Key Changes
The 2002 Farm Act contains several first-time research
and technical assistance provisions to assist organic crop
and livestock producers with production and marketing. The
Act authorizes $15 million in new funding for advanced organic
production systems research and $5 million for a national
cost-share program to help defray the costs of certification
incurred by organic crop and livestock producers. For the
first time, organic producers who produce and market only
organic products will be allowed an exemption from paying
conventional marketing assessments.
Summary of Provisions
Several provisions directly affect the U.S. organic sector:
- The Organic Agriculture Research and Extension Initiative
authorizes $3 million per year in new mandatory appropriations
in fiscal years (FY) 2003-07. Funds will be used to administer
competitive research grants, largely through USDA's Cooperative
State Research, Education, and Extension Service. Research
is to focus on determining desirable traits for organic
commodities; identifying marketing and policy constraints
on the expansion of organic agriculture; and conducting
advanced research on organic farms, including production,
marketing, and socioeconomic research.
- Other research and extension provisions for organic agriculture
that are authorized, but not mandated, include data development
on organic agricultural production and marketing; facilitated
access to organic research conducted outside the United
States for research and extension professionals, farmers,
and others; and a mandated report on the need for additional
funding for research and promotion of organic agricultural
products.
- A National Organic Certification Cost-Share Program is
established to assist producers and handlers of agricultural
products in obtaining certification under the National Organic
Program established under the Organic Foods Production Act
of 1990. The program provides $5 million in FY 2002 to remain
available until expended. The maximum Federal cost share
is 75 percent annually, with payments up to $500 per producer
or handler.
- Certified organic producers who produce and market only
organic products and do not produce any conventional or
nonorganic products are exempt from paying an assessment
under any commodity promotion law. Organic growers had concerns
about paying assessments that did little or nothing to market
organic products. Methods for improving the treatment of
certified organic agricultural products under Federal marketing
orders will be evaluated as part of the research and extension
provisions authorized under the Farm Act.
Several other provisions in the 2002 Farm Act indirectly
affect organic crop and livestock producers. Processes used
to produce agricultural commodities (including organically
produced products) are now included in the definition of products
that qualify for value-added market development grants. Several
of the conservation assistance programs may interest organic
farmers, and one—Agricultural Management Assistance—now
specifically mentions organic farming among the practices
that qualify for assistance to mitigate risk through market
diversification and resource conservation practices.
Economic Implications
Organic farming has been one of the fastest growing segments
of U.S. agriculture in recent years, but it is building on
a small base and faces numerous production and marketing obstacles
to more widespread adoption. The Organic Agriculture Research
and Extension Initiative is designed to fund projects that
address these obstacles. The organic production and marketing
data initiatives can make price discovery less costly and
improve market efficiency, and may assist farmers, processors,
food manufacturers, and others in making sound economic investment
decisions in the food and agriculture sector.
The organic farm structure differs substantially from the
U.S. agriculture industry as a whole, with fruits, vegetables,
and other high-value specialty crops making up a much larger
proportion of this sector. The Conservation Security Program,
which provides payments to producers for adopting or maintaining
a wide range of management, vegetative, and land-based structural
practices to address resource concerns, may interest organic
farmers who commonly adopt these types of practices as part
of their organic farming systems. Unlike most other Federal
conservation programs, producers who grow specialty crops
will be eligible to participate. The technical assistance
features of the Conservation Security Program may be useful
for organic farmers and those interested in transitioning
to organic farming systems.
USDA promulgated final rules implementing the Organic Foods
Production Act in December 2000. These rules require that
all except the smallest producers and handlers be certified
by a State or private agency accredited under the uniform
standards developed by USDA. State and private certifier fees
for inspections, pesticide residue testing, and other certification
services represent an added expense for organic producers.
In 2001, USDA established a certification cost-share program
to help pay certifier fees in 15 States—Connecticut,
Delaware, Maine, Maryland, Massachusetts, Nevada, New Hampshire,
New Jersey, New York, Pennsylvania, Rhode Island, Utah, Vermont,
West Virginia, and Wyoming. The 2002 Farm Act's National Organic
Certification Cost-Share Program provides funds that will
complement this program, making organic growers in all States
eligible for certification cost-share assistance. The maximum
Federal cost share is 75 percent annually, with payments up
to $500 per producer or handler. This would cover a substantial
part of the certification costs of many organic farmers with
small operations, who typically pay a smaller fee based on
the sliding-scale fee structure that many certifiers have
in place.
Federal research and policy initiatives often play a key
role in the adoption of new farming systems in the United
States. The research activities and technical assistance authorized
by the 2002 Farm Act could encourage growth in the organic
farm sector.
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