[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
REVIEW OF ECONOMIC IMPACTS OF
ORGANIC PRODUCTION, PROCESSING,
AND MARKETING OF ORGANIC
AGRICULTURAL PRODUCTS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HORTICULTURE AND ORGANIC AGRICULTURE
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
APRIL 18, 2007
__________
Serial No. 110-11
Printed for the use of the Committee on Agriculture
www.agriculture.house.gov
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COMMITTEE ON AGRICULTURE
COLLIN C. PETERSON, Minnesota, Chairman
TIM HOLDEN, Pennsylvania BOB GOODLATTE, Virginia
Vice Chairman Ranking Minority Member
MIKE McINTYRE, North Carolina TERRY EVERETT, Alabama
BOB ETHERIDGE, North Carolina FRANK D. LUCAS, Oklahoma
LEONARD L. BOSWELL, Iowa JERRY MORAN, Kansas
JOE BACA, California ROBIN HAYES, North Carolina
DENNIS A. CARDOZA, California TIMOTHY V. JOHNSON, Illinois
DAVID SCOTT, Georgia SAM GRAVES, Missouri
JIM MARSHALL, Georgia JO BONNER, Alabama
STEPHANIE HERSETH SANDLIN, South MIKE ROGERS, Alabama
Dakota STEVE KING, Iowa
HENRY CUELLAR, Texas MARILYN N. MUSGRAVE, Colorado
JIM COSTA, California RANDY NEUGEBAUER, Texas
JOHN T. SALAZAR, Colorado CHARLES W. BOUSTANY, Jr.,
BRAD ELLSWORTH, Indiana Louisiana
NANCY E. BOYDA, Kansas JOHN R. ``RANDY'' KUHL, Jr., New
ZACHARY T. SPACE, Ohio York
TIMOTHY J. WALZ, Minnesota VIRGINIA FOXX, North Carolina
KIRSTEN E. GILLIBRAND, New York K. MICHAEL CONAWAY, Texas
STEVE KAGEN, Wisconsin JEFF FORTENBERRY, Nebraska
EARL POMEROY, North Dakota JEAN SCHMIDT, Ohio
LINCOLN DAVIS, Tennessee ADRIAN SMITH, Nebraska
JOHN BARROW, Georgia KEVIN McCARTHY, California
NICK LAMPSON, Texas TIM WALBERG, Michigan
JOE DONNELLY, Indiana
TIM MAHONEY, Florida
Professional Staff
Robert L. Larew, Chief of Staff
Andrew W. Baker, Chief Counsel
William E. O'Conner, Jr., Minority Staff Director
.........................................................
__________
Subcommittee on Horticulture and Organic Agriculture
DENNIS A. CARDOZA, California, Chairman
BOB ETHERIDGE, North Carolina RANDY NEUGEBAUER, Texas
LINCOLN DAVIS, Tennessee Ranking Minority Member
TIM MAHONEY, Florida JOHN R. ``RANDY'' KUHL, Jr., New
JOHN BARROW, Georgia York
KIRSTEN E. GILLIBRAND, New York VIRGINIA FOXX, North Carolina
KEVIN McCARTHY, California
K. MICHAEL CONAWAY, Texas
Keith Jones, Subcommittee Staff Director
.........................................................
(ii)
C O N T E N T S
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Page
Cardoza, Hon. Dennis A., a Representative in Congress from the
State of California, opening statement......................... 1
Prepared statement........................................... 47
Neugebauer, Hon. Randy, a Representative in Congress from the
State of Texas, opening statement.............................. 3
Prepared statement........................................... 49
Peterson, Hon. Collin C., a Representative in Congress from the
State of Minnesota, prepared statement......................... 50
Goodlatte, Hon. Bob, a Representative in Congress from the
Commonwealth of Virginia, prepared statement................... 52
Witnesses
Wilcox, Ms. Caren, Executive Director and CEO, Organic Trade
Association, Greenfield, Massachusetts......................... 4
Prepared statement........................................... 81
Marqusee, Mr. Robert B., Director, Department of Rural Economic
Development, Woodburry County, Sioux City, Iowa................ 5
Prepared statement........................................... 113
James, Ms. Bea, Category Leadership Program Manager, National
Cooperative Grocers Association, St. Paul, Minnesota........... 7
Prepared statement........................................... 120
Lipson, Mr. Mark, Policy Program Director, Organic Farming
Research Foundation, Santa Cruz, California.................... 9
Prepared statement........................................... 126
Vieira, Mr. Manuel, Owner, A.V. Thomas Produce, Livingston,
California..................................................... 20
Prepared statement........................................... 133
Martens, Ms. Mary-Howell R., Lakeview Organic Grains, Penn Yan,
New York....................................................... 21
Prepared statement........................................... 137
Lively, Mr. Scott, President and CEO, Dakota Beef, LLC, Howard,
South Dakota................................................... 23
Prepared statement........................................... 141
Pike, Mr. Robert, Vice President/General Manager, Braswell Foods/
Glenwood Foods, Nashville, North Carolina...................... 24
Prepared statement........................................... 149
Marquardt, Ms. Sandra, President, On the Mark Public Relations,
Silver Spring, Maryland, on behalf of Ms. La Rhea Pepper,
President, Organic Essentials, Inc., O'Donnell, Texas.......... 36
Prepared statement........................................... 152
Clarkson, Mr. Lynn, President, Clarkson Grain Company, Inc.,
Cerro Gordo, Illinois.......................................... 37
Prepared statement........................................... 161
Ghilarducci, Mr. Rich, President and CEO, Humboldt Creamery,
Fortuna, California............................................ 39
Prepared statement........................................... 166
Dawes, Ms. Nicole Bernard, President and COO, Late July Snacks,
Hyannis, Massachusetts......................................... 40
Prepared statement........................................... 170
Submitted Material
Behar, Mr. Harriet and Mr. Aaron Brin, Sweet Earth Farm, Gays
Mills, Wisconsin............................................... 54
Birmingham, Ms. Dierdre, Owner-operator, Somerset Orchard and
Farm, Mineral Point, Wisconsin................................. 56
Brushaber, Mr. James R., Organic Producer, Beaverton, Michigan... 58
Butterfield, Ms. Brenda A., Butterfield Organic Growers,
Pittsfield, New Hampshire...................................... 59
Conner, Dr. David S., Ph.D., Researcher, East Lansing, Michigan.. 61
Diffley, Ms. Atina, Gardens of Eagan Organic Farm, Farmington,
Minneosta...................................................... 62
Hildebrand, Mr. Stanley J., Organic Producer, Rutledge, Missouri. 66
Kelly, Mr. Dan, Blue Heron Orchard, Canton, Missouri............. 67
Lipson, Mr. Mark, Policy Program Director, Organic Farming
Research Foundation, Santa Cruz, California.................... 68
Lubbert, Mr. and Mrs. Walter and Joyce, Organic Farmers, Mendon,
Illinois....................................................... 70
Martinell, Ms. Bonnie, CEO, On Thyme Gourmet Inc., Co-owner, Boja
Farm, Bridger, Montana......................................... 71
Miller, Mr. Tim P., Millberg Farm Certified Organic, Kyle, Texas. 73
Rogers, Mr. David L., Farm Policy Advisor, Northeast Organic
Farming Association of Vermont................................. 74
Wilcox, Ms. Caren, Executive Director and CEO, Organic Trade
Association, Greenfield, Massachusetts......................... 79
HEARING TO REVIEW ECONOMIC IMPACTS OF ORGANIC PRODUCTION, PROCESSING,
AND MARKETING OF ORGANIC AGRICULTURAL PRODUCTS
----------
WEDNESDAY, APRIL 18, 2007
House of Representatives,
Committee on Agriculture,
Subcommittee on Horticulture and Organic Agriculture
Washington, DC.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Dennis
A. Cardoza [Chairman of the Subcommittee] presiding.
Members present: Representatives Cardoza, Etheridge, Davis,
Gillibrand, Peterson (ex officio), Neugebauer, Kuhl, and
McCarthy.
Staff present: Tyler Jameson, Keith Jones, Scott
Kuschmider, Merrick Munday, John Riley, Sharon Rusnak, April
Slayton, Debbie Smith, John Goldberg, Alise Kowalski, Pam
Miller, and Jamie Weyer.
STATEMENT OF HON. DENNIS A. CARDOZA, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Cardoza. Good morning. This hearing of the Subcommittee
on Horticulture and Organic Agriculture, to review economic
impacts of organic production, processing and marketing of
organic agricultural products, will come to order.
I want to thank you all for being here today, attending our
hearing and taking time from your busy schedules to testify
about the economic impacts of organics on agriculture. I want
to acknowledge the absence of one witness from Mr. Conaway's
district today. Mrs. La Rhea Pepper is unable to be here with
us due to the passing of her husband, after a lengthy illness.
The members of the Subcommittee extend our sympathy to Ms.
Pepper and her family. In her absence, her oral testimony today
will be read into the record by Mrs. Sandra Marquardt.
Ladies and gentlemen, this is a historic hearing. Today
marks the first hearing on organic agriculture ever to be held
in the House Agriculture Committee. I am proud to be chairing
this Subcommittee as we engage, for the first, time organic
producers, processors, and manufacturers, in a substantial
discussion of the challenges and opportunities facing the
industry. But I must also commend Chairman Peterson for his
leadership in acknowledging the important role that organic
agriculture has to play in ensuring a prosperous U.S. farm
sector by creating a Subcommittee to specifically monitor this
industry as we write the 2007 Farm Bill.
In 2005, the U.S. organic market grew 17 percent to reach
$14.6 billion in retail sales. Organic food's share of the
total retail food sales has reached 2.5 percent. Certain non-
food sectors show even more remarkable growth. Organic fiber
sales have grown over 44 percent in the past year; organic
flour sales, over 50 percent; and today, organic products are
rapidly becoming mainstream staples in high-end restaurants,
sports venues, university cafeterias, club stores and other
mass-market retailers. This broad acceptance and perception of
quality is a far cry from where organic was just 20 years ago.
It was once the domain of ugly broccoli, dried up apples and
wormy tomatoes. Today, the industry offers to the American
consumer high-quality produce, innovative salad mixes, full
lines of convenience foods and dairy items. The product
diversity represented here today by producers and processors
witness a testimony in and of itself. Organic has arrived in
the hearts and minds of the American consumer.
Today, all the members at their daises are provided with
cookies from the Late July organic company, and they were
provided today by a witness on one our panels, Nicole Bernard
Dawes, the President of Late July, who will be testifying
later.
There are, however, significant challenges to maintaining
the growth and reputation of the U.S. organic sector. The first
and perhaps foremost challenge is ensuring the continued
integrity of the USDA organic seal. Consumers look to the
USDA's green and brown seal as their assurance of the highest
quality in organic products. In order to maintain its well-
deserved consumer confidence, the National Organic Program must
be adequately staffed so that it can provide the industry with
timely responses to its questions and calls for new standards
to exercise the appropriate oversight of accredited certifying
agents, and to engage in the proper enforcement of regulatory
violations.
Furthermore, the rapid growth and demand for organic
products in the United States has not gone unnoticed by other
countries. Producers abroad are vying to meet the demand for
organic products created by the U.S. consumer. I am extremely
concerned that foreign imports, especially from those rising
from agricultural giants like China, claim to be organic when
they are failing to meet some basic standards for organic
agriculture. The rapid increase in these so-called organic
imports is further straining NOP's limited resources. As I am
sure we will hear time and time again from the panel today, the
integrity of the organic label is the most important, if not
the only symbol, for consumer confidence. Any cracks in that
system from products at home or abroad can cause significant
damage to the industry and must be rectified immediately.
Finally, we in Congress must work to ensure that organic
agriculture is better integrated into USDA as a whole.
Technical assistance for organic producers, through USDA
extension programs, is often sporadic and its availability is
uneven among extension agents. Organic farmers can be penalized
simply for being organic farmers when assessing crop insurance.
And finally, we must ensure the sector receives the research it
badly needs to continue its remarkable growth.
I look forward to hearing from the panels today and
especially from one of my hometown constituents and dear
friend, Mr. Manuel Vieira, from Livingston, California. With
that, I now I yield to the Ranking Member, Mr. Neugebauer, the
time for him to make his opening statement.
STATEMENT OF HON. RANDY NEUGEBAUER, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Neugebauer. Well, thank you, Chairman Cardoza. And of
course, this is my first time to be in these new facilities
here and I might add that we have traded up.
Mr. Cardoza. We have moved up in the world.
Mr. Neugebauer. Thank you for calling today's hearing on
organic agriculture. I didn't realize that this was the first
time a Committee had heard that, and so it is an honor to be a
part of this very historic day, as we talk about the expanding
organic industry.
The National Organic Program is a successful voluntary
marketing program, through standards that all producers and
processors follow certification enforcement processes.
Consumers know that when they purchase goods with the USDA
organic seal, they are purchasing food that has been grown or
raised in a certain manner. I emphasize that the NOP is a
marketing program and it is voluntary, because I believe that
these two features of the program have contributed to its
success. For organic producers and processors, the demand for
their products has been growing by nearly 20 percent a year.
Entrepreneurs have realized this demand and have invested in
supplying this growing market and they are receiving a price
premium for their products. I understand that those in organic
agriculture have a number of priorities for the 2007 Farm Bill,
and I am interested in learning more from the industry on these
proposals, given our limited resources and also given the fact
that the marketplace has been good to the organic producers.
There is an appropriate USDA role when it comes to
maintaining the standards and certification behind the USDA
organic label. USDA has the responsibility to ensure that the
label means what it says. There is also an appropriate role for
research and extension, and organic producers also benefit from
the research and conversation programs that are available to
all farmers. However, I am cautious about increasing the role
of USDA in the organic marketplace and in producers' decisions
on whether or not to engage in organic agriculture.
I look forward to hearing more about your ideas for the
2007 Farm Bill and learning from the organic producers and
processors here today about the growth and changes in the
market for organic products. Thank you, Mr. Chairman.
Mr. Cardoza. Thank you, Mr. Neugebauer. The chair would
request other members to submit their opening statements for
the record so that witnesses may begin their testimony and we
ensure that there is ample time for your questions. We want to
start with panel one and we would like to welcome you all to
the table. We will start with Mrs. Caren Wilcox, Executive
Director and CEO of the Organic Trade Association, from
Greenfield, Massachusetts. Welcome. Mr. Robert Marqusee,
Director of the Department of Rural Economic Development,
Woodbury County, Sioux City, Iowa. Thank you for being here,
sir. Ms. Bea James, Category Leadership Program Manager,
National Cooperative Grocers Association, St. Paul, Minnesota;
and Mr. Mark Lipson, Policy Program Director of the Organic
Farming Research Foundation, from Santa Cruz, California. Ms.
Wilcox, please begin when you are ready. Each panelist will
have five minutes. You are welcome to summarize your written
testimony so that we can get to your questions as soon as
possible.
STATEMENT OF CAREN WILCOX, EXECUTIVE DIRECTOR AND CEO, ORGANIC
TRADE ASSOCIATION
Ms. Wilcox. Thank you, Mr. Chairman, good morning, and
Ranking Member Neugebauer and members of the Subcommittee. I am
Caren Wilcox, Executive Director of the Organic Trade
Association, OTA for short, the 1600 member business
association representing all aspects of the organic chain,
including farming, processing, distribution and retailing of
food, organic textiles and personal care products. Thank you
for this historic hearing. We do agree with you that it is
historic. It has been my great opportunity to lead the Organic
Trade Association for the last year, following a long career in
the private and public sectors, almost exclusively involved
with food and agriculture.
