

animals into organic production without 

limit and thought 12 months of organic 

management was sufficient for sale of 

milk as ‘‘organic’’ under OFPA. They 

argued that allowing producers to 

transition animals without limit allows 

producers to respond quickly to 

consumer demand and to rebuild herds 

in the case of disease or illness. They 

also argued that the current demand for 

organic milk was evidence that 

consumers are satisfied by the current 

requirements. 

AMS is not allowing organic 

operations to continually transition 

nonorganic animals into organic 

production in the final rule. While an 

allowance to continually transition 

nonorganic animals would allow 

producers to adjust their herd size 

quickly by permitting the purchase of 

nonorganic animals to transition, such 

an allowance would also be likely to 

decrease the organic management of 

calves. This is because during the 

period of nonorganic management, 

producers would not be required to 

adhere to the feed, healthcare, or living 

condition requirements stipulated by 

the USDA organic regulations. Even if 

AMS were not to limit transition to a 

one-time event, as suggested by some 

comments, AMS would not expect all 

organic dairies to stop managing calves 

and young dairy stock organically. Some 

producers would likely continue to use 

the organic milk produced by their 

animals as feed for their offspring, while 

others might source nonorganic milk to 

reduce feed costs. AMS does not believe 

that all producers would adopt a 

consistent practice in response to the 

policy, and AMS could not assure 

consumers that organic dairy products 

are using common production standards 

which are consistent a key purpose of 

OFPA (7 U.S.C. 6501(2)). 

Furthermore, many organic 

stakeholders commented that the 

practice of taking animals out of organic 

production upon birth and restarting 

organic management one year prior to 

milk production (which is currently 

allowed by some certifying agents) is 

inconsistent with consumer 

expectations, and has led to 

inconsistencies in the implementation 

and oversight of the organic livestock 

rules. As discussed above, AMS 

explicitly made the policy choice to 

implement provisions that increase the 

number of animals managed as organic 

from the last third of gestation. 

Establishing national standards to 

govern the marketing of organically 

produced products is a key purpose of 

OFPA (7 U.S.C. 6501(1)). Further, based 

on public comments, AMS believes the 

policy choices in this rule align with 

practices that many certifiers and most 

organic operations already follow.25 26

(3) Prohibit Third-Year Transitional 

Feed During Transition 

(§ 205.236(a)(2)(vii)) 

Another comment received by AMS 

requested that third-year transitional 

crops not be allowed as feed during the 

transition period. The commenter 

pointed out that these crops cannot be 

fed to organic slaughter stock or fiberbearing animals and argued that the 

allowance for transitioning dairy stock 

to consume these feeds does not 

advance a consistent organic standard, 

as intended by OFPA. 

AMS recognizes that there are 

differences between the requirements 

for transitioning dairy animals and 

livestock used to produce organic meat 

and fiber products. AMS has not 

prohibited third-year transitional crops 

as feed during transition in the final 

rule, as the allowance to use third-year 

transitional crops eases the burden of 

transitioning for new dairy operations 

and is permitted by OFPA. 

(4) Prohibit Third-Year Transitional 

Feed for Offspring (§ 205.236(a)(2)(iii) 

and (iv) and (v) and (vi)) 

A commenter argued that AMS was 

expanding the allowance for third-year 

transitional crops by allowing offspring 

to consume this type of feed during the 

transition. They commented that OFPA 

does not allow offspring born to 

transitioning animals to be fed crops 

and forage in the third year of organic 

management. 

AMS disagrees that OFPA limits use 

of third-year transitional crops to any 

specific class or age of livestock during 

the transition. OFPA allows third-year 

transitional crops to be fed to dairy 

animals up to the end of the 12-month 

transition period. Dairy animals, 

regardless of the stage of production, are 

equally subject to these requirements. 

Restricting the use of third-year 

transitional crops for offspring would 

impose stricter requirements for 

offspring born during transition, even 

though these animals are managed 

organically for a longer period of time 

prior to production of organic milk. 

The final rule allows any transitioning 

animal to consume third-year 

transitional crops during the 12-month 

transition, including offspring born 

during the transition and young stock. 

Animals that consume third-year 

transitional crops during the transition 

period are transitioned animals, and 

animals born to transitioned animals 

that consumed third-year transitional 

crops during the last third of gestation 

are transitioned animals. Transitioned 

animals are not eligible to produce 

organic meat or fiber. In addition, 

transitioned dairy animals may not be 

sourced by certified organic dairies. 

(5) Require Milk for Offspring That Is 

Eligible for Sale as Organic 

(§ 205.236(a)) 

Some commenters pointed out that 

both the current organic regulations and 

the proposed rule allow milk to be fed 

to offspring in certain circumstances 

when the milk would not meet the 

requirements for sale as organic. They 

referred to § 205.237, which requires 

organically produced agricultural 

products in livestock feed rations and 

questioned how milk that does not 

qualify for sale as organic can be 

provided to offspring. For example, the 

organic regulations only require that 

breeder stock be managed organically 

starting no later than the last third of 

gestation. If nonorganic breeder stock 

are managed as organic only during the 

last third of gestation, the milk suckled 

by offspring at the time of birth would 

not qualify for sale as organic. 

Additionally, commenters also 

requested that AMS clarify if milk from 

nonorganic animals that has been 

managed organically during the last 

third of gestation can be provided to 

animals other than their own offspring. 

In the final rule, offspring born to 

animals that have been managed 

organically starting no later than the last 

third of gestation can be considered 

organic animals instead of transitioned 

animals. AMS has not imposed stricter 

requirements for dairy animals than 


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those that currently exist for slaughter 

stock or changed the requirements for 

slaughter stock, and organic slaughter 

stock may receive milk that could not 

itself be sold as organic. AMS 

recognizes that the allowance for 

feeding offspring milk that cannot itself 

be certified and sold as organic (for 

human consumption) may appear 

inconsistent. However, current organic 

regulations clearly allow animals to be 

certified organic if managed organically 

managed starting no later than the last 

third of gestation, without any 

prohibition on milk nursed from the 

nonorganic mothers by the offspring. 

The final rule does not change these 

requirements. 

In response to comments about 

whether milk from nonorganic breeder 

stock or transitioning animals may be 

provided to animals that are not an 

animal’s own offspring, if offspring are 

separated from their mothers after birth, 

as is common practice on dairy farms, 

milk that is pooled from a group of 

animals but is not comprised entirely of 

organic milk may not be provided to 

offspring. Milk from transitioning 

animals that is collected by the dairy 

farm and not consumed directly by the 

offspring may not be sold as organic. 

The final rule establishes limitations 

on offspring that have consumed milk 

from a transitioning mother that 

consume(d) third-year transitional crops 

during or after the last third of gestation. 

Calves are considered transitioned 

themselves when they or their mothers 

consume(d) third-year transitional crops 

during or after the last third of gestation. 

As transitioned animals, these offspring 

are not eligible for sale as organic 

slaughter stock and may not be sourced 

by organic dairies per § 205.236(a)(2). 

Conversely, mothers that have been 

organically managed starting no later 

than the last third of gestation and 

which are fed only organic feed during 

the last third of gestation (no third-year 

transitional crops) give birth to organic 

offspring (organically managed from the 

last third of gestation) with a status 

similar to that of organic slaughter stock 

born to nonorganic breeder stock. 

Organic animals organically managed 

from the last third of gestation may be 

sold between organic dairy farms and 

produce organic milk on any organic 

dairy farm. 

(6) Applying for Certification—Timeline 

(§ 205.236(a)(2)(ii)) 

AMS received comments about the 

proposed requirement for producers to 

submit an application for certification 

during the 12-month transition period, 

including a description of the transition. 

Several commenters requested that AMS 

revise the requirement so producers 

would be required to submit their 

application and describe the transition 

prior to starting the 12-month transition 

rather than during the 12-month 

transition. These commenters thought 

this would allow a certifying agent to 

oversee the entire transition, prevent 

potential infractions, and help ensure 

adequate recordkeeping and tracking of 

transitioning animals. 

Another commenter suggested that 

AMS require producers to apply for 

certification within 90 days before or 

after feeding dairy animals third-year 

transitional crops. Another commenter 

stated it was unclear if the proposed 

rule changed the existing rule in regard 

to the obligations and responsibilities of 

transitioning operations and certifying 

agents. Yet another commenter pointed 

out that the language in the proposed 

rule made it unclear if a producer could 

submit an application before the 

transition started. 

In the final rule, AMS has not 

required that producers submit an 

application prior to starting the 12- 

month transition. Operations that sell 

livestock or livestock products as 

organic, including milk, must be 

certified, with the exception of those 

operations described in § 205.101. 

While there are likely benefits to both 

producers and certifying agents when an 

application is submitted early in the 

transition to organic, the timing of the 

submission of an application does not 

dictate whether an operation meets the 

requirements for certification. Certifying 

agents are required to verify that 

producers comply with all provisions of 

the USDA organic regulations. 

Producers who choose to submit an 

application late in their transition may 

experience delays in obtaining 

certification until the certifying agent 

verifies that all provisions are 

compliant. The transitioning animals 

will continue to transition through this 

pre-certification period; product may 

not be sold or represented as organic 

without certification. 

Applications submitted prior to, or at 

any time during, the 12-month period 

are all subject to the same review 

criteria described in §§ 205.400–205.406 

of the current regulations. Certifying 

agents who are unable to verify an 

applicant is in compliance with the 

requirements must not grant 

certification. 

(7) Provide 18 Months for Transition 

(§ 205.236(a)(2)(vi)) 

Several commenters requested that 

producers be given more than a 12- 

month period to transition to organic. 

Extending the period of time from 12 

months to 18 months would allow a 

producer to add additional nonorganic 

animals to its operation for six months 

after the beginning of its transition, 

while still requiring each animal to be 

managed organically for no less than 12 

months immediately prior to production 

of milk to be sold, labeled, or 

represented as organic. Commenters 

stated that a longer period would help 

reduce the stress associated with 

starting a new dairy by allowing 

flexibility. Commenters stated that by 

allowing additional time, new 

producers would be able to use the 

additional time to source animals and 

stagger when animals start to transition 

to reduce the financial burden of 

transition. 

AMS understands that transitioning a 

dairy to organic can be financially and 

logistically challenging. However, AMS 

is maintaining, as proposed, the 12- 

month transition requirement. While 

AMS recognizes that a longer period for 

the transition would likely ease some of 

the challenges of transition, AMS finds 

a 12-month total allowance is still 

appropriate. AMS did not find broad 

support for this option in comments, 

and verification of compliance is 

simpler when animals are transitioned 

as one group. Under the final rule, 

producers are not prevented from 

sourcing animals for the transition over 

a period of time, but the group must 

transition together. For example, a farm 

could gradually acquire nonorganic 

animals for six months prior to starting 

the 12-month transition, begin the 

transition once all animals arrive on the 

farm, and then end the transition for all 

animals at the same time. Additionally, 

the regulations allow new operations 

and certified operations to purchase 

dairy animals at any time, provided they 

have been managed organically from the 

last third of gestation. 

(8) Do Not Limit Transition for Goat 

Operations (§ 205.236(a)(2)) 

AMS received a few comments 

regarding non-bovine animals (e.g., 

sheep or goats). Several commenters 

stated that the proposed rule would 

have a greater impact on goat operations 

than cattle operations, as there are fewer 

non-bovine dairy operations and 

sourcing organic replacements may be 

difficult. One commenter requested that 

AMS allow goat operations to 

continuously transition animals on 

existing operations. The commenter 

stated that goat producers are 

continually striving to improve their 

genetics and that, if limited to 

purchasing organic goats, the producers 

could not efficiently improve the 

genetics of the herd. The commenter 


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stated that under the rule, new genetics 

would need to be introduced by 

obtaining nonorganic bucks alone, 

rather than nonorganic does and bucks. 

AMS recognizes that the availability 

of organic (last third of gestation) nonbovine animals for sale is limited; 

however, AMS is not making an 

exception to the one-time transition for 

non-bovine operations in the final rule. 

AMS does not believe there is a 

difference in consumer expectations for 

these milks compared to organic cow 

milk. Given the policy choice, based an 

agency analysis and public comments, 

to increase the number of animals 

managed as organic from the last third 

of gestation, it is appropriate to require 

goats to meet the same requirements as 

cows. Additionally, as described below, 

producers may purchase nonorganic 

male breeder stock and nonorganic 

female breeder stock, at any time, for the 

production of organic offspring. Breeder 

stock that are not transitioned as part of 

the initial herd may not produce milk to 

be sold, labeled, or represented as 

organic. 

C. Breeder Stock (§ 205.236(a)(3)) 

This section of the final rule describes 

the provisions for bringing on breeder 

stock from a non-organic operation to an 

organic operation. The provision 

stipulates that breeder stock must be 

brought onto an operation by the last 

third of gestation and must be 

organically managed from the last third 

of gestation through the period in which 

the breeder stock is nursing its 

offspring. No changes were made to this 

section between the proposed 

regulations and the final rule. Below we 

describe the final rule and respond to 

comments received on the proposed 

rule. 

i. Breeder Stock—Changes Requested 

But Not Made 

(1) Require Organic Management of 

Breeder Stock (§ 205.236(a)(3)) 

In 2015, AMS received many 

comments that expressed opposition to 

allowing breeder stock to rotate in and 

out of organic management. 

Commenters generally requested that 

the final rule require uninterrupted 

organic management of breeder stock 

starting from the time they are brought 

onto an organic operation. Commenters 

requested that if the organic 

management of nonorganic breeder 

stock is interrupted, the breeder stock 

can no longer produce organic offspring. 

In 2019, AMS received additional 

comments that discussed this issue. As 

in 2015, comments predominantly 

supported modifying the current 

language in the proposed rule to 

stipulate that breeder stock can be 

transitioned only once to organic 

management. These commenters cited 

organic herd health and consistency 

with the language in OFPA as their 

principal factors. One commenter 

further referenced the OFPA provision 

related to breeder stock and argued that 

the proposed rule language allowing 

breeder stock to be transitioned from 

nonorganic to organic at any time is 

inconsistent with the intent of OFPA. 

One commenter noted that modifying 

the current language in the proposed 

rule stipulating breeder stock may be 

transitioned to organic management 

only once would be inconsistent with 

language in OFPA that states ‘‘any 

source.’’ This commenter recommended 

that these advocates work with Congress 

rather than the USDA to achieve these 

changes. 

AMS has not revised the requirements 

for breeder stock in the final rule. OFPA 

states that breeder stock may be 

purchased from any source (7 U.S.C. 

6509(b)); there is no requirement that 

the source be certified organic. Further, 

while the current regulations at 

§ 205.236(b)(1) clarify that organic 

livestock removed from organic 

operations lose their organic status, this 

provision does not extend to nonorganic 

breeder stock that are themselves not 

certified organic or eligible for 

slaughter, sale, or labeling as organic 

(§ 205.236(b)(2)). Therefore, AMS does 

not believe that restrictions on how 

nonorganic breeder stock are managed 

outside of the last third of gestation and 

after the weaning of organic offspring 

are warranted. 

However, AMS is establishing 

requirements for the management of 

nonorganic breeder stock during the last 

third of gestation and while an organic 

offspring is consuming milk from the 

nonorganic breeder stock after birth. 

Additionally, a producer must continue 

to prevent commingling of organic and 

nonorganic products and prevent 

contact of any organic production or 

products with prohibited substances (7 

CFR 205.201(a)(5)). 

(2) Change Regulatory Text From 

‘‘Brought’’ To ‘‘Purchase’’ 

(§ 205.236(a)(3)) 

Several comments requested that 

AMS change the language at 

§ 205.236(a)(3) to only allow organic 

operations to ‘‘purchase’’ nonorganic 

breeder stock rather than allow breeder 

stock to be ‘‘brought’’ onto organic 

operations, as currently allowed. 

Commenters pointed out that OFPA 

language allows for organic operations 

to purchase nonorganic breeder stock 

and that this implies the breeder stock 

are to be managed organically following 

purchase. By changing the language to 

align with OFPA, the commenters argue 

breeder stock would no longer go in and 

out of organic management while 

managed at the operation. 

