Effects of USDA Organic-Certification Fee-Reimbursement Program

Okay, this paper is a little dry—but it explores the effectiveness (or lack thereof) of the federal organic-certification program.

In order to reduce the impact of organic certification fees on small farming operations in the United States, Congress has authorized the U.S. Department of Agriculture (USDA) to offer the Organic Certification Cost Share Programs, which comprises the National Organic Certification Cost Share Program (NOCCSP) and the Agricultural Management Assistance (AMA) Organic Certification Cost Share Program (USDA, 2014a). The former program’s funds are distributed to all U.S. states and territories, and the latter’s funds target sixteen states. The increased budget for organic certification fees will support sustainability in some ways, hinder it in others, and have a marginal effect on food security and social justice.

This incentive program covers up to 75 percent of a farmer’s organic certification fees (to a maximum of $750). In 2014, the USDA announced that the amount of money available to offset organic-certification fees for beginning organic farmers had doubled the amount assigned in the 2008 Farm Bill, to approximately $13 million (USDA, 2014b). Of that amount, $11.5 million will be allocated via the NOCCSP and the remainder will be allocated via the AMA program. The National Sustainable Agriculture Coalition (NSAC) has endorsed this increase, finding the program “essential in helping farmers, especially small and mid-scale farms, become organic operations and maintain their organic status” (NSAC, 2014b).

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Defining “Sustainable”

In order to interpret the ability of this program to promote or hinder sustainability, the term should be defined (as is possible). The U.S. Environmental Protection Agency defines a sustainable entity as one that “creates and maintains the conditions under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic and other requirements of present and future generations” (n.d.). Some of the ways an organic farm may be environmentally sustainable include using few or no herbicides and pesticides, transporting produce a short distance to market, and integrating agriculture with livestock. However, “organic” doesn’t guarantee “sustainable.” The USDA National Institute of Food and Agriculture notes that “organic practices may conflict with sustainability goals in certain situations” (2009). The institute doesn’t indicate any of those situations.

Promoting Sustainable Business

By encouraging more people who are interested in organic farming to pursue it, the Organic Certification Cost Share Programs promotes sustainable business—insofar as a small organic farm can be considered sustainable as per the preceding section. The USDA finds its program to have “helped increase the number of farmers markets nationwide to over 8,100, a 74 percent increase since 2008” (Vilsack, 2014). Eighty-three percent of small-acreage farms (10 or fewer acres) gross $10,000 or less, so this program will make a difference to those farmers (Newton, 2014).

To some degree, this program might encourage existing farmers to switch to organic farming; however, because of the $750 dollar limit, this would only be useful to farms with gross incomes of approximately $100,000 or less (Oregon Tilth, 2014).

Hindering Sustainable Business

Considering the above income figure of $100,000, it can be said that the Organic Certification Cost Share Programs hinder sustainable business, as the USDA estimates that a farm needs to generate $100,000 of annual sales to be solvent (Newton, 2014), and therefore this cost-share is ineffectual to an economically sustainable business.

Organic certification can be cost-prohibitive for beginning farmers; approximately $700 the first year, with more for inspections (Oregon Tilth, 2014). While the NOCCSP can help farmers, the funds only cover 75 percent of the total fee. This can create a hardship for small farmers.

After the first year, the certification base fee rises in accordance with a farm’s gross income, but not in an equitable manner. If comparing the base fee to income, one sees that the more money a farm makes, the lower a percentage of their income the fee represents—ranging from 6 percent at the low end of the income scale to 0.5 percent at the high end (See Table 1).

Table 1

Oregon Tilth Base Fees, Ratio of Fee-to-Income

Gross Income Base Fee Percentage of Income
(calculated using maximum income in range)
$0 – $4,999 $299 6%
$15,000 – $24,999 $431 2%
$150,000 – $174,999 $1,339 0.7%
$400,000 – $499,999 $2,500 0.5%

Source: Oregon Tilth. (2014, May 1). Oregon Tilth Certified Organic Fee Schedule. Retrieved from http://tilth.org/files/certification/OTCOFeeSchedule.pdf

The NOCCSP, which is responsible for allocating the bulk of the 2014 fee-reimbursement budget, distributes funds to different states and territories in vastly different amounts—for example, Mississippi will receive $5,000, Wisconsin will receive $1,032,200, and California will receive more than $2 million (USDA, 2014c). The AMA funds target sixteen specific states, so most states will receive none of this program’s funding. These disparities may result in encouraging organic farming in some states while discouraging it in others.

Program Impact on Food Security and Social Justice

The NOCCSP does little to specifically affect food security or social justice, other than to promote a few small organic farms. Those farms are most likely to sell their produce at a farmers’ market or a CSA, both of which might be set up to accept SNAP—but SNAP is underutilized at such outlets (Athens et al., 2013).

The USDA as a whole understands, at least on paper, the demographic situation facing agriculture in this country, noting that new agricultural producers may come from farming backgrounds or be new to agriculture; they may be college graduates coming home to farm with their families, veterans, second career seekers, immigrants and people from all ethnic backgrounds. Tomorrow’s producers will be representative of America’s diverse heritage and population (Vilsack, 2014).

However, the USDA’s true commitment to women, minority, and other disadvantaged potential farmers is better revealed by its funding of the Outreach and Assistance for Socially Disadvantaged Farmers and Ranchers. NSAC notes that this program, “funded at $20 million per year in the last farm bill, has provided only half that amount in this year’s bill—despite the new farm bill’s expansion of the program to also provide outreach to military veteran farmers” (NSAC, 2014a). So, unless a socially disadvantaged farmer is also a veteran, they have much less chance of being reached by this program. Additionally, funding for this program was suspended in 2013 while the terms of the 2012 Farm Bill were being negotiated. So, including backlog, there will be more demand for a program with a wider scope and less money (NSAC, 2014c).

Organic farms require more hand labor, with weeding and picking of specialty crops. The Outreach and Assistance for Socially Disadvantaged Farmers and Ranchers program has no mission to improve the working conditions of farm workers, nor does the Farm Bill as a whole (Furgurson, 2012; Lilliston, 2014). The NOCCSP supports small farmers but doesn’t have much affect on larger problems, such as the environmental sustainability of large farms, social justice for farm workers, or food security for low-income eaters.

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