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Exploring the Costs of Going Organic

By Tamara Scully




Forks with Vegetables by Okea/dreamstime. Fork with Money by Shawn Hempel/dreamstime.

The USDA's National Organic Program (NOP), fully implemented in 2002, requires any product labeled or sold as "organic" to meet the NOP standards. Prior to the federal system for certification, numerous third-party organic certification programs maintained varying minimum standards. The USDA has standardized the requirements.

Through the NOP, the USDA helped an additional 763 producers become certified organic in 2013, an increase of 4.2 percent from the previous year. The industry today encompasses a record-breaking 18,513 certified organic farms and businesses in the U.S. alone, representing a 245 percent increase since 2002.

The question of whether or not to obtain certification often focuses on the costs. Aside from the expense of certification, the time needed to complete the ongoing record-keeping and paperwork is a common complaint. In fact, it's often cited as the reason why those who are otherwise farming organically are not becoming certified. Without certification, these growers can't market their products as organic, although there are provisions in the law that allow farms with less than $5,000 in gross income each season to avoid formal certification. However, these small farmers remain legally obligated to follow NOP standards if they're marketing the product as organic.

Growers who already employ organic practices often don't see the benefits of certification. They've built customer relationships on trust and open access to the farm and its growing methods. They may already be getting a premium for offering locally grown, chemical-free products, and don't anticipate much beyond that with official certification. Some growers see certification as expensive, not as meaningful as their established practices, and as being co-opted by industrial agricultural interests.

Are these concerns justified? What are the real costs of organic production?

Promoting certification

The National Young Farmers Coalition has taken the obstacles to certified organic production seriously. The organization's new publication, "Vegetable Farmer's Guide to Organic Certification" by Emily Oakley, is available online (http://bit.ly/Qgxf1n). The guide was written to address the concerns of farmers, particularly the many young farmers who are growing using organic methods, but have opted not to become certified.

Oakley addresses the common obstacles to certification, using expert opinions as well as her own experience and that of others. She walks readers through the necessary steps for organic certification. The guide also features marketing strategies and sources for organic materials. Additional resources are available at http://bit.ly/1its6xw.

The certification process itself, without taking into account production variables and inputs, does come with a price tag.



Through the National Organic Program, the USDA helped an additional 763 producers become certified organic in 2013, an increase of 4.2 percent from the previous year.
Photos court esy of Sherry Dudas , Honey Brook Organic Farm, unless otherwise noted.

There are numerous certifying organizations. Since fees vary, it's a good idea to investigate the certifying agents available in your state. There are about four dozen certifying agents in the U.S. A list is maintained by the Agricultural Marketing Service (http://1.usa.gov/1te4m lG). Certifiers may specialize in different areas of organic production or may work primarily with farms of a specific size. For example, the Northeast Organic Farming Association of Vermont bases its annual fees on the amount of gross farm sales. For a farm with $100,000 in gross sales, the 2013 certification cost was $800.

The National Organic Certification Cost-Share Program was recently expanded in the 2014 farm bill. This program provides financial assistance to qualified producers - up to 75 percent of the annual certification costs or a maximum of $750 per year. Separate but similar, the Agricultural Management Assistance Program (http://1.usa.gov/Qrlo0i) provides cost-share assistance to producers in 16 states: Connecticut, Delaware, Hawaii, Maine, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Utah, Vermont, West Virginia and Wyoming.

Certification involves filling out a report each year, known as an organic production plan, that describes production methods. Growers must keep detailed records and make them available for inspection, although the specific records needed are not delineated by the NOP standards. Certifying agencies typically review seed orders, soil testing and fertility information, yield and harvest records, labels from inputs and crop rotations. These records show that the basic practices of organic agriculture are being followed. They're also crucial records growers should utilize whether or not they want to become certified.

Farm inspection involves a record audit and a thorough on-site examination to determine that organic production plans are being followed. Plans include information on the use of cover crops; soil management strategies to increase fertility and decrease runoff and erosion; and pest and disease management strategies for each crop. Farm reviews and inspections are annual, although typically less involved than the initial application process.



Organic farming is a complex system, with many elements to consider beyond the actual monetary investment in the official USDA certified organic seal.

The transition to organic

Although certification costs may be one primary hurdle for those already practicing organic methods, those using conventional practices have other concerns. For growers who are accustomed to routinely using chemical measures for combating weeds, pests and disease issues, the cost of approved certified organic crop protectants or soil amendments is often cited as an obstacle.

"Making the transition is more about looking at all the pieces of the system, rather than a substitution of inputs," said Katy Green, the organic transitions coordinator for the Maine Organic Farmers and Gardeners Association. "Thinking of the cost of production is only looking at one piece of the puzzle."

Green emphasizes that transitioning to organic production is about much more than the costs. Opting to move from conventional practices of applying chemicals as a first line of defense to the increased hands-on cultural practices associated with organic growing requires an abrupt change in perspective. The goal is to create farms that are thinking about the system as a whole.

"The biggest shift is transitioning from one system to another, not just substituting one organic-approved amendment for the most similar conventional amendment," Green said.

When a conventional producer transitions to organic production methods, the focus needs to change. A grower accustomed to only looking at the nutrient analysis of the soil, for example, would have to look at all parameters of soil health.