AMS is not convinced that changing 

the regulations to allow purchase of 

nonorganic breeder stock at any time 

would be significantly different than the 

current regulation. Furthermore, as 

nonorganic animals, breeder stock are 

not regulated under USDA organic 

regulations, except during the last third 

of gestation when producing organic 

offspring and/or nursing their organic 

offspring. 

(3) Require One Year of Organic 

Management Prior To Allowing Calves 

To Consume Milk (§ 205.236) 

See discussion above in Dairy 

Transition—Changes Requested but Not 

Made, titled ‘‘Require Milk for Offspring 

that is Eligible for Sale as Organic’’. 

(4) Allow Milk Suckled by Animals 

Other Than Own Calf (§ 205.236) 

See discussion above in Dairy 

Transition—Changes Requested but Not 

Made, titled ‘‘Require Milk for Offspring 

that is Eligible for Sale as Organic.’’ 

(5) Clarify the Status of Male Animals 

for Breeding (§ 205.236(a)(2)(ix)) 

Some commenters noted that the 

wording of proposed § 205.236(a)(2)(ix) 

implies that male animals cannot be 

brought onto an organic operation for 

breeding purposes. They proposed 

including language affirming that male 

breeder stock may be used at any time 

and won’t be required to be managed 

organically. 

AMS has not made any changes and 

points out that this section describes 

requirements for dairy animals used 

‘‘for organic milk production,’’ which 

do not include male animals. Breeder 

stock are defined at § 205.2 as female 

livestock. The use of nonorganic male 

animals for breeding purposes is not 

restricted by this section or by other 

sections of the organic regulations. 

D. Prohibitions (§ 205.236(b)) 

This section of the final rule 

stipulates that product from animals 

from removed from organic management 

to a nonorganic operation cannot be 

sold as organic and breeder stock and 

transitioned animals not under 

continuous management since the last 

third of gestation may not be sold, 

labeled, or represented as organic 

slaughter stock. Below we describe the 

final rule and respond to comments 

received on the proposed rule. 


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27Approved January 21, 2021. 

i. Prohibitions—Comments and 

Revisions 

Section 205.236(b)(1)—A commenter 

thought AMS should specify in this 

section that handling organic livestock 

products at a nonorganic operation 

affects the organic status of products, as 

the term AMS used (‘‘managed’’) does 

not apply well to edible and nonedible 

products. The commenter suggested that 

‘‘managed’’ be changed to ‘‘managed or 

handled’’. 

AMS agrees that the term ‘‘managed’’ 

is better used to describe activities 

related to livestock production than it is 

suited to describe activities (e.g., 

processing) related to livestock 

products. In the final rule, AMS has 

removed the reference to livestock 

products from this section after 

concluding that it is not necessary to 

discuss livestock products in this 

section. Requirements related to the 

handling, processing, and labeling of 

organic products are covered at length 

and in detail under other sections of the 

USDA organic regulations. Other 

sections of the regulations also address 

the types of operations that must be 

certified organic, and AMS is preparing 

a separate final rule to clarify 

requirements for operations that handle 

organic products and to clarify which 

operations are exempt from the 

requirements of certification (see 

proposed rule at 85 FR 47536). 

Section 205.236(b)(2)—AMS revised 

the proposed term ‘‘dairy stock’’ to 

‘‘dairy animals’’ in the final rule to be 

consistent with language used 

throughout § 205.236(a). 

E. Records (§ 205.236(c)) 

Section 205.236(c) amends the current 

regulations to specifically require that 

an operation’s records identify whether 

dairy animals were transitioned to 

organic. These records are required for 

certifiers to verify compliance, as 

organic operations may not source 

transitioned animals after their one-time 

transition is complete (§ 205.236(a)(2)). 

Additionally, transitioned animals may 

not be represented as organic slaughter 

stock. These requirements support the 

livestock recordkeeping requirements 

described in OFPA (7 U.S.C. 6509(f)) 

and the USDA organic regulations at 7 

CFR 205.103. No changes were made to 

this section between the proposed rule 

and the final rule. 

F. Administrator Variances for 

Movement of Transitioned Animals 

(§ 205.236(d)) 

This added section of the final rule 

includes provisions to allow for 

movement of transitioned animals in 

certain situations. See discussion above 

in ‘‘DAIRY TRANSITION 

(§ 205.236(a)(2)).’’ 

G. Livestock Feed (§ 205.237(a)) 

This section of the final rule includes 

a revision to the livestock feed 

requirements. Below we describe the 

final rule and changes from the 

proposed rule. 

i. Livestock Feed—Revisions 

In the final rule, § 205.237(a) was 

revised to include a reference to 

§ 205.236(a)(3), which allows offspring 

to consume milk from nonorganic 

breeder stock. The reference to these 

requirements is made here to recognize 

that milk from breeder stock is not 

necessarily certified organic. Section 

205.236(a)(3) requires operations to 

provide breeder stock with organic feed 

throughout the last third of gestation 

and during the lactation period, during 

which time they may nurse their own 

offspring. The reference to these 

requirements in § 205.237(a) is intended 

to provide a more complete description 

of the livestock feed requirements. The 

update to this section does not permit 

the feeding of milk from breeder stock 

to organic animals other than the 

breeder stock’s offspring. 

H. Other Amendments Considered 

i. Other Amendments Considered— 

Changes Requested But Not Made 

(1) Fiber Producing Animals 

(§ 205.236(b)(2)) 

AMS received several comments 

about the sections of the proposed rule 

that include information about fiberproducing animals. Some commenters 

argued that the rule should be revised 

to allow a one-time transition for fiberbearing animals. One comment noted 

that recent changes to organic 

regulations align dairy and fiber animals 

in other areas, such as parasiticide use, 

and so the rule for transitioning of dairy 

animals should be the same for fiberbearing animals. They also stated that 

this revision would be consistent with 

other organic livestock fiber standards 

around the world and excluding it 

would put United States producers at a 

global economic disadvantage. 

AMS did not propose an allowance 

for transition of fiber animals in the 

proposed rule, so AMS is not creating 

an allowance for the transition of fiber 

animals in the final rule. An allowance 

to transition fiber animals could require 

amendment of OFPA, which authorizes 

a transition for dairy animals only. This 

means that producers can transition 

sheep, for example, from nonorganic 

milk production to organic milk 

production, but would need to source 

animals organically managed beginning 

at the last third of gestation in order to 

produce organic wool. 

V. Related Documents 

Documents related to this final rule 

include the Organic Foods Production 

Act of 1990, as amended, (7 U.S.C. 

6501–6524) and its implementing 

regulations (7 CFR part 205). AMS 

published a series of proposed rules that 

addressed, in part, the origin of 

livestock provisions at: (1) 62 FR 65850, 

December 16, 1997; (2) 65 FR 13511, 

March 13, 2000; and (3) 71 FR 24820, 

April 27, 2006. Past final rules relevant 

to this topic were published at: (1) 65 

FR 80548, December 21, 2000; and (2) 

71 FR 32803, June 7, 2006. 

The NOSB deliberated and made the 

recommendations described in this final 

rule at public meetings announced in 

the following Federal Register notices: 

67 FR 19375, May 7, 2002; 67 FR 54784, 

September 17, 2002; 67 FR 62949, 

October 19, 2002; and 68 FR 23277, May 

13, 2003. AMS also considered NOSB 

recommendations from June 2, 1994, 

and March 20, 1998, in the development 

of this final rule. NOSB meetings are 

open to the public and allow for public 

participation. NOSB recommendations 

are available on the AMS website. 

Paperwork Reduction Act 

This final rule is clarifying current 

requirements pertaining to 

documenting, reporting, and 

recordkeeping for organic dairies and no 

additional collection or recordkeeping 

requirements are being imposed. In 

addition, AMS is prohibiting the 

sourcing of transitioned animals in 

§ 205.236(a)(2) that would have allowed 

transitioned animals to move between 

organic operations in response to public 

comment on the proposed rule. 

However, certified operations may 

request a temporary variance from the 

prohibition on the movement of 

transitioned animals for specific 

circumstances, now described in 

§ 205.236(d). The paperwork burden in 

the currently-approved OMB ICR# 

0581–0191 27 includes the time and 

costs to comply with existing organic 

system plan requirements and 

recordkeeping requirements, and more 

than accounts for any burden associated 

with requesting temporary variances 

even with the expanded criteria at 

§ 205.236(d). 

Currently, temporary variances as 

described at § 205.290 are calculated at 

10% or 4,628 of 46,277 total 


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28Total number of currently certified organic 

operations from Organic Integrity Database, August 

7, 2019, https://organic.ams.usda.gov/Integrity. 

29 Variance requests can be viewed by the public 

at: https://www.ams.usda.gov/rules-regulations/ 

organic. 

30Applies only to certified organic ruminant 

livestock producers located in counties designated 

as primary or contiguous natural disaster areas by 

Secretary Vilsack. The list of declared State 

counties is available on USDA’s website for Disaster 

Designation Information. 

operations 28 at one hour for each 

variance for a total of 4,628 hours 

annually. Yet, there were only 10 actual 

temporary variances requested in 

2021 29 although 2 requests covered 

certified organic ruminant operations in 

counties impacted by extreme drought 

that were declared disaster areas.30 If we 

calculated 2021 as impacting 25 

operations, this would amount to a total 

of 25 hours of impact. This still leaves 

a very large annual margin of 4,603 

hours under the current information 

collection for all types of temporary 

variances. Actual previous 10 years of 

requests for temporary variances 

averaged about 2–7 requests per year. If 

all 3,134 currently certified organic 

dairy producers request a temporary 

variance under the expanded criteria 

described in § 205.236(d), there would 

still be very large margin of 1,469 

burden hours. 

AMS recognizes that the burden for 

temporary variances will need to be 

restructured. AMS will prepare an 

information collection package for this 

additional burden and will ultimately 

merge impacts from this final rule into 

OMB ICR# 0581–0191. The process for 

updating the NOP’s overall program ICR 

will begin in January 2023, and will 

allow an opportunity to merge the 

burden from any other final rules with 

optimal efficiency. 

Civil Rights Review 

AMS has reviewed this final rule in 

accordance with the Department 

Regulation 4300–4, Civil Rights Impact 

Analysis, to address any major civil 

rights impacts the final rule might have 

on minorities, women, and persons with 

disabilities. AMS has determined that 

there is evidence of an adverse impact 

to males, females, Hispanics, Whites, 

Black/African Americans, Asian 

Americans, and Native Hawaiians based 

on an 80 percent analysis for farms 

reporting 50 percent or more from 

organic sales; the impact rate for 

American Indians/Alaskan Native does 

not meet the condition for adverse 

impact. There are no data for a baseline 

comparison for all organic dairy 

producers. 

AMS is not aware of any data 

indicating organic dairy operations 

owned by members of protected groups 

are more likely to continually source 

transitioned animals. While AMS does 

not have specific race, ethnicity, or 

gender data regarding organic livestock 

producers, the rule would not alter the 

ability for producers of any race, color, 

national origin, gender, religion, age, 

disability political beliefs, sexual 

orientation, or marital or family status to 

participate in the National Organic 

Program or change their protections 

from discrimination. 

The Agency has concluded that the 

final rule will impact organic dairy 

producers by potentially increasing 

production costs for: (1) Organic 

livestock and dairies that currently 

continually transition nonorganic 

animals for use on their operation or 

sale; (2) organic dairies that currently 

source transitioned dairy animals as 

replacements; and (3) organic dairies 

that purchase organic replacement 

animals (as increased demand could 

increase prices). To mitigate these 

impacts, AMS is providing organic 

producers one year from publication of 

the final rule to complete any ongoing 

transitions. Additionally, any organic 

operations selling organic replacement 

heifers may benefit from higher prices. 

Executive Order 13175 

This final rule has been reviewed in 

accordance with the requirements of 

Executive Order 13175, ‘‘Consultation 

and Coordination with Indian Tribal 

Governments.’’ Executive Order 13175 

requires Federal agencies to consult and 

coordinate with tribes on a governmentto-government basis on policies that 

have tribal implications, including 

regulations, legislative comments or 

proposed legislation, and other policy 

statements or actions that have 

substantial direct effects on one or more 

Indian tribes, on the relationship 

between the Federal Government and 

Indian tribes, or on the distribution of 

power and responsibilities between the 

Federal Government and Indian tribes. 

AMS has assessed the impact of this 

rule on Indian tribes and determined 

that this rule would not, to our 

knowledge, have tribal implications that 

require consultation under E.O. 13175. 

In a December 2019 AMS Quarterly 

Tribal Listening Session, AMS provided 

an overview of this final rule and 

invited any requests for concerns or 

consultation. AMS received no 

questions or comments during the 

listening session. AMS has also 

researched its database of certified 

organic dairies operating under Tribal 

Government and found no such 

operations. 

Executive Orders 12866 and 13563 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives, and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, 

reducing costs, harmonizing rules, and 

promoting flexibility. AMS has prepared 

the RIA with the purpose of 

accomplishing these objectives. 

The Regulatory Flexibility Act (5 

U.S.C. 601–612) requires agencies to 

consider the economic impact of each 

rule on small entities and evaluate 

alternatives that would accomplish the 

objectives of the rule without unduly 

burdening small entities or erecting 

barriers that would restrict their ability 

to compete in the market. 

Congressional Review Act 

Pursuant to the Congressional Review 

Act (5 U.S.C. 801 et seq.), the Office of 

Information and Regulatory Affairs 

designated this rule as not a major rule, 

as defined by 5 U.S.C. 804(2). 

Executive Order 12988 

Executive Order 12988 instructs each 

executive agency to adhere to certain 

requirements in the development of new 

and revised regulations in order to avoid 

unduly burdening the court system. 

This final rule is not intended to have 

a retroactive effect. 

To prevent duplicative regulation, 

states and local jurisdictions are 

preempted under OFPA from creating 

programs of accreditation for private 

persons or State officials who want to 

become certifying agents of organic 

farms or handling operations. A 

governing State official would have to 

apply to USDA to be accredited as a 

certifying agent, as described in section 

6514(b) of OFPA. States are also 

preempted under sections 6503 and 

6507 of OFPA from creating certification 

programs to certify organic farms or 

handling operations unless the State 

programs have been submitted to, and 

approved by, the Secretary as meeting 

the requirements of OFPA. 

Pursuant to section 6507 of OFPA, a 

State organic certification program may 

contain additional requirements for the 

production and handling of organically 

produced agricultural products that are 

produced in the State and for the 

certification of organic farm and 

handling operations located within the 


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31The July 2013 OIG audit report on organic milk 

operations may be accessed at the following 

website: http://www.usda.gov/oig/webdocs/01601- 

0002-32.pdf. 32Caswell, Julie A. and Eliza M. Mojduszka. 1996. 

‘‘Using Informational Labeling to Influence the 

Market for Quality in Food Products.’’ American 

Journal of Agricultural Economics. Vol. 78, No. 5: 

1248–1253. 33Zorn, Alexander, Christian Lippert, and 

Stephan Dabbert. 2009. ‘‘Economic Concepts of 

Organic Certification.’’ Deliverable 5 of the EU FP7 

CERTCOST Project: Economic Analysis of 

Certification Systems in Organic Food and Farming. 

34Michael Darby and Edi Karni, ‘‘Free 

Competition and the Optimal Amount of Fraud’’ 

Journal of Law and Economics 16(1973)1:67–88 

35Lassoued, R. and J.E. Hobbs (2015) ‘‘Consumer 

Confidence in Credence Attributes: The Role of 

Brand Trust’’ Food Policy 52:99–107. 

State under certain circumstances. Such 

additional requirements must: (a) 

Further the purposes of OFPA, (b) not 

be inconsistent with OFPA, (c) not be 

discriminatory toward agricultural 

commodities organically produced in 

other States, and (d) not be effective 

until approved by the Secretary. 

In addition, pursuant to section 

6519(c)(6) of OFPA, this final rule does 

not supersede or alter the authority of 

the Secretary under the Federal Meat 

Inspection Act (21 U.S.C. 601 et seq.), 

the Poultry Products Inspection Act (21 

U.S.C. 451 et seq.), or the Egg Products 

Inspection Act (21 U.S.C. 1031 et seq.), 

concerning meat, poultry, and egg 

products, nor any of the authorities of 

the Secretary of Health and Human 

Services under the Federal Food, Drug 

and Cosmetic Act (21 U.S.C. 301 et 

seq.), nor the authority of the 

Administrator of the EPA under the 

Federal Insecticide, Fungicide and 

Rodenticide Act (7 U.S.C. 136 et seq.). 

