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OTA Comments: Competition

June 21, 2022

Following President Biden’s Executive Order on “Promoting Competition in the American Economy,” which creates a White House Competition Council and directs Federal agency actions to enhance fairness and competition across America's economy, USDA is directed (among other things) to submit a report on the effect of retail concentration and retailers' practices on competition in the food industries. In order to compile that report, USDA has requested comments from producers, food and farm businesses, and other knowledgeable stakeholders like the Organic Trade Association (OTA) on the following: “Competition in Food Retail and Distribution Markets and Access for Agricultural Producers and Small and Midsized Food Processors” and “Competition and the Intellectual Property System: Seeds and Other Agricultural Inputs”. On June 15, 2022, OTA, which represents over 9,500 organic businesses across 50 U.S. states, submitted comments specific to the organic trade in response to both requests.

Food Retail and Distribution Markets, and Access

OTA’s comments on this request are related to USDA-certified organic products and most directly address the following USDA questions:

Do label standards, verification, and enforcement appropriately support access to markets for agricultural producers and small and mid-size processors? (Question #15).
How could other USDA programs, services, and authorities be further deployed to enhance access to retail markets for agricultural producers and small and mid-size food processors? (Question #20).

Processing and Distribution Infrastructure

Investment in organic processing and distribution infrastructure is critical to the health and continued development of U.S. supply chains. All processing facilities that handle organic product are required to maintain an organic certification and systems plan to ensure compliance with the organic regulations and prevent commingling and contamination. To support development and expansion of small and mid-size organic processors, USDA should establish a competitive grant program for market and infrastructure development to expand organic processing capacity. This type of program should assist companies in retooling, refurbishing and rebuilding processing facilities to meet organic market demand across all regions, commodities and scales.

Retail Compliance and Voluntary Certification

Although retail establishments are not required to become certified, they do have a legal responsibility to prevent commingling and contamination of organic products with prohibited substances, keep records that show products marketed as organic have been correctly handled from production through delivery to the customer, and comply with specific labeling requirements. Retailers may also voluntarily seek organic certification. To support retailers’ ability to carry and sell organic products from small and mid-size processors and distributors, guidance and support is needed to help them understand and comply with organic requirements.

NOSB has passed two recommendations – in 2009 and 2014 – that would clarify organic compliance requirements for retailers of organic products. Together these recommendations will improve consistency and integrity in merchandising, handling and marketing of organic products in retail establishments, and improve consumer understanding of the distinction between “organic” and “certified organic” retailers. OTA urges USDA to include these provisions in the SOE Final Rule and to implement remaining portions through updated guidance documents in the NOP Handbook.

Transitional Certification

Certification of farms transitioning to organic is key to developing transitional markets, enabling a supply-chain premium for transitional crops that can incentivize producers to move towards organic, and reducing the financial burden of a three-year transition period. Transitional certification would strengthen supply chain management by providing transparency in the future growth of organic acreage, which can facilitate better business planning and contract development for buyers and producers.

Some certifiers currently offer private transitional certification programs, but these are not harmonized and lack consistent oversight. OTA supports the establishment of a USDA Certified Transitional Program that would standardize transitional certification and provide long-term support for small and mid-size agricultural producers and their supply chain partners. USDA previously made a formal announcement approving the program in early 2017, but months later withdrew the program without explanation. USDA should open a public comment docket on this program and allow stakeholders to weigh in.

Intellectual Property: Seeds and Other Agricultural Inputs

OTA’s comments on this request are related to seeds and inputs used in USDA-certified organic agriculture and most directly address the following USDA questions:

Are regional needs, tribal and underserved communities, climate concerns, and product-specific needs (ex., organic seeds) appropriately served by the seed marketplace? (Questions #2 and #20)
Please comment on the strengths, weaknesses, effectiveness, and gaps in current USDA policies and programs to facilitate access to affordable seeds and other agricultural inputs for farmers, plant breeders, ranchers, and other stakeholders. (Question #22)

Organic Seed

The USDA organic regulations (7 CFR § 205.204) require that organic producers use organic seeds, annual seedlings, and planting stock. Producers are allowed, however, to use non-organic (non-GMO, untreated) seeds and planting stock when equivalent organic varieties are not commercially available in the appropriate form, quality or quantity. Unfortunately, this provision does not include language requiring producers to prove due diligence in seeking organic seeds/seedlings/stock nor does it require a commitment to improving use over time. Because of this, the use of non-organic seed has become widely accepted and has persisted despite increasing availability of organic seed. According to the Organic Seed Alliance’s latest "Organic Seed Report", there has been no meaningful improvement in the use of organic seed over the last five years.

In 2018, NOSB passed a recommendation that would require organic crop producers to demonstrate continuous improvement in sourcing and use of organic seed and planting stock each year. USDA has not yet implemented this simple, yet critical, amendment to the organic regulations. OTA urges USDA to implement the NOSB Strengthening Organic Seed Usage recommendation without delay.

Additional actions needed to support development and availability of organic seeds include:

Support research in organic seed breeding.
Expand access to seed saving and seed storage.
Help conventional seed producers transition to organic.
Support development of a database that reliably includes all commercially available organic seed to support sourcing and enforcement with the goal of eventually closing the exemption that allows organic producers to use non-organic seed.