You will hear today from several OTA members, who will
talk about their individual experiences of going organic and
how they have literally built their businesses often from the
ground up. Perhaps the most important thing you will hear from
many of them is the impact that organic agriculture has had,
not only on their own wellbeing, but also on the economic
growth of their communities.
Certified organic production and processing starts with a
positive system of farming that maintains and replenishes soil
fertility without the use of toxic and persistent pesticides
and fertilizers. It includes a system of production from farm
to fork, so that we may maintain the organic integrity that
begins on the farm. Organic foods must be produced without the
use of antibiotics, synthetic hormones, sewage sludge,
irradiation, genetic engineering and other excluded practices;
and cloning animals or using their products is considered
inconsistent with organic practice. For products that use at
least 95 percent organic ingredients, the USDA organic seal may
be used on a voluntary basis. You will see it on the Late July
products, and we included it in our testimony.
OTA studies the marketplace because USDA does not have the
authority to do so comprehensively. And as the Chairman said,
food and beverage sales were about $14.6 billion in 2005 and
occupied about 2.5 percent of the retail marketplace. The
fastest growing organic product categories include meat, dairy
and condiments. Fruits and vegetables, many from California,
Mr. Chairman, represent the largest dollar value category in
the organic sector. Pet food was growing as a category even
before the latest tragic recalls and it is growing even faster
now.
Now, I do want to talk about farmland, which is not growing
as fast in terms of certification. ERS tells us that .5 percent
acreage of cropland and .5 percent of pastureland are certified
organic acres. The national standards were implemented in 2002,
so we hope that additional acreage is now reaching certified
organic status after its 3-year conversion. But it is clear,
U.S. farmers are not keeping up with consumer demand for
organic products in the United States, and the government does
not collect import data on organic goods, but imports must be
substantial. We want to enhance the ability of U.S. farmers to
provide as much organic food, fiber and other organic products
as possible for our country. To that end, we have four
objectives in the farm bill: providing technical and conversion
assistance and cost-share certification for farmers; we also
need to overcome hurdles of data collection, including organic
prices, markets, crops, farms, processors and crop loss
experience. It is almost entirely absent now from the USDA's
lexicon and this data is critical for organic growth, not only
for its own sake, but because we need it for our crop insurance
and banking needs. USDA is known across the world for research
and you will hear a little bit more about that later, but we
only get a tiny share. And finally, we need to be sure that
USDA, in general, and the National Organic Program,
specifically, have the resources to keep up with the dramatic
growth that organic certification programs demand. Consumers
need to have confidence in the label and USDA's attention to
NOP will ensure that fact. We need your help with this.
Organic offers rural America's farmers, and its shoppers
alike, a choice of wonderful products, while contributing to
the protection of our land, air and water. Frankly, what we
need is parity of resources to build sound infrastructure as we
compete in the marketplace with conventional food and products
of biotechnology. We look forward to working with the members
of the Subcommittee and the Full Committee to achieve great
results. That you for this opportunity.
[The prepared statement of Ms. Wilcox appears at the
conclusion of the hearing:]
Mr. Cardoza. Thank you, Ms. Wilcox. Next for the panel we
have Mr. Robert Marqusee, Director of the Department of Rural
Economic Development. Sir, welcome to our panel and please
proceed with your testimony.
STATEMENT OF ROBERT B. MARQUSEE, DIRECTOR, DEPARTMENT OF RURAL
ECONOMIC DEVELOPMENT
Mr. Marqusee. Thank you very much. My name is Robert
Marqusee and I am the Director of Rural Economic Development
for Woodbury County, Iowa, which is the Sioux City area. I want
to thank the Chairman and the Ranking Member and the entire
Committee for this awesome responsibility to communicate to
this group and to the government the devastating effects of
subsidized industrial farming and what those effects are on the
rural landscape, and what we in Woodbury County have done by
way of local policies promoting organic agriculture to
counteract those impacts.
When I began my position in March of 2005 as Rural Economic
Development Director, our rural communities were long in
decline. The average loss of population in our rural non-
bedroom communities was about 25 percent and the folks who
remained in those communities were aging. This is typical of
rural communities throughout the State of Iowa, where the
average age of the farmer is 55 to 60 years old, most of the
land is cash-rented, 25 percent of the land is owned by
individuals aged 75-plus, and farms are getting larger and
larger, a 78 percent increase in farms exceeding 1,000 acres,
pushing out the small to midsized farm operations. As the Des
Moines Register concluded in a special 2-part report, the
continued industrialization of farming will promote fewer
owners of land, faster decline in rural populations, less
income and a strain on the environment.
I quickly discovered that the reason for this sad state of
affairs was twofold. Federal farm subsidies, in the advent of
chemical farming, encouraged large corporate farms that produce
less diversified crops with less labor, higher input and
environmental costs, all of which shattered the previous local
agricultural economies. A lot of money was flowing out of the
county. The results of that policy have been the consolidation
of farms and the elimination of next-generation farmer. In
addition, I found that 10 percent of the farmers receive
approximately 80 percent of the subsidies. Despite millions of
subsidy dollars being paid to farmers, there was a net loss
growing the directed corn and soybean. In other words, I found
our rural communities in crisis and I expect at least half of
our rural communities to disappear within the next 10 years.
There is no debate as to the cause of this decline.
So Woodbury County enacted two policies, trying to reverse
the fortunes of the rural communities. We needed to recreate
the economic dependencies of producers, local markets,
distribution and storage. Our only option was to counter the
negative economic forces that was creating the problem. We
passed the first policy in the Nation that provides a hundred
percent real-property tax rebate to any farmer who converted
from conventional to organic farming practices. Then we passed
a mandatory local food purchase policy requiring the county to
purchase locally-grown organic food for its jail, juvenile
detention center, and work release program. We now have a local
organic food restaurant, a market store, farmers market, a
local foods broker and soon-to-be-announced regional foods
brand. A neighboring county has enacted the Woodbury organics
conversion policy and two others have indicated that they will
adopt a similar policy this year.
A major problem has been in supply and this is really the
crux of the matter. While the demand is high, our aging farmers
are trapped in the subsidy treadmill. There are few young
farmers left in these communities and most economic development
activities focus on erecting ethanol plants. It should be noted
that the rush to ethanol as a prime economic development tool
does nothing but put industrial farming on steroids. The
monetary incentives associated with high corn prices is to
eliminate crop rotations, level scenic hills in search of more
producing land, increases land prices, has higher input costs,
most of the benefits going to the landowner and not the cash-
rent farmer. As for the supply of organic products, it is hard
to compete with a system of Federal and market supports so
totally dedicated to industrial agriculture. The demand is
there. Organic food is the only growing segment of the food
industry, yet Federal policy does not promote, on equal
footing, the organic food industry. Therefore the trade
imbalance will continue to grow while consumers demand the
better organic choice. This situation simply does not make
sense.
We in Woodbury County are doing everything we can to
reverse the trends in our rural communities. However, without a
significant modification of Federal farm policy, the picture of
rural America will be bleaker and beyond repair in the very
near future. I have submitted written testimony which contains
a coherent detail of what I have said today and I request that
it be accepted for the record. Thank you very much.
[The prepared statement of Mr. Marqusee appears at the
conclusion of the hearing:]
Mr. Cardoza. Thank you, sir. Your testimony will be
included in the record.
Mr. Marqusee. Thank you.
Mr. Cardoza. Next, we have Bea James from St. Paul,
Minnesota. Welcome. Thank you very much for being here and
please proceed with your testimony.
STATEMENT OF BEA JAMES, CATEGORY LEADERSHIP PROGRAM MANAGER,
NATIONAL COOPERATIVE GROCERS ASSOCIATION
Ms. James. Mr. Chairman and members of the Subcommittee,
good morning. My name is Bea James and I want to thank you for
giving me the opportunity to speak to you today. My testimony
will provide a brief overview of the delicate integral working
relationship between local organic farmers and retail
cooperatives, as well as the thriving economic results produced
by this relationship.
I have worked in the natural organic food industry for more
than 20 years and have a variety of combined experience,
including distribution, production and purchasing in mass
market as well as co-op store formats. I currently manage the
Category Leadership Program for the National Cooperative
Grocers Association, NCGA. I also hold the retailer seat on the
USDA National Organic Standards Board, although my comments
today do not represent those of the NOSB. I am a member of the
Minnesota Department of Agriculture Organic Advisory Task
Force. Although I am not an economist, I would encourage you to
read Bill McKibben's book Deep Economy. His book offers
compelling economic facts about the current need to pursue
prosperity in a more local direction, with communities
producing more of their own food.
My point today is simple, so I will make it right off. The
local organic farmer, as an individual and as a member of a
larger community, has a positive impact on the thriving success
of our communities, our economy and the integrity of organic
agriculture. I am here before you today on behalf of the NCGA,
a business services cooperation for natural food co-ops located
throughout the United States, which include more than 130
independent co-op storefronts where you will find beautiful
broccoli and not rotten tomatoes, fresh and beautiful, in 32
States, with combined annual sales of nearly $800 million.
Organic agriculture is undoubtedly a bright spot in
agriculture today. Despite the difficulties in making the shift
to organic farming, the rewards are great for those farmers who
truly make the commitment to do so. But the rewards for organic
farmers are dependent on consumer acceptance and access to
their product. And here is where the role of the NCGA starts.
NCGA is working to provide markets for small, local sustainable
and organic farmers. This partnership not only ensures
consumers have a broad array of organic products available in
their stores, but also makes sure that the infrastructure of
this symbiotic relationship is contributing to a thriving
community of economic growth and development.
In a general survey conducted by the NCGA, we learned that
many of our co-ops are sourcing over 15 percent of their
products from local producers. As a group, in the Minneapolis/
St. Paul area, 12 co-ops alone have estimated that almost 19
percent of their retail sales come from local purchases. The
NCGA works with thousands of local farmers and producers across
North America and we are proud that our co-op members have a
first-name working relationship with them and their families. I
would like to share with you 1 of 3 economic success stories
that I have submitted in my written testimony to illustrate the
symbiotic relationship between farm and community.
In New Prague, Minnesota, the Minar's third-generation farm
is thriving, but this would not have happened without the co-op
partnership. The Minar family farm goes as far back as 1926 and
7 years ago the Minars decided to commit to sustainable
agriculture and began selling their milk in glass jars to only
6 co-ops in the Twin Cities area. In 2004, they became USDA
certified organic and today their Cedar Summit Farm products
can be found in more than 90 retail outlets throughout the
Midwest. As Dan Minar put it, ``we would not be where we are
today if it was not for the co-ops. Our sales started with them
and our success is because of them.'' There are two other
examples that I have submitted and I encourage you to please
read them. There are hundreds of other examples that I could
refer to. I hope that you value how these examples illustrate
what is clearly a win-win-win situation for the farmer, the co-
ops and the consumer.
Organic consumers have a strong philosophical desire to
support local agriculture and value the quality and freshness
they receive in doing so. Organic consumers also appreciate the
smaller ecological footprint the distribution of local organic
food makes, enjoy knowing organic farmers and value the
connection their purchases given towards the food they are
eating. The small, local organic farm adds to the integrity and
value of the organic label by creating these hands-on
experiences in their communities. If we are to maintain the
hope and promise that organic agriculture has become, it is
critical that we meet the consumer demand with ample supply and
continued standards based in organic integrity. Simply put, we
need more organic farms and continued government funding for
expanding the organic sector in agriculture. The circle of life
illustrated in my examples depends on it.
Attached to my written testimony is a summary of the NCGA
and the National Organic Coalition 2007 Farm Bill priorities,
on a wide range of issues and programs and I urge your strong
consideration of these proposals. Mr. Chairman and members of
the Subcommittee, I thank you and I encourage you to recognize
that local organic farms are vital to the success of the
communities we all live in.
In conclusion, my point today still remains, the local
organic farmer, as an individual and as a member of a larger
community, has a positive impact on the thriving success of our
communities, our economy and the integrity of organic
agriculture. Thank you.
[The prepared statement of Ms. James appears at the
conclusion of the hearing:]
Mr. Cardoza. Thank you very much. Next up on our panel is
Mark Lipson from Santa Cruz, California. Mark has testified at
one of my listening sessions in California previously and we
welcome you to Washington, sir. Please proceed.
STATEMENT OF MARK LIPSON, POLICY PROGRAM DIRECTOR, ORGANIC
FARMING RESEARCH FOUNDATION
Mr. Lipson. Thank you very much, Mr. Chairman, and thank
you, Mr. Ranking Member. My name is Mark Lipson and I represent
the Organic Farming Research Foundation, which was founded in
1990 by organic farmers to promote the improvement and
widespread adoption of organic farming practices.
The Nation's 10,000 certified organic farmers are the
leading innovators of ecologically-based agriculture. Their
entrepreneurship is the foundation of the economic success that
organic foods and fiber are enjoying in the marketplace. These
organic farmers are in every State and region of the country.
They grow every type of crop and livestock that is produced in
the United States. On behalf of these producers, I thank the
leaderships of the Full Committee and the Subcommittee for this
historic opportunity. We respectfully look forward to building
the information record with you and doing our part to craft
Federal policy that contributes to the wellbeing of all of the
food and farming system in the United States.
Organic agriculture makes strong and unique contributions
to all of the strategic goals for agriculture, productivity,
conservation, rural development, health and safety and trade.
Because of these multiple benefits, support for improving and
expanding organic agriculture is one of the best investments
that you can make with the limited resources available to you.
The highest payoff target in this investment strategy is
organic research and education. Organic agriculture is based on
natural processes of soil fertility and ecological management
of pests and diseases. Most agricultural technology is directed
at simplifying the farm landscape. Organic systems require
complexity and diversification. Successful organic management
is information-intensive. There is no simple recipe but
knowledge is always the key ingredient.
Lack of research and education in organic agriculture is
inhibiting growth of this sector. There is an accelerating
decline of the U.S. share in the rapidly growing domestic
markets. Notably, this lack of research and education applies
both to new and novice farmers making the transition, as well
as veteran growers facing technical limits to their expansion.
The lack of statistical data and current market information is
hurting organic producers and inhibiting growth in several
ways. Capital and credit be difficult to obtain because there
isn't reliable data to back up business plans and budgets.
Organic producers are currently charged a 5-percent surcharge
on crop insurance premiums.
It is also notable that the regulatory program for the
organic label is affected by the lack of research support. The
National Organic Program within USDA/AMS is trying to solve
some complex regulatory questions that were not fully
anticipated in the 1990 law. All of these issues need but
severely lack scientific data to inform the policy formulation.
In producing, in marketing and in maintaining the integrity of
the label, information is a limiting factor to growth and
success.
Now, deliberate Federal investment in organic agriculture
research and extension did not begin until 2001 and it remains
miniscule. USDA's total spending for research, education and
economics is about $2 billion a year. Less than one percent of
that now is specifically directed at the needs of organic
production. With these very small resources, there is excellent
work being done in each of the USDA's research agencies, and in
my written testimony, I have summarized some of this and I will
be happy to talk about that more. Overall, these programs have
succeeded at creating a good set of prototypes scattered around
different parts of the country, good models, but we have only
begun to address the backlog of basic and applied organic
systems research.
OFRF has provided recommendations for policy targets and
program objectives in the 2007 Farm Bill that are attached to
our testimony. There are a variety of ways to meet these
targets. We look forward to discussing these as the Committee
proceeds to work on specific legislative proposals.