Regulatory Impact Analysis and 

Regulatory Flexibility Analysis 

AMS is taking this action to set origin 

of livestock production practice 

standards for organic dairy animals, 

reduce variance between the approaches 

taken by certifying agents, and increase 

the share of organic dairy animals that 

are under organic management for their 

entire lives. AMS updated the analysis 

from the proposed rule (84 FR 52041) 

using the most recent information about 

the dairy market, including the number 

of certified organic operations and the 

number of organic dairy animals. 

Updating information with NASS 

Organic Survey data from 2019 revises 

the estimated costs of the final rule to 

$615,000–$1,845,000. Below public 

comments on previously published 

regulatory analyses are also discussed. 

Need for the Rule 

AMS determined that the USDA 

organic regulations for sourcing dairy 

animals and managing breeder stock 

require additional specificity to ensure 

organic dairy operations meet a 

consistent standard. AMS’s revisions of 

the requirements support two purposes 

of OFPA (7 U.S.C. 6501): To establish a 

national standard for organically 

produced products and to assure 

consumers that organically produced 

products meet a consistent standard. 

Interpretations of the ‘‘origin of 

livestock’’ organic regulations have 

differed between certifying agents, and 

the different interpretations have led to 

divergent practices by organic dairy 

operations for sourcing replacement 

dairy animals. These inconsistencies 

have contributed to confusion among 

organic dairy producers about what the 

regulations require. The inconsistencies 

have produced an unequal situation in 

which production costs are influenced 

by any given certifier’s interpretation of 

the organic livestock regulations. 

However, a certifier is not likely to 

publish its interpretation of the existing 

regulations, and a certifier may not even 

apply its interpretation consistently 

among the operations it certifies (some 

may be allowed to continually transition 

animals while others are not). 

AMS is revising the regulations to 

ensure the USDA organic regulations are 

administered and enforced in a clear 

and uniform manner, and to address 

inconsistencies determined in the 2013 

USDA Office of Inspector General (OIG) 

Audit.31 The OIG audit of organic milk 

operations found that the interpretation 

and implementation of the origin of 

livestock requirements differed across 

producers and certifying agents. As a 

result, organic milk producers may have 

faced materially different organic 

production requirements based on their 

particular certifier’s interpretation of the 

NOP’s origin of livestock requirements. 

This rulemaking will help ensure that 

producers face consistent application of 

the organic standards. Furthermore, 

AMS expects that increased clarity will 

help assure consumers that organic 

dairy products meet a consistent 

standard, a stated purpose of the 

Organic Foods Production Act (OFPA) 

of 1990 (7 U.S.C. 6501). NOP’s 

experience is that because organic 

products cannot be readily 

distinguished from nonorganic products 

based on sight inspection, buyers rely 

on process verification methods to 

ensure that organic claims are true. 

Within the economics literature, organic 

food products are ‘‘credence goods,’’ or 

goods with characteristics that are 

valuable but are difficult to verify, both 

before and after purchase.32 33 34 Foods 

certified under USDA’s NOP, including 

milk, have a common standard that 

specifies production practices, such as 

dairy herd pasture requirements, 

permitted feeds, and permitted use of 

antibiotics and hormones, that cannot 

be independently verified by 

consumers. 

When producing goods with credence 

characteristics, producers face a moral 

hazard problem stemming from their 

incentive to forego taking costly actions 

or investments associated with the label 

claim if handlers or consumers have no 

way of verifying the production process 

(i.e., asymmetric information). In 

providing guidance to Federal agencies 

undertaking rulemaking, OMB Circular 

A–4 cites asymmetric information as a 

source of market failure and as a 

potential justification for regulation. 

However, the social benefit of 

addressing an information asymmetry 

can be no higher than the willingness to 

pay for the additional information by 

the party with less information. 

Lassoued and Hobbs (2015) further 

emphasize the role of trust in the 

institutions and brands that verify 

credence good attributes as being 

essential for developing the consumer 

confidence that drives brand loyalty.35

AMS developed the final rule in the 

context of maintaining consistency and 

trust in the USDA organic label as 

directed by OFPA, as it pertains 

specifically to organic dairy farms and 

to organic farms and organic handlers/ 

processors generally. AMS anticipates 

this final rule will support both 

producer and consumer confidence in 

the organic label by reducing major 

inconsistencies in production practices 

across organic dairies, and resulting in 

more organic animals that are managed 

organically throughout their productive 

lives. 

Baseline 

This rule specifies the conditions 

under which operations can transition 

non-organic animals to organic for the 

purpose of milk production. Current 

dairy production and husbandry 

practices provide important context for 

the baseline and cost analysis. For a 

general description of replacement 

animal production, see ‘‘Overview of 

Organic Dairy Production’’ in section II. 

Background above. 

The baseline presented below focuses 

on production practices of bovine dairy 

farms maintaining cows and heifers and 

does not include quantitative estimates 

for non-bovine dairy farms that 

maintain sheep and goats. AMS does 

not expect this rule will have a 

substantial economic impact on those 

specific sub-sectors for the following 

reasons: Goat does and sheep ewes are 


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36Certifying agents are required to send 

information on certified operations to AMS 

annually. Current and historical data may be 

accessed through the Organic Integrity Database at 

the following link: https://organic.ams.usda.gov/ 

Integrity/. Accessed 11/21/2019. 

37The ERS ARMS survey information may be 

found at the following link: http://

www.ers.usda.gov/data-products/arms-farmfinancial-and-crop-production-practices.aspx. 

38The USDA NASS surveys may be found at the 

following link: https://www.nass.usda.gov/Surveys/ 

Guide_to_NASS_Surveys/Organic_Production/. 39OTA/Nutrition Business Journal, 2021 Organic 

Industry Survey. Nutrition Business Journal 

conducted a survey between January 13 and April 

23, 2021, to obtain information for their estimates. 

Over 120 organic firms responded to the survey. 

Available online at https://ota.com/resources. 

40The 2014 Dairy NAAHMS report may be found 

at the following link: http://go.usa.gov/xKfEh. 

41Current and historical data may be accessed 

through the Organic Integrity Database at the 

following link: https://organic.ams.usda.gov/ 

Integrity/. 

42Organic Trade Association (OTA)/Nutrition 

Business Journal, 2021 Organic Industry Survey 

(pp. 3). 

43National Retail Report—Conventional vs 

Organic—https://usda.library.cornell.edu/concern/ 

publications/000000043?locale=en. 

able to produce milk earlier than cows, 

so the potential cost-savings for nonbovine dairy farms to continually source 

transitioned animals (vs. animals under 

organic management from the last third 

of gestation) is small compared to that 

for bovine dairy farms. For this reason, 

the practice of continually adding 

transitioned animals to organic nonbovine herds is likely less prevalent 

than with organic bovine herds. While 

a commenter asked for an exemption for 

goats during the comment period citing 

limited availability of organic genetics, 

there are avenues to bring in additional 

genetics through breeding stock. These 

operations also make up a relatively 

small portion of the organic dairy 

industry. The Organic Integrity 

Database 36 of certified organic 

operations includes approximately 56 

dairy goat operations and 2 dairy sheep 

operations. 

AMS used multiple data sources to 

describe the baseline and build 

quantitative estimates. The first source 

is the Agricultural Resource 

Management Survey (ARMS), which is 

maintained by USDA’s Economic 

Research Service (ERS) and includes 

questions about dairy farm cattle 

purchases, restocking rates, and organic 

status.37 In 2016, ERS conducted a 

supplemental ARMS that focused on 

organic dairy operations; this was the 

most recent such survey. AMS worked 

with ERS to analyze the ARMS data and 

develop an estimation of organic dairy 

production practices and costs for this 

rule. 

Other sources of data are the National 

Agricultural Statistics Service’s (NASS) 

2019 Certified Organic Production 

Survey and 2017 Census of 

Agriculture,38 which include State-level 

data on production, herd sizes, output, 

and sales for organic and non-organic 

crops and livestock. Additionally, the 

Organic Trade Association’s (OTA) 2021 

Organic Industry Survey is used to 

summarize market information and 

trends within the organic industry.39

Also, AMS requested an organic dairy 

farm special tabulation from the 

National Animal Health Monitoring 

System (NAHMS) Dairy 2014 report 

collected by USDA’s Animal and Plant 

Health Inspection Service.40

A final source of data is the AMS list 

of all certified operations included in 

the Organic Integrity Database (OID). 

The organic regulations require USDAaccredited certifying agents to keep 

track of the number of operations they 

certify in OID (7 CFR 205.501(a)(15)(ii)). 

AMS consolidates this information into 

a public, searchable online database.41

AMS used information from this 

database to cross-check NASS data on 

the number of organic dairy operations. 

The Organic Dairy Market—Sales and 

Number of Operations 

According to the OTA Industry 

Survey, U.S. organic food, fiber, and 

agricultural product sales were over 

$61.9 billion in 2020.42 Organic dairy 

and eggs is the third largest sector in 

organic retail food sales (13 percent), 

after fruits and vegetables (36 percent) 

and beverages (14 percent). Sales of 

organic dairy products, including milk, 

cream, yogurt, cheese, butter, cottage 

cheese, sour cream, and ice cream, 

exceeded $7.4 billion in 2020. Table 2 

shows the organic dairy market 

characteristics by subcategory. 

TABLE 2—ORGANIC DAIRY MARKET—RETAIL SALES BY SUBCATEGORY

Subcategory 2020 Sales 

($ M) 

2020 Growth 

(%) 

% of organic 

dairy sales a

Avg. premium b

(%) 

Organic 

premium 

($ M) 

Milk/Cream ......................................................................... $3,770 11.1 59.2 68 $1,527 

Yogurt d .............................................................................. 1,310 3.9 20.6 30 304 

Cheese e ............................................................................. 653 14.3 10.3 73 276 

Butter/Cottage Cheese/Sour Cream d ................................ 492 15.8 7.7 72 207 

Ice Cream e ........................................................................ 142 19.5 2.2 65 56 

Total ............................................................................ 6,367 10.5 100.0 61 2,370 

aThe Organic Trade Association’s 2021 Organic Industry Survey (p. 67) included eggs as a subcategory for its summary on organic dairy 

sales, but we have excluded the data on eggs from this table. b USDA’s AMS weekly reported prices in the 2020 weekly dairy retail report based on the first weekly report in January, April, July, and October. These reports are available at: https://www.ams.usda.gov/market-news/dairy. Average prices of product categories are averages across the 

four periods weighted by store counts. Premiums are calculated as the: ((Organic Price¥Conventional Price)/Conventional Price). Any missing 

data was supplemented by the previous weeks prices, if available. cThe dollar value of the organic premium for each category is: (Organic Sales × Premium)/(1 + Premium). dThe yogurt and butter, sour cream and cottage cheese premiums are respectively the average of the premiums of 32 oz. yogurt products and 

1 lb. of butter, weighted by counts of stores advertising organic products. Cheese premiums are for natural varieties in 8 oz. blocks. ePrice data for organic Ice Cream was only available the first quarter. The premium is calculated with only this data. 

Table 2 also includes premiums (or 

‘‘markups’’) in the prices of dairy 

products marketed as organic versus 

nonorganic products. For dairy 

products, the average organic premium 

was 61 percent and totaled nearly $2.4 

billion in value.43 In market 

equilibrium, this markup reflects both 

the higher costs of organic production 

and the value consumers place on 

organically labeled products and their 

various attributes. 

The 2019 NASS Organic Production 

Survey estimated that U.S. had 

approximately 3,134 certified and 

exempt organic dairy farms that milked 


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44USDA NASS. 2017. Census of Agriculture— 

2019 Certified Organic Survey. Available online at: 

https://www.nass.usda.gov/Surveys/Guide_to_

NASS_Surveys/Organic_Production/. 

45The Organic Integrity Database is available 

online at: https://organic.ams.usda.gov/Integrity/. 

AMS identifed approximately 3,180 bovine dairy 

operations in the database, as of January 2020. 

46USDA’s Milk Production (December 2020) 

Report available online at: https://downloads.usda.

library.cornell.edu/usda-esmis/files/h989r321c/ 

q524kf13h/ws85b748b/mkpr1220.pdf. 

47USDA’s Certified Organic Production Survey 

available online at: https://www.nass.usda.gov/ 

Surveys/Guide_to_NASS_Surveys/Organic_

Production/. 

48USDA APHIS. NAHMS Dairy, 2007, Part I: 

Reference of Dairy Cattle Health and Management 

Practices in the United States, 2007. This survey 

included both nonorganic and organic dairy 

animals. Available online at: http://go.usa.gov/ 

xKfEh. 

49USDA APHIS. NAHMS Dairy 2007, 84. 

50USDA APHIS. NAHMS Dairy 2007, 87. 

a peak of 363,404 cows in 2019.44 These 

organic dairy farms had milk sales of 

nearly $1.6 billion in 2019. Total 

organic milk production in the United 

States increased to 5.1 billion pounds in 

2019, representing a 27 percent increase 

in production from 2016 and 84 percent 

increase since 2011. In that same time 

frame, the number of certified organic 

farms grew 22 percent over 2016 (2,559 

farms in 2016) and grew 70 percent 

compared to 2011 (1,848 farms in 2011). 

AMS used the 2019 NASS data for our 

analysis, as it is consistent with data 

from the Organic Integrity Database 45

and also includes data on the number of 

organic dairy cattle maintained by 

certified operations. The Organic 

Integrity Database does not include data 

on the number of organic animals 

managed by organic operations. 

Organic Dairy Farms—Characteristics 

and Distribution 

Organic dairy farms are, on average, 

smaller than conventional dairy farms. 

NASS’s Certified Organic Surveys 

Agriculture (not conducted on an 

annual or regular basis) show that the 

number of milk cows owned by organic 

dairy farms averaged 108 head in 2011, 

105 head in 2016, and 108 head in 2019. 

In contrast, NASS’s Census of 

Agriculture (conducted in every five 

years) showed the number of milk cows 

for conventional dairy farms averaged 

144 head in 2012 and 175 head in 2017. 

Organic dairy farms also have lower 

yields, on average, than conventional 

dairy farms. The 2019 NASS Organic 

Production Survey showed that each 

organic cow produces about 14,096 

pounds of milk annually, or 47 pounds 

per day over a 300-day lactation period. 

NASS production data for 2019 shows 

that across all operations (conventional 

and organic) average production is 

23,391 pounds of milk per animal 

annually, or 78 pounds per day over the 

same 300-day period.46 Despite lower 

yields, organic dairy farms can be 

economically viable through the price 

markups they receive over conventional 

milk and milk products. Table 2 shows 

that the average premium for organic 

dairy products averaged 61 percent at 

the retail level. 

Based on the 2019 NASS Survey of 

Organic Production Data, Table 3 shows 

that the highest concentration of organic 

dairy farms is in the Northeast and 

Upper Midwest regions,47 however the 

large, organic dairy farms in California 

and Texas represent a large share of 

output. The five States with the largest 

number of certified organic dairy farms 

(Wisconsin, Pennsylvania, New York, 

Ohio, and Indiana) accounted for 64.5 

percent of total farms. However, those 

States represented less than 25.7 percent 

of national organic milk production. 

By contrast, the West and South 

Central regions accounted for the 

highest milk production per farm. The 

two highest organic milk producing 

States (California and Texas) 

represented only 5.13 percent of total 

certified organic dairy farms, while 

producing 33.4 percent of the total 

organic milk nationally. The survey also 

indicates significant regional differences 

in the average number of milk cows on 

dairy farms. For example, California 

dairies average 372 head per farm, Texas 

dairies average 4,647 head per farm, and 

Wisconsin dairies average 60 head per 

farm. ARMS and NAHMS data show 

similar patterns of size difference across 

regions. 

