1. Overview of the U.S. Organic Sector Presented by: Catherine Greene Senior Agricultural Economist Economic Research Service—USDA www.ers.usda.gov/briefing/organic

2. U.S. Organic Production Systems   production system that is managed in accordance with the Organic Foods Production Act and regulations to respond to site-specific conditions by integrating cultural, biological, and mechanical practices that foster cycling of resources, promote ecological balance, and conserve biodiversity. ---USDA National Organic Program

3. 1990 Organic Foods Production Act Government Role SEC. 2102 - Purposes (1) to establish national standards governing the marketing…of organically produced products; (2) to assure consumers that organically produced products meet a consistent standard; and (3) to facilitate interstate commerce in fresh and processed food that is organically produced

4. Final regulations implemented on Oct. 21, 2002 All domestic organic production and imports must be in compliance Provisions include: - Organic Production & Processing Standards - Organic Labeling Requirements - USDA Organic Seal - Producer/Handler Certification - Certifier Accreditation USDA National Organic Program (NOP)

5. USDA Organic Certification Requirements Certification required for producers and handlers-- with an exception for those earning $5,000 or less in organic sales Certification process involves preparation of an organic plan, record-keeping, and annual on-site inspection Organizations (State, private, and foreign) that provide organic certification services must be accredited by USDA

6. USDA Organic Production Standards Crop standards (transition period, rotations, pest/nutrient inputs, seeds) Livestock standards (organic feed, antibiotic prohibition, outdoor access) Processors (inputs, product co-mingling)

7. USDA Organic National List: Allowed & Prohibited Substances Evaluation Criteria (OFPA - Sec. 2119) Potential for detrimental chemical interactions Toxicity and mode of action Probability of contamination during manufacture, use, misuse or disposal Effect on human health Effect on biological & chemical in agroecosystem Alternative practices and materials available Compatibility with sustainable agriculture

8. USDA Organic Labeling Requirements Label requirements and USDA seal use varies depending on the percentage of organic ingredients in the product Products containing 95 percent organically produced raw or processed agricultural products may display the “USDA Organic” seal Use of additional eco-labels in conjunction with organic label is permitted

9. USDA Organic Certifier Accreditation & Import Equivalency USDA accreditation to maintain certifier consistency and impartiality Certifier requirements include record-keeping, confidentiality & annual performance appraisals of inspectors Accreditation period is 5 years Import equivalency based on USDA accreditation or equivalency agreement

10. U.S. Organic Food Retail Sales, 1997-2005 YearOrganicAnnualOrganic/ FoodGrowth Total ($ Bil.) (%) (%) 1997 3.6 N/A.81 1999 5.017.6 1.06 2001 7.4 20.7 1.41 2003 10.420.2 1.94 2005 13.816.2 2.48 Source: Nutrition Business Journal and OTA’s 2006 Manufacturer Survey

11. US R ETAIL S ALES OF O RGANIC F OOD $13.8 Billion in 2005 Source: Organic Trade Association’s 2006 Manufacturer Survey

12. US Retail Sales of Organic Food Percent Growth in 2005 Source: Organic Trade Association’s 2006 Manufacturer Survey

13. Organic Food Channel Distribution, 2005 Channel Percent of Organic Sales Natural Foods Stores47 Mass Market46 Other * 7 * Includes farmers market, food service, and other non-retail store sales Source: Organic Trade Association’s 2006 Manufacturer Survey

14. U.S. certified organic acreage and operations, 2005 Source: USDA, Economic Research Service, based on information from USDA-accredited State and private organic certifiers.

15. U.S. Certified Organic Cropland and Pasture, 1992 - 2005 1/ Excluding Alaska Sources: 1992-94,Agr. Marketing Service Economic Research Service,USDA; 1995 (including revisions of 1992-94 farmland), Agrisystems International; 1997,2000-05, Economic Research Service, USDA.