America wants organic foods and fiber. America wants
organic family farms in the landscape. Beginning farmers want
to participate in the organic market. Our country needs a
diversity of approaches to the very serious challenges we face
in dietary health, energy and environmental conversation and
rural economic development. Relatively modest investments in
scaling up organic agriculture can help provide solutions in
all of these areas and provide a tremendous return to our land,
our health and our economy. Thank you very much for the
opportunity to testify today, and I do ask that I may revise
and extend these comments in the written record with additional
data.
[The prepared statement of Mr. Lipson appears at the
conclusion of the hearing:]
Mr. Cardoza. Thank you very much. You will be able to add
to your testimony as we go forward. I just want to make a
personal note that my wife is a family doctor. For several
years now, she has moved the family into a more organic mode.
In fact, we get a box of fresh fruits and vegetables delivered
to our house every week, all organic, and it has helped my
children, who shun fruits and vegetables of all kinds, to now
appreciate it more, as we require them to finish the box before
they can go on to other things.
We will now move on to questions and the chair would like
to remind members that they will be recognized for questions in
order of seniority, for members who were here at the start of
the hearing. After that, members will be recognized in order of
arrival, and I appreciate the members understanding. I would
like to start. Well, at least let me acknowledge Chairman
Peterson's arrival.
Mr. Peterson. Well, Mr. Chairman, thank you for that and I
want to thank you and the Ranking Member for your leadership.
And we are, you know, going to put some focus on this issue in
this Committee and I think there are lots of opportunities here
for folks in agriculture, especially young people, and so we
appreciate your leadership and we appreciate you holding this
hearing.
Mr. Cardoza. Thank you, Mr. Peterson. I want to recognize
that you have been an outstanding Chairman on how you have
conducted the Committee so far this year and we look forward to
big things in the farm bill, accomplishments that will largely
be at your direction. One of them is this historic hearing
today, where you have set up this Subcommittee and led us on a
new path and we thank you for that.
I will kick off the questions, then I will turn it over to
my colleague, Mr. Neugebauer, to ask a set of his own
questions. I would like to start with Ms. Wilcox, in my first
question. In your written testimony, ma'am, you highlight the
difficulties with crop insurance for the organic industry.
Could you expand on this issue?
Ms. Wilcox. Yes, Mr. Chairman. As my colleague Mark Lipson
said and as we say in our written testimony, farmers have a
very difficult time with crop insurance. Initially, they
weren't permitted to get Federally covered crop insurance at
all. And then there was a ``remedy'' for that, where they are
now permitted to pay an extra five percent and be compensated
at the conventional rate if they have a loss. So they have
inputs that are more comprehensive than a conventional farmer
would have and yet, if they have a loss, they do not get that
compensation. There are also some problems in them being
covered by the NAS Census, which impedes some of their disaster
assistance, also. But just on the crop insurance issue, that is
why we are very, very concentrated on trying to get good data.
We are told that one of the reasons is that, of course, we need
to have actuarial data in order to write an insurance product.
And having worked at the Department, I do understand that the
Department does have some criteria for that. I think we have a
good chance, if we can get the data, to have a good analysis
done in the Department, a quick one, that will permit crop
insurance to be issued on a much more equitable basis, with
parity toward the conventional and biotech community, which
doesn't pay five percent and gets compensated for their loss.
Mr. Cardoza. Thank you. As a follow up, again, in your
written testimony you state that the 3-year transition period
is essential to create a working organic farm, yet you
acknowledge the difficulties new entrants face during the
transition period. Is this a technical assistance issue? Is it
a financial assistance issue? What are the challenges that you
are facing?
Ms. Wilcox. Well, the farmers report to us and I think that
Mark would probably want to comment on this, too. They report
to us that the conversion process can be quite daunting. First
of all, as you acknowledged, it is very difficult for them to
find advisors, in terms of going to organic. The extension
system is very uneven in that process. We have a couple of
States where extension is very pro organic and they have a lot
of good information. But we also have areas where extension has
actually issued information that is contrary to organic. And so
we have to find mentors for or farmers have to find mentors for
themselves. They also do have financial challenges because of
the banking system. Without actuarial data, again, the bankers
tend to say to that people that they may not be able to finance
them as carefully. We actually have board members of OTA who
are helping with the financing of their supplying farmers as
they go through conversion. So there are a host of needs. A
farmer has to look at the whole process before he goes and gets
a certifier. He has got to have a business plan. He has got to
have a credit plan. He has got to understand the marketplace,
in terms of the products where he can really know that he will
have a market. And all of that takes some technical assistance
and advisory work.
Mr. Cardoza. Thank you. Mr. Lipson, I want to follow up on
your point in your testimony. You note that the National
Organic Program, and I assume, the National Organic Standards
Board, are wrestling with regulatory questions. More research
could assist in forming these regulatory responses. Can you
expand on that point?
Mr. Lipson. Yes, sir. One example is the effort right now
to develop regulations for pasture requirements for organic
dairy animals. There is a great deal of difficulty that the
program is having in figuring out how to define, in an
enforceable way, what is adequate nutrition from pasture in
order to write a regulation that meets the spirit and letter of
the 1990 law. In order to do that, they are relying primarily
on anecdotal information from the producers, who have a very
sophisticated idea of how those requirements can be met. But in
order for the regulatory program to put that into a legalistic
framework, they are straining to find scientific data that
backs them up and gives them a strong legal foundation for
making those changes. Now there is good work in the research
pipeline, now being done that could help with that, but it is
coming very late in the process. There are other issues such as
production of organic seed in order to meet a full enforcement
of the organic seed requirement, a whole number of areas where
there just isn't yet good scientific information that an agency
typically would rely on in writing these regulations.
Mr. Cardoza. Thank you. Thank you very much. I will now
call on my colleague, the Ranking Member of the Committee, Mr.
Neugebauer, for five minutes of questioning.
Mr. Neugebauer. Well, thank you, Mr. Chairman. I guess
first to Ms. Wilcox. There has been a great deal of discussion
about technical assistance to producers during this transition
period. While many organizations have advocated that the USDA
should provide this technical assistance, I was wondering why
this shouldn't come from the trade associations. Would they be
better able to provide that? Could you kind of share that with
me?
Ms. Wilcox. Well, we do think that the technical assistance
should be multi-faceted and diverse, and OTA is actually
preparing some opportunities that will help, we hope, with
technical transition. But since we have a very large land grant
system with extension and we have many NGOs out in the
countryside that are familiar with the steps that need to be
considered prior to going into transition, into conversion, we
do believe that there is a role for USDA to play, either in
direct technical assistance through extension, but also through
contracting with various NGOs, who are not terribly prosperous
in terms of trying to expand their operations but who have the
knowledge that can be given to, for instance, young farmers who
really want to explore conversion but don't know about rotation
of crops that they might want to pursue, some of the manure
management that they may want to do, that they do have to do in
terms of organic farming, some of the technical things that
need to be done and we do believe that there is a role. As you
well know, USDA gives a lot of technical advice about a lot of
things and we think organics should have a little bit of a
share.
Mr. Neugebauer. This is really a question for the panel and
maybe you could just kind of go down there. But obviously, one
of the things that is important is the certification process
and the enforcement process, if you are going to have a
certification process and the enforcement. What is the general
consensus right now of how that process is working, both from
the certification side and the enforcement side? And Mr.
Lipson, we will start down on your side and we will move to
your right.
Mr. Lipson. The Certification and Accreditation Program run
by USDA is the standard for the world. There is no question
about that. And the integrity that has been built is absolutely
critical to the consumer demand, but the system is strained. It
is being strained by the growth right now and the very
understaffed condition of that program is a complete bottleneck
for the rulemaking that everybody needs to have out in the
open, in order to maintain that consumer confidence.
Mr. Neugebauer. So is it the rules or is it just the
ability to get certain products certified?
Mr. Lipson. Well, it is both. There are parts of the
standards that are incompletely implemented. The pasture and
grazing requirements for dairy animals is probably the biggest
one on the table right now. But there are other areas of the
standards, aquaculture, honeybees, mushrooms, where there isn't
even a standard, even a draft rule, yet in place. And so there
are years worth of work stacked up that the National Organic
Program simply does not have the staff to address in a timely
way.
Mr. Neugebauer. Okay. Ms. James?
Ms. James. Currently the situation with the certification,
from my point of view, is there is, number one, a demand in the
industry for more organic products. There is a lack of those
products being grown and produced, and the weight of having
those items available relies on there being ample support in
the certification part of the industry. And as new regulations
become developed for these areas that need to have
certification processes, such as pasture and aquaculture, the
weight of that comes down on to the certification process.
There is no other audit trail or process currently in place in
order to make sure that organic products are truly organic. The
certifier is the one who has the weight of a lot of that. And I
know also that there is a shortage of certifiers to work for
the certification agencies as well.
Mr. Neugebauer. Mr. Marqusee?
Mr. Marqusee. The certification process for what we need in
the county, actually, it is very helpful for the county,
because the county doesn't have to do the enforcement. We just
rely on the NOP and the certification. But what we did at
Woodbury County was, from a local policy perspective and local
foods policy perspective, is to allow transitional products to
be sold within our local food systems from the local food
purchase plan and various other things that we have gotten. So
we are trying to ease the transition costs for the 3-year
period traditionally for crops by accepting those in the system
initially for sale, but they have to be on the track for
certification at the end of year 3. Under our organics
conversion policy, if at the end of three years they are not
certified, they have to hand back the taxes that they have been
rebated. But I have nothing specific in terms of the actual
certification process.
Mr. Neugebauer. Thank you.
Ms. Wilcox. The certifiers, of course, are private or state
entities and they operate as agents of USDA and USDA has a
responsibility to accredit them and they have a process for
that. But what we have to look at is that the NOP itself, the
National Organic Program office has only about six people and
that is all FTEs. That is not just professionals. And they
don't have a full-time rule writer, for instance, so we have
this backlog of rules. But the same people who have to be
looking at the rules, also have to be looking at the
accreditation process for the certifiers and they also need to
be making sure that produce that is being produced offshore is
done by accredited certifiers and that there is oversight
there, and that any problems that emerge in the certification
process, because we are all learning new things and there are
new products that are asked to be certified, then any of those
can be resolved and that all of the certifiers can be informed
of any policy changes. So it is a very complex area and it is
one that we are increasingly alarmed about because our industry
is growing so fast and NOP is not able to keep up right now.
Mr. Neugebauer. Thank you very much.
Mr. Cardoza. Thank you, Mr. Neugebauer. Ladies and
gentlemen, rank has its privileges and I will now recognize the
Chairman of the Committee, Mr. Peterson, for questions.
Mr. Peterson. Well, thank you, Mr. Chairman. I want to
delve into this transition period a little more. You know, we
have been having some conferences and meetings back in my
district and it comes up about this transition period. You
know, the industry is, as you say, growing faster than any
other sector, so I am kind of trying to get a hand on just what
the Chairman was talking about earlier. But these 3 years, what
do you do with that land during those 3 years, does it just sit
there or they are growing these crops during that period of
time but they are just not certified, is that what the
situation is?
Mr. Marqusee. Well, I would say that, typically, they will
do a cover crop and try to get their land prepared for the
crops later. They can grow crops during that period, but their
yields will be significantly lower.
Mr. Peterson. Right. And so this cover crop, if they are
just doing that, that is not saleable, there is no income off
of it. You have got, apparently, a program in your county to
help this?
Mr. Marqusee. That is correct.
Mr. Peterson. Yes. But there isn't any Federal help for
this, right?
Mr. Marqusee. No, there isn't and the problem that we have
had is struggling is because of the age of the farmer.
Mr. Peterson. Yes.
Mr. Marqusee. It is pretty hard. We are trying to attract
younger people back to our county.
Mr. Peterson. Right. So what if we, for example, took the
CSP program and we said that one of the things that we would do
with that would be to have some kind of help to transition,
would that be something you think would make sense?
Mr. Marqusee. I do, yes.
Mr. Peterson. Would this cause a problem in making it too
easy and we end up getting too many people in organic and
collapse----
Mr. Marqusee. I guarantee you that won't----
Mr. Peterson. That is not going to happen?
Mr. Marqusee. No.
Mr. Peterson. We have got a bigger market out there, then.
In that regard, the other thing that came up is as we were
planning this conference that we had, and we have an organic
dairy that was set up in my district and the guy at the meeting
says he has a lot more market than hes got producers. Even
though he is paying 25 bucks a hundred, he can't get enough
people to transition. Another guy that is an organic beef
herder, grass-fed beef, can't buy enough cattle to fill his
market. I think to some extent it seems to me that in a dairy,
a lot of these producers are 55, 60 years old. They are not
going to convert unless they have a young son or daughter who
wants to come back. So I am just trying to get my hands around
what would be the best policy to try to move this along and you
think technical assistance is a big part of this, as opposed to
taking away these barriers or I guess it is a combination of
both?
Mr. Marqusee. I think technical assistance is very
important and I would mirror what has been said by Ms. Wilcox.
We have created a network of existing organic farmers as
mentors, but of course, that is a very difficult program
because they are busy working on their farms, so they don't
want to travel all over the place, but we have created that
kind of resource for those who convert. I would like to
indicate that we have had younger people moving into our county
as a result of this policy. What the county could really use is
local money to facilitate, identify and create markets, for
instance, and that is precisely what we were doing. My job at
the county level has been to find markets for those producers.
So we have demand. You know, it is tremendous demand. The
problem is that I just don't have supply and it is really hard
for me to convince a 60-year-old farmer to start doing
organics.
Mr. Peterson. Yes. The other thing that I read about, and
it was somewhat the focus of what we were looking at in my
district, is local foods. Now how does local foods fit in with
organic? Is there some kind of a differentiation here?
Mr. Marqusee. It is the same coin and then they are both
complimentary.
Mr. Peterson. But what I am getting is, is there some kind
of effort going on to label things local as opposed to organic,
you know?
Ms. James. Actually, in the State of Minnesota, the
Minnesota Department of Agriculture is currently looking at a
way to label things as grown in Minnesota. One of the
distinguishing differences between a locally-produced product
and one that isn't, is the ecological footprint that happens
between the community, that it really is a very sustainable
system when you have a local organic farm selling to an outlet,
a farmers market or a small cooperative and then those
consumers coming, and I know I mentioned that in my testimony,
but I think it is really important to recognize that symbiotic
relationship with the consumer experiencing that really adds to
the value and integrity of the organic seal, because they have
a firsthand experience with being able to meet that farmer and
understand exactly how they benefit from purchasing those
products.
Mr. Peterson. Anybody else?
Mr. Lipson. Mr. Chairman, the baseline for a robust,
diversified, local food economy is going to have to be organic.
The local environmental impacts, the interaction between the
community and the farm, if we are going to keep building this
movement for local food, having that production based on local
inputs for fertility and a healthy environment, doing the pest
management, that is just going to be the baseline of those
kinds of systems.
Mr. Peterson. Thank you. Thank you very much, Mr. Chairman.
Mr. Cardoza. Thank you, Mr. Chairman. I would now like to
recognize Mr. Robert Etheridge for five minutes of questioning.
Thank you.