TABLE 3—TOP STATES WITH ORGANIC DAIRY FARMS COMPARED TO PRODUCTION (2019) 

Number of organic 

dairy farms 

Percent of U.S. 

organic dairy 

farms 

Milk production 

(pounds) 

Percent of U.S. 

milk production 

United States ........................................................................... 3,134 100 5,122,684,816 100 

California ........................................................................... 150 4.79 889,290,462 17.36 

Texas ................................................................................ 9 0.29 821,868,224 16.04 

Wisconsin ......................................................................... 525 16.75 440,963,146 8.61 

Oregon .............................................................................. 40 1.28 321,420,989 6.27 

New York .......................................................................... 607 19.37 386,732,234 7.55 

Pennsylvania .................................................................... 362 11.55 215,797,929 4.21 

Vermont ............................................................................ 172 5.49 202,401,003 3.95 

Washington ....................................................................... 45 1.44 136,897,016 2.67 

Minnesota ......................................................................... 125 3.99 138,891,803 2.71 

Ohio .................................................................................. 260 8.30 128,388,287 2.51 

Idaho ................................................................................. 29 0.93 364,524,076 7.12 

Indiana .............................................................................. 246 7.85 142,678,892 2.79 

Michigan ........................................................................... 93 2.97 66,684,699 1.30 

Iowa .................................................................................. 105 3.35 70,705,742 1.38 

Maine ................................................................................ 88 2.81 61,387,355 1.20 

The Organic Dairy Market— 

Replacement Animals 

Cull and Mortality Rates 

Operations source replacement 

animals from on- and off-farm sources to 

replace animals that are sold to other 

farms, die, or are intentionally removed 

and sold to slaughterhouses (‘‘culled’’). 

The APHIS NAHMS surveys 48 in 2007 

and 2014 provide data on how many 

animals are culled (removed) from U.S. 

dairies annually and the reasons for 

their removal. Most dairy cows were 

removed for udder problems or 

reproductive problems, followed by 

lameness and poor production.49 In the 

2007 APHIS NAHMS survey of dairies, 

23.6 percent of all dairy animals were 

permanently removed from farms that 

year (excluding cows that died) 50 while 

the 2014 survey found a corresponding 


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51USDA APHIS. NAHMS Dairy 2014, Report I: 

Dairy Cattle Management Practices in the United 

States, 2014. Available online at: http://go.usa.gov/ 

xKfEh, 218. 52As an example, a 100-cow lactating dairy herd 

would produce about 50 heifers annually (i.e., 50 

percent of births). Considering this heifer group as 

a single group, a 7.8 percent mortality rate would 

reduce the herd to about 46.1 animals by the end 

of year one (assuming a 7.8 percent mortality rate 

over the entire year). Additionally, AMS assumes a 

10 percent cull rate could further reduce this to 41.5 

animals at the end of year one. By the end of the 

second year, this number could be reduced another 

1.8 percent (mortality rate for weaned heifers) to 

40.7 animals. Assuming a further 10 percent 

reduction due to culls, the original 50-animal group 

may be reduced to 36.6 animals by the end of year 

two. 

53The 2017 ARMS survey indicates that the 

average organic herd size is 102.7 head while the 

2016 Census of Organic Production indicates it is 

104.5 (= 267,523 head/2,559 farms). 

54The OIG report does not represent a random 

sample of operations. No commenter disputed or 

provided additional data for this estimate through 

public comment. 

annual cow removal rate of 28.4 

percent.51 The 2014 NAHMS survey 

found that 21 percent of adult organic 

cows were removed from the U.S. 

national organic herd that year. These 

figures include animals that are sold as 

replacement females to other dairies. 

The 2014 survey found a lower 

percentage of cows were permanently 

removed on small and medium 

operations (26.0 and 26.3 percent, 

respectively) than on large operations 

(29.7 percent). 

The same surveys provide 

information about the deaths of animals 

on dairies. Overall, annual mortality 

rates were 7.8 percent for un-weaned 

heifers, 1.8 percent for weaned heifers, 

and 5.7 percent for cows (2007 survey). 

In 2014, NAHMS identified that about 5 

percent of adult organic dairy cows die 

on the farm (compared to 21 percent of 

adult organic cows that were removed 

for other reasons). These numbers were 

roughly consistent with the 2007 report. 

Between culling and mortality, a dairy 

farm would need to raise or purchase 

females that represent about 30 percent 

(23.6 percent culled plus 5.7 percent 

deaths) of the farm’s herd size to 

maintain its size. As a lactating dairy 

herd (cattle) typically calves about 50 

percent female offspring each year, the 

overall dairy herd should have enough 

replacement females to replace culled 

animals and animals that die. This 

conclusion considers downward 

adjustments for mortality (using 2007 

NAHMS rates noted above of 7.8 

percent and 1.8 percent) and additional 

reduction for culling.52 The additional 

(excess) replacement female animals 

should allow organic dairy operations to 

expand the number of animals in their 

herds should they wish to expand. 

Additionally, producers may choose to 

breed with sexed semen which will 

increase the number of female offspring 

available to the dairy farm. 

Sourcing Organic Replacement Animals 

Most organic dairy farms replace culls 

and deaths with replacement heifers 

that are born and raised on the farm. 

The 2014 NAHMS data reports that 96.5 

percent of organic replacement heifers 

are born and raised on the organic 

operation. An additional 2.6 percent of 

the replacement heifers are born on the 

operation and are subsequently raised 

off the operation before returning to the 

operation. The remaining 0.9 percent of 

replacement females are born off the 

operation and are presumably 

purchased from other operations. 

The 2016 ARMS data (again, the most 

recent survey of this type) also provides 

information about how dairies source 

replacement animals. Overall, ARMS 

data indicates that in 2016, the average 

organic dairy farm milked 102.7 cows 

and added 43.0 replacement animals of 

all types (cows or heifers of all sizes). Of 

those replacements, 93.8 percent (40.35 

head) were born on the farm (and 

owned continuously by it) and 85.1 

percent (36.62 head) were both born and 

raised on the farm. Based on 2,559 total 

dairy farms with a total herd size of 

267,523 reported in the Census of 

Agriculture (2016 data), ARMS data 

indicates that 110,037 total heifers and 

milk cows (41.1 percent of the herd) 

were added to operations in 2016.53

Purchased animals from off-farm 

sources included 4,325 milk cows (3.9 

percent), 1,953 large heifers weighing 

more than 500 pounds (0.73 percent), 

and 559 small heifers weighing less than 

500 pounds (0.2 percent). 

Exact data on how many of the 

purchased replacement heifers are 

transitioned heifers and how many are 

organically managed from the last third 

of gestation is not available. For this 

reason, this RIA calculates costs for two 

conjectured values for the share of 

purchased replacements that are 

transitioned heifers. Furthermore, AMS 

does not have aggregated data on what 

approach producers currently use when 

purchasing replacement heifers. 

Therefore, AMS does not have data on 

how many producers are bringing 

heifers into organic production as 

nonorganic animals and transitioning 

them into organic (or purchasing 

animals transitioned on other organic 

operations) versus sourcing and 

managing animals as organic from the 

last third of gestation. Excluding small 

heifers (which would not be able to 

achieve the cost savings of continuous 

transitioning), AMS uses the 2016 

ARMS survey to estimate the total 

number of large replacement heifers 

purchased (2,460 large heifers 

purchased annually) and assumes 25– 

50% of all large replacements are 

transitioned for our cost model based on 

the OIG report (Audit Report 01601– 

0002–32) that half of certifiers allowed 

the practice of continuous 

transitioning.54 AMS did not receive 

comments providing more accurate 

estimates or objections to this 

assumption during the comment periods 

for the proposed rule. 

AMS notes that, according to the OIG 

report, not all certifying agents allow 

certified operations to continually 

transition animals. OIG found in a 

survey of six certifying agents (among 

the top ten certifying agents for dairy 

operations) that three allowed certified 

operations to continually transition 

animals. 

Regulatory Impact Analysis 

Comments Received on Costs and 

Benefits 

AMS sought input from the public 

about the estimated costs and benefits of 

this rule. AMS published estimated 

costs and benefits in the 2015 proposed 

rule and published an updated analysis 

in May 2021. AMS summarized and 

responded to these comments below. 

Availability of Replacement Animals 

In 2015, some comments noted that 

organic heifer supplies were tight and 

that the heifers for sale were not of 

consistently high quality. This led 

commenters to believe the proposed 

rule could curtail growth of existing or 

new operations, restrict milk supply, 

and raise consumer prices. Some 

comments urged AMS to seek a 

consistent standard for all operations 

while considering that operations may 

need to grow to meet consumer demand. 

A comment in 2015 calculated that a 

dairy could be expected to raise only 

enough of its own heifers to grow at an 

annual rate of 5 percent, after 

accounting for morbidity and culling. 

This commenter questioned AMS’s 

conclusion there would be an ample 

supply of organic heifers under the rule. 

The commenter estimated that the 

industry would take time to catch up 

with the demand for organic heifers 

(organically managed from the last third 

of gestation). 

Other comments in 2015 argued that 

there was an adequate supply of organic 

heifers (organically managed from the 

last third of gestation) available or that 

operations would raise and sell them if 

the price was higher and reflected the 


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19762 Federal Register / Vol. 87, No. 65 / Tuesday, April 5, 2022 / Rules and Regulations 

55Fay Benson. Cornell College of Agriculture and 

Life Sciences. ‘‘USDA Puts Northeast Organic 

Dairies at a Disadvantage.’’ Small Farms Quarterly. 

January 13, 2020. https://smallfarms.cornell.edu/ 

2020/01/usda-puts-northeast-organic-dairies-at-adisadvantage/. 

cost of raising them. In 2019, 

commenters claimed there is a surplus 

of organic heifers (organically managed 

from the last third of gestation) available 

to meet market needs and that there is 

an ample supply of animals even if 

morbidity/mortality rates are high or 

heifer selection is aggressive. No 

comments in 2019 or 2021 claimed that 

organic heifer supplies were 

constrained. 

AMS response: Based on our analysis 

of the comments received, AMS 

continues to believe that sufficient 

numbers of organic heifers (organically 

managed from the last third of gestation) 

would be available after rule 

implementation to maintain and/or 

grow existing organic dairies. To 

mitigate potential and unforeseen 

impacts, AMS is providing a 

compliance date of ten months beyond 

the effective date of this final rule to 

allow animals in the middle of an 

approved transition to complete the 

transition and produce organic milk. 

AMS received many comments that 

supported this approach during the 

comment periods. AMS is also 

including a variance process for 

certified operations that are small 

businesses, and meet certain other 

specific and limited circumstances. 

These operations may request a variance 

from the prohibition on the movement 

of transitioned animals for specific and 

limited situations. 

Price of Replacement Animals 

A commenter in 2019 disagreed with 

AMS’s estimate of a $1,300 cost 

difference between transitioned animals 

and organic animals (organically 

managed from the last third of 

gestation). The commenter believed 

AMS’s estimate was too high. The 

commenter further explained that its 

‘‘discussions with dairy auction sales 

barns that previously sold organic cattle 

do not align with that value’’ and the 

most common response it received from 

extension agents in the Northeast was 

that ‘‘demand and verified sales have all 

but dried up for organic springing 

heifers [heifers close to calving].’’ 

AMS received many comments in 

2019 related to the cost difference for 

raising heifers organically vs. 

nonorganically during the first 12 

months of life. One commenter found a 

$469 average cost difference (organic 

being more costly) per animal. Most 

comments noted a cost difference from 

$600 to $1,000 per calf, and some 

comments noted a difference as high as 

$1,300 per calf. Commenters tended to 

use the difference in production costs to 

describe the financial disadvantage and 

the harm to operations that source only 

organic animals (organically managed 

from the last third of gestation) in 

comparison to operations that 

continually transition heifers to organic 

production. In 2021, several 

commenters reiterated the difference in 

cost of raising dairy replacement heifers 

under organic management versus 

conventional management in the first 

year of life, citing figures from $623 to 

$1,300 per calf. A few commenters 

referred to a study by Cornell 

Cooperative Extension that found an 

average $884 savings per animal 

compared to animals raised using 

organic methods.55

Commenters in 2015, 2019, and 2021 

generally agreed that implementation of 

the proposed rule would result in 

greater demand for organic heifers and 

would likely increase the price of 

organic replacement animals. Many 

commenters viewed this scenario 

favorably, as it would benefit organic 

producers who sell organic animals 

(organically managed from the last third 

of gestation), as opposed to some heiferraising operations currently selling 

transitioned animals. In 2021, one 

producer commented that in the last 

decade the market value of organic 

replacement dairy cattle (organically 

managed from last third of gestation) is 

$1,100/head (or more) below the cost of 

producing them, as the continuous 

transitioning of non-organic dairy 

replacements has flooded the market. 

Another commenter stated that market 

prices are $1,500 to $1,800 per head, a 

lower value than the $2,000 or $2,500 

value assumed by USDA’s analysis. 

AMS response: AMS continues to 

present the costs of the rule as a range 

based on different potential scenarios 

(see Table 5). AMS agrees with 

comments that the price of organic 

heifers may increase, and we have 

estimated costs under two scenarios 

where the price of heifers increases by 

$500 and where the price does not 

increase that are discussed further in the 

section on final rule costs. AMS 

estimates that the price of an organic 

heifer (organically managed from the 

last third of gestation) is $2,000 and up 

to $2,500 if increased demand drives 

prices upward. This represents a $1,000 

to $1,500 premium for organic animals 

(organically managed from last third of 

gestation) animals over transitioned 

animals. The estimated difference seems 

to agree with comments that production 

costs for these animals are $600 to 

$1,300 higher. AMS recognizes that this 

price estimate may be high and thus the 

result might be considered an upper 

bound of the estimated costs. 

Effect on Consumer Milk Price 

A commenter in 2015 estimated the 

rule would increase the cost of 

producing organic milk by 3.7 to 6.0 

cents per half gallon (0.87 percent to 

1.42 percent, respectively) and that the 

increase would be passed to consumers, 

thereby negatively affecting consumer 

demand. However, AMS also received 

comments in 2015 from organic milk 

consumers that supported the proposed 

rule even though they expected the rule 

to lead to higher milk prices. Other 

comments noted that if supply of 

organic milk were to become very 

restricted under the new requirements, 

retail prices could increase to a point 

where consumer demand would flatten 

or even decrease. 

In 2019, stakeholders were more 

concerned with how consumer milk 

prices negatively affect organic dairy 

producers than how they affect 

consumers. Comments frequently 

discussed the idea that there is an 

oversupply of organic milk currently 

‘‘flooding the market’’ that are driving 

consumer prices down. In 2021, 

commenters were again concerned 

about an oversupply of organic milk and 

the subsequent economic hardship for 

organic dairy farmers. Commenters 

found that a strict and fair enforcement 

of the rule would allow for a gradual 

increase in organic milk production that 

would match consumer demand. NOP 

received comments regarding concerns 

about Concentrated Animal Feeding 

Operations (CAFOs) producing large 

quantities of organic milk, with one 

commenter noting if transitioning 

remained, it would only further push 

market power to fewer operations in the 

industry and another stating their ability 

to capitalize on transitioning pushed 

small and mid-sized operations out of 

production. Commenters stated that the 

rule would not have a significant effect 

on consumer milk prices but would 

positively affect many dairy farmers. 

One group of dairy farmers reported that 

88 operations would be positively 

impacted by the rule, while only four 

would face a negative impact. 

AMS response: Table 2 figures 

indicate that the retail premium of 

organic milk products over conventional 

milk products is 61 percent. The AMS 

Dairy Market News for August 9th to 

13th, 2021, indicated that the twelvemonth average (farm-level) organic milk 

pay price was $31.55 per 

hundredweight while forecasting the 

2021 all milk price at $17.95 per 


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56Because of economic effects due to the 

pandemic and recency of data, AMS does not adjust 

for inflation in our estimates. 

57Total industry costs are estimated to be 1.3 

billion using organic dairy enterprise budget from 

Iowa State University Research and Extension. 

Source: https://www.extension.iastate.edu/ 

dairyteam/content/iowa-dairy-budgets. 

58See AMS–NOP–11–0009–2799. 

59Source: Organic Trade Association (OTA), 2021 

Organic Industry Survey. 

60Source: AMS Feeder and Replacement Auction 

Data, https://www.ams.usda.gov/market-news/ 

feeder-and-replacement-cattle-auctions. 

hundredweight. Together these values 

indicate that the farm-level organic 

markup is 76 percent. The ERS farm 

share of the retail price for the milk and 

dairy basket in 2020 was 30 percent. 

