Strategy: Organic Certification

Transcription

1 Strategy: Organic Certification Franklin Egan, Yawen Lu, Jeff Milder NTRES 454 October 30, 2003

2 Environmental Problems of Conventional Agriculture Salinization & Desertification Erosion Reduced soil fertility Excessive irrigation water demand Decreased on-farm & near-farm biodiversity Runoff & leaching of nutrients and toxins High energy usage Agricultural wastes

3 Organic Agriculture as an Environmental Strategy Organic Agriculture Integrated Agriculture Regulations, Taxes, and Subsidies that Affect the Environmental Impact of Agriculture Agro-Environmental Goals What is the most cost-effective combination of strategies to achieve agro-environmental goals? What role should organic agriculture play?

4 Sales of Organic Foods U.S. Sales : (unit: billion) 1990: : : : : : 11.0 Sales grows at least 20% each year since 1990 Source: International Trade Centre UNCTAD/WTO (1997)

5 Organic Certification Certification and labels create consumer confidence. Certification agencies developed along with organic agriculture. Discontinuities across standards limit market growth.

6 The National Organic Program: Background Organic Foods Production Act, USDA appointed National Organic Standards Board to develop the NOP USDA released a standard that permitted GMOs, sewage sludge, and ionizing radiation. After public backlash, standards revised. Final Rule released Dec. 2000, implemented Oct

7 The National Organic Program: Rules The NOP is the strongest and most comprehensive standard in the world. --Dan Glickman, Secretary of Agriculture Crops must be grown organically 3 years before certification. Buffer zones. Mandatory crop rotation. No GMOs, sewage sludge, or ionizing radiation. All inputs and processing chemicals must be approved by the National List.

8 The National Organic Program: Certification Pre-existing certifying agencies absorbed under the NOP. Farmers must contact an accredited agency to certify their operation. USDA owns the word organic. $10,000 fine for sales without certification.

9 The National Organic Program: Labels 100% organic 95% organic 70-95% organic <70% organic

10 Hypothesized Environmental Benefits of Going Organic Higher on-farm & near-farm biodiversity Healthier soil (e.g., organic matter, microbial activity, fertility) Less erosion Less runoff & leaching of nutrients and toxins Lower energy usage Low input, low waste system To what extent does organic agriculture, as practiced in the U.S. under the USDA standard, achieve these benefits?

11 Biodiversity RELEVANT ORGANIC PRACTICES: Cover crops/fallows, intercropping, hedgerows, fewer biocides. FINDINGS: Practices are not mandated by the USDA standard or consistently used in the U.S. Nevertheless, evidence of higher biodiversity on organic farms.

12 Energy Usage Farm Component GJ/ha (conventional) Machinery % Fuel % Electricity % Fertilizer 16 2% Biocides 87 46% Infrastructure % TOTAL % Comparison of apple production systems in Washington, USA. Source: Reganold et al Nature 410:926. % used on organic farm

13 Inputs and Wastes Few organic farms approximate closed systems Input substitution is common The USDA standard is consistent with, but does not mandate, a lower-input, lowerwaste system

14 One Assessment of the Environmental Benefits of Organic Agriculture

15 USDA Organic Standard & Sustainability: The Verdict Sustainable agriculture is difficult to codify In almost all cases, organic farming practices fall notably short of agro-ecological ideals ; still, substantial environmental benefits exist USDA organic certification has limited value as an environmental strategy, but is important for other reasons Organic certification is not a substitute for stronger national agro-environmental policies

16 Characteristics of U.S. Organic Market Organic Engaged Organic Attached Organic Borderline Organic Uninterested Percent of consumers Degree of purchase interest Very high Moderate Weak None Average number of organic products purchased within year Environmental focus for buying organics Highest High Moderate Low Health focus for buying organics Highest High High Moderate Source: Hartman and New Hope (1997)

17 Information Asymmetries Label function: Reducing information gap and transaction costs between producers and consumers Label effectiveness and mislabeling: When extensive mislabeling occurs, the value of labeling is undermined and the organic food market fails

18 Organic Certification Costs Can be expected to rise under the NOP Certifier must bear the added costs of USDA accreditation Costs will be passed on from producers and handlers to consumers

19 Organic Certification Costs (Examples) A State-based Private Certifier: Initial application fee of $250, plus costs of inspection, plus a 25% service charge California Certified Organic Farmers (CCOF): Annual cost of certification (F) is F = (0.005)(Total Revenue) + e t includes one-time fee of $250, the cost of annual on-site inspection, and the costs related to the extensive paperwork * e t

20 Impact of USDA/NOP on Small Farms All growers with more than $5,000 annual sales must be certified More paperwork, higher cost The Final Rule of USDA/NOP is designed for industrial agriculture farms Results: Larger, less diverse operations will benefit most; smaller growers will need to focus on direct marketing or leave organic certified system (uncertified organic like naturally grown )

21 Questions Will these labels help consumers make educated choices? What other national policies are needed to complement organic certification?