Mr. Etheridge. Thank you, Mr. Chairman, and thank you for
holding this hearing. Let me thank each of you for coming
today. Ms. Wilcox, let me ask you a question, because you
pointed out, in your written as well as in your oral testimony
before the Committee, and almost all of you have touched on
this, that this industry is the fastest growing segment of
agriculture today, and one of the main recommendations for the
farm bill is that technical assistance be made available for
producers to convert to organic production. My question would
be, how do you see this technical assistance working within the
framework of current organic production? And I guess, why do
you think it should be one of the highest priorities in the
2007 Farm Bill?
Ms. Wilcox. Well, Mr. Etheridge, obviously, we would like
to increase the amount of organic production in the United
States. We know the consumers are demanding a very high amount
of organic in the marketplace and we want a lot more acreage to
be here in the United States. I am not opposed to imports.
About half of our food is imported now, but it would be much
better for our environment and for our consumers if it was
grown here. So then we have to look at what are the impediments
to going to certification, and when we tried to look at that,
we found that the actual facing about whether you will decide
to try to go organic is a daunting kind of a task. People are
asking themselves the question, what do I do in the three
years, like the Chairman asked. What do I do about working
without the pesticides that I have always worked with? How do I
learn about managing pests, there is a perfectly good way to
learn that, but it is a whole new way of farming than they may
have been taught in ag school and certainly that they may have
been taught by their neighbors or their parents. And so we do
believe that there are certain things that need to be done,
including looking at rotation requirements, soil preparation,
the manure and the handling of animals, which is done in a much
different way in organic. There are just a myriad of things
that need to be done or looked at before you decide to go ahead
and convert your farm, because that is a big decision. And then
there is a need for technical assistance and mentoring while
you are doing that because, as my colleague here said, there
can be a diminution of production during the three years. It is
not as dramatic in some cases as has been portrayed by
conventional agriculture, but there can be a diminution,
because you are learning also about rotation and about growing
several crops instead of one row crop, and you are learning
about a lot of new things.
Mr. Etheridge. How does the United States stack up
internationally in terms of development of organic markets? Any
data on that you are aware of?
Ms. Wilcox. The Department reported. They did a very good
study, it is a couple of years old now, between the EU and the
United States, and the EU, just in the 15, you know, original
countries in the EU had about 5 times the amount of acreage
converted in 2003, so I have no idea now what that number may
be. And of course, we do know, although anecdotally, that other
countries are responding to the organic demand in great numbers
and there is a lot of conversion going on.
Mr. Etheridge. Good. Thank you. Ms. James, you raised the
concern of synthetic or non-organic products being used as
substitutes in organic products because of lack of organic
ingredients. Can you be a bit more specific on the issue, and
can these organic ingredients be produced in the United States?
Ms. James. Currently the National Organic Program
Regulation 205.606, 605, 604, you will find a list--National
list of allowed synthetic and nonsynthetic agricultural and
nonagricultural products. At a current NOSB meeting that was
held, there was a significant amount of agricultural products
that were being petitioned--non-organic agricultural products
that were being petitioned to be listed on the National List.
And in my opinion, I believe that if our organic farming
situation in the United States was thriving and we had more
government support for growing these agricultural products, we
would not have to be listing things that should be able to be
grown organically and be in organic products. Does that answer
your question?
Mr. Etheridge. Partially. I may come back to that later.
Thank you, Mr. Chairman. I will yield back. I see my time has
expired.
Mr. Cardoza. Thank you, Mr. Etheridge. I would now like to
call on Mr. Kuhl for five minutes of questions.
Mr. Kuhl. Thank you, Mr. Chairman, and I thank all of the
panel members for coming and testifying. A question for you,
Ms. Wilcox, first. In my years of dealing with organic
agriculture at the State level, I have noticed that the general
population has a very difficult time really kind of
differentiating the difference between organic and regular
produce. I have noted that there has been some advertising in
recent cases, particularly as it relates to dairy products,
where there have been some organic producers advertising as
being pesticide-free and/or antibiotic-free, and I am curious
as to--I think that sends the wrong message, certainly,
because, as you know, the Federal regulations require all
products to be essentially pesticide-free and antibiotic-free,
and I think that does a disservice to organic farming. I am
curious as to what the Organic Trade Association is doing to
try to control what I would call non-misleading advertising
practices within the organic industry?
Ms. Wilcox. Well, as you know, probably controlling members
is just about as hard as controlling constituents, Mr. Kuhl,
but we certainly do put out what we regard as factual and
important marketing messaging that is truthful and complete. We
try to make that available to our members so that they
understand that sometimes misstatements are made, but we are
not in a position to police their advertising. I don't review
their advertising. When I was at Hershey Foods, I reviewed all
of the advertising so I knew what was there. But we don't do
that, so we have to rely on our members to comply with the law,
which is an important thing in this country. We do have truth-
in-advertising laws. In the area of antibiotics, I think it is
important to realize that, in fact, while the phrase you
described may raise a question for you, animals that are raised
in the United States on an organic ranch or farm are not
treated with antibiotics. And if, for humane reasons, they
became so ill that they had to be treated with an antibiotic,
they would be removed from the organic herd and placed into a
conventional herd. So the organic dairy or organic farmer is
absolutely not using antibiotics or synthetic hormones in their
animals and that is in contrast many times to conventional.
Mr. Kuhl. Yes. Is there some sort of advertising promotion
that you send out to your members to suggest that they follow?
Ms. Wilcox. No.
Mr. Kuhl. Okay.
Ms. Wilcox. No, at our annual meetings, we hold seminars
for people to learn about marketing techniques and of course,
we emphasize truth in advertising at those.
Mr. Kuhl. Okay. And a question for the panel. I am
disappointed that the Chairman had to leave, but as you all
know, because I was looking for a commitment from him that
there wouldn't be any kind of shrinking baseline for the farm
bill overall, and that there would be increased kind of assets
available, particularly as it relates to this Subcommittee. But
I think most of us understand that there probably is going to
be less money available and therefore we are going to have to
prioritize requests from the ag community for specific kinds of
things, and I am curious. If you had to pick 2 areas, each one
of you, just 2 areas that this Subcommittee should kind of
prioritize for the furtherance of organic agriculture, what
would they be? We will start with Mr. Lipson.
Mr. Lipson. Very clear, the research and extension are the
limiting factors to growth. It has all of these secondary
impacts that I have tried to outline. I think that is going to
be the biggest payoff for investing resources.
Mr. Kuhl. Okay. Ms. James?
Ms. James. Organic conversion assistance and organic
certification cost-share assistance.
Mr. Kuhl. Okay.
Mr. Marqusee. I would say crop insurance is probably the
biggest, and market development.
Mr. Kuhl. Okay. And Ms. Wilcox?
Ms. Wilcox. Well, we need conversion, absolutely, and we
also need data because it leads to all the other things that
can help with conversion.
Mr. Kuhl. Okay, thank you all.
Mr. Cardoza. Thank you. Mr. McCarthy.
Mr. McCarthy. Thank you, Mr. Chairman. I appreciate you
holding this hearing. In my district out in the California, I
have seen organics grow, especially in the carrots and
continuing in expanding. I was just listening to the last
question about organic conversion, so my first question is, how
much of organic product is exported right now? Is there any?
Ms. Wilcox. Yes, there is. I don't think that I have that
number with me and I would be glad to provide it for you. OTA
actually participates in the Market Access Program, the MAP
export program, and there is a substantial but not a huge
amount of product that is exported mostly to very high income,
you won't be surprised, areas that would like to buy our
processed organic product, and then there is some other
production that is----
Mr. McCarthy. Because the reason I ask, I heard organic
conversion the most and if we were to do something in the farm
bill, many of those that grow organic now get a premium price.
I am wondering if there is a program, if you are thinking of
one on the conversion, if it should be a sliding scale in,
should it be by different product, so not everybody switches
within a certain market and the price comes down. Those that
got in before conversion are somehow penalized because
government helped another. Has anyone put any thought to, when
say conversion, a program for conversion?
Mr. Lipson. Mr. McCarthy, the strategy that we need is one
that takes regionally resources in terms of research and
extension and market development, looks at the specific
opportunities that match markets to production capacities and
puts together that puzzle in terms a diversified approach to
conversion in an area. In California, there is obviously huge
trade opportunities in the Pacific Rim. You know, we do have a
long way to go towards fulfilling the domestic growth in
demand, but there are very important opportunities in
international trade as well and those can be matched up with
production capacities, but it is going to be different in every
region of the country, so what we need is a strategy like they
are doing in Woodbury County. It takes all the pieces in terms
of market development and technical information, local demand
as well as export opportunities, to try to craft a strategy
that way.
Mr. McCarthy. And so I understand the whole matrix you do,
but would you pick all products and converge over by region and
you would say which ones by market size?
Mr. Lipson. Well, I think there is definitely, with more
market analysis, we would have better information about how
much room there is to grow in different areas. I mean----
Mr. McCarthy. So prior to do any conversion, the number one
would be the data and the market analysis?
Mr. Lipson. We need business plans, for sure, and you have
got to have good data in order to be able to build those.
Ms. Wilcox. The OTA does do market surveys because USDA is
not authorized at this time to do a comprehensive market
survey, and one of the questions we ask is if you could get
more how many of you could market more product if you could get
more certified ingredients? And over 50 percent of our
respondents say that they would have a shortfall. And I think
it is important for you to realize that, of course, you come
from the strongest organic State, California. We have only
achieved having reports of organic in all 50 States in the last
year and we have, you know, as I said in my testimony, .5
percent of cropland and .5 percent of pastureland has been
certified. While consumer demand this year, we believe, will be
3 percent or more, it will actually be 3 percent in the retail
store. So consumer demand is going up like this and organic
production is, frankly, in the United States, not going up like
that.
Mr. McCarthy. Thank you, Mr. Chairman. No further
questions.
Mr. Cardoza. Okay. Mr. Etheridge, did you have a follow-up
that you wanted----
Mr. Etheridge. No.
Mr. Cardoza. Okay. I think the members will have some
follow-up questions and they will contact you individually to
get those answers. Thank you very much for your testimony.
Mr. Lipson. Thank you very much.
Mr. Cardoza. Thank you. We would now like to invite to the
dais the second panel. We would like to invite up today Mr.
Manuel Vieira, Owner of A.V. Thomas Produce, from Livingston,
California; Ms. Mary-Howell Martens from Lakeview Organic
Grains in Penn Yan, New York; Mr. Scott Lively, President and
CEO of Dakota Beef, from Howard, South Dakota; and Mr. Robert
Pike, Vice President and General Manager of Braswell Foods and
Glenwood Foods in Nashville, North Carolina. Welcome to all.
Mr. Vieira, a special welcome to you, all the way from
California. You have been a dear and old friend and you have
done a fantastic job in growing your organic business, and
please feel free to proceed with your testimony.
STATEMENT OF MANUEL VIEIRA, OWNER, A.V. THOMAS PRODUCE
Mr. Vieira. Thank you, Mr. Chairman. My name is Manuel
Vieira. I am from Livingston, California, in Merced County,
where I own my company, A.V. Thomas Produce. We grow, pack and
ship organic yams and sweet potatoes. We started with 10 acres
of organic sweet potatoes in 1988. Now we grow over 1500. We
ship our organic product all over the United States, Canada and
Europe. A.V. Thomas Produce has been in business since 1960.
I would like to start by first expressing my thanks to
Chairman Cardoza and Ranking Member Neugebauer and the rest of
the Subcommittee for your commitment and dedication to
agriculture as a whole and especially to organic farming. I
would also like to express thanks to our organic Subcommittee
for holding this hearing so that all may have a better
understanding on how truly important organic farming is for the
future and the wellbeing of all.
Organic integrity, responsibilities and requirements are
tested and inspected by our dual-certifiers, COFA, California
Organic Farmers Association, and OCIA, Organic Crop Improvement
Association. Each year our operation goes through a rigorous
and intensive inspection at our farm and our processing and
packing entities. Each field has a complete file of all the
previous three years of activities. Each of our farms has a
list of requirements to be met. These requirements are all
enforced to the year. The rules and regulations of organic
farming are set by certification and verification programs that
we apply through our certification bodies. We are currently
accredited through the USDA National Organic Program, NOP,
certification program. We are also accredited by the European
Union verification program, which allows us to export our sweet
potatoes and yams to Europe.
The NOP was mandated by the Organic Food Production Act of
1990. This provided a uniform organic standard. The NOP
accredited certifying agencies, such as COFA and OCIA, it
confirms that the certifiers understand and is using the
national standard and also confirms that the certifier can
conduct business of certification properly.
Mr. Cardoza, I would like to conclude once again by
thanking you and the members of the Subcommittee for the
opportunity to share a little about our organic commitment.
Thank you all.
[The prepared statement of Mr. Vieira appears at the
conclusion of the hearing:]
Mr. Cardoza. Thank you, Mr. Vieira. Next up we have Ms.
Mary-Howell Martens from Penn Yan, New York. Welcome.
STATEMENT OF MARY-HOWELL R. MARTENS, LAKEVIEW ORGANIC GRAINS
Ms. Martens. Thank you very much, Mr. Chairman, thank you
to Mr. Kuhl, he is my district representative, and to Mr.
Etheridge, because I am a horticulture major from North
Carolina State, so I have connections to several things.
I am going to go ahead and start with part of my testimony
and it is a quote. ``I wish you didn't have to do that.'' I was
saying that to my husband as I was standing by the kitchen
door, several months pregnant with my second child, watching my
husband go out to battle the weeds, all dressed up in his white
zoot suit, his Tyvek suit, heavy green gloves. He was out to
fight the enemy. Me too, but what choice do we have? It was
1991, the first year after we had split up the farm partnership
with Klaas' two brothers. It is not easy farming over 600
acres, just the two of us. Farm prices are never good, weather
is always risky, but at least we had one advantage over most of
our neighbors. Weed control was rarely a problem because Klaas
was very good at planting herbicide combinations and
fertilizers. In my job in the grape breeding program at the New
York State Agricultural Experiment Station, I was responsible
for planting the grape spray program for the breeding
vineyards, and so Klaas and I had many romantic moments during
our early marriage discussing the relative merits of this
chemical and that chemical.
How do two people so apparently committed to the
agribusiness ideal of American agriculture end up operating a
large organic farm not very many years later? We truly believe
that we were like many conventional farmers, using chemical
fertilizers and pesticides simply because we thought there was
no other way, but very concerned what it was doing to us, our
family, our land, our environment and our community. We are now
farming over 1400 acres of certified organic crops, corn,
soybeans, small grains, red kidney beans, cabbage, hay, and for
every crop, there is a good, profitable organic market.
All three of our children are active on the farm. In
addition to working on our farm, our son Peter, who is 18, has
rented 250 acres of his own land is farming that organically
and is earning good profit to buy farm equipment and pay for
his college education. Our 15-year-old daughter Elizabeth, who
is here today, has purchased heifers with her USDA/FSA youth
loan and is transitioning them to organic and is learning a lot
from those cows every day, things that she could learn no other
way. Eleven-year-old Daniel works on the farm and helps on the
farm in every way he can. All three children are proud to be
involved in our farm and proud to be organic farmers.
In the mid 1990s, Klaas and I began grinding organic feed
from our own grains, for several nearby dairy farmers. In 2001,
our business had grown enough to justify purchasing the local
feed mill and with the help of a USDA Rural Development grant,
we converted it to a fully-organic feed mill that is now known
as the Lakeview Organic Grain. This operation is now employing
7 full-time employees and 2 full-time truck drivers, and now
serves over 300 organic animal farmers in New York and
Pennsylvania. We also supply organic crop seeds and other
organic inputs and a whole lot of information. I spend probably
most of every day on the phone talking to people. We talk about
resources. Well, a lot of people come to us and we help them
with weed control, soil fertility management, animal
management. We are now grinding more feed at our feed mill than
Agway ever did when they ran it previous to us, and we are even
grateful for some competition entering the business, because
the pie is big enough for all of us.