Table 5 shows that the total costs of 

this rule to the organic milk producers’ 

net of transfers would be $1,845,000 

under our 50 percent transitioning 

scenario and $922,500 under our 25 

percent transitioning scenario discussed 

further below. The Census of Organic 

Agriculture indicates that farm-level 

organic milk revenue was $1.585 billion 

in 2019.56 Based on these figures, AMS 

estimates that a final rule would 

increase producer costs by less than 

1%.57

Number of Transitioning Animals 

One commenter in 2015 estimated 

there were 60,000 conventional animals 

transitioning to organic production on 

new and established dairy farms. The 

commenter predicted this could lead to 

an oversupply of milk and decrease in 

milk price (income for the dairy farm). 

Another commenter in 2019 believed 

that ‘‘tens of thousands’’ of animals had 

transitioned since 2015. 

AMS response: AMS recognizes that 

we do not have precise data on how 

many animals are transitioned on an 

annual basis by certified organic 

operations. Our information, obtained 

from industry and certifying agents, 

indicates that most organic dairy farms 

do not continually transition animals. 

However, because of the lack of precise 

numbers available, AMS estimates that 

transitioned animals comprise 25 

percent (low end) to 50 percent (high 

end) of all purchased replacement 

animals. AMS did not receive concrete 

data from comments to support 

alternative figures. 

Changes in Dairy Market Since 2015 

In 2019, many comments noted that 

the organic dairy industry had changed 

considerably since AMS published the 

proposed rule in 2015. Primarily, 

commenters noted a decline in 

consumer demand for organic milk and 

increased availability of organic milk 

and organic dairy cows.58 Some 

comments noted that fewer operations 

are transitioning to organic production 

due to limited opportunities to secure a 

contract with a milk handler or because 

the price premium for organic 

production is no longer an incentive to 

transition. Some 2019 comments noted 

that the cost of the rule would be less 

than AMS estimated in 2015 due to 

increased availability of organic 

replacement animals (organically 

managed from last third of gestation) 

and a corresponding drop in prices for 

these animals. 

AMS response: AMS recognizes that 

the organic dairy market in 2015 

differed from the current organic dairy 

market. Our calculation of costs for this 

rule is higher than those calculated in 

2015 because the cost calculation is 

based, in part, on the number of organic 

dairy operations and total organic herd 

size. These numbers have both 

increased since 2015, so the estimated 

cost is higher. 

AMS also notes that there have been 

significant changes in the organic dairy 

market starting in 2020 that correspond 

to the start of the COVID–19 global 

pandemic. During this time, the demand 

for organic products, including organic 

milk and milk products, increased 

dramatically due to changes in 

consumer behavior such as a shift to athome dining (vs. dining out), among 

other impacts. Organic dairy grew 

almost 2% in 2019 and 8% in 2020.59

Data on the current trends in organic 

replacement heifer markets are limited, 

but AMS observes relatively stable 

prices in the non-organic dairy 

replacement market now compared to 

pre-pandemic period.60 The long-term 

effects of the pandemic on consumer 

behavior and the organic dairy market, 

specifically, are difficult to predict, 

though AMS expects the predicted 

effects of costs and benefits of our 

analysis to hold. For this analysis, AMS 

used the most current information 

available to present our estimated costs 

and benefits. 

Costs and Benefits (General) 

A commenter in 2019 disagreed with 

AMS’s cost analysis in the proposed 

rule. It stated that the cost analysis 

‘‘fails to capture the cost inequities of 

not implementing the proposed rule,’’ 

and specifically points to its ‘‘failure to 

distinguish production costs between 

organic and transitioned heifers.’’ 

Without this information, the 

commenter argues ‘‘neither the agency 

nor stakeholders can understand the 

true cost, and true harm, of 

implementing or not implementing the 

proposed rule.’’ Furthermore, the 

commenter calculated the harm to 

operations that source only organic 

animals (organically managed from the 

last third of gestation) using the 

difference in production costs for 

transitioned animals and organic 

animals (organically managed from the 

last third of gestation). The commenter 

estimated that 25 percent or 50 percent 

of all culled organic dairy animals are 

replaced with transitioned animals and 

calculated competitive harm of $9.29 

million to $18.58 million annually 

($469 multiplied by 25 percent to 50 

percent of all culled animals using a 

cull rate of 28.4 percent). 

AMS response: The commenter 

estimates that the competitive harm 

from the current enforcement practice of 

allowing transitioned animals is $9.29 

million (under the 25 percent scenario) 

and $18.58 million (under the 50 

percent scenario). These estimates are 

based on the commenter’s finding that 

a conventional heifer costs $462 less to 

raise and that organic farms require 

79,242 replacement heifers annually 

(based on a 28.4 percent cull rate and 

the 2016 organic U.S. herd size of 

279,021 head). 

AMS understands the commenter’s 

general concern that organic dairy farms 

need to replace a substantial share of 

cows each year and that the different 

application of transition practices by 

certifiers and producers creates cost 

disparities. AMS uses the cost 

difference for purchased replacement 

heifers (transitioned vs. organically 

managed from last third of gestation) as 

its estimate of the per animal increase 

in costs for dairy farms that have used 

transitioned animals. AMS recognizes 

that this does not account for increased 

costs to operations that might maintain 

ownership of offspring that are born onfarm, subsequently removed from 

organic production, and then 

transitioned back into organic 

production. AMS understands that most 

certifiers do not interpret the current 

regulations to allow this practice. Any 

increase in the cost of replacement 

heifers only applies to the purchasers of 

such animals who would otherwise 

have purchased transitioned animals. 

For this reason, AMS believes that 

applying the cost differential to 

replacement heifers that are both 

purchased and unpurchased (i.e., 

owned) would overstate the cost of the 

rule. 


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19764 Federal Register / Vol. 87, No. 65 / Tuesday, April 5, 2022 / Rules and Regulations 

61Using the Organic Integrity Database, AMS 

identified dairy cattle operations with listed organic 

animals that were suspended or surrendered their 

organic dairy certification between 2016–2021. 

62A springer is a heifer (i.e., a female cow that 

has not previously calved) that is 7 to 9 months 

pregnant and will begin producing milk within 0 

to 2 months. 

As described in our consideration of 

regulatory alternatives below (see 

Alternative A), AMS expects that 

purchases of replacement heifers that 

are transitioned animals would increase 

if AMS allowed this practice through 

regulatory action. Additionally, dairy 

operations utilizing heifer-raising 

operations while retaining ownership 

may switch to operations that use 

conventional practices and then 

transition the animals to organic 

production. Table 4 shows that only 11 

percent of operations purchase 

replacement heifers. The uneven 

application of the current rule suggests 

that a smaller share of producers is 

benefiting from the cost advantage of 

transitioned heifers at a level higher 

than that suggested by the average 

number of head purchased. 

Costs of Final Rule 

The final rule will likely increase 

production costs on organic livestock 

and dairy operations that currently 

continually transition nonorganic 

animals and/or operations that source 

transitioned dairy animals as 

replacements. Additionally, any dairy 

that purchases organic heifers may pay 

higher prices for organic animals due to 

increased demand, but organic 

operations selling replacement heifers 

would benefit from any higher prices. 

We assume that farms that exclusively 

raise their own organic replacement 

heifers and manage those animals 

organically from birth would not incur 

additional costs under the final rule. 

Similarly, dairy farms that send organic 

heifer calves to other certified organic 

operations to have the animals 

continuously managed as organic (for 

some period of time before returning to 

the farm) would not incur additional 

costs. Finally, nonorganic dairy 

operations converting to organic 

production for the first time would not 

incur new costs during the 12-month 

transition period; they may transition 

animals on a one-time basis under the 

final rule. 

Estimated Costs for Dairies 

The final rule creates two costs for 

organic dairy farms. First, dairy farms 

that transition heifers or purchase 

transitioned replacement heifers after 

their initial transition to organic would 

be required either to purchase highercost organic replacement heifers 

(organically managed from the last third 

of gestation) or to raise their own 

replacements by raising organic calves 

to maturity. This analysis assumes that 

transitioned animals are sold at a 

discount compared to organic 

replacement animals (organically 

managed from last third of gestation). 

Second, by raising the demand for 

organic replacement heifers, the final 

rule may raise the price of organic 

replacement heifers if operations 

currently selling organic (transitioned) 

replacement heifers cannot comply with 

the requirements and operations that 

sell organic replacement heifers 

(organically managed from last third of 

gestation) cannot easily increase 

offerings. While this price increase is 

likely to be small, it would raise costs 

to any organic dairy farm that is a net 

buyer of organic replacement heifers, 

regardless of whether it continually 

transitions animals or purchases 

transitioned replacement heifers. This 

same price effect, however, would 

create an offsetting benefit to any dairy 

farm that is a net seller of organic 

replacement heifers. 

AMS investigated the additional costs 

that could possibly arise due to limiting 

the movement of transitioned animals. 

Under the final rule, producers are 

unable to sell their transitioned animals 

as organic and must take the 

conventional price for these animals. 

This cost is likely to only impact 

producers seeking to liquidate their 

herd. The final rule does not alter the 

current regulations that prohibit 

transitioned animals from being sold for 

organic slaughter (therefore would not 

receive the organic premium at end of 

life) and operations can continue to 

manage a transitioned animal rather 

than sell it for a loss in most cases of 

continued operation. Only when an 

operation is forced to sell their animals 

at the lower conventional price because 

of the final rule would there be any 

additional cost due to the prohibition of 

the movement transitioned. The final 

rule provides for a variance request 

process (§ 205.236(d)) that could allow 

an organic operation to sell their 

transitioned animal in certain situations 

(bankruptcy, insolvency, 

intergenerational transfers). 

AMS looked at all operations with 

listed dairy animals that were 

suspended or surrendered their organic 

certification between 2016–2021 and 

found at most five that could face costs 

due to limited movement of transitioned 

animals.61 Between the five operations, 

they had less than 300 head in total at 

the time of exit from the organic market. 

While the increased costs possibly faced 

by these operations would increase the 

total cost of the rule, data indicate that 

all observed operations would likely 

have been eligible for the variance and 

thus been able to avoid additional costs. 

Because no operations would have faced 

additional costs due to the prohibition 

on the movement of transitioned 

animals between 2016–2021, AMS did 

not include this as an additional cost in 

the final analysis. 

AMS estimates the costs of the final 

rule by estimating the total number of 

replacement animals purchased by U.S. 

organic dairy cattle operations annually. 

AMS then estimates the percentage of 

all purchased animals that do not meet 

the requirements of the final rule (i.e., 

the percentage of animals bought by 

organic operations that are not 

organically managed from the last third 

of gestation). Due to the unavailability 

of precise data, AMS estimated a range 

of possibilities (25 percent to 50 percent 

of all purchased animals). AMS received 

no public comments that provided a 

more accurate estimate. To calculate 

costs, AMS then multiplied the number 

of animals by the price difference 

between organic (organically managed 

from last third of gestation) and 

nonorganic heifers (we use nonorganic 

heifer prices as a substitute for 

transitioned animals in the absence of 

that data). Finally, AMS considered a 

possible increase for the price of 

organically managed from the last third 

of gestation heifers to calculate the 

maximum expected costs. The data and 

calculations are discussed in detail 

below. 

The ARMS survey includes farm-level 

data on purchases and sales of heifers 

weighing more than 500 pounds, a 

category that explicitly includes sales of 

springers.62 While the ARMS survey 

does not identify whether purchased 

heifers have been organic from birth or 

have transitioned to organic status, it 

does identify whether the farms 

themselves are certified or transitioning 

to organic status. Since all cattle sold by 

organic dairies are themselves organic 

and all cattle sold by non-organic 

dairies are conventional, this analysis 

assumes that the difference in the large 

heifer sales prices for organic or 

transitioning farms and other farms 

reflects the difference in costs for those 

animals. This analysis estimates costs 

under the alternative assumptions that 

either 25 or 50 percent of all purchased 

heifers are transitioned heifers. 

AMS used 2016 ARMS data to 

estimate the number of replacement 

animals purchased by organic 


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Federal Register / Vol. 87, No. 65 / Tuesday, April 5, 2022 / Rules and Regulations 19765 

63USDA NASS 2019 Organic Survey, Table 17, 

dairy cow inventory as of December 31, 2019. 

https://www.nass.usda.gov/Publications/AgCensus/ 

2017/Online_Resources/Organics/index.php. 

64This includes 2019 data collected in the AMS 

Livestock and Replacement Cattle Reports reported 

at https://www.ams.usda.gov/market-news/feederand-replacement-cattle-auctions for the following 

five auction: Mid-Georgia Livestock, Jackson, GA; 

Empire Livestock, Cherry Creek, NY, Mammoth 

Cave Dairy Auction, Smiths Grove, KY; New 

Holland Sales Stables, New Holland, PA; and 

Toppenish Monthly Dairy Replacement Sale, 

Toppenish, WA. 

For the final rule, not all of the auctions 

previously used had available data. Using the three 

available reports in August 2021, AMS determined 

that the average price for non-organic springers was 

approximately $1,169. While this is higher than our 

previous measurement, AMS maintains the 

approximation of $1,000 because of the smaller 

available sample and the lower price produces an 

upper-bound on our cost estimates. 

65Fay Benson. Cornell College of Agriculture and 

Life Sciences. ‘‘USDA Puts Northeast Organic 

Dairies at a Disadvantage.’’ Small Farms Quarterly. 

January 13, 2020. https://smallfarms.cornell.edu/ 

2020/01/usda-puts-northeast-organic-dairies-at-adisadvantage/. 

operations. (This survey is conducted 

every 5 years, so these are the most 

recent numbers available at the time of 

this writing.) Table 4 provides the 

average numbers and prices of large 

heifers bought and sold by organic or 

transitioning farms, divided into four 

different size categories, along with 

figures for all organic or transitioning 

farms and all other non-organic farms. 

Compared with their non-organic 

counterparts, organic and transitioning 

dairy farms are more likely to purchase 

large heifers as replacements, and sell a 

smaller share of their large heifers. On 

average, organic dairies purchased 

replacement large heifers at a rate of 

0.73 percent of their total herd size (or 

0.75 head) and sold large replacement 

heifers at a rate of 1.27 percent of their 

total herd size. However, only 10.9 

percent of organic and transitioning 

dairy farms purchased large heifers so 

that the average farm purchasing heifers 

bought 6.9 head. Based on a 2019 herd 

size of 337,540 milk cows,63 all organic 

dairies purchase 2,464 large heifers 

annually. Rounding the large heifer 

purchase figure to 2,460, these figures 

imply that 615 purchased heifers are 

transitioned (rather than organically 

managed from the last third of gestation) 

under our 25 percent assumption, and 

1,230 are transitioned heifers under our 

50 percent assumption. 

TABLE 4—HEIFER PURCHASE AND SALES PRICE AND RELATED STATISTICS BY DAIRY FARM SIZE AND ORGANIC STATUS

[ARMS] 

1–49 49–99 100–199 200+ All 

Organic and Organic Transitioning Farms 

Number of Farms in ARMS Survey ......................................................... 144 114 42 32 ....................

Largest Number of Cows Milked ............................................................. 33 68 132 499 103 

L. Heifers Sold (head per operation) ....................................................... 0.31 0.84 0.60 8.02 1.27 

Sold L Heifers ($/Head) ........................................................................... $1,350 $1,993 $2,111 $1,918 $1,887 

% of Farms Purchasing L. Heifers .......................................................... 8% 16% 10% 7% 10.9% 

Purch. L. Heifers as a % of Herd ............................................................ 1.5% 1.0% 1.3% 0.2% 0.73% 

Other Farms 

L. Heifers Sold (Head) ............................................................................. 1.14 1.37 1.73 9.68 5.5 

Sold L Heifers ($/Head) ........................................................................... $600 $1,161 $1,304 $989 $1,012 

% of Farms Purchasing L. Heifers .......................................................... 3.3% 7.2% 4.8% 12.1% 8.7% 

Purch. L. Heifers as a % of Herd ............................................................ 0.2% 1.0% 0.8% 3.2% 2.9% 

AMS also used the 2016 ARMS data 

(again, the most recent data source of 

this type) to estimate the price 

difference between organic replacement 

animals and nonorganic replacement 

animals. Table 4 shows the price at 

which organic and transitioning dairies 

sold large replacement heifers. Because 

the price of transitioned heifers 

compared to organic heifers (organically 

managed from the last third of gestation) 

is not available, our analysis uses the 

cost of non-organic large heifers as a 

substitute. This is likely to exaggerate 

the cost differential. The large heifer 

selling price of $1,887 at organic and 

transitioning dairy farms was $865 more 

than the selling price of $1,012 at nonorganic farms. Across individual farm 

size categories, however, this difference 

in prices between organic and nonorganic selling prices varied across size 

categories, ranging from $750 (farms 

with 0–49 cows) to $937 (200+ cows). 