"The transition to organic production goes most smoothly when a holistic approach is taken to look at all the farm systems and how they'll shift," Green said. "This starts with the soil. Organic farmers must feed the soil, not the crop. That approach might mean changing a cropping sequence to address a particular issue or pest."

Before a crop can be considered certified organic, the ground must be free of prohibited chemicals for a three-year period. During this time, a grower is considered to be in the transitioning phase. "Transitioning to Organic Production," a pamphlet available from the Sustainable Agriculture Research & Education program (http://bit.ly/1lbC7yD), suggests that a gradual full-farm transition, or a transition of one parcel of the farm at a time, can minimize risks and maximize benefits.

Transitioning the entire operation at once is an option. However, an initial decrease in yield is typically seen during the first years of a transition, when the chemical impact is removed but the biological benefits are not yet fully in place. This, along with any increased costs of production, may be a barrier to organic certification.

Consider transitioning one parcel of land - removing all banned inputs and following an organic production plan on the crops grown there - to minimize the risk of changing practices on the entire farm. This land must be kept separate from other fields and buffered from the impacts of any drift or runoff from the nontransitioning acreage. In addition, equipment that's shared between the transitioning and nontransitioning fields will have to be cleaned before entering the transitioning parcel.

Alternatively, banned substances can be removed from use in increments to reduce the learning curve and risk of changing all management strategies at once. Although it will take longer to eventually become certified, customers may pay price premiums as you reduce your chemical inputs.

Dispelling myths

Chemical inputs can be expensive. In crops where inputs are routinely applied - such as fumigants on strawberries or the numerous chemical sprays often put on tree fruit crops, which would be restricted or disallowed under the NOP standards - the costs of production in an organic system can actually decrease. However, this can be offset by decreases in yield or quality. It can also be enhanced by increases in market value for organic fruit. It's a balancing act.

According to "Enhancing Organic Agriculture in Oregon: Research, Education, and Policy" (http://bit.ly/1j6Z6s0), a survey conducted in Oregon found that vegetable and fruit farmers were most concerned about weed management, production costs and labor requirements, in that order, when considering organic production.



Consider transitioning one parcel of land to minimize the risk of changing practices on the entire farm.

Dr. Karen Klonsky, extension specialist with the University of California, Davis, Department of Agricultural and Resource Economics, presented a webinar outlining a study of organic versus conventional production. Slides from the webinar can be viewed at http://bit.ly/1gLEt7m. In the study, researchers gathered data from growers and used this to develop a hypothetical California farm. They then considered a variety of factors, such as hours per acre of labor needed and the cost of equipment, machinery, inputs and resources used, in order to calculate the total costs of production. Organic production didn't always come with a higher production cost.

"There are some crops that lend themselves to organic production much more than others," Klonsky said.

The researchers also ran a long-term study of organic, low-input and conventional farming systems. They compared production practices and found that, depending on the crop, the techniques to control weeds, increase soil fertility or control pests could overlap. Some chemical "tools" that are not available to organic growers are the first line of defense for conventional growers, while other inputs or practices may be used in both systems, Klonsky noted.

"The crops that conventionally use hand-weeding also use hand-weeding in organics," she said. In either system, "The value of the crop has to be high enough to justify hand-weeding."

Other considerations

A study in West Virginia (http://bit.ly/1gLSPVx) found that "Decisions regarding organic certification consider certain trade-offs: Growers weigh the extra expense and paperwork associated with certification against the potential price premiums that certified organic products could command in the marketplace and the potential additional costs (or savings) encountered when using organic methods." James Farmer, Ph.D., assistant professor at the Indiana University School of Public Health-Bloomington, offered some insight into the research summary.

The decision to transition to organic production "is very much based on the accumulation of an individual's risk tolerance, motive and farming philosophy," Farmer said. "A practical question I would ask is whether I will lose yield and revenue during the transition period, and if so, is this OK?"

Practical considerations might prevent organic certification. This could include being surrounded by conventional farms, or being in a rural area with little customer demand or a lack of wholesale outlets offering a price premium for certified organic produce.

"I would advise a vegetable grower to take a serious look at the potential market outlets and distribution opportunities," Farmer said. "Farmers can grow just about anything in a variety of ways. Selling it is the biggest hurdle. Our research in West Virginia pointed to the need for aggregation, such as food hubs, to make the transition and certification worthwhile for those farmers living in rural areas."



The question of whether or not to obtain organic certification often focuses on the costs.

Hidden benefits of organic production include reduced chemical exposure for the grower, increased farm self-sufficiency as the use of off-farm inputs decreases, and the potentially increased nutritional content of organically grown produce, Farmer noted. These factors, as well as other long-term positive environmental and health effects, benefit the farmer, the customer and the community, but aren't always considered in a straight comparison of costs of production.

It's often hard to quantify the change in production costs - beyond the initial and annual certification costs - when considering a switch from more conventional growing methods to organic production. Managing soil fertility with cover crops, composting and rotation; using companion planting and biodiversity to control pests and diseases; utilizing hand-weeding, flame weeders or mulching to manage weed pressures; and building organic matter to decrease runoff, increase nutrients and promote healthy crops are practices whose costs aren't as easily tallied as a tank of fuel or the cost of a chemical application. Organic farming is a complex system, with many elements to consider beyond the actual monetary investment in the official USDA certified organic seal.

The author is a freelance contributor based in New Jersey. Comment or question? Visit http://www.farmingforumsite.com and join in the discussions.