We have learned that, while many outside the organic
community may define us by what we don't do, we don't do
pesticides, we don't do antibiotics, all that we were talking
about earlier, we would rather define ourselves by what we do
do, crop rotation, soil fertility, soil health management,
managing our farm for health, soil health, plant health, animal
health, so that intervention isn't needed, that we don't need
to rely on outside inputs.
Where do we go from here? At this time in New York alone,
there are over 600 certified organic farms, 125 in our district
alone, more than 250 organic dairy farms and over 100,000
certified organic acres. The National Organic Program needs
help. They do a fine job and we fully support them, but they
are woefully understaffed and underfunded. We need help. We
need to get them more money so that they can have at least--
well, all organic funding should be at least the same
percentage that organic agriculture has in the United States.
We need more help for NRCS personnel so that they can do a
better job of improving our farmland, informational services,
like ATTRA and SARE, need more funding so that they can
distribute useful information to researchers, to farmers, to
extension agents. We need more help for transition farmers so
that we have more supplies. We would buy more grain from New
York if we had it, but there isn't enough.
In conclusion, I want to thank all of you for forming this
Subcommittee and for listening to us today. Agriculture in the
United States is diverse, but organic is no longer a minor
niche just for the counterculture or the extremely affluent. It
is creating a lot of opportunities for many people, hope for
many people, and that needs your help.
[The prepared statement of Ms. Martens appears at the
conclusion of the hearing:]
Mr. Cardoza. Thank you. Next, we have Mr. Scott Lively from
South Dakota. Welcome, sir, and please proceed with your
testimony.
STATEMENT OF SCOTT LIVELY, PRESIDENT AND CEO, DAKOTA BEEF, LLC
Mr. Lively. Thank you very much, Mr. Chairman and members
of the Subcommittee. I want to thank you for holding this
hearing. I have been very impressed so far with the level of
questions. I kind of thought this would be huge educationally,
from our point, and you guys are clearly well educated and
asking great questions and I appreciate that. It shows how
serious you are taking this. I know what a huge task you have
with the farm bill and I appreciate this being such a serious
section of it.
As you stated, my name is Scott Lively. I am the CEO and
Chairman and the founder of Dakota Beef, LLC. I have been
active member of the organic food industry for seven years.
Exactly seven years ago this summer, I founded Dakota Beef,
along with my wife, purely because she had her second child and
took off on an organic zealot tangent and decided that our kids
were going to consume nothing but organic dairy, fruits and
vegetables forever and we went pretty much cold turkey
overnight. I knew nothing about the industry nor did I really
care much about it. I was a meat-eating, potato-eating guy from
Chicago. Nevertheless we went out and bought 30 head of cattle
in Seward, Illinois, we processed them locally, all at one
time, and sold them door to door in Chicago restaurants out of
the back of her Volvo, mostly white tablecloth and gourmet
restaurants. Seven years later, we are clearly the largest
organic certified beef company in the Nation. We are in all 48
States, with the exception of North and South Dakota. I don't
understand why, being called Dakota Beef. And we ship hundreds
of thousands of pounds of beef per month.
This market is clearly a consumer-driven market. It is
affecting the economy in many ways. The small town in South
Dakota where we are headquartered had roughly 1200 working
adults, 65 of which now work for our beef plant, and we employ
another 15 employees across the United States in 5 different
States, in sales, marketing, research and development and
whatnot.
Going back to this being a consumer-driven industry, I
think a lot of people would like to pretend this industry
didn't exist and that is more concentrated on that crunchy
granola, whole food shopper. It clearly is not. As you guys
have stated yourselves, this industry is growing at a dramatic
rate. Seventy percent of the consumers in America report that
they purchase organic products at least occasionally. This
industry has grown consistently at 20 percent a year for the
last 10 years. In my opinion, it is rapidly approaching a $40
billion industry over the next couple of years.
In my opinion, this symbol that the USDA/NOP has put out is
clearly arguably the strongest process claim ever made in USDA
history. It is a claim that has never, ever been made of how a
product is processed, from the way it is raised, if a livestock
or farm, the way it is handled, the way it is shipped to the
facility that it is processed in, and what I would encourage
you to look at is why consumers are purchasing this. What is
causing this growth? What is causing the 20 percent a year? It
is a perceived notion, in my opinion, that these consumers
believe that when it has this symbol, which has become a brand
in itself, that they perceive it is better for the environment,
that it is better for their health, and that they perceive that
it supports small, local farmers.
As you work on the 2007 Farm Bill, I encourage you to look
at the following: continue to improve USDA oversight for the
NOP. I think that a stricter standard is not necessarily the
answer right now, and I certainly wouldn't encourage lightening
the standard, but enforcing the current standard, enforcing the
rules in the national list is clearly what needs to happen.
Elevate the compliance and the assessment inspections,
particularly around, but not limited to, imported organic
agricultural products. I think that the paper trail on imported
beef, particularly for my industry, is pretty thin and I think
that when we are going out to these foreign countries and
bringing in certified organic grass-fed beef or whatever it is,
there just needs to be a little more oversight on that. We
particularly focus on grain-fed choice-graded beef in the
United States and there is nothing wrong with the imports, but
it has got to be regulated and we have got to make sure that
the consumer believes in this brand, that they believe in that
symbol. The only way this is going to be done is stronger
resources and funding to the USDA's NOP. I think last year the
funding was about $2.1 million and I am speaking from memory
and a guess, and that is to basically oversee an industry that
is approaching $40 billion. Consumer confidence in this sector
is a direct result of organic product integrity, which in turn
is dependent on NOP oversight and enforcement.
I look forward to your questions and I really appreciate
the time to address you.
[The prepared statement of Mr. Lively appears at the
conclusion of the hearing:]
Mr. Cardoza. Thank you. Next up we have Mr. Robert Pike
from Nashville, North Carolina. Welcome, sir.
STATEMENT OF ROBERT PIKE, VICE PRESIDENT/GENERAL MANAGER,
BRASWELL FOODS/GLENWOOD FOODS
Mr. Pike. Thank you. Well, good morning, Mr. Chairman and
Ranking Member and especially my congressman, Mr. Etheridge,
that we have so enjoyed having him even to our facilities in
Nash County.
Braswell Foods is a family-owned company that produces,
processes and distributes eggs and feed in the Mid-Atlantic
region. We are owned by Scott Braswell, who is the third-
generation owner. The company's heritage can be dated back to
1834 to a small water-powered corn milling operation in Nash
County, North Carolina. From that small beginning, the Braswell
family has grown the company to one of the largest egg and feed
producers in the Mid-Atlantic region. Our current operations
consist of 5 operating companies with over 150 employees, and
contracts with 23 family-owned organic farming operations.
In 1996, Braswell acquired Glenwood Foods in Jetersville,
Virginia. Glenwood Farms was an established egg producer and
marketer to the Virginia region. Just prior to our acquisition,
the previous owners had seen the need to start producing and
marketing organic eggs. They were true pioneers, because this
was before it was cool to be organic and long before the USDA
certification requirements that prevented fraudulent marketing
of organic products.
Beginning with a flock of 15,000 birds, our flock size now
is approaching 400,000. These birds produce about 10 million
dozen eggs per year under the brands of Eggland's Best and
other branded labels that can be found in most of the retail
natural food stores from Maine to Florida. We also export
product to Canada and Bermuda. Braswell is a fully-integrated
organic egg producer. We have our own feed milling, pullet
growing, liquid egg product and distribution operations. All of
our operations have been certified by QAI, Quality Assurance
International, from day one. The Braswell family of companies
enjoy a reputation, being one of the country's premier organic
egg and feed providers with sales over $20 million per year.
Our feed-milling operation not only supplies feed to our
own birds, but to other organic livestock operations. We
purchase organic corn from 7,000 acres and soybeans from 6,000
acres of certified land. Most of the grain that we buy is from
the Midwest, but we have also established buying programs to
encourage grain farmers in our local area to convert to organic
production by paying premiums for the grain during the
transition period of 3 years, in exchange for the following 3
year's crops. We traditionally pay from 50 to 100 percent
premiums for these crops over the regular commodity crops, with
today's pricing of organic corn being anywhere from $10 to $12
a bushel and bean meal over $600 a ton.
It is a concern that the 2006 crop will not be enough to
supply the demand until the new crop is available. One of our
main suppliers of organic grains has told us that, because of
the increased demand from organic livestock, there will be a
major shortage in a large part of 2007 and into 2008. Producers
will have to look for offshore supplies, such as China and
Europe, to fill the gap. This shortage will limit our
industry's growth.
Organic production has also had a great influence on our
conventional operations. We have implemented many of the third-
party certification principles in our food safety, animal
welfare and environmental programs. Braswell is the first and
only ISO 14001 certified egg company, which shows the continual
commitment to produce the best products while striving to
improve our environment.
As part of our rapidly growing organic community, we have
seen many changes and challenges as we strive to serve the
customers' demand for organic products. One key event that has
helped committed organic producers, such as Braswell, was the
implementation of the USDA certified organic program. For the
most part, this program has leveled the playing field for fair
competition and has provided assurance to the consumer that
organic products are what they say they are. This program has
been government at its best, but it still needs Congress'
support as demand for more certification of both domestic and
foreign supplies increase. For example, China is making organic
soybean meal available to us in North Carolina at 25 percent
less value versus Midwest meal. As the U.S. demand increases
and the U.S. farmer does not put more acres in to organic,
supplies of organic products will be needed and more grain
supplies will be needed to fill the gap from offshore. These
suppliers will need to be held to the same high standards that
our domestic suppliers are and USDA will need more resources to
ensure the process.
Another area of concern and challenge is somewhat of a
paradox, is the use of organic fertilizers, livestock waste, on
our croplands while some of our environmentalist friends have
targeted this practice as not good for the environment. Some
even said that organic materials should be classified as
``hazardous waste.'' As treated as other waste, it would fall
under the Superfund law. If our laws prevent the use of this
natural product, which has been used to grow crops since the
beginning of time, the organic food industry would collapse.
The Braswell family would hope that if you have not tried
some of our eggs, that you will in the future, and invite you
to see our operations in North Carolina and Virginia and again,
thank you for the privilege of being here today.
[The prepared statement of Mr. Pike appears at the
conclusion of the hearing:]
Mr. Cardoza. Thank you very much to our entire panel. I
have to say that you are quite impressive, all of you, in both
the scope and commitment of your endeavors. I am very
impressed. I want to start the questioning with Mr. Vieira.
Sir, you are truly one of the American success stories in
farming in organics. I think you arrived here in the United
States in 1968 and have grown your business. I toured it
recently. It is fantastic and so impressive, the commitment and
the innovation that you have brought to the industry. My dad
and grandfather used to be sweet potato growers, as you know,
and they were pioneers in their time, but nothing compared to
what you have done in your industry.
I was very interested in your testimony. You talk about the
conversion process going to organics. I would like you to
elaborate a little bit about that. And also what is entailed
for your particular industry in converting to organics? Then I
also would like you--you mentioned in your testimony that you
also are certified for the EU to export to them and I would
like to know what differences there currently exists between EU
certification and USDA certification?
Mr. Vieira. Thank you, Mr. Chairman. First of all, it was
not easy when, in 1988, our company decided to start planting
organic yams and sweet potatoes. And as I said, we started in a
very small scale, only 10 acres it and was a process of
learning and getting beat once in a while. But every year, we
had the commitment and we decided to keep going and we
increased from one year to the other. And in 19 years we went
from 10 acres to over 1500. One of the most difficult things is
land. We have to have three years of doing almost nothing. You
can plant rye or you can leave it just open. We have to have a
strong commitment for organic, as we did.
Like I said, the three years we have without anything or we
rent most of our ground, so we have to have affidavits from
neighbors, from the county, from anyone if this pasture, as you
know, in our area is lot of land has been in just pasture that
nothing has been doing for a long time around Livingston,
Atwater, Stevenson and when we find the ground we would work it
is like vision ground. And like I said, finding the proper
ground, going into the process according to the laws, rules,
regulations, is one of the most difficult things we have.
As far as the requirements to go to Europe, it is more or
less the same as here. We have two independent entities that
give a certification and when we present to them our history,
what we have been doing for almost 20 years, we present every
single document that they ask us, it has been no problem to
ship to Europe. Because we have been having enough market in
this country and Canada to ship our sweet potatoes, we are not
so crazy to ship to Europe if we have the market here. But we
ship a few to a few good clients.
Mr. Cardoza. Thank you. Ms. Martens, one thing that you
mentioned at some length was the fact that you used to spray
herbicides and now you are not. I will tell you that I am an
avid family gardener in my home and I am so interested to
figure out how you can control those darn weeds without using
herbicides. Could you elaborate a little bit on your technique?
This is really not for the Committee's purposes, but for my
personal purposes.
Ms. Martens. I would be happy to. Looking at weed control
is probably our major challenge on a crop farm. We don't have
the insects and diseases that would be in a vegetable farm, but
weed control is a challenge, but it is not an impossible one.
In fact, once you get your system, it is not that difficult. We
separate it into two distinct categories; the cultural weed
control, where by rotating your crops, enhancing soil health,
soil fertility management, you really, truly limit and control
the amount of weeds and the species of weeds that are present
so that you can then go in with mechanical tools that are
appropriate and do not require a great deal of labor or
petroleum that are timed correctly for effective weed control.
On our row crops, if we can get in with what is called a
coil tine harrow, which are thin wire tines that shake the
ground, aerate it and allow for weed seedlings to desiccate, to
dry out. If we can get in twice, once right around emergence
and once right after emergence and then go in twice with a
field cultivator or an in-row, between-row cultivator, four
passes will do weed control sufficient to make our fields look
as if they had been sprayed with herbicide. It isn't that
difficult, it isn't rocket science. It is more timing and
having the right tools and having your soil in good shape and
having your crop rotations in good shape.
Mr. Cardoza. Yes, I have a follow-up question. Do you have
that rotten nut grass in your area? Because that is a blight in
my area.
Ms. Martens. We do have nut sage, we did. One of the things
we found that a lot of the rhizome weeds, like nut sage and
crabgrass, that we expected to be problems when we went organic
stopped being problems, mainly because of the microbial
activity in the soil. When you change your soil conditions, you
change your weed populations and the things that you think are
going to be a problem aren't necessarily.
Mr. Cardoza. That is interesting. Thank you. I would like
to talk to you more about that.
Ms. Martens. All right.
Mr. Cardoza. I am going to ask a little indulgence. There
is one question I would like to ask the entire panel. Can you
comment on the effects of imports on your business and the
sufficiency of oversight by USDA? I am concerned, frankly, that
in some other countries we are simply not getting the oversight
that protects the consumer. You all have built up such a high
standard and high bar in our country. We do have high oversight
here. And I am just afraid that the further you get from
Washington or U.S. borders and as you get to other countries,
we are simply seeing a lack of oversight in those areas.
For example, in some countries, application of water that
is polluted from the rivers in that country are a huge concern
to me where you wouldn't allow a pesticide but yet there might
be pesticides or other chemicals in the water that is being
applied to organic farms. Can you all speak to that? Do you
have any knowledge of that? And what is the effect of imports
on your industry and whether you believe that oversight is high
enough, a high enough bar? I will start with Mr. Pike.