Based on the data, our analysis assumes 

that before the imposition of any of the 

changes, a transitioned heifer costs 

$1,000 and an organic heifer costs 

$2,000 so that the difference in price 

between the two animal types is slightly 

higher than the largest difference 

observed in the data. 

Related data and public comments 

support these assumptions on price 

relationships. The approximately $1,000 

price of non-organic bred heifers (our 

substitute for the price of a transitioned 

animal) is supported by livestock 

auction market prices.64 These data 

show that bred heifers in the third 

trimester (i.e., springers) of supreme and 

approved quality sold for $1,045. 

Additionally, the assumptions are 

supported by public comments that 

indicate it costs between $600 and 

$1,300 more to raise an organic calf than 

a nonorganic calf. Comments in 2021 

echoed this cost difference. 

Additionally, several commenters 

pointed to an analysis completed in 

2019 by the Cornell Cooperative 

Extension that determined the cost is on 

average $844 higher per animal for 

organic management during the first 

year of life. The study considered not 

just higher feed costs but also labor, 

buildings, machinery, health costs, 

trucking, manure handling and 

culling.65

The increased demand for 1,230 

additional organic replacement heifers 

(organically managed from last third of 

gestation) under the 50 percent 

transitioning assumption (or 615 

additional organic replacement heifers 

under the 25 percent transitioning 

assumption) is not expected to lead to 

large price increases for organic heifers 

because the additional organic pasture 

and feed required for 1,230 additional 

organic replacements constitutes a very 

small share of the input requirements 

for the 103,000 heifers currently 

retained by organic farms for their own 

replacements. Therefore, increased 

demand for organic dairy replacement 

animals is not expected to lead to 

dramatic price increases: because the 


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66A 25 percent price increase resulting from a 50 

percent increase in quantity supplied is consistent 

with an elasticity of supply of 2. 

67These costs reflect only those for dairy cattle. 

Costs for purchasing dairy sheep and goats are not 

included in this analysis. 

68This estimate accounts only for replacement 

animals, not any animals that would be required to 

facilitate growth in the industry. 

69As discussed above, AMS has found that 

organic heifer prices have changed slightly from the 

proposed rule, but are still close to original 

estimates and chose to represent organic and 

conventional heifer prices as $2,000 and $1,000 

respectively for simplicity. This does not impact the 

estimated cost impact of the rule. 

increase in demand is relatively 

insignificant, supply should be able to 

match demand without spurring 

substantial price increases. However, 

this analysis assumes that the increased 

demand for organic replacement heifers 

pushes up their price by $500, or 25 

percent,66 to $2,500. In this case, the 

total cost of purchasing replacement 

heifers by organic dairy farms would be 

$6.15 million per year (2,460 

replacements animals purchased from 

off farm at $2,500 per head). This would 

be the new total cost of purchasing 

organic heifers rather than the 

additional cost of purchasing organic 

heifers, which is considerably less.67

Table 5 shows the estimated costs to 

and intra-industry transfers between 

organic dairy farms purchasing organic 

heifers under alternative assumptions 

on price response and replacement 

heifer purchases. The costs capture the 

additional resources need to shift the 

supply of transitioned cattle into the 

supply of organic cattle. The intraindustry transfers may arise from the 

increased demand for organic dairy 

heifers, after accounting for shift of 

supply from transitioned supply to 

organic supply as described above, that 

may result in increased prices. Industry 

transfers are costs to a set of dairy farms 

(or possibly milk processors and 

consumers) that are exactly offset by 

benefits to another dairy farm (or 

possibly milk processors and 

consumers) which results in no 

additional resources being produced. 

When the final rule is enacted, transfers 

may flow from net buyers of organic 

heifers to net sellers of organic heifers 

as the price of organic heifers increases. 

If the price of organic heifers does not 

increase, then no transfers will occur. 

AMS expects that organic dairy farms 

will purchase 2,460 replacement heifers 

per year based on our analysis of ARMS 

data.68 If the price of organic dairy 

heifers were to be unchanged following 

the rule, our analysis finds that total 

costs would increase by $1,230,000 per 

year under the assumption that 50 

percent of purchased replacement 

animals had been transitioned animals, 

or costs increase by $615,000 under the 

assumption that 25 percent of 

purchased replacement animals had 

been transitioned animals. In these 

cases, there are no transfers. If the price 

of organic dairy heifers rises to $2,500 

and 25 percent of purchased 

replacements are transitioned, our 

analysis finds that total costs are 

$922,500 (reflecting 615 new organic 

replacement heifers purchased for 

$1,500 over the conventional price) and 

transfers are $922,500 (reflecting 1,845 

previously purchased organic heifers 

purchased at price $500 higher). 

If the price of organic dairy heifers 

rises to $2,500, and 50 percent of 

purchased replacements are 

transitioned, our analysis finds that total 

costs would be $1,845,000 (reflecting 

1,230 new organic replacement heifers 

purchased for $1,500 over the 

conventional price) and transfers would 

be $615,000 (reflecting 1,230 previously 

purchased organic heifers purchased at 

price $500 higher). This information is 

presented in Table 5 below. 

TABLE 5—ESTIMATED COSTS UNDER ALTERNATIVE ASSUMPTIONS FOR PRICE RESPONSE AND THE QUANTITY OF

TRANSITIONED ANIMALS PURCHASED BY CERTIFIED ORGANIC OPERATIONS ANNUALLY

Assumptions regarding . . . Estimated 

additional 

costs net of 

transfers 

Estimated 

transfers . . . Price response 69 . . .Transitioning heifers 

The price of organic heifers remains at $2,000 ........... 25 percent of heifers are transitioning ......................... $615,000 $0 

The price of organic heifers remains at $2,000 ........... 50 percent of heifers are transitioning ......................... 1,230,000 0 

The price of organic heifers rises from $2,000 to 

$2,500.

25 percent of heifers are transitioning ......................... 922,500 922,500 

The price of organic heifers rises from $2,000 to 

$2,500.

50 percent of heifers are transitioning ......................... 1,845,000 615,000 

If some of the sellers of the 1,230 

additional organic heifers required 

under the 50 percent assumption (or the 

615 additional organic heifers required 

under the 25 percent assumption) have 

costs to supplying these animals that are 

less than $2,500, then industry transfers 

would exceed the values stated in Table 

5. Increased sales are expected to benefit 

operations that have more flexibility in 

capacity (e.g., available pasture) to 

accommodate raising organic 

replacement heifers for the organic 

market. Importantly, sales response 

across individual farms will likely be 

uneven and depend on site-specific 

factors such as the farm’s ability to 

access new buyers and increase organic 

pasture. 

Differences in purchase patterns of 

milk cows and replacement heifers also 

vary by size in a way that affects the 

distribution of costs associated with the 

final rule. Ten percent of operations 

with fewer than 50 cows reported 

purchasing milk cows, and the average 

number purchased was 6 head. Five 

percent of operations with between 50 

and 99 cows reported purchasing milk 

cows, and the average number 

purchased was 14 head. Three percent 

of operations with between 100 and 199 

cows reported purchasing milk cows, 

and the average number purchased was 

10 head. No operations with 200 or 

more cows reported purchasing milk 

cows. 

The pattern is different for purchasing 

heifers. Eight percent of operations with 

fewer than 50 cows reported purchasing 

heifers, and the average number 

purchased annually was 7 head. Sixteen 

(16) percent of operations with between 

50 and 99 cows reported purchasing 

heifers, and the average number 

purchased annually was 4 head. Ten 

(10) percent of operations with between 

100 and 199 cows reported purchasing 

heifers, and the average number 

purchased annually was 17 head. Seven 

(7) percent of operations with 200 or 

more cows reported purchasing heifers, 

and the average number purchased was 

12 head. 


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70Scenario 1 presents the low cost estimate, with 

only 25% of heifers purchased associated with the 

additional $1,000 organic premium. Scenario 4 

presents the high cost estimate, with 50% of heifers 

associated with a $1,500 dollar organic premium 

(the difference between the cost of transition and 

the increased price due to demand) and 50% of 

heifers incurring a $500 dollar premium from the 

increased prices due to increased demand. [The 

$500 dollar premium is an industry transfer, but 

AMS keeps the cost for individual operations to 

better acknowledge the possible high end costs for 

operations who only purchase animals.] 71USDA, Animal Plant Health Inspection Service. 

Dairy Heifer Raiser, 2011 (October 2012). Available 

online at: https://www.aphis.usda.gov/aphis/ 

ourfocus/animalhealth/monitoring-andsurveillance/nahms/nahms_dairy_studies. 

72The Organic Integrity Database includes 

descriptions of the products for which organic 

farms are certified as recorded by the certifying 

agent. It lists 220 operations that recorded dairy 

cattle but not milk production (i.e., a possible 

indicator for a heifer-raising operation). These 

operations were often identified as being involved 

with ‘‘dairy cows,’’ ‘‘breeding operations,’’ and 

‘‘replacements.’’ Unfortunately, the database does 

not provide sufficient information to use in our 

analysis of heifer-raising operations. 

Based on the range created by the 

scenarios presented in Table 5,70 the 

average dairy with fewer than 50 cows 

would pay an additional $127–$510; 

dairies with between 50 and 99 cows 

would pay an additional $166–$666; 

dairies with between 100 and 199 cows 

would pay an additional $439–$1,755; 

and dairies with 200 or more cows 

would pay an additional $209–$837. 

The costs by size of operation are 

summarized in Table 6. 

TABLE 6—COSTS BY SIZE OF OPERATION FOR PURCHASING ORGANIC HEIFERS

Size of Operation 

Fewer than 

50 cows 50–99 cows 100–199 cows 200 or more cows 

Number of Farms .............................................................................. 1,359 1,076 396 302 

Share of Operations .......................................................................... 43% 34% 13% 10% 

Average Cost Per Farm .................................................................... $127–$510 $166–$666 $439–$1,755 $209–$837 

Total annual cost for purchase of replacement heifers across size 

class ............................................................................................... $173,210–$692,839 $179,127–$716,506 $173,915–$695,660 $63,189–$252,757 

Percent of operations that purchased replacement heifers annually 7.6% 16.4% 10.2% 6.8% 

Average number of replacement heifers purchased annually (for 

operations purchasing heifers) ...................................................... 6.68 4.06 17.22 12.33 

Cost per operation annually (25% to 50% transitioned heifers) (for 

operations purchasing heifers) ...................................................... $1,670–$6,678 $1,016–$4,063 $4,306–$17,225 $3,082–$12,330 

The costs in Table 6 do not reflect the 

offsetting effect of transfers (i.e., they 

only capture the cost of transfers at a 

producer level, not accounting for how 

the producers selling will gain from 

this). For this reason, the sum of the 

total costs of replacing heifers across all 

size categories ($0.56 million and $2.37 

million) in Table 6 roughly equals the 

sum costs (net of transfer) and transfers 

in Table 5 ($0.615 million and $2.46 

million) with minor discrepancies 

reflecting rounding differences. 

Effects on Heifer-Raising Operations 

Organic dairy operations that 

continually source transitioned heifers 

will need to change their practices to 

meet the requirements of the final rule. 

In some cases, organic dairy operations 

source their transitioned heifers from 

off-site heifer-raising operations. Here, 

AMS discusses the potential effects of 

the final rule on these operations. 

A 2011 USDA NAHMS study on 

heifer-raising operations 71 found that 

most heifers sent to heifer-raising 

operations (80 percent) are returned to 

their dairy of origin. The study also 

found that most heifer-raising 

operations receive weaned calves (rather 

than wet calves) and send them back as 

pregnant heifers. AMS specifically 

requested comments and data on the 

likely impacts on heifer-raising 

operations. AMS did not receive any 

data on the number of heifer-raising 

operations that continually transition 

animals for sale to organic dairies or on 

the number of animals raised by such 

operations annually. Aside from 

fragmentary evidence in the AMS 

Organic Integrity Database, AMS does 

not currently have specific data on the 

locations, numbers, or sizes of organic 

heifer-raising operations.72

In the absence of specific information, 

AMS considered that organic dairy 

operations could be using organic 

heifer-raising operations to transition 

animals on a continual basis by taking 

in nonorganic weaned calves (e.g., 12- 

month old heifers) and providing 

organic management for 12 months 

before returning the pregnant organic 

heifers to an organic dairy. 

Under the final rule, organic heiferraising operations will not be required 

to change their animal production 

practices. These operations are certified 

organic and currently manage animals 

in compliance with the USDA organic 

regulations as a requirement of their 

organic certification. However, the final 

rule does not allow any operations, once 

certified, to source nonorganic animals. 

Therefore, these operations will be able 

to accept only weaned calves that have 

been organically managed from the last 

third of gestation. 

Within the analysis, AMS assumed 

that competitive markets for both 

transitioning and replacement heifers 

have resulted in prices for these animals 

that are sufficiently high enough to 

allow sellers to recover the cost of 

raising these animals along with a 

‘‘normal’’ rate of return on capital 

investment. The analysis assumes that 

the 50 percent conjectured increase in 

price of organic replacement heifers is 

sufficient to simultaneously ensure that 

markets clear (i.e., quantity supplied 

equals quantity demanded) at the higher 

number of transacted animals and offset 

the increased costs to supplying more 

animals. 

As with other aspects of our analysis 

regarding supply response, AMS 

assumes that the ability of individual 

sellers of replacement heifers to adjust 

management practices to market 

conditions will vary with the sitespecific characteristics of operations, 

such as their ability to find new buyers 

and access to additional organic pasture. 

Whether heifer-raising operations will 

increase or decrease sales of organic 

heifers following the implementation of 

the rule cannot be determined with the 

available data. 

Regulatory Impacts and Effects on 

Consumers 

Most dairies report that they source at 

least some of their replacement cows 

from their own calves, and only 11 

percent of all dairies purchase 

replacement heifers, with less than 1 

percent of all replacements being 

purchased externally (off the farm). The 

majority of producers that do not 

purchase replacement heifers would not 

see an increase in costs. To replace 

purchased transitioned heifers, dairies 

would have to either raise their own 

replacements or buy them from an 


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19768 Federal Register / Vol. 87, No. 65 / Tuesday, April 5, 2022 / Rules and Regulations 

73Hughner, R.S., McDonagh, P., Prothero, A., 

Shultz, C.J., & Stanton, J. (2007) Who are organic 

food consumers? A compilation and review of why 

people purchase organic food. Journal of Consumer 

Behaviour: An International Research Review, 6(2– 

3), 94–110. 

74USDA NASS organic surveys are available at: 

https://www.nass.usda.gov/Surveys/Guide_to_

NASS_Surveys/Organic_Production/index.php. 

75Organic Trade Association (OTA)/Nutrition 

Business Journal, 2021 Organic Industry Survey 

(pp. 3). 

operation that sells organic replacement 

heifers (organically managed from the 

last third of gestation). Since the current 

supply of replacement heifers can be 

increased without large price increases, 

as detailed above, it is unlikely that the 

final rule will significantly increase 

milk production or milk costs to the 

consumer. 

The final rule will provide producers 

and consumers of organic foods with 

multiple benefits that extend beyond the 

organic livestock producers that are 

directly impacted. First, the rule will 

provide uniformity to the enforcement 

of regulations relating to the origin of 

livestock, removing avenues for 

inefficiencies and risks created by 

different certifier standards and 

potentially reducing consumer 

confusion about the nature of 

production of dairy products. Second, 

the rule will create uniformity in the 

application of the USDA organic 

regulations, by generally requiring 

organic management for an animal’s 

entire life. This has the potential to 

decrease information asymmetries 

associated with the meaning of the 

organic seal and reduce transactions 

costs to consumers in interpreting the 

meaning of the seal with respect to milk 

products. In addition, some consumers 

may actually be willing to pay more for 

milk that they know to have been 

produced by animals that were managed 

as organic from the last third of 

gestation. While other policy options 

would also achieve consistency, the 

policy choice to restrict the 

transitioning of organic dairy animals is 

considered most consistent with 

producer and consumer expectations for 

the organic management of an animal 

throughout its life. 

