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Date Published: March 23, 2004

Federal regulations affect large, small growers of organic foods differently

Author: JIM McGUINNESS
 
Organic farmer Martin Miles grows peppers, snow peas, tomatoes, and garlic on his farm in Stickleville, Va. He's a member of Appalachian Harvest Growers Group, a network of nearly 30 organic farmers whose customers include Food City, Ukrops in Richmond, Va., Whole Foods (Mid-Atlantic and Southern divisions), and Earth Fare in Asheville, N.C. The former tobacco farmer figures to gross $30,000 in a normal year.

Kingsport's Ned Johnson has been a commercial organic farmer since 1998. His yield includes lettuce, greens, tomatoes, and cucumbers. Johnson is president of Highlands BioProduce, a co-op of four to six farmers that sells half-bushel baskets of organic produce to a small number of subscribers on a weekly basis. He'll make less than $5,000 in a typical year.

Miles and Johnson sit on opposite ends of the organic farming spectrum. While they have similar agricultural philosophies, their business goals are different.
The difference became more profound in October 2002 when the federal government issued a new set of regulations for the organic farming industry. The regulations state that all farms and handling operations selling organic agricultural products worth more than $5,000 a year must be certified by a state or privacy agency accredited by the United States Department of Agriculture. The annual certification fee amounts to $550 to $600 per farm.

Such regulations should prove to be a boon to the large growers vying for shelf space at your local supermarket, serving to validate their status as "certified organic" farmers. But they're less beneficial to a smaller grower whose lesser profit makes any additional fees cost-prohibitive.

"It was pretty drastic," Johnson said of the fee's impact. "The expense is pretty large for a small grower such as myself. So I decided not to go with the new government regulations. I can still call it organic, but I can't call it ‘certified' organic."

Adds Miles: "If it's organic, then I want the regulations to be organic. I just wish the federal government would have kept out of it."

Yet while the regulations mean an added expense - and much more paperwork - it also provides a benefit to the farmer who wants to run a competitive business.

"Some farmers hate the new regs, and I'm not wild about crossing every ‘t' and dotting every ‘i' either," said Anthony Flaccavento, executive director of Appalachian Sustainable Development in Abingdon, Va. "But it's actually a pretty good tradeoff because in the final analysis, it protects their turf."

It also could lead to a financial windfall as organic products continue to trend upward in the marketplace. According to the Farming Research Foundation, sales of organic produce have risen 20 to 25 percent annually since 1991 - tripling in size to somewhere between $11 billion and $13 billion in 2003. The continued growth is mainly attributed to the fact that organics are now carried in 73 percent of all conventional grocery stores.

"That's a dramatic change over a few years ago when you had to go to a specialty store to find them," said Flaccavento.

Food City reports an overall growth of 125 percent since they began stocking organic products two years ago.
"More and more people were coming in asking for it, so we kept adding more items," said Mike Tipton, Food City's director of produce operations.

Ingles Market in Colonial Heights has also experienced a similar increase since opening its organic section three years ago.

"We've had a 30 to 40 percent increase each year," said Brandon Kent, the store's assistant manager. "It's mainly because people want to live healthier. Most of the major diet plans call for eating organic food. "

A farmer's decision to forsake conventional farming for organic methods is based mainly on concerns over environmental and health issues.

Conventional farmers apply synthetic fertilizers to the soil to grow their crops, spray with pesticides to protect crops from pests and disease, and use synthetic herbicides to control weed growth. Organic farmers counter with feeding soil and building soil matter with natural fertilizer to build crops, use biological control (a live bug or fungus) to protect crops from pests and fungus, and make use of crop rotation, mechanical tillage, and hand-weeding to control weed growth. As a last resort, organic farmers may apply certain botanical and non-synthetic pesticides. The meat, dairy products and eggs that organic farmers produce are from animals that are fed organic feed and allowed access to the outdoors.

"I made a moral decision," said Johnson. "I just don't believe in putting a lot of chemicals and pesticides in the ground. In the 1800s everybody did it that way. It's only been since the second World War that they got into making synthetic fertilizer. That's not treating the Earth right."

"I just think it's healthier because you're not dealing with pesticides," said Miles. "If you grow conventional produce in a garden, you can wash [the pesticides] off the outside. But what worries me is what's on the inside."
While projections call for continued growth in organic foods, farmers on the lower end of the profit line wonder whether the growth will ultimately include them.

"The small grower can exist if they find the right niche," Johnson said. "For us, the basket program is the right niche. For someone else, it might be marketing to a few restaurants or to a farmers' market. But they really need a niche."

The government recently made it somewhat easier on small growers by finalizing a new regulation that would decrease the annual certification fee to between $150 to $200 for growers who net up to $300 but are part of a larger network of growers. They can make the "certified organic" claim, but only as part of the group. Also, Virginia and Tennessee both have cost-sharing programs that will pay up to 75 percent of a farmer's certification. The money is not unlimited, however, and is issued on a first-come first serve basis.

"Those things help," Miles said. "Anytime you've got to pay more it bothers people. I think that's one of the problem with getting more farmers - they don't want to pay to be certified. We have the demand, we just don't have enough farmers. "

Adds Flaccavento: "The cost and the burden of the paperwork has been a hindrance. if you're going to start small, which most of our growers do, you obviously don't want to pay out tons of money."