Mr. Pike. Well, at this time, as I said in my testimony, we
are being offered organic soybean meal out of China and after
just recently adopting a little girl from China and seeing the
vastness of that country, I can't imagine some of the
certification efforts that has to go on there. But it is being
offered. The certifiers are assuring us that the product is
certified properly. There is a concern there, but more
importantly it is limiting the growth of our own industry and
our own farming community to be able to convert to organics. As
in eggs, eggs are a fairly perishable item. There is not any
pressure at this point in time.
Mr. Cardoza. Thank you.
Mr. Lively. It is a great question and I am so glad you
brought it up. I would say that the single biggest competitive
issue facing the organic beef producer is foreign beef both
economically and for the oversight and paper trail you are
discussing. In the supply chain of livestock, you have got many
layers. It is not just that a guy raises an animal, sells an
animal, it gets processed. There is genetics. There is a cow-
calfer that breeds and then your next step is to lay a
background or spend some time with the animal until the animal
is up to an age where it can be fed or finished on high protein
grains to get that lush flavor we all like.
Each one of those steps in the organic agriculture for
livestock has to be certified organic and watched. The field
that the animal grazes in has got to be certified organic with
soil samples, with the three year wait and whatnot, as well as
any added feeds; corn, soy, flax, barley, wheat, whatever else
is put in that animal's diet. I can't imagine that it is being
managed or the oversight is--in my opinion, there is clearly
not the same standard being held to the U.S. beef as there is
to foreign beef and it is purely an opinion there.
But I can't imagine that an entire supply chain is being
tracked along with the processing. Once it turns from a
livestock product to a food product that is actually being
handled, that process is being tracked and then it is put on
some big cargo freighter and trucked over with here with
diesels and call it sustainable meat. So my issue is that you
are correct. I think the oversight on foreign beef could be a
lot tighter, but my only information is anecdotal and opinion
right now.
Mr. Cardoza. Something that I think this Committee is going
to have to really look at even more is exactly what you just
talked about and something else that was talked about, and I
don't want to divert from the question, I want to get back to
the panelists, but I am very concerned that the organic label,
as someone said previously, is also sort of a moniker for
sustainable.
Mr. Lively. Yes.
Mr. Cardoza. And I am not sure that all countries have the
same view on this as we do and that we are employing
sustainable practices.
Mr. Lively. If I could make one more point on that and I
will pass in a second here, is that when we process an animal
at Dakota Beef in Howard and that animal becomes a carcass and
is now become a food product and the USDA gives the thumbs up
that this is a sanitary, clean--and by the way, the USDA does a
great job keeping, you know, food safe, clean and moving, but
they are not overly educated on the organic standard. We spent
our first year of production teaching our USDA inspector how to
monitor us for organic rules and now he is great. He has done
his own research.
But we spray that carcass with organic citric acid or hot
water, things that are allowed. What foreign countries might
use on a beef carcass, who knows what the allowed substances
would be? How would you even track it? How would you know what
the source of that product is? And that is, indeed, where all
pathogens are removed and it is given the thumbs up; this is
clean, move it into the cooler and start processing it.
Mr. Cardoza. You have instructed us to instruct our staff
to start looking at this right away. Thank you.
Ms. Martens. Just briefly. At our feed mill, we have a
commitment to buy first, New York grown grain for feeding New
York dairy cows. Because for two reasons. One is that we know
the farmers growing them and so therefore we know what
practices they are using and their integrity. But we also want
the income, the wealth to stay in New York as best we can. This
is community development, because the money that is generated
in New York benefits not just agricultural businesses, but
bounces around the community in many different ways.
If we cannot get what we need from New York, and we can't.
New York doesn't grow anywhere near enough grain for our needs.
Then we will go Midwest or western Canada, Ontario and then, as
a last ditch source, we will go outside the country. We will be
bringing in some sunflower meal in from South America later
this year because there isn't enough. I feel that the integrity
issue is a big one, but community development and keeping the
benefits of organic farming here in the United States to
benefit both the suppliers and the users is very, very
important. And so if we can put emphasis on that, we will not
only solve the integrity and the traceability, but we will also
help American farmers.
Mr. Cardoza. Thank you. Mr. Vieira.
Mr. Vieira. Mr. Chairman, I think your question was a great
one. The other day I saw, in our district, the city of Merced,
California, a can of yams from China, which makes me very
nervous. They were conventional, non-organic, but even
conventional, I hope that those countries that grow any type of
produce, it doesn't matter if it is organic or conventional,
that they follow the same rules, strict rules and regulations
as this country. Thank you, sir.
Mr. Cardoza. Thank you. I will now turn it over to my
Ranking Member, Mr. Neugebauer, for his question period.
Mr. Neugebauer. Thank you, Mr. Chairman, and thank you for
that last question. That was a very good question, very
interesting response from our folks. This transition period
that we have been talking about, I want to kind of explore that
a little bit more. Is the three years, is that kind of a set-
in-stone number and if it is, can you explain to me kind of
what is going on there?
Ms. Martens. The rule says that there has to be 36 months
between last prohibited material and harvest, so that is, in
effect, three years. We have taken many acres through
transition and we have never grown nothing for three years. And
I think it is a really important point to say that you don't do
nothing, you don't leave that land idle, you don't get no
income off of it. You just have to use organic practices for
those 36 months and you cannot sell the crop as organic. But
you can grow conventional hay, you can grow conventional
soybeans, which work very well under organic management; just
can't use GMO varieties.
Many people that we work with have hay land, CRP land,
other idle land coming out that can be organic immediately
because nothing has been applied on them for the previous three
years. They don't need to go through a three-year deliberate
transition if nothing has been applied. So yes, it is three
years, but there are many ways to do it where you don't lose
income during that time nor do you lose a crop.
Mr. Neugebauer. So would it be a fair assessment to say
that the transition period, because it is three years, is not
an impediment, necessarily, for if I am conventional farming,
to move to organic farming, Mr. Lively?
Mr. Lively. I don't think it is an impediment, no. I think
that there are a few factors and I am going to speak from the
corn industry because I know cattle and corn is about the only
two crops that I focus on. Typically, when someone is doing
what is called the transition crop, during those three years
they might experience a slight loss in yield because they are
not using the chemical fertilizers and whatnot they are used to
using. But it is a great training ground for them and a period
for them to learn how to do organic agriculture.
I have never, and I have probably worked with
certifications on over 60,000 acres of certified organic corn
in South Dakota in the last year. I have never seen a producer
lose money on a transition. I have seen him have less yield and
have down years but never lose money and I have always seen the
banks being willing to lend against it. The struggle is getting
the bank to understand the process once it is organic and hey,
this is a much higher margin, more expensive crop with higher
input cost.
But as Ms. Martens has mentioned, the idea of CRP land is
becoming a phenomenal route for people wanting to get into the
organic industry quicker. A lot of these are ranchers and
farmers have huge tracts, quarters and quarters of CRP land and
they are getting, you know, a nice annual fee for keeping it as
CRP land. Maybe there is quite a bit of CRP land out there, I
am not sure. I know how much there is in South and North
Dakota. This land, if it has been treated according to CRP
standards, would certify organically almost instantaneously.
Now granted, a lot of CRP land was put in that is not
farmable, which defeats the whole purpose, in my opinion, but
that land would certify overnight, quickly, and what we are
really talking about is an affidavit and the producer is
willing to sign his affidavit saying hey, listen, it has been
three years. I have been solid. I have done a good job. Here is
my backup and management proof. There are a lot of guys that
could go organic much quicker than they think.
Another market for that transition corn would be the all-
natural cattle industry. There is a significant difference
between all-natural and 100 percent organic and we need to be
very clear on that. The standards are clearly different. A lot
of these all-natural producers would like to buy transition
corn because they are basically buying what is organic corn for
commodity prices during that time. So there are options for
them and no, it is not sitting stagnant.
Mr. Neugebauer. And you mentioned another important piece
of that is the capital. Is there recognition in the capital
markets, the lending markets, that this is, you know, a better
opportunity economically for some of our producers and is the
lending, farm lending industry, as a whole, fairly responsive
to that?
Mr. Lively. I would say that has been slow in coming, but
it is coming. There is a lot of private equity capital coming
into the space. A lot of these hedge funds that are sitting on
tons of cash and have nothing to do with it are getting into
the space. A few progressive banks, such as the Bank of
Oklahoma and Rabobank, are putting some time around this and
seeing the value for what it is. But as a whole, I would say
the bank industry has not jumped on board yet. They are still
very much tied to the commodity industry.
Mr. Neugebauer. Anybody else want to respond to that?
Ms. Martens. We have an organic farmers group that gets
together during the winter for day-long meetings and pretty
often, we have conventional farmers who are thinking about
going organic bring their banker or their loan officer to the
meetings so they can learn about organic farming and see what
real organic farmers look like. And they usually go away
feeling pretty comfortable with the whole situation because we
don't look weird and we don't act weird. We act pretty
responsible. And so it is an educational process, but bankers
are generally fairly open to seeing successful farms because
they see so many farms that are not successful, conventional
ones.
Mr. Neugebauer. Mr. Vieira.
Mr. Vieira. Another type of crop, sweet potatoes, in our
area is like a nematode and worms. And because there is no
chemical to use for organic, we have to have at least one,
sometimes two years of what we call dry farming or oats or
winter rye. No irrigation. In our area, usually, from April to
October, we have no rain that we like. We don't want rain at
the time, so because there is no needing that at the time,
during that period of time, so the nematodes and the white
worms go away. So there are reasons why we don't farm during
those three years. One is the requirement, by the rules, and
the other one is to benefit us because we could farm something,
but if we do farm, we have to irrigate and we are going to keep
those pests alive, which we don't want to. Thank you.
Mr. Neugebauer. Thank you very much.
Mr. Cardoza. Thank you, Mr. Neugebauer. Mr. Etheridge.
Mr. Etheridge. Thank you, Mr. Chairman, and thank you for
this hearing. Let me thank all of the panelists and especially
my friend, Mr. Pike, from Nashville, North Carolina. And I have
had a chance to tour their operation and I would tell you that,
and this was several years ago, they do an outstanding job,
they really do. Mr. Pike, let me ask you a question. You
mentioned your concern that you had about the U.S. organic
market becoming reliant on organic feedstock from abroad and
each one of you discussed it a little bit, specifically China
and given what has happened in recent days with feedstock for
pets and even today they pull more product off the shelves.
My question is, and you had indicated that feedstock is
about 25 percent less than domestic feedstock. In your opinion,
does this call into question the quality standard for these
products? You alluded to it. I am going to give you a chance to
talk about it a little bit more. And finally, how can we be
sure that these foreign grains are actually organic? And after
you answer, I may give someone else a chance to comment because
I have one more question for you.
Mr. Pike. As Ms. Martens mentioned, we also prioritize our
purchases in terms of local areas, branching out and of course,
it would be the importation of product. Even at significant
reduction in cost, we put that down on an as-needed basis. From
the standpoint of quality, we test all of our ingredients for
various and sundry protein, all the normal things and from what
we have indicated, the quality has been at standard.
It has not been above and it has not been below, but it has
been at standard and so from that standpoint in our
formulations, we do make any adjustments for that. But in terms
of guaranteeing that it was organic, we rely strictly on the
certification agencies, which are approved by our certification
agency as a reliable source of the whole process, that any
organic soybean farmer in our case, would go through.
One of the things that I mentioned in my testimony, too, is
the transition issue. That would also be a question of how they
transition in these foreign markets and these are some of the
things I would be interested in understanding.
Mr. Etheridge. Let me have one follow-up with you and then
I will ask some others to comment. What percentage of Braswell
products are currently organic and in your opinion, are we
still expecting to see this demand continue to grow as we have
seen it over the last number of years?
Mr. Pike. Yes. Currently our total organic production is
roughly 30 percent of our total flock. In our feed milling
operations, this represents close to 35 percent. We continue to
see the growth. We supply feed to some broiler operations, as
well as other egg operations. Our egg demand for branded egg
products, as well as some of the house brands that you see in
major grocery stores has continued to grow.
It has been phenomenal. It just continues to blow our socks
off every year when we do our market projections and budgets.
Our limiting factor today is our supply of organic grains to
keep our animals fed. One day without organic feed and our
birds are no longer organic and the investment that we have in
our birds, which is double of conventional, goes away
overnight.
Mr. Etheridge. You indicated poultry operations and other
operations in the area that are organic, other than egg
operations?
Mr. Pike. Yes, there are some broiler operations over near
Siler City that are growing. They are looking to double their
production this year, as well, because of the demand for the
product.
Mr. Etheridge. Just so everyone will know, the poultry
operation in North Carolina is substantial. Ms. Martens, you
mentioned in your testimony the difficulty organic producers
face in obtaining bank loans and other sources of financing.
Can you just share with us briefly the help you may have
received from USDA's rural development in obtaining your
additional loan in getting your feed mill up and running?
Ms. Martens. Well, we were very fortunate to get a rural
development loan. It is a good program that stimulates rural
development in that it requires that farmers or other managers
work together in groups and develop ideas that will help the
community, itself, into a business plan. We did get that. It
was not a substantial amount of financing for the mill.
Fortunately, we bought the mill at a time when the market was
expanding, so we haven't needed a whole lot of financial
assistance because we have had such a vastly expanding market
simultaneously.
There is money available. The bankers we work with are very
interested in the whole organic process and the opportunities
and they have been very good to us, very good to work with and
we will help other farmers get into contact with the same
bankers. So I have not seen that to be a major impediment for
most people if they can document that they are good farm
managers. Because one thing I want to emphasize is it really
takes a superior farmer to be an organic farmer.
It takes somebody who is willing to not just find
organically approved substituted materials, but to really
change their management style, become a lot more skilled at
observation and decision making and timing. And so for a banker
to be willing to extend credit, they have to see that the
person does have those skills and has a good track record and a
good possibility of being a skilled organic farmer.
Mr. Etheridge. Thank you. You are attentive to detail. Let
me thank each of you and I yield back.
Mr. Cardoza. Thank you, Mr. Etheridge. Mr. Kuhl.
Mr. Kuhl. Yes, Mr. Chairman. Just a quick question to the
panel. We spent a lot of time on this transition period.
Obviously, that is very important and seems like to expand the
markets, we have got to do more there, from a Committee
standpoint. What was the most difficult part of the transition
for each one of you in your business? And keep in mind that I
am interested in that aspect that we can be helpful with from a
Committee standpoint.
Ms. Martens. I think the biggest impediment for transition
is thinking that you can do it. It is a mental thing more than
any kind of operational thing. Believing that it is possible
and then finding other people that you can talk to and learn
the tools and the techniques and have somebody there for
support to say okay, yes, you do have a few weeds. That is not
going to kill you, you are still going to get a good crop. So
as far as you are concerned, we need strong organizational
support for programs like SARE, like ATTRA. They are
information, but they also fund programs that will help farmers
to help other farmers.
We need a sense that there are other people in the area
that are going to be helping them. So I think mentoring
programs make a lot of sense if farmers can take time out of
their busy schedule to do that. What I see is that just
throwing money at organics isn't necessarily the solution. It
has to be focused in ways where farmers who are wanting
information can get that information and can put it to use. So
when there are problems or mistakes or insecurities, there is
someone there to talk to.
Mr. Kuhl. Thank you.
Mr. Lively. I would say that, you know, the obstacles are
there and the issues are there, but after seven years, it has
just kind of become a cost of doing business. You deal with it.