Together, the provisions in this rule 

could enhance and protect the value of 

organic premiums that some consumers 

are willing to pay for milk certified 

under the USDA organic regulations, as 

it reinforces consumer trust and demand 

in the label. Research has shown that 

consumers purchase organic products 

for various reasons.73 A number of these 

reasons, including environmental and 

animal welfare concerns, accrue benefits 

over the entire period of production. 

The final rule should increase these 

consumer benefits (due to increased 

number of dairy animals that are 

managed as organic throughout their 

productive lives) while also protecting 

against shocks to consumer demand due 

to reaction to inconsistent practices. 

The 2019 NASS Certified Organic 

Production Survey shows that organic 

milk is the top organic commodity in 

sales value, worth $1.6 billion in 2019.74

Sales of organic milk increased by 14 

percent from 2016. At the retail level, 

the OTA 2021 U.S. Industry Survey 75

found sales of organic dairy products, 

including milk, cream, yogurt, cheese, 

butter, cottage cheese, sour cream, and 

ice cream, exceeded $7.4 billion in 

2020. As a result, even a fraction-of-apercentage increase in willingness to 

pay would more than justify the 

quantified costs of the rule. Table 2 

shows the organic dairy market 

characteristics by subcategory. 

Organic dairy cattle producers who 

sell organic dairy females may receive a 

benefit as part of an intra-industry 

transfer. AMS estimates that on the high 

side, the price of an organic heifer may 

increase by $500 over current prices due 

to increased demand. If this price 

increase were to occur, dairy producers 

who are net sellers of replacement 

springers would benefit through the 

intra-industry transfer. 

While AMS does not know whether 

the final rule will increase demand for 

organic milk, AMS believes there is 

value in creating a uniform origin of 

livestock rule that prevents organic 

dairies from continuously transitioning 

non-organic animals into organic milk 

production. If inconsistent practices 

were to persist in the industry, 

consumer confidence and the organic 

premium as a whole would be at risk to 

confusion about the benefits of the label. 

Strengthened consumer confidence 

should be valuable for organic milk 

producers as it strengthens the value of 

the organic brand in the mind of 

consumers. 

Survey results from a producer 

survey, sent out by the Cornucopia 

Institute to certified organic dairies in 

the country, provide general support for 

prohibiting continuous transition of 

heifers and ensuring a uniform 

interpretation of organic origin of 

livestock rules. Of 174 responses 

received, 70% supported immediate 

implementation of a ban on continuous 

transition of dairy cows, and not a 

single respondent said allowing 

continuous transition has had a positive 

economic impact on their operation. Of 

the 41 respondents that listed a specific 

dollar loss resulting from the lack of 

consistent standards with respect to 

livestock origin rules, the mean loss 

reported per milking animal was $490. 

A total of 86 respondents indicated the 

uneven standards have had a negative 

economic impact on their operation, 

either due to lower heifer prices or 

lower milk prices. In addition to these 

quantitative estimates of perceived 

losses, some producers expressed their 

opinion that inconsistent interpretation 

of the origin of livestock rules harm the 

organic brand, lower milk prices, 

contribute to an oversupply of organic 

milk, tilt the market towards large 

dairies against small dairies, increase 

psychological stress for farmers, and 

lead to the loss of organic milk 

contracts. 

AMS sees these observations as 

indicators of risk to demand for organic 

dairy product. Studies show that 

consumers value organic standards for 

the environmental and health benefits 

they perceive flowing from them. Lack 

of consistency in organic standards may 

shake some consumers’ confidence in 

the label. Reduced consumer confidence 

could lead to lower demand for organic 

milk (and perhaps other products), 

which would lower quantity and price 

of organic milk products on average. 

Confidence from organic producers is 

also important in sustaining the organic 

market to meet growing demand. If 

organic dairy producers become 

discouraged by the known differences in 

interpretation and application of origin 

of livestock provisions, they may exit 

the market, believing the system to be 

unfair. 

Overall, the survey responses identify 

a series of perceived negative 

consequences to the respondents 

individual operations stemming from 

inconsistent standards, and likewise 

from any alternative that would 

continue to allow continuous transition 

of conventional animals into organic 

dairy production. Finally, outreach by 

organic producers on this rule, both to 

AMS and Congress, emphasize the 

importance of this rule to the broader 

organic industry, beyond organic dairy. 

Inconsistency in the implementation of 

this set of provisions is seen as part of 

a broader need to ensure consistent 

implementation of the standards in 

accordance with the OFPA. Again, 

while this consistency could be 

achieved in different ways, AMS has 

selected the policy path that aligns with 

many public comments over many years 

encouraging the limitation of organic 

transitions of livestock. 

Alternatives Considered 

AMS considered alternatives that 

would be both less stringent (less costly) 


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and more stringent (more costly). The alternatives considered are shown in 

Table 7 and discussed below. 

TABLE 7—ALTERNATIVES CONSIDERED

Alternative Description 

(A) Allow Continual Transition for All Operations .................................... Allow any operation to transition nonorganic dairy animals into organic 

production over a 12-month period on a continual basis. 

(B) Prohibit All Transitions ........................................................................ Remove all exceptions for transition of nonorganic animals. 

Alternative A—Allow Continual 

Transition for All Operations 

AMS considered amending the 

regulations to specify that any operation 

could transition dairy animals into 

organic production over a 12-month 

period on a continual basis. Under 

OFPA, a dairy animal from which milk 

or milk products will be sold or labeled 

as organically produced must be raised 

in accordance with OFPA for not less 

than the 12-month period immediately 

prior to the sale of such milk and milk 

products (7 U.S.C. 6509(e)(2)(A)). The 

final rule will typically require more 

than a 12-month period of organic 

management prior to the sale of milk 

and milk products for established 

dairies (i.e., from the last third of 

gestation). OFPA specifies that dairy 

livestock be managed organically for a 

period not less than a 12-month period, 

so AMS could presumably allow 

transition of any dairy animal into 

organic production after a period of 

exactly 12 months of organic 

management. 

This is the legal standard currently in 

effect. While current regulations allow 

for continual transition of nonorganic 

dairy animals into organic dairy 

operations, that is not occurring under 

the current regulations. As a result, 

AMS estimates no immediate changes in 

costs or benefits associated with leaving 

existing regulations in place. However, 

in this scenario, organic dairy farms 

may be more likely to source or 

transition animals if the practice is 

affirmed by the program and universally 

allowed by certifiers. If more 

transitioned animals are sourced, more 

young dairy animals will be treated with 

antibiotics and other medications 

prohibited in organic livestock 

production and/or provide nonorganic 

feed until one year. Relatedly, 

operations wanting to assure consumers 

that they had raised organic heifers 

under organic conditions through their 

entire lives would have to do so under 

a separate certification program. 

ARMS Data indicated that the average 

organic dairy operation kept 40.4 heifers 

(or 39.3 percent of its herd) for breeding, 

of which 36.6 heifers (or 35.7 percent of 

its herd) were kept for breeding and 

raised on the operation. The difference 

of these values (3.6 percent) represents 

the likely proportion of organic heifers 

raised on outside heifer-raising 

operations (as a share of the total herd). 

If all those animals become transitioned 

heifers, then an additional 12,154 

animals (i.e., 337,540 head * 3.6 

percent) would be transitioned. AMS 

assumes that the price difference 

between organic (organically managed 

from the last third of gestation) and 

transitioned heifers reflects the $1,000 

cost difference in raising dairy heifers 

between these two comparative 

production systems. In this case, the 

reduced cost of allowing for continuous 

transitioning of heifers is $12,154,000. 

The potential cost associated with the 

adoption of the continuous transition 

for all organic dairies could be 

illustrated by a deleterious effect on 

markups to products marketed under 

the organic label; although a markup 

reduction is not a cost, from the societywide perspective taken for purposes of 

Executive Order 12866 and OMB 

Circular A–4, it may signify a greater 

incentive for the (costly) establishment 

of alternative certifications to USDA 

organic certification. Table 2 shows that 

milk products marketed under the 

organic label earned an average 

premium of 61 percent over 

conventional products that total $2.4 

billion in total value. A one percent fall 

in total premiums would be associated 

with a $24 million reduction in organic 

premiums at the retail level. 

While continual transition could 

theoretically support a regulatory 

objective to establish a consistent and 

uniform standard for all operations, 

AMS is not selecting this alternative. 

Based on available information, AMS 

understands that most established 

organic dairies can (and do) readily 

raise dairy animals for a period longer 

than the 12-month minimum required 

in OFPA. If AMS selected Alternative A, 

it would likely be more disruptive to 

existing operations and require more 

operational changes than we expect will 

be required by this final rule. 

Furthermore, the National Organic 

Standards Board’s recommendations, 

and stakeholder comments support and 

inform AMS’s decision to not select this 

alternative. 

OFPA directs organic animal 

production practices to be free of 

antibiotics (7 U.S.C. 6509(c)(3) and 

6509(d)(1)). While a one-time transition 

allowance is necessary to support 

growth in the organic dairy market, 

AMS believes that the policy option that 

minimizes antibiotics (and provides for 

lifelong organic management) is the best 

course to remain true to the broad range 

of organic production practices 

described in OFPA. Comments indicate 

that at least some consumers already 

expect organic milk is produced without 

the use of any antibiotics (and other 

substances prohibited under the USDA 

organic regulations) and expect organic 

management of all animals on organic 

operations from the last third of 

gestation. Alternative A would not meet 

these expectations, and adopting the 

alternative could cause a decline in 

consumer confidence, lower demand for 

organic milk and dairy products, and 

lower organic milk prices for producers. 

The aforementioned survey results 

presented by the Cornucopia Institute 

strongly support this reasoning. 

Alternative B—Prohibit All Transitions 

A second alternative AMS considered 

was to remove any allowance for dairy 

operations to transition animals to 

organic production, including new and 

nonorganic dairies seeking to convert to 

organic production. Under this option, 

all dairy animals would need to be 

managed organically from the last third 

of gestation for milk and dairy products 

to be sold, labeled, or represented as 

organic. 

The costs of this alternative are 

threefold. First, producers would bear 

the increased annual costs of $1,845,000 

described in Table 5 and under the onetime transition scenario where 50 

percent of heifers are transitioning. 

Because conventional dairy farms 

transitioning to organic would also need 

to purchase heifers and milking cows 

approximately equal to the size of their 

current operations, AMS believes this 

alternative may lead to price increases 

for organic heifers of significantly more 


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19770 Federal Register / Vol. 87, No. 65 / Tuesday, April 5, 2022 / Rules and Regulations 

76Bernanke, Ben S. (1983) ‘‘Irreversibility, 

Uncertainty and Cyclical Investment’’, Quarterly 

Journal of Economics (98) 85–106. 

77Caballero, Ricardo J. and Pindyck, Robert S. 

‘‘Uncertainty, Investment, and Industry Evolution’’ 

International Economic Review (1996)37:641–663. 

78Carruth, A., Dickerson, A., and Henley, A. 

(2000) ‘‘What do We Know About Investment 

Under Uncertainty?’’ Journal of Economic Surveys 

(14)2: 119–154. 

than 50 percent. This would increase 

the costs of the rule. 

Second, this alternative would limit 

the ability of the industry to expand to 

meet growing demand and could 

thereby create price instability within 

the market. In periods of stable demand, 

firm entry into the organic market is 

modest, reflecting factors such as 

population and income growth. In these 

stable periods under current rules, the 

cost of producing organic milk for 

established producers reflects both the 

higher cost of production in terms of 

feed costs, land requirements, and 

animal husbandry practices, and the 

higher cost of replacement heifers. In 

periods of rapid industry growth (i.e., 

high demand), entrants to this industry 

bear those costs as well, but also face 

the significant additional costs of 

converting land for organic feed and 

pasture over a 3-year period. 

Under this alternative, in periods of 

industry growth (i.e., high demand) new 

entrants to the industry would face the 

additional cost of acquiring organic 

heifers and milking cows under periods 

of tight supply and this alternative 

could lengthen the time required for 

new entrants to begin production. While 

a subset of organic dairies would see 

higher returns on sales of heifers, 

incumbent farms seeking to grow would 

see higher costs of expanding herds 

through heifer purchases and the 

additional time required to certify 

additional land under the organic 

program. While some incumbent 

producers may benefit under this 

alternative in the short-term, the added 

costs to entry and expansion would 

likely foster price volatility for organic 

heifers and wholesale organic milk, as 

the industry’s ability to quickly expand 

in response to demand fluctuations 

would be severely handicapped. 

Furthermore, organic heifers are an 

input to wholesale organic milk 

production, and wholesale milk is an 

input to retail organic milk products 

such as organic cheese, yogurt, butter, 

and retail-level milk. Bringing organic 

milk products to market requires 

complementary investments in retail 

marketing outlets and brand 

development. Bernanke (1983), 

Cabellero and Pindyck (1996), and 

Carruth et al. (2000) find that increasing 

input price volatility reduces 

investment since the value of the option 

to delay the investment rises with 

increased uncertainty about the 

investment’s return.76 77 78 Such 

volatility could limit long-term growth 

in organic milk demand if downstream 

milk processors (for cheese and other 

milk products) and retailers require an 

organic milk supply with stable prices 

to allow for planning of other 

investments such as equipment, brand 

promotion, and retail promotion, which 

in some cases constitutes building retail 

stores focused solely on the sale of 

organic products. 

This alternative would simplify 

enforcement of the requirements by 

applying a single standard, without 

exceptions, to all organic dairy 

operations. It would also align the 

requirements for dairy animals with the 

requirements for organic slaughter 

stock, but AMS does not believe this 

option is necessary for several reasons. 

First, AMS believes that certifiers will 

be able to enforce a rule that allows for 

a limited and well-defined transition. 

Second, AMS believes that allowing 

one-time transitions for organic dairy 

operations maintains market stability 

while simultaneously preserving the 

value of the organic label. Transition is 

also permitted by OFPA (7 U.S.C. 

6509(e)(2)). Third, AMS notes that other 

aspects of the USDA organic regulations 

slow entry into this market and believes 

that eliminating its historic allowance of 

dairy animal transitions could impact 

downstream organic processors and 

retailers, who have invested in the 

industry based on the expectation of the 

continuation of regulations that ensure 

a stable and responsive market supply. 

Most commenters supported a one-time 

allowance. 

Final Regulatory Flexibility Analysis 

The Regulatory Flexibility Act (RFA) 

(5 U.S.C. 601–612) requires agencies to 

consider the economic impact of each 

rule on small entities and evaluate 

alternatives that would accomplish the 

objectives of the rule without unduly 

burdening small entities or erecting 

barriers that would restrict their ability 

to compete in the market. The purpose 

is to fit regulatory actions to the scale of 

businesses subject to the action. 

Pursuant to the requirements set forth in 

RFA, AMS performed an economic 

impact analysis on small entities. Small 

entities include producers and 

agricultural service firms, such as 

handlers and accredited certifying 

agents. AMS has determined that the 

final action would impact small entities 

but that it would not have a significant 

economic impact on them. 

The RFA permits agencies to prepare 

the regulatory flexibility analysis in 

conjunction with other analyses 

required by law, such as the RIA. AMS 

notes that several requirements of the 

regulatory flexibility analysis overlap 

with those of the RIA. For example, the 

RFA requires a description of the 

reasons why the action by the agency is 

being considered and an analysis of the 

rule’s costs to small entities. The RIA 

likewise describes the need for the rule, 

the alternatives considered, and the 

potential costs and benefits of the rule. 

In order to avoid duplication, AMS 

combined some analyses, as allowed in 

§ 605(b) of the RFA. As explained 

below, AMS expects that the entities 

that could be impacted by the final rule 

would qualify as small businesses. In 

the RIA, the discussion of alternatives 

and the potential costs and benefits 

pertains to impacts upon all entities, 

including small entities. Therefore, the 

scope of those discussions in the RIA is 

applicable to regulatory flexibility 

analysis under the RFA. The RIA should 

be referred to for more detail. 

