This is the third in a series of five farm bill fact sheets from the Sustainable Agriculture Coalition. For more information on the status of all sustainable agriculture provisions in the Senate and House versions of the farm bill, please visit SAC’s farm bill legislative tracking center.
Despite the fact that organic agriculture is one of the fastest growing sectors of American agriculture, the U.S. is currently experiencing a domestic shortfall of organically produced food as consumer demand continues to outpace supply. Considering the enormous potential organic practices have to increase farm revenue in our rural communities, preserve and enhance the environment, and provide nutritious food to our citizens, federal policies aimed at assisting farmers’ and ranchers’ transition to organic production must be a priority in the 2008 Farm Bill.
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WHY PUBLIC POLICIES ARE NEEDED
- Organic farming relies intensively on information and management for its success, yet the USDA does not spend a fair share on organic research. The U.S. retail market share of organic foods is currently approaching 3.5% and established trends should take the market share of organic to nearly 10% by 2012. Yet USDA-REE expenditures explicitly directed to research and information programs for organic agriculture in FY 07 are less than 1.5% of total REE spending.
- The majority of U.S. farmers have been deterred from converting to organic production systems because of the high costs associated with conversion and their lack of technical expertise. While consumer demand for organic products is projected to continue doubling every 3-4 years, in 2005, less than 1 percent of all U.S. cropland and pasture was certified organic. During the three-year conversion to organic production, farmers have to incur up front costs but do not receive the higher price premium of the organic crop. The high costs coupled with lack of technical expertise makes organic conversion prohibitive for many farmers, despite the market incentives.
- Organic farmers are treated inequitably under the Federal Crop Insurance Program, deterring some farmers from transitioning to organic production. Currently, organic farmers applying for crop insurance are automatically and unfairly charged a 5% surcharge on crop insurance premiums [PDF] because they are organic. Furthermore, under this policy organic producers are reimbursed at the lower conventional crop price (not the premium for organic products) if their crop suffers damage.
- The organic sector is still without comprehensive data on par with what is provided by USDA to the conventional farming sector. Data are vital to farmers in making planting decisions, accessing markets, and applying for crop insurance. While the 2002 Farm Bill authorized the Organic Production and Marketing Data Initiative requiring USDA to collect segregated organic farm financial indicators, market trends, and census-type data, efforts have been sporadic without a specific funding designation for these efforts.
- For many small and medium-sized farming operations, the annual cost of organic certification can be quite burdensome. The annual cost of organic certification varies greatly depending on the size and complexity of the operation, but ranges from $500 to $20,000 a year.
STATUS OF RELEVANT PROVISIONS IN THE HOUSE AND SENATE BILLS
There are key differences between the organic conversion, research, and crop insurance provisions of the House and Senate versions of the Farm Bill that must be resolved during conference committee negotiations:
- Both House and Senate Farm Bills increase the mandatory funding levels for the Organic Farming Research and Extension Initiative, with the House version providing $5 million a year and the Senate version providing $16 million a year. Urge the 2008 Farm Bill conference committee to adopt the Senate version in the final bill.
- Both the House and Senate Farm Bills create an Organic Conversion Assistance Program, but the House bill authorizes the program but does not provide mandatory funding. The Senate bill provides mandatory funding for the program through the Environmental Quality Incentives Program. Urge the 2008 Farm Bill conferees to adopt the Senate version, but with the House provision that stipulates a specific percentage (at least 50%) of funding to be used for technical assistance.
- The Senate bill prohibits the 5% surcharge on organic producers unless the surcharge can be proven warranted on a crop-by-crop basis. The Senate bill also requires the USDA to develop and implement procedures to allow for reimbursement of organic farmers at the organic rate for their crop when farmers suffer a loss. The House Farm Bill, on the other hand, prolongs current discriminatory crop insurance practices by requiring a study to be conducted on the issue, but stipulating no immediate action to rectify the situation. Urge the 2008 Farm Bill conference committee to adopt the Senate provisions in the final farm bill.
- Both House and Senate bills reauthorize the Organic Production and Marketing Data Collection program and provide mandatory funding over five years (the House bill provides $3 million over five years and the Senate bill provides $5 million over five years). Urge the conference committee to adopt the Senate version in the final farm bill.
- Both House and Senate bills provide $22 million in mandatory funding for the National Organic Certification Cost Share Program over the life of the farm bill and increase the annual payment cap from $500 to $750.