From my personal experience on the cattle side, we have one of
the largest organic ranches in the Nation in eastern Oregon,
about 155,000 acres; 90,000 of which is BLM land. This ranch
covers two different counties and two different BLM districts.
One district has been unbelievably cooperative about working
with us in co-managing the land, not spraying, allowing us to
do the weed control.
The other district has been somewhat impossible to deal
with and telling us that they have absolutely no willingness at
all and they are going to spray where they want to spray and it
is their land, although we are stuck in a 99 year lease with
them and we are trying to graze organic cattle there. So I
would say that the challenges would be getting more cooperation
from the other agencies, such as the BLM and I really do
believe there is a huge opportunity in the CRP program. I think
it is a very untapped resource where there is, I wouldn't use
the word cheap, but available low-cost organic land.
Mr. Kuhl. Mr. Pike.
Mr. Pike. You know, one of the things that the Committee
needs to understand is that organics is not only herbicide and
pesticide issues. It also pertains to environmental as well as
animal care guidelines and one of the things that took our
company in making the transition from our normal cage laying
operations was going to a free roaming mode of production. For
our people, it was more of a mindset, accepting these whole new
ways of doing things. In terms of our transition and our
livestock, the three years doesn't really apply, but it is a
definite change in how we manage our birds. But, again, working
back with the corn farmers and helping them and educating them
is part of our process, as well.
Mr. Vieira. Sir, in the sweet potato and the yam industry,
one of the most difficult things has been convincing the sweet
potato costs of California or everybody involved in investing
more money in developing new types of sweet potatoes like pox
resistant or nematode resistant or white worm resistant. That
has been one of the most difficult things. In our industry, we
would like to have the help for research and new varieties and
new types of sweet potatoes that can resist all the types of
pests that we have in our soil in our area. Thank you, sir.
Mr. Kuhl. Thank you. All right, Mr. Chairman, I yield back.
Mr. Cardoza. Thank you. Clearly, this is a panel of
innovators and pioneers. You have all mentioned research at one
point or another and that is something that this Committee has
consistently heard from panelists across the spectrum,
conventional and organic farmers. We are going to be doing a
hearing on a bill about specialty crops that most of the
members of this panel are co-signers on and it will be done in
Mr. Holden's Subcommittee, but it will include all these
concerns for research.
And the commitment of this Committee has been as we go
forward and write the farm bill, that we are certainly going to
be very sensitive to making sure that whatever we write in
every section of the bill also applies to organic producers, so
you will, for the first time, be included in all aspects of the
bill. Thank you so much for your testimony. You have done a
great job today. I would like to call up the third panel at
this time.
Today we have, as I said previously, Ms. Sandra Marquardt,
President of On the Mark Public Relations, Silver Spring,
Maryland on behalf of Ms. La Rhea Pepper, President of the
Organic Essentials, Inc. of O'Donnell, Texas. We have Mr. Lynn
Clarkson, President of the Clarkson Grain Company from Cerro
Gordo, Illinois. We have Mr. Rich Ghilarducci, President and
CEO of the Humboldt Creamery in Fortuna, California and we have
Ms. Nicole Bernard Dawes, President and COO of Late July snacks
from Hyannis, Massachusetts. I want to thank you again for the
snacks. I have been munching them all morning and it is
probably going to effectively be my lunch today, so thank you
for the sustenance here.
I also want to mention that, as you can note, a number of
the panel and Committee members have had to transition to other
meetings. That in no way should discourage your comments
because they will all review and get transcripts of this
hearing and I will make sure to pass on your comments to them.
You comments are very important to this Committee.
Unfortunately, members in the Congress have to multi-task and
when you get near the lunch hour, we have several meetings that
sort of trigger that second round of meetings they have to
attend to, so I apologize for the lack of members, but they
will, in fact, review your testimony. And would you please
start, Ms. Marquardt?
STATEMENT OF SANDRA MARQUARDT, PRESIDENT, ON THE MARK PUBLIC
RELATIONS, ON BEHALF OF MS. LA RHEA PEPPER, PRESIDENT, ORGANIC
ESSENTIALS, INC.
Ms. Marquardt. Good morning, Mr. Chairman. It has been a
wonderful, wonderful hearing. Thank you very much for hosting
it. My name is Sandra Marquardt and I thank you for allowing me
to testify on behalf of La Rhea Pepper, who wishes she could be
here but cannot. I will be talking about the burgeoning organic
fiber sector and by that, I am referring to organic cotton,
such as this, the organic wool, organic silk and really, any
natural fiber that is grown in an organic manner. I will do my
best to represent La Rhea Pepper, but she will be coming here
to Washington, D.C. this summer and maybe you two can chat
directly.
Mr. Cardoza. Absolutely.
Ms. Marquardt. Thank you. So La Rhea Pepper is the CEO of
Organic Essentials in O'Donnell, Texas. Organic Essentials
manufactures organic cotton personal care products, such as
cotton balls and swabs and cotton rounds and until recently,
feminine hygiene products. She is also an organic cotton grower
farming 1100 acres of organic cotton near Lubbock, Texas. Given
La Rhea and her husband Terry's concern about the extensive use
of pesticides on the approximately 3.5 million acres of cotton
around them, the Peppers became certified organic farmers in
1991 and were certified by the Texas Department of Agriculture.
In 1993 they and a handful of other family farmers created
the Texas Organic Cotton Marketing Cooperative, which is also
called TOCMC. And TOCMC has since expanded to 30 family farmers
growing 8,000 acres of organic cotton and this has enabled the
high plains of Texas to become the number one organic
production area in the United States and one of the top 4
production areas for organic cotton in the world. TOCMC created
Organic Essentials in 1996 to market value added products using
a short, staple length fiber that otherwise falls outside of
the spinning qualifications for yarn, et cetera, and which was
otherwise sold at low prices on the conventional market. These
products are now available everywhere from Whole Foods to
places like CVS and even Wal-Mart.
In the late 1990s, La Rhea joined the Organic Trade
Association's board of directors where she spearheaded the
effort to create cutting edge standards for the processing,
such as dyeing and printing, finishing of organic fiber
products. This would enable a product to be considered organic
from field to finished product. In 2002 La Rhea helped co-found
a non-profit organization called the Organic Exchange, which is
based in California, in Oakland, and it facilitates expansion
of the global organic fiber industry.
Now, expansion is really what we have seen. Globally, sales
of organic cotton products increased an average of 35 percent
annually to $583 million in 2005 and these sales are
anticipated to skyrocket to $2.5 billion by the end of next
year, reflecting an average income or an average annual growth
rate of 116 percent, which is unprecedented in the conventional
sector, that is for sure.
Companies using organic fiber today include such well known
brands as Nike, Patagonia, Nordstrom, again, Wal-Mart, as well
as more than 1200 small and medium size brands, retailers and
well-known designers such as Paul McCartney's daughter, Stella.
The irony is that as we have heard before, for a number of
other crops, organic crops, there isn't enough organic cotton
to go around for the number of brands that want to use it.
Another irony, the United States used to be tied with Turkey as
the largest organic cotton production area in the world, but
the growth today is happening in Turkey, India and China;
everywhere else but the United States.
Now why is this incredible growth opportunity bypassing the
United States? Well, U.S. farmers face barriers such as a five
percent higher insurance premium for the same coverage. Again,
we talked about that earlier. And new organic cotton growers
face having their crops decertified is sprayed by conventional
insecticides as part of the Boll Weevil Eradication Program.
Lastly, while we thank Cotton Incorporated for it annual
financial survey support of OTA's organic cotton acreage
survey, we asked that it provide the same kind of support for
technical research, education and promotion of organic cotton.
Mr. Chairman, I thank you again for your interest in
organic production and we look forward to working with you in
any way possible to help grow the organic fiber market. Thank
you again.
[The prepared statement of Ms. Pepper appears at the
conclusion of the hearing:]
Mr. Cardoza. Thank you. Mr. Clarkson.
STATEMENT OF LYNN CLARKSON, PRESIDENT, CLARKSON GRAIN COMPANY,
INC.
Mr. Clarkson. Mr. Chairman, I would like to introduce
myself as Lynn Clarkson, President of Clarkson Grain Company in
Illinois. I would like to thank you and your Committee for your
delightful interest in organic and I would like to encourage
that.
My company works with farmers throughout the United States,
mostly in grains and oils, oil seeds, which means we are
operative between the Alleghenies and the Rockies and from the
Gulf of Mexico to the Canadian border. We work with corns,
white, yellow and blue; soybeans and wheat, but primarily corns
and wheat. Those are the farmers who are at the foundation
level of the growth in meats and dairy products. Those are also
the farmers who almost all have products that have to go
through a conversion process. They are not selling directly to
consumers. They are selling inputs to other parts of the
industry.
Almost every panelist here has underlined the major
challenge as a supply challenge. Our industry has done a
phenomenal job in finding demand. To satisfy demand, we have to
have supply and we are not doing so well here. I would like to
give my version of Economics 101 for organic agriculture. When
I left my office yesterday, we were paying approximately $3.50
a bushel for conventional corn delivered to central Illinois.
At the same time, we were paying over $7 a bushel for
organic corn at the farm, almost anywhere in the Midwest. We
were paying approximately $7.50 for conventional soybean
delivered into central Illinois and probably a minimum $14 a
bushel for any organic soybean. The soybean doesn't even have
to have a lot of self-respect to garner the $14. We will take
almost any quality at that level and we are lucky to get it.
Now, prices don't mean a lot without a consideration of
yield. And many pundits have suggested that the organic farmer
can't raise yields competitive with his conventional neighbor.
Approximately 158 replicated studies by Iowa State University
would indicate that on the average, organic farmers should
expect between 90 and 95 percent of the yield of his
conventional neighbor.
What are his costs? His costs are no higher than his
conventional neighbor. So what does that mean for the net
effect on his finances? They are significantly better. They are
so much better that the best organic farmers in their pursuit
of land are offering premiums to land owners of $20 to $50 an
acre to allow them to rent land and convert it to organic.
So if what I said is true, why are we having difficulty in
finding farmers willing to convert? Why are we having
difficulty in finding additional land? There is a host of
reasons varying from simple to complex and many of those
reasons go to stepping into the unknown. Others have asked for
help through extension to remove some of the risks of going
into the unknown. There is a new level of selling not to the
neighborhood elevator. We frequently have to sell to companies
located hundreds of miles away.
Also in the organic world there are not a lot of elevators
dedicated so your buyers will expect you to hold your crop on
the farm until the buyer needs it. That is an inconvenience
factor. There are several inconvenience factors. And then we
step up to today's reality where we have ethanol changing the
face of rural America. We are now paying more for conventional
corn than we were for organic corn a year and a half ago. We
have essentially doubled the price of conventional corn.
With the conventional farmers now making or looking at the
potential of profits down the road, the highest in their lives,
we are finding extreme difficulty in convincing anyone to do
anything that is inconvenient. Even though the net return to
the farm might be between 50 and 100 percent higher, there are
inconvenience factors here. So one of the unintended
consequences of the U.S. ethanol policy is a restriction on
what we can do in the organic world.
There are infrastructure issues, too, and I would like to
leave you with one thought about blue corn. I hope that you
have enjoyed a blue corn chip at someplace in your diet. And
you and I both know it is corn, but there is one large
organization that doesn't claim it is corn. That is the USDA. A
blue corn farmer technically cannot seal his crop because it is
not considered to be corn. Now why isn't it corn? Because USDA
relies on GIPSA, the grain inspection, stockyards and packers
administration, to define corn. If they don't define it, it is
not corn. To add insult to injury, under current grading rules
of the USDA, blue corn is 100 percent damaged because the blue
color suggests mold.
So there are some things that could be done fairly cheaply
here to adjust the bureaucracy to some of the nuances of our
world. Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Clarkson appears at the
conclusion of the hearing:]
Mr. Cardoza. Thank you. Go ahead, sir.
STATEMENT OF RICH GHILARDUCCI, PRESIDENT AND CEO, HUMBOLDT
CREAMERY
Mr. Ghilarducci. Good morning, Chairman Cardoza and members
of the Subcommittee. My name is Rich Ghilarducci and I am
President/CEO of Humboldt Creamery Association, a dairy
cooperative owned by over 50 dairy families located along the
north coast of California. With the milk that our dairy
families produce, our processing facilities, which are member
owned, manufacture both organic and conventional ice cream,
fluid milk and powdered milk products. Today we employ over 250
people and our products are sold in all 50 States and
international markets.
Humboldt Creamery Association's organic program started in
2001 with three dairy families representing less than 5 percent
of our milk supply. Today, organic milk production represents
60 percent of our milk supply from 30 dairy families. I would
like to thank the Subcommittee for the opportunity to testify
in this groundbreaking hearing about organic agriculture, which
is an important topic for our members, our region and consumers
throughout the United States.
Humboldt Creamery Association was founded in 1929. We are
the oldest dairy cooperative in the State of California. Most,
if not all, of our 50 member/owner families are direct
descendants of the 152 founding members of the cooperative. In
the last few years, some members of the Humboldt Creamery
Association were forced to leave the dairy business because it
was no longer financially feasible to maintain their family
dairies.
It is especially disappointing to know that this decision
was often made when the dairy was to be transitioned from one
generation to the next. Not only for Humboldt Creamery
Association, but throughout the United States, succession is
one of the leading factors in the declining number of family
farms. However, during the same period of time, something very
positive happened within our cooperative. Over 25 of our family
farms transitioned from conventional dairy operations to
organic dairy operations. In 2006 alone, 15 of our member-owned
dairies converted to certified organic.
A cornerstone of organic dairy management is pasture
grazing, which our members do throughout most of the year
except for during the most inclement weather. Another is a
natural preventative approach to livestock healthcare, as
opposed to the use of antibiotics and other synthetic
treatments. These techniques of pasture and livestock
management have been the method of dairying in our region for
generations. So for many of the cooperative families, organic
certification is a validation of a dairy in practice. It has
been their daily routine for many years.
We request that this Subcommittee recognize the enormous
opportunity that organic agriculture offers family farmers
throughout the United States to once again fill a role that has
been vanishing, that of the entrepreneurial family farm which
contributes to the United States economy. In order to do this,
infrastructure must be supported by the United States Congress
to ensure the industry's growth.
Humboldt Creamery Association believes there are two key
topics that need to be supported by this Subcommittee;
increased funding for the USDA National Organic Program and
financial support for technical assistance in transition from
conventional to organic. The USDA Organic seal is recognized by
consumers to mean strict production and environmental
standards, are behind every product labeled organic. It is up
to the USDA to ensure the credibility of the organic label.
Funding and staffing at the USDA National Organic Program must
keep pace with the growing marketplace.
Making the transition from conventional to organic dairying
can be cumbersome to a dairy farmer. It requires specific
knowledge of growing organic crops to feed their dairy animals,
as well as specialized livestock management techniques. In
order to ease this transition and help farmers with the change,
Humboldt Creamery urges the Subcommittee to support
authorization for educational programs and technical training
in organic production.
The SARE, the ATTRA programs have been successful in this
area in the past. EQUIP has also been successful. More
ambitious organic transition programs, at least in dairy,
should be carefully scrutinized by this Committee to ensure
that they will not disrupt the orderly development of the
organic milk supply and allow economics to dictate supply. For
Humboldt Creamery Association, the growing organic dairy market
has provided an exciting, viable opportunity for future
generations.
In conclusion, I want to thank Chairman Cardoza and the
House Subcommittee and I am a firm believer in the United
States organic industry and the important role that the USDA
plays in the integrity of the industry. I would be pleased to
answer any questions.