Potentially Affected Small Entities 

AMS has considered the economic 

impact of the final action on small 

entities. Small entities include 

producers transitioning into organic 

dairy production, existing organic dairy 

producers, producers that raise 

replacement animals for organic dairies, 

and certifying agents. AMS believes that 

the cost of implementing the rule will 

fall primarily on organic dairies that 

currently purchase transitioned heifers, 

although any organic dairies that 

purchase organic heifers would be 

expected to pay higher prices in the 

short-term due to increased competition 

for these animals. Farms that sell their 

excess organic replacement heifers may 

see an increase in demand for their 

heifers, and farms that raise their own 

organic replacement heifers would not 

likely be affected by the rule. AMS 

believes heifer development operations 

also could be impacted by this action. 

However, limited information on the 

number and size of heifer development 

operations prevents our estimation of 

the number of such entities and any 

increased costs for those entities. 

The Small Business Administration 

(SBA) defines small agricultural service 

firms, which include certifying agents, 

as those having annual receipts of less 

than $8,000,000 (13 CFR 121.201). 

There are currently 76 USDA-accredited 

certifying agents; based on a query of 

AMS’s Organic Integrity Database (OID), 

there are approximately 57 certifying 


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79Small operations making purchases buy 6.57 

heifers and will pay $1,000 more for half those 

animals and $2,000 on the others. Large operations 

making purchases buy 12.33 heifers and will also 

pay $1,000 more for half those animals and $2,000 

on the others. 

80As with the Table 6 costs breakout by operation 

size, total costs in Table 8 ($0.59 million and $2.36 

million under the 25 percent transition at $1,000 in 

cost and 50 percent transition at $1,500 in cost 

scenarios) roughly equal the Table 4 estimates of 

costs net of transfers ($0.615 million and $2.46 

million). Discrepancies are attributed to rounding 

errors. 

agents (38 domestic and 19 foreign) who 

are currently involved in the 

certification of organic livestock 

operations. While certifying agents are 

small entities that would be affected by 

the final rule, AMS does not expect that 

these certifying agents would incur 

significant costs as a result of this 

action. Certifying agents already must 

comply with the current regulations. 

The recordkeeping burden of these 

routine certification activities are 

accounted for in the information 

collection package OMB #0581–0191, 

e.g., maintaining certification records 

for organic dairy operations. 

For the final regulatory flexibility 

analysis, AMS estimated how organic 

dairy operations of different sizes (small 

versus large) would be impacted as a 

result of purchasing only organic dairy 

replacement animals (organically 

managed from the last third of 

gestation). As defined by SBA (13 CFR 

121.201), small agricultural producers 

are those having annual receipts of less 

than $1,000,000. AMS used this SBA 

criterion to identify large organic dairy 

operations as those with cash receipts of 

more than $1,000,000 and small 

operations as those with cash receipts of 

$1,000,000 or less. 

Data on the exact shares of organic 

dairy farms that have sales above and 

below $1,000,000 are not available. 

However, ARMS data indicates that the 

average sales revenue of dairy farms 

from sales of organic milk and animals 

is $2,855 per milked cow, a figure that 

indicates that revenues exceed 

$1,000,000 for farms with more than 350 

head. 

Within the 2016 ARMS data, 90 

percent of organic dairy farms (300 of 

the 332) had fewer than 200 milking 

animals. Lacking more detailed 

information, AMS assumes that 90 

percent of all organic dairy farms, or 

2,832 operations of the 3,134 operations, 

qualify as small businesses under the 

SBA standard. AMS also assumes that 

these farms purchase replacement 

heifers in the same pattern as the 

average farm with 200 or fewer head. In 

this case, small organic dairy farms 

purchase 0.7 replacement heifers on 

average, with the 11.3 percent of small 

farms that purchase replacement heifers 

buying 6.6 head on average. In contrast, 

large organic dairy farms purchase 0.8 

replacement heifers on average, with the 

6.8 percent of large farms that purchase 

replacement heifers buying 12.3 head on 

average. 

TABLE 8—COSTS BY SIZE OF OPERATION FOR PURCHASING ORGANIC HEIFERS

Fewer than 50 cows 50–99 cows 100–199 cows 200 or more cows 

Size of Operation 

Number of Farms .............................................................................. 1,359 1,076 396 302 

Share of Operations .......................................................................... 43% 34% 13% 10% 

Average Cost Per Farm .................................................................... $127–$510 $166–$666 $439–$1,755 $209–$837 

Total annual cost for purchase of replacement heifers across size 

class ............................................................................................... $173,210–$692,839 $179,127–$716,506 $173,915–$695,660 $63,189–$252,757 

Percent of operations that purchased replacement heifers annually 7.6% 16.4% 10.2% 6.8% 

Average number of replacement heifers purchased annually (for 

operations purchasing heifers) ...................................................... 6.68 4.06 17.22 12.33 

Cost per operation annually (25% to 50% transitioned heifers) (for 

operations purchasing heifers) ...................................................... $1,670–$6,678 $1,016–$4,063 $4,306–$17,225 $3,082–$12,330 

For this cost analysis (shown in Table 

8), AMS assumed that the difference in 

cost between transitioned replacement 

heifers and organic replacement heifers 

(organically managed from the last third 

of gestation) is currently $1,000 per 

head, that half of organic replacement 

heifers currently purchased are 

transitioned. In our more conservative 

scenario, we assumed only 25% of 

replacement heifers were bought 

transitioned and would face a $1,000 

increase in cost. Our most costly 

scenario assumes that the increased 

demand for organic replacement heifers 

raises their price by $500, for a total of 

$1,500 in additional costs to 50% of all 

replacement heifers. Based on our 

analysis, AMS estimates that, under the 

final rule, small operations would 

collectively spend an additional 

$526,251 (25% at a $1,000 increase cost 

per head) to $2,105,005 (50% at a 

$1,500 increase cost per head) for 

heifers. Large operations would 

collectively pay an additional $63,189 

to $252,757 for heifers. Of the 

operations that purchase heifers, the 

average additional cost per operation in 

the scenarios would be between $1,642 

to $6,569 for small operations and 

$3,082 79 80 Table 8 summarizes the cost 

analysis using SBA criterion for small 

businesses (i.e., producers with less 

than $1,000,000 in cash receipts). 

TABLE 9—COST OF ORGANIC REPLACEMENT HEIFERS BY SBA CRITERION FOR SMALL BUSINESSES

Small operations 

(<$1,000,000) 

Large operations 

(>=$1,000,000) 

Number of Operations ..................................................................................................................... 2,832 302 

Total cost (all operations) ................................................................................................................ $526,251–$2,105,005 $63,189–$252,757 

Per operation purchasing replacement heifers ............................................................................... $1,642–$6,569 $3,082–$12,330 

To understand the potential costs in 

context, AMS used the higher average 

cost estimate per operation from Table 

9 the purchase of organic replacement 

heifers (i.e., $6,569 for small; $12,330 

for large) and compared it to the average 

gross cash farm income for farms with 

200 head or fewer and for farms with 

more than 200 head using a revenue 


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19772 Federal Register / Vol. 87, No. 65 / Tuesday, April 5, 2022 / Rules and Regulations 

estimate from ARMS data that farms 

earn $2,855 per head. Of farms with 200 

head or fewer and an average of 

$158,003 in sales, the 11.3 percent of 

farms purchasing replacement heifers 

will have their costs increase 4.2 

percent on average in the costliest 

scenario. Of large farms with more than 

200 head and $1,683,366 in revenue, the 

12.33 percent purchasing replacement 

heifers will see costs increase by 0.7 

percent. 

It is important to note that these cost 

figures do not include the potential 

offsetting effect of transfers or increased 

revenue from replacement heifer sales 

as organic replacement heifer prices 

increase. This revenue is recorded as a 

transfer in the benefit-cost analysis. 

AMS is including additional 

flexibility for certified dairy operations 

that are small businesses, specifically, 

by allowing those operations (in certain 

limited circumstances) to request a 

variance from a portion of this final 

rule. Procedures described at 

§ 205.236(d) allow small businesses to 

request movement of transitioned 

animals between certified organic 

operations in specific and limited 

situations (e.g., bankruptcy, 

intergenerational transfers). These 

procedures should increase flexibility 

for small business production decisions 

and lower the upper bound of the costs 

estimated in Table 9. 

AMS has not identified any relevant 

Federal rules that are currently in effect 

that duplicate, overlap, or conflict with 

the final rule. The action will provide 

additional clarity on the origin of 

livestock requirements that are specific 

and limited to the USDA organic 

regulations. 

List of Subjects in 7 CFR Part 205 

Administrative practice and 

procedure, Agricultural commodities, 

Agriculture, Animals, Archives and 

records, Fees, Imports, Labeling, 

Livestock, Organically produced 

products, Plants, Reporting and 

recordkeeping requirements, Seals and 

insignia, Soil conservation. 

For the reasons set forth in the 

preamble, 7 CFR part 205 is amended as 

follows: 

PART 205—NATIONAL ORGANIC 

PROGRAM 

■ 1. The authority citation continues to 

read: 

Authority: 7 U.S.C. 6501–6524. 

■ 2. Section 205.2 is amended by adding 

in alphabetical order the terms ‘‘organic 

management’’, ‘‘third-year transitional 

crop’’, and ‘‘Transitioned animal’’ to 

read as follows: 

§ 205.2 Terms defined. 

* * * * * 

Organic management. Management of 

a production or handling operation in 

compliance with all applicable 

provisions under this part. 

* * * * * 

Third-year transitional crop. Crops 

and forage from land included in the 

organic system plan of a producer’s 

operation that is not certified organic 

but is in the third year of organic 

management and is eligible for organic 

certification in one year or less. 

Transitioned animal. A dairy animal 

converted to organic milk production in 

accordance with § 205.236(a)(2) that has 

not been under continuous organic 

management from the last third of 

gestation; offspring born to a 

transitioned animal that, during its last 

third of gestation, consumes third-year 

transitional crops; and offspring born 

during the one-time transition exception 

that themselves consume third-year 

transitional crops. 

* * * * * 

■ 3. Section 205.236 is revised to read 

as follows: 

§ 205.236 Origin of livestock. 

(a) Livestock products that are to be 

sold, labeled, or represented as organic 

must be from livestock under 

continuous organic management from 

the last third of gestation or hatching: 

Except, That: 

(1) Poultry. Poultry or edible poultry 

products must be from poultry that has 

been under continuous organic 

management beginning no later than the 

second day of life; 

(2) Dairy animals. Subject to the 

requirements of this paragraph, an 

operation that is not certified for organic 

livestock and that has never transitioned 

dairy animals may transition nonorganic 

animals to organic production only 

once. After the one-time transition is 

complete, the operation may not 

transition additional animals or source 

transitioned animals from other 

operations; the operation must source 

only animals that have been under 

continuous organic management from 

the last third of gestation. 

Eligible operations converting to 

organic production by transitioning 

organic animals under this paragraph 

must meet the following requirements 

and conditions: 

(i) Dairy animals must be under 

continuous organic management for a 

minimum of 12 months immediately 

prior to production of milk or milk 

products that are to be sold, labeled, or 

represented as organic. Only certified 

operations may represent or sell 

products as organic. 

(ii) The operation must describe the 

transition as part of its organic system 

plan. The description must include the 

actual or expected start date of the 

minimum 12-month transition, 

individual identification of animals 

intended to complete transition, and 

any additional information or records 

deemed necessary by the certifying 

agent to determine compliance with the 

regulations. Transitioning animals are 

not considered organic until the 

operation is certified. 

(iii) During the 12-month transition 

period, dairy animals and their offspring 

may consume third-year transitional 

crops from land included in the organic 

system plan of the operation 

transitioning the animals; 

(iv) Offspring born during or after the 

12-month transition period are 

transitioned animals if they consume 

third-year transitional crops during the 

transition or if the mother consumes 

third-year transitional crops during the 

offspring’s last third of gestation; 

(v) Consistent with the breeder stock 

provisions in paragraph (a)(3) of this 

section, offspring born from 

transitioning dairy animals are not 

considered to be transitioned animals if 

they are under continuous organic 

management and if only certified 

organic crops and forages are fed from 

their last third of gestation (rather, they 

are considered to have been managed 

organically from the last third of 

gestation); 

(vi) All dairy animals must end the 

transition at the same time; 

(vii) Dairy animals that complete the 

transition and that are part of a certified 

operation are transitioned animals and 

must not be used for organic livestock 

products other than organic milk and 

milk products. 

(3) Breeder stock. Livestock used as 

breeder stock may be brought from a 

nonorganic operation onto an organic 

operation at any time, Provided, That 

the following conditions are met: 

(i) Such breeder stock must be 

brought onto the operation no later than 

the last third of gestation if their 

offspring are to be raised as organic 

livestock; and 

(ii) Such breeder stock must be 

managed organically throughout the last 

third of gestation and the lactation 

period during which time they may 

nurse their own offspring. 

(b) The following are prohibited: 

(1) Livestock that are removed from 

an organic operation and subsequently 

managed or handled on a nonorganic 

operation may not be sold, labeled, or 

represented as organic. 

(2) Breeder stock, dairy animals, or 

transitioned animals that have not been 


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under continuous organic management 

since the last third of gestation may not 

be sold, labeled, or represented as 

organic slaughter stock. 

(c) The producer of an organic 

livestock operation must maintain 

records sufficient to preserve the 

identity of all organically managed 

animals, including whether they are 

transitioned animals, and edible and 

nonedible animal products produced on 

the operation. 

(d) A request for a variance to allow 

sourcing of transitioned animals 

between certified operations must 

adhere to the following: 

(1) A variance from the requirement to 

source dairy animals that have been 

under continuous organic management 

from the last third of gestation, as stated 

in paragraph (a)(2) of this section, may 

be granted by the Administrator to 

certified operations that are small 

businesses, as determined in 13 CFR 

part 121, for any of the following 

reasons: 

(i) The certified operation selling the 

transitioned animals is part of a 

bankruptcy proceeding or a forced sale; 

or 

(ii) The certified operation has 

become insolvent, must liquidate its 

animals, and as a result has initiated a 

formal process to cease its operations; or 

(iii) The certified operation wishes to 

conduct an intergenerational transfer of 

transitioned animals to an immediate 

family member. 

(2) A certifying agent must request a 

variance on behalf of a certified 

operation, in writing, to the 

Administrator within ten days of 

receiving the request of variance from 

the operation. The variance request 

shall include documentation to 

demonstrate one or more of the 

circumstances listed in paragraph (d)(1) 

of this section. 

(3) The Administrator will provide 

written notification to the certifying 

agent and to the operation(s) involved as 

to whether the variance is granted or 

rejected. 

■ 4. Section 205.237 is amended by 

revising paragraph (a) to read as follows: 

§ 205.237 Livestock feed. 

(a) The producer of an organic 

livestock operation must provide 

livestock with a total feed ration 

composed of agricultural products, 

including pasture and forage, that are 

organically produced and handled by 

operations certified under this part, 

except as provided in § 205.236(a)(2)(iii) 

and (a)(3), except, that, synthetic 

substances allowed under § 205.603 and 

nonsynthetic substances not prohibited 

under § 205.604 may be used as feed 

additives and feed supplements, 

Provided, That, all agricultural 

ingredients included in the ingredients 

list, for such additives and supplements, 

shall have been produced and handled 

organically. 

* * * * * 

■ 5. Section 205.239 is amended by 

revising paragraph (a)(3) to read as 

follows: 

§ 205.239 Livestock living conditions. 

(a) * * * 

(3) Appropriate clean, dry bedding. 

When roughages are used as bedding, 

they shall have been organically 

produced in accordance with this part 

by an operation certified under this part, 

except as provided in 

§ 205.236(a)(2)(iii), and, if applicable, 

organically handled by operations 

certified under this part. 

* * * * * 

Erin Morris, 

Associate Administrator, Agricultural 

Marketing Service. 

[FR Doc. 2022–06957 Filed 4–4–22; 8:45 am] 

BILLING CODE 3410–02–P 


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