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2001 Marketing Orders - Organic Trade Association
Organic Trade Association
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2001 Marketing Orders

 

OTA’s Congressional Education Day 2001 

Issue:  Marketing Order and Promotion Order Reform 


Background for Congress
 


Position: OTA farmer members strongly support reform in federal marketing orders and federal promotion orders.
 


Many organic farmers are minority members within the groups covered by marketing and promotion orders and have special concerns.
 


Proposals for improving marketing and promotion orders

OTA supports Congress taking one of two actions.  Either 1) exempt organic farmers from marketing orders while studies determine the effect of marketing orders on organic production, or 2) channel marketing order funds collected from organic producers into organic marketing and promotion programs. Organic farmers, however, overwhelmingly prefer a marketing system that promotes the distinct advantages of organic products. 


OTA’s Government Affairs Committee (GAC) produced the proposal below based on the idea that marketing order funds collected from organic farmers should be channeled to organic marketing programs. If Congress does not want to consider exempting organic farmers from marketing orders, the proposal below represents an acceptable alternative.
 


1.  Because of their distinct marketing status established by the Organic Foods Production Act, certified organic products will be recognized as distinct products within the marketing order. A subcommittee of organic producers and handlers, elected by the organic producers and handlers in the marketing order, will determine the treatment of organic products within the marketing order, including but not limited to the following areas:

a. research;

b. marketing and promotion;

c. establishing reserves, set asides, etc., for organic products based on supply and demand for organic products; and

d. other assessments, policies, etc., established by the marketing order. 


2.  The subcommittee of organic producers and handlers may utilize funds assessed on organic products:

a. to provide specific services for organic products, such as research and promotion; or

b. to integrate the funds into the regular program operated by the marketing order with or without special conditions for their use or for the requirements of the program.1 


In the case of 2a above, the subcommittee may elect to assign funds assessed on organic products to a generic program for research or promotion that is operated by the Organic Trade Association.2

(Based on a document prepared by the OTA GAC Subcommittee on Marketing Orders, May 25, 2001) 


[1]
   For example, research funds assessed on organic production could be allocated to the regular research program of the marketing order because that program funds a significant amount of research that will benefit organic as well as conventional producers.  Promotion funds assessed on organic production could be allocated to the regular promotion program because that program promotes organic products in its promotional materials. 


[2]
   The Organic Trade Association could establish a Board or other entity to review or establish research and promotion programs for which the funds from multiple marketing orders could be used.  The entity established for this purpose will be representative of all stakeholders in the organic community.


Concern about volume limitations

One controversial aspect of some marketing orders is a volume limitation; when demand is low, producers under those marketing orders cannot produce more than a certain amount of the commodity, because prices would fall to unacceptably low levels. However, there can be increased demand for organic commodities while the conventional counterparts maintain only average demand or even suffer reduced demand. Thus, a volume limitation may be imposed on organic crops because of soft demand for the conventional crop, while demand is rising for the organic crop.  It is unfair to ask organic producers to limit their production when demand for organic product is rising, even if demand and price are falling for conventional product. Organic producers should be able to respond as though organic crops are different commodities. 


Concern about promotion programs

Another controversial aspect of milk and potato marketing orders is a section under which the commodities are promoted. Organic producers of crops which fall under marketing orders that include a promotion program must pay into a pool which does not pay for promoting the distinctive advantages of organic production. Therefore, organic producers do not gain as much benefit from marketing orders as conventional producers. 


There are also separate federal promotion orders which have the same problem—the special benefits of organic production are not covered by the generic promotion orders.
 

 
 
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