[The prepared statement of Mr. Ghilarducci appears at the
conclusion of the hearing:]
Mr. Cardoza. Thank you very much, sir. Ms. Dawes.
STATEMENT OF NICOLE BERNARD DAWES, PRESIDENT AND COO, LATE JULY
SNACKS
Ms. Bernard Dawes. Chairman Cardoza, Ranking Member
Neugebauer and members of the Subcommittee, I want to thank you
for inviting me to this historic hearing.
My name is Nicole Bernard Dawes and I am the President and
COO of Late July Organic Snacks. Our factory and company
headquarters are located on Cape Cod in Massachusetts and on
any given day, we have three generations at our family
business, including my father, who is my business partner and
here today, and at least one of my young children is regularly
at the office with us. We employ 30 people and manufacture
exclusively USDA Certified Organic products. Our products are
available in all 50 States, as well as internationally, and we
are working on expanding our export program.
Since our founding in 2003, we have grown over 40 percent
annually and our current run rate has us at over $7 million in
annual sales. This is the third national food company started
by my family. The first was Cape Cod Potato Chips and the
second was Chatham Village Foods. I am here today to discuss
the incredible opportunity this new industry represents, the
challenges that we face, how organic products benefit our
country and specific ways that Congress can help us.
I have spent my entire life in the food business; first as
a child at my mother's natural food store in the 1970s and
later at my parents' businesses and now at Late July Organic
Snacks. I believe our nation is at a major turning point with
our food supply and this Congress has an incredible opportunity
to change, for the better, the future of our food supply by
becoming advocates for organic agriculture.
Recent events have underscored to people the need to care
about where their food comes from, what is in it and the impact
their buying choices have on the food chain. Parents are
checking ingredients before they pack their kids' lunch and
this generation of kids are learning to ask questions about
their food. The National Organic Program created a level
playing field, enabling companies like Late July to compete
equally against much larger companies. It established a rigid
set of standards that gave our industry credibility in the
marketplace.
Now everybody carrying the USDA seal is in the same boat.
We are all subject to the same strict standards. I believe that
organic agriculture is the gold standard for the food business.
It offers family farms an economically viable alternative,
produces innovation and most importantly, provides an
opportunity for businesses and individuals to put environmental
stewardship into action.
For all these reasons, organic production is a worthwhile
endeavor for food entrepreneurs like myself and not
coincidentally, it is also the fastest growing segment of the
food industry. But there are challenges. For us, namely, cost.
At Late July, our ingredients can be up to 10 times the price
of one of our conventional competitors and supply shortages are
at the root of that. We also have to spend significantly for
research and development. And while we try to keep our prices
competitive with the conventional brands, we do still have to
charge more.
We are also finding that some channels, like school lunch
programs, would like to offer more organic products but can't
afford the higher costs. We are also facing confusion with all-
natural or conventional in the marketplace. Higher costs are
acceptable to shoppers as long as they know and understand what
the USDA Organic seal stands for, but we are finding, as we
branch out into more and more mainstream accounts, the USDA
Organic seal and its meaning needs a significant amount of
explaining.
Late July and companies like ours are major customers for
organic commodities and we need to broaden our customer base in
order to grow the industry. But we need to do this while
maintaining the same strict standards that we have so our
industry never loses the credibility we have worked so hard to
build. Why does all this matter? Organic agriculture reduces
the amount of persistent pesticides in our country's air and
groundwater. Organic farmers don't use petrochemical based
fertilizers and have a lower carbon footprint per pound.
So much today is said about reducing our impact on the
environment and making better food choices, but as individuals,
it is hard to know where to start. Organic products are a
gateway. That is why organic farming is such an important
practice to encourage in the U.S., something you can do when
you are shopping for your food and when you are making
Congressional policy decisions.
As a child of the 1970s natural food movement, I was teased
for the contents of my lunchbox. My mother would pack carob
coated rice cakes and miso soup and it was products like these
that created the old stereotype that organic products don't
taste very good. The National Organic Program was the real
impetus we needed to create the kind of organic products I
could only dream about as a child. And while it has been a
groundbreaking initiative, it still needs much support.
I am here to ask for: increased funding for the National
Organic Program so it can be fully implemented, effectively
enforced and better understood; the removal of export barriers
and oversight on imports; assistance in getting organic
programs to school lunch programs; support for the Organic
Trade Association's recommendations. Finally and most
importantly, I ask you to take a position in favor of organic
agriculture.
I reiterate that we are on the verge of a major turning
point in our food supply and this Congress has a real
opportunity to make a difference. Thank you so much for this
honor.
[The prepared statement of Ms. Bernard Dawes appears at the
conclusion of the hearing:]
Mr. Cardoza. Thank you very much. I have less questions and
I have a couple answers in statements that I want to present.
First of all, Mr. Clarkson, I was fascinated with your story
about the blue corn not being recognized as corn. I do enjoy
blue corn tortillas and chips. I think it is emblematic of how
we oftentimes have a disconnect from the real world to USDA and
how come we can't bridge that gap more readily than we do
sometimes is frustrating to both farmers and to members of
Congress. I am going to ask my staff to prepare a letter from
this Committee to USDA to ask that this particular issue be
resolved forthwith and hopefully we will have some impact. If
not, please feel free to contact us soon.
Mr. Ghilarducci, I hope I haven't butchered your name too
badly. I have a history of butchering names.
Mr. Ghilarducci. Been worse.
Mr. Cardoza. You mentioned, as Ms. Dawes does and others
today, that funding for the USDA program for timely answers and
timely issues is critically important and I think you have
really hit on something that we are going to have to pursue and
hopefully the work that we are going to do in this farm bill
will have some impact on that, but I am going to have a
conversation again with Ms. DeLauro, who is the Chairwoman of
the Ag Appropriations Subcommittee here in the House. I know
she is incredibly supportive of organics in general. Even
though she comes from more of an urban setting than a rural
setting, she is a fabulous champion for agriculture in so many
ways and really works very hard to make sure that we do the
right thing in this area of the Appropriations Committee. We
will be communicating with her either through letter or private
communication to try and see that we get organics fully funded
in this farm cycle and so that is another area that we will
pursue.
Finally, Ms. Dawes, you mentioned the importance of the
organic seal as part of your testimony and I will tell you that
is something of incredible concern to me as we go forward.
Making sure that seal that you have worked so hard to build
maintains its value and only a few bad actors or a few
violations could really destroy something that you have worked
so hard to build up and the value of that. And I think it is
going to be one of the top priorities of this Committee to
continue to do oversight in this area, whether it be in
international imports and whether or not they meet the same
standards or whether or not there are a few bad actors in the
industry that could harm or damage the work that you have so
diligently put in.
I just want to make one final observation before I ask my
colleague, Ms. Gillibrand, if she would like to ask some
questions. I have been incredibly impressed with the
entrepreneurial spirit, with the commitment and frankly, the
successful nature that the folks who have testified in all
three panels today have exhibited. I am very impressed with
that and I encourage you; you don't need much encouragement
from Congress, but you have done it of your own spirit and your
own hard work. It reminds me of that kind of spirit that my
grandparents had when they came to this country and farmed the
land in a natural way. It was just the way they knew, was to
not use pesticides or things, but they just did it mainly
because that was what they could afford and that was what they
knew from the old country. And I see that same kind of spirit
in so many of you and it makes me feel good about the future of
agriculture.
Ms. Gillibrand, it is all yours.
Ms. Gillibrand. Thank you, Mr. Chairman. Thank you all for
coming. I really appreciate your dedication and your commitment
to organic farming. I come from a district in upstate New York
and we have a lot of organic farming, a lot of agriculture, a
great history in agriculture and I am very worried about the
future of agriculture in this country.
I am very worried about our dairy farms, which are dying
because the price of milk is too low and the price of gas is
too high and the price of feed is too high and they are really
having a tough time sustaining their business. So I want to
focus a bit on some of the challenges that you have, to hear a
little bit more about them.
Ms. Dawes, you talked about trade being an impacting
effect. You said there are problems with the export laws and
the import laws. Can you elaborate on the effects they have on
you and what laws you would want changed and how?
Ms. Dawes. Certainly. I will say, at our two previous
businesses, Cape Cod Potato Chips and Chatham Village Foods,
exports represented a significant portion of our revenue. But
at Late July at the moment, our primary exports are to Canada
and a few spotty locations around the world. There are some
inconsistencies between the NOP rules and in other organic
rules in, say, the EU which makes it very difficult for us to
produce products that meet both standards.
We are working on that now, but we are a small family
business and to have to spend, you know, significantly to
research how to do what we do here in another country and also,
you know, all the other costs that are associated with that, I
mean, despite the huge opportunity it represents, it is
something that, while we would like to do it right now, I think
we are probably still a few years away from really benefiting
from it.
On the import side, really, the oversight on the imports
is, from my perspective, just critically important to
maintaining the integrity of our industry. People have to feel
that every single organic product that they buy is filled with
ingredients that maintain our strict NOP standards.
Ms. Gillibrand. So it is your sense that in the imports
markets that our oversight is insufficient, that there is not
enough testing of other brands that come in or what type of
oversight would you like to see more of?
Ms. Dawes. I think that it is just so new and as the market
is growing so fast, we need to make sure that we maintain that
strict oversight and that strict oversight is communicated to
the public.
Ms. Gillibrand. Okay. And then on the export side, what
regulations are too expensive or difficult for you to meet that
the European Union requires?
Ms. Dawes. We are having trouble right now finding a dairy
ingredient that we can use in our products to sell in the
European Union. All of our dairy ingredients are from some of
the best dairy farms in this country. But there are some
differences in the regulations between our production practices
and the EU production practices that make it impossible for us
to market those ingredients in Europe right now.
Ms. Gillibrand. What production practices?
Ms. Dawes. I think a dairy producer would probably be more
qualified to talk about that.
Ms. Gillibrand. Is it that dairy is not organic?
Ms. Dawes. No, no. Absolutely not. The dairy meets all of
our strict organic; it is more on the processing side.
Ms. Gillibrand. Okay. Okay, that is helpful. Have any of
you been non-organic and moved towards organic, or have you all
started your farms as organic farms?
Mr. Ghilarducci. For our members, dairy members, initially
they were all conventional dairies and I shouldn't say all of
them. Which is kind of a breath of fresh air. Three of our
members are first generation farmers that actually started in
the dairy industry and that is something very unique, to see
people enter the industry and the only way they have been able
to do that is through organics. But all of our dairies, the
others besides those three, have converted from conventional to
organic.
Ms. Gillibrand. What kind of support or ideas do you have
for us, as legislators, to facilitate a farmer to move from
regular farming to organic farming, because I know that is a
very, very costly effort, and what kind of legislative changes
or supports would you see would be valuable to facilitate that
if a farmer chooses to become an organic farmer?
Mr. Ghilarducci. For us in the dairy sector, what I see is
education is the most important thing, through the ATTRA
program or the SARE program. And when I say that it is obvious
there is an initial up-front cost, but if we can work with them
to become efficient in their new practices of organic dairying
long-term, that is what is sustainable for their businesses.
And I would also caution, as far as direct payments for
conversion. I think the marketplace has taken care of that and
recent history has shown, in the dairy sector, that has worked
adequately to convert dairies.
Mr. Clarkson. Might I offer you a couple comments in
response to some of your questions? Many of the U.S. feed
producers, corn, soybean, soybean meal, technically meet all
European standards, but they don't file as if they meet them.
You can't use Chilean nitrate for fertilizer under the European
rules; under the U.S. rules, you can. So we have to get an
affidavit from the farmer saying that he doesn't. I don't know
if you have ever tried to chase a farmer down to get him to
sign a document. It is difficult.
Ms. Gillibrand. I can imagine.
Mr. Clarkson. It is extremely difficult. I want to second
my colleague's comments about the service of ATTRA and others
in providing information. Much of the difficulty is in helping
people step into the unknown. It is not a system they are used
to and in conventional farming, you can lay off responsibility
of third party quite easily. You write a big check and that
party takes care of the nutrition and the weed and pest
control.
In the organic world, the farmer has to do it himself.
There are no third parties there today; 10 years from now there
may be. But there is more individual responsibility. And what I
would ask you for help in, my company exports to Japan, Taiwan,
Korea, western Europe, sometimes South America and Canada. The
biggest difficulties we deal with in sending an organic product
aren't strictly about organics. It is about GMO contamination.
The Koreans, for instance, have the tightest standard in
the world, I might say an absurd standard. It is 0. And 0 is a
long, long way. The testing is done when containers or
shipments arrive in Korea. I would like to see some negotiation
so we can test and decide whether it is acceptable or
rejectable before we invest in international freight. So that
is a conversation I would like to see moved to a conclusion.
Ms. Gillibrand. Thank you.
Mr. Cardoza. Thank you. I want to thank everyone for your
time and for your extremely thoughtful testimony on the state
of organic agriculture in the United States. This hearing was
long overdue, as organics have become an increasingly powerful
force in agriculture and one that truly deserves our full
attention and respect. Again, I must give credit to Chairman
Peterson for not only creating this Subcommittee for specific
oversight responsibility over organics, but for also
recognizing the value of including more stakeholders in writing
the farm bill than in previous years.
We heard from a number of people in the organic industry
today from nearly every region of the country, representing
nearly all the major organic commodities. There are certainly
challenges that organic agriculture is facing, including lack
of research and adequate crop insurance, highland values and
countless other challenges. However, it seems clear that
despite these obstacles, organic agriculture is growing with
leaps and bounds, providing high-quality products for a
demanding consumer.
But there is more work for this Subcommittee to do,
clearly. First and foremost, we must maintain the integrity of
the organic seal we just spoke about. Without this seal, the
unparalleled confidence it brings, consumers cannot
differentiate between the products that have met our most
stringent standards and those that are only claiming to do so.
This is especially important for the imports of organic
products. I am extremely concerned that small fissures in the
confidence of organic products from foreign countries can and
will have a disastrous effect on the domestic organic industry
if we are not careful. Furthermore, we must look closely at the
transition procedures for moving from conventional to organic
agriculture and how these rules and regulations are working in
the real world and out in the field.
Also, there is obviously a need for more research dollars
for organic agriculture to identify better farming methods and
plant resistant stocks. However, as we move into the 2007 Farm
Bill, we face a number of these challenges, not the least of
which is finding ways to pay for new and expanded programs for
organics, for specialty crops, for bio-energy and other sectors
of agriculture that have not been well-represented in previous
farm bills.
I urge you all to be careful in evaluating your asks. So
are we are going to have to be fiscally responsible and as we
move forward, we have to look for ways to maximize every dollar
the Federal government expends. I say that in every committee
that I serve on. I say it in all areas. Frankly, we are far to
stretch, with our Federal budget, to be able to do all the
things that we want to do and we are going to have to be very
strategic in what we ask for.
This hearing was an important first step in that process
and I truly thank you all for your obvious commitment to
organic agriculture. I look forward to working with you as we
continue our farm bill discussions and beyond, as we bring
organics fully into the fold of Federal programs and the
Federal agricultural community. I am very pleased that you all
were here today. Thank you very much. Under the rules of this
Committee, the record of today's hearing will remain open for
10 days to receive additional material and supplementary
written responses from witnesses to any question posed by a
member of the panel. This hearing of the Horticulture and
Organic Agriculture Subcommittee is hereby adjourned.
[Whereupon, at 12:45 p.m., the Subcommittee was adjourned.]
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