1. The Present and Future for American Agriculture: A Perspective From the Organic Trade Association August 29, 2006 Caren Wilcox, ED & CEO At the request of the USDA Advisory Committee on Biotechnology & 21 st Century Agriculture

2. What is the Organic Trade Association? Founded in 1985 Serves the organic system of agriculture, food/fiber distribution Has grown with the industry Helps to maintain the chain of organic integrity from farm to table or farm to fashion

3. OTA coordinates with many state, regional and local groups of organic producers, certifiers or processors Diverse membership in both size and scope 60% of OTA membership declare less than $100,000 in annual revenue from organic sales

4. State and Regional Strengths Many state and regional groups with which we coordinate Organic farm organizations Cooperatives Organic Certifier Organizations Most are members of OTA

5. States Organic grew up in many places Primary states today and yesterday – –California, Texas, Colorado –Vermont, New Hampshire –Iowa, Wisconsin, Minnesota –Pennsylvania and New Jersey

6. Size and Scale Diverse in size and scope/business structure 60% OTA Members declare less than $100,000 in organic sales revenue Publically traded: Hain-Celestial, United Natural Foods (UNFI), Whole Foods, Wild Oats

8. Developing the Organic Market First efforts at standardization were voluntary, local, state 1990 Federal Law passes –Organic Foods Production Act (OFPA) Benefits: national organic label, certifiers accredited, national and international presence

9. Developing the Organic Market Many iterations of the rule Final rule finished in 2000 Initial standards and label introduced in October 2002

10. Basics of the Rule Farms that sell more than $5000 of organic product must be certified to make the claim Processors are certified

11. Basics of the Rule Three Excluded Methods of Production or Processing: No use of genetically modified organisms No use of sewage sludge No use of irradiation

12. Basics of the Label Products that are 100% organic can be labeled as such and use the “USDA Organic” seal 95% organic ingredients can opt to use the “USDA Organic” seal At least 70% organic can make the claim “made with organic” Remaining 30% - no use of excluded methods

13. Imported Products U.S. law requires agricultural product sold as organic in U.S. must meet or exceed U.S. standards regardless of source or processing site

14. Organic Grows and Promotes Itself Organic had to make its own system of production and distribution Segment truly grew at the “grassroots” Consumer demand for environmentally sound production methods

15. Organic Grows and Promotes Itself Organic responds to desire for Consumer Choice Shoppers seek to live more healthfully Consumers seeking products for: healthy life style environmental benefits

16. Desired Attributes Studies show consumers want: Foods and fiber grown without use of toxic and persistent pesticides Foods that are natural – without artificial preservatives, flavors, colors, no gmos Foods grown on farms with sustainable practices

17. Desired Attributes Consumers want good taste and quality Organic producers responded and developed attractive, tasty products 73% of shoppers have purchased organic products – 23% buy each week

18. Organic Marketplace Organic products are everywhere Organic is now 2.5% of food and beverage in U.S. (up from 0.81% in 1997)

19. Organic Food Sales by Channel, 2005 Source: OTA’s 2006 Manufacturer Survey & Nutrition Business Journal’s organic industry model.

20. Organic Marketplace Growth rates in double digits since about 1990 Currently at about 16% Conventional at about 2 -4 %

21. Organic Foods Sales and Penetration, 1997-2005 Source: Nutrition Business Journal estimates based on OTA’s 2006 Manufacturer Survey, annual Nutrition Business Journal surveys of manufacturers, SPINS, and other sources.

22. Organic Food Sales 2005 by Category Source: OTA’s 2006 Manufacturer Survey. Category and growth estimates derived from survey responses, Nutrition Business Journal’s organic industry model, SPINS retail data, and other sources.

23. Organic Food Category Share, 2005 Source: OTA’s 2006 Manufacturer Survey. Category and growth estimates derived from survey responses, Nutrition Business Journal’s organic industry model, SPINS retail data, and other sources.

24. Forecasted Average Annual Organic Food Sales Dollar Growth, 2007-2010 Source: Organic Trade Association’s 2006 Manufacturer Survey and Nutrition Business Journal analysis

25. Organic Marketplace Expanding by consumer demand Our challenge to meet the demand! A nice problem to have!

26. U.S. Government Support? For Organic # 1 Organic is grateful for the professionals at the National Organic Program in AMS Limited support from other areas of USDA include small economic research projects Increasing acknowledgment in REE and NRCS

27. Comparative Studies One study done by ERS concerns EU vs. US support for organic and it is very instructive

28. OTA Supports USDA In this Appropriations Cycle NOP – seeking $3.13 vs $2.026 Price information Crop and Livestock Analysis Study of number of acres and organic farms in U.S.

29. OTA Supports USDA Research money is essential House Floor action to put $5 million in Ag Appropriations – supported by all organic Transition money via organic certification cost share dollars

30. USDA Supports Organic Funds have been allocated and programmed to benefit organic in a few cases –CSREES –EQIP –NRCS –FAS

31. Is there Equity and Parity in Support? 2006 Support for Biotechnology in USDA ONLY Approximately $170,000,000

32. Impact of Lack of Support Organic producers and processors need production and price data Basis for marketplace, risk insurance Farm map request!

33. Will OTA Work for Change? OTA, with others in the organic community, will be seeking parity in the next Farm Bill.

34. The Elephant in the Room Biotechnology Regulation Potential losses to organic sector

35. Co-existence? “The concurrent but separate existence of two or more nations of assertedly great ideological disparity” Amer. Heritage Dictionary Lebanon-Israel? Former East & West Germany?

36. Successful Co-existence Strict and neutral parties enforce the separation Protect the weak and underfinanced from the strong and wealthy Encourage societal responsibility, enhance human life and environment

37. Organic is a good neighbor not a “nation of great ideological disparity” True coexistence is characterized by a desire to live in harmony with neighbors

38. The Future for Organic The future of organic is bright in the United States and worldwide We believe we are the agriculture of the 21 st Century

39. Learn more at www.ota.com.www.ota.com