16. Organic Adoption Rate Varies by Crop (2005) Certified organic crop acreage accounts for: Specialty Crops Field Crops_________ 1.6% U.S. tomato acreage 0.2% U.S. corn acreage 2.4% U.S. grape acreage 0.2% U.S. soybean acreage 3.4% U.S. apple acreage 0.5% U.S. wheat acreage 3.7% U.S. lettuce acreage 0.8% U.S. rice acreage 5.8% U.S. carrots acreage3.1% U.S. dry pea/lentil acreage Source: USDA Economic Research Service

17. USDA agencies have expanded research and other activities to support the organic sector Agencies with new programs since the late 1990s: Agricultural Marketing Service (AMS) Agricultural Research Service (ARS) Cooperative State Research, Education, and Extension Service (CSREES) Economic Research Service (ERS) Foreign Agricultural Service (FAS) National Agricultural Statistics Service (NASS) Natural Resources Conservation Service (NRCS) Risk Management Agency (RMA) Source: USDA Economic Research Service

18. USDA Organic-Sector Statistics USDA-Economic Research Service  Certified organic acreage and livestock analysis  Annual USDA producer surveys: Organic dairy farms in ‘05; organic soybean operations in ’06; apple operations in ‘07  Nationwide organic handler survey USDA-National Agricultural Statistics Service  Census statistics (every 5 years)  Administers USDA producer surveys  USDA-Agricultural Marketing Service  Occasional Market News prices for organic produce  Weekly Market News report organic poultry & eggs USDA-Foreign Agricultural Service  Trade estimates

19. Federal Organic Sector Activities Market facilitation Implementing uniform national standards and certification Market research and analysis Promoting organic exports Research and education Competitive grants program developed for organic systems research (mandatory funds allocated in the 2002 Farm Act) Risk reduction Crop insurance products are being developed for organic producers Certification cost share and conservation programs USDA certification cost-share program expanded to 50 states in 2002 States tapping EQIP and other conservation programs to support organic producers

20. Organic activities now included in all ERS programs Food Economics Division—modeling consumer demand for organic food Market and Trade Economics Division— research on organic food markets and distribution Resource and Rural Economics Division— examining the adoption of organic farming systems

21. ERS Organic Activities: Tracking adoption of organic farming ERS has tracked the adoption of certified organic farming systems in the U.S since mid-1990s ERS collaborates with over 50 state and private certifiers, other USDA agencies, and several state offices of USDA’s National Agricultural Statistics Service to make estimates Estimates available by commodity and state, 1997, 2001-2005, see www.ers.usda.gov/Data/Organic www.ers.usda.gov/Data/Organic

22. ERS Organic Activities: Research and analysis on specific markets ERS conducts research and analysis of consumer demand and prices in specific markets Historical farmgate and wholesale organic prices for selected fruits,vegetables, livestock and eggs, see www.ers.usda.gov/data/OrganicPrices www.ers.usda.gov/data/OrganicPrices Recent articles include trends in organic egg an poultry markets, see www.ers.usda.gov/briefing/organicwww.ers.usda.gov/briefing/organic Research modeling fresh organic produce consumption is underway

23. ERS Organic Activities: U.S. Organic Handler Survey Nationwide survey of all certified organic food handlers in the U.S. was conducted in 2006 Research is underway and outreach tools are being developed

24. ERS Organic Activities: Expanding USDA’s producer survey USDA’s Agricultural Resources and Management Survey (ARMS) expanded in 2005 ARMS is the major USDA producer survey for economics, www.ers.usda.gov/Briefing/ARMS/ www.ers.usda.gov/Briefing/ARMS/ ERS and NASS adding a targeted sample of organic producers:  dairy in 2005  soybeans in 2006  apples in 2007 Research currently underway comparing the costs, revenues, yields, energy intensiveness, and structural characteristics of organic and conventional production.

25. For more information ERS Organic Briefing Room, www.ers.usda.gov/briefing/organic —provides links to all ERS organic research reports, articles, and data