Organic Feed

Organic livestock producers are required to provide all livestock with certified organic feed, but producers today are struggling to access many organic feed protein sources (e.g., soybean meal, alfalfa, canola meal, and sun cake). There are myriad causes for these supply chain disruptions, including but not limited to: new tariffs on U.S. imports of organic soybean meal; revocation of the U.S. – India organic recognition agreement, which previously allowed the Indian government to accredit domestic certifiers to the NOP; a reduced number of operations available to export certified organic items due to delisting and/or suspensions of certifying agencies; issues getting export transaction certificates; limited capacity to domestically process organic soybean meal. OTA members interested in learning more about the supply chain and US-India trade issues are invited to attend a members-only listening session,"India Organic Trade Constraints" on June 30 at 12pm EST.

OTA encourages USDA to take action and provide resources to help address U.S. organic operations’ supply chain challenges by supporting domestic production and handling of organic feed products. USDA should provide financial support for new equipment and technical assistance to help producers to expand organic production, aggregation, processing, manufacturing and distribution.

Organic Fertilizers (UPDATED: July 18, 2022)

On July 15, 2022, OTA submitted comments on fertility inputs used in USDA certified organic agriculture in response to USDA's Request for Information (Docket AMS-AMS-22-0027 Access to Fertilizer: Competition and Supply Chain Concerns) on how to better support modes of production that rely less on fertilizer, or support access to markets that may pay a premium for products relying on less fertilizer. OTA’s comments on this request are related to competition and market concentration in the fertilizer industryand most specifically address the following USDA questions:

Please comment on sustainability, climate, and other environmental concerns and risks relating to fertilizer markets. (Question #9)
How might USDA better support modes of production that rely less on fertilizer, or support access to markets that may pay a premium for products relying on less fertilizer? (Question #14)
Are there ways USDA could support more effective use of other fertilizers from livestock? (Question #11)

Sustainability, Climate, and Other Environmental Concerns and Risks Relating to Fertilizer Markets

Much of the USDA’s Request for Information focuses on challenges that arise in markets for synthetically manufactured conventional fertilizers that rely on petroleum feedstocks. The manufacture of synthetic nitrogen fertilizer alone is responsible for as much as 10% of direct global agricultural emissions; a 37% increase since 2001. By eliminating synthetic nitrogen fertilizers, which are prohibited in organic production, direct global agricultural greenhouse gas emissions could be reduced by about 20%.

Organic production reduces emissions of nitrous oxide by avoiding soil applications of synthetic nitrogen and preventing the creation of new reactive nitrogen. Organic farming also slows the growing over-abundance of reactive nitrogen on our planet, such as nitrous oxide, by minimizing the introduction of reactive nitrogen into our global pool through the application of synthetic fertilizer. Instead, the majority of reactive nitrogen comes from recycled sources like compost; a small amount of new reactive nitrogen is also produced from nitrogen-fixing bacteria in the roots of cover crops or other legumes. A 2020 study shows that across all food groups, organic production uses around 50% less new reactive nitrogen as compared with conventional production. Organic adds significantly less to the global pool of reactive nitrogen and helps cycle potential nitrogen waste pollution back into food production by using manure and food waste as fertilizer.

Supporting Modes of Production that Rely Less on Fertilizer, or Support Access to Markets that May Pay a Premium for Products Relying on Less Fertilizer

Supporting USDA-certified organic agriculture is the most effective means by which USDA can support agricultural production that relies less on fertilizer and access to markets that may pay a premium for products relying on less fertilizer. Despite the long-term economic and environmental benefits organic agriculture provides, less than one percent of domestic farmland is certified organic today. USDA should invest in programs that support farmers transitioning to and actively engaged in organic production. The following areas of focus should be prioritized (OTA's previous comment contains further details):

Technical Assistance – USDA should develop a competitive grant program for organizations that provide regionally adapted programs and services that support farmers transitioning to organic. USDA should also provide required training on organic for USDA staff and work towards staffing an organic specialist in every state/region.
Market Development – To transition more acreage to organic and support farmers in organic transition, USDA must put an equal emphasis on increasing processing capacity and supporting market development opportunities that ensure a healthy organic marketplace.
Conservation, Crop Insurance, and Certification Cost Share Improvements – Prioritize and increase USDA conservation program payments to farmers for organic management practices that build soil health (e.g., cover cropping, crop rotations, using organic soil amendments, and conservation tillage); expand and adapt crop insurance and loan program options to better accommodate organic production systems and premiums; expand the certification cost-share reimbursement rate and cover 100% of the costs of certification for qualified small- and mid-sized producers and socially disadvantaged farmers; provide tax credits to landowners offering long-term leases

Ways USDA Could Support More Effective Use of Other Fertilizers from Livestock

USDA can support effective use of other fertilizers through investments in organic research and technical assistance, which is beneficial for any and all farmers looking to implement more sustainable production practices. Resources, tools, and other support from USDA must embrace organic agricultural systems and the unique practice standards and restricted inputs withwhich organic farmers must comply. OTA recommends that USDA:

Improve resource efficiency of manure and other organic-approved fertility inputs with innovations that align with organic principles of fostering physical, chemical, biological systems of soil as the basis of soil and plant fertility.
Develop agricultural technology (AgTech) tools that are appropriate for organic systems.
Develop food safety tools and risk mitigation strategies that are appropriate for organic systems that use manure and promote biodiversity, and also comply with other third-party foodsafety requirements.
Identify best on-farm practices for improving yields and profitability so that farmers cab evaluate which are most likely to promote environmental sustainability and also maintain (or increase) their bottom line.

Additional Information

OTA has previously submitted comments on these subjects in response to Executive Orders 14017 “America's Supply Chains” (No. AMS-TM-21-0034) (86 FR 20652) and “Investments and Opportunities for Meat and Poultry Processing Infrastructure” (No. AMS-TM-21-0058) (86 FR 37728):