UPDATE FEBRUARY 29, 2024
On Thursday, February 29, the Organic Trade Association, joined by seven other organic stakeholders and with legal counsel from the Center for Food Safety, filed a “friend of the court” amicus brief in support of organic “grower group” certification in the ongoing grower group lawsuit challenging the longstanding practice, which was further codified in USDA’s 2023 organic rule revisions.
It is our shared view that the Organic Food Production Act’s (OFPA) unambiguously supports the inclusion of grower groups, a well-established, internationally recognized, and necessary practice that is a critical element for the proliferation of organic practices globally and the inclusion of thousands of smallholder farmers in the organic marketplace. While we strongly condemn any organic fraud and call on USDA to use its authority to prevent it, individual cases of fraud should not be confused with the importance of the grower group system. In fact, USDA’s new rule gives it increased strength to address any such problems. Any prohibition on group certification would cause catastrophic consequences to all organic stakeholders: the lost livelihoods of small organic farmers around the world, the elimination of the sourcing for organic companies, and the loss of organic products like coffee, chocolate, and more for organic consumers, who would lose access to these products. Accordingly, we presented these concerns to the court in support of the efficacy and legality of the grower group certification process, a system that significantly benefits organic farmers, the environment, and consumers.
UPDATE FEBRUARY 22, 2024
On Thursday, February 22, the USDA filed a response to the plaintiff's request for summary judgment and additionally filed a motion for summary judgment in its favor. The motions outline a comprehensive argument in response to the legal challenge. The filings detail the background and statutory framework of organic certification in the United States, explaining the role of producer groups within this framework and the USDA's Strengthening of Enforcement (SOE) Final Rule. This rule codified existing practices for certifying producer (grower) groups, adding specific requirements for oversight and inspection. It emphasizes the benefits of producer group certification for small and foreign producers, aiming to demonstrate that the regulations are designed to maintain the integrity of organic certification while also being equitable and accessible.
The USDA presents two arguments. First, they contend that the court does not have jurisdiction over the case. Under this argument, they claim that the plaintiff waived its challenge to the SOE rule by failing to comment on SOE when it was open to public input. USDA further argues the plaintiff has no grounds for standing given that they have not demonstrated a direct injury caused by the rule. Lastly, the USDA contends that the case is not timely; the plaintiff failed to file within six years of the government's decision. Although the SOE was just published in 2023, the USDA and NOSB had recommendations and policy memoranda dating to 2002, 2007, 2008 and 2011. Second, regardless of the court's jurisdiction, USDA argues the SOE rule on producer groups is lawful on its own. Specifically, it contends that the SOE provides guidelines for producers' groups that are equivalent to OFPA criteria. Further, the USDA argues that the annual onsite inspection requirements for producer groups are compliant with OFPA and that the "1.4 times the square root or 2%" requirements of the rule based on industry practice and are statistically robust.
In its conclusion, the USDA requests that the court grant summary judgment in its favor. The USDA's motion seeks to underscore the careful consideration and balance the USDA has tried to achieve in regulating organic certification, ensuring both the growth of organic agriculture and the protection of consumers and producers within the organic market.
UPDATE JANUARY 2, 2024
On Jan 2nd, the plaintiff, Pratum Farm LLC filed for a motion for summary judgement requesting relief in the form of a declaration that the grower group inspection requirements be deemed inconsistent with the Organic Food Production Act (OFPA) statutes which would defacto end the certification of grower groups, critical for several crops grown exclusively by small farmers in the developing world – such as spices, coffee, and cocoa. The motion contends that the USDA exceeded its authority with this rule, creating a system that bypasses necessary inspections and compromises the integrity of organic certification. Further, in seeking summary judgement, the Plantiff asserts that there are no significant facts in dispute and that, based on the law, the moving party is entitled to judgment in their favor as a matter of law. USDA has until Feb 22nd to respond to the motion and is expected to do so.
This is the latest development in a suit brought by Pratum Farm filed on October 17, 2023. The suit challenges the United States Department of Agriculture's (USDA) Grower Group provisions of the Strengthening Organic Enforcement (SOE) rule. Pratum Farm argues that the rule allows for a reduced level of annual inspection of organic farms, which is in contrast to the statutory requirement of annual inspections by accredited certifiers. This case holds significant implications for the organic agriculture industry, international trade, organic supply chains and equity for the smallest farmers throughout the world. OTA will continue to monitor the development of this case and its implications for the industry.
Producer Groups: Empowering Small Farmers Around the World
Recent coverage of a lawsuit filed by an Oregon hazelnut farmer against the USDA for certification of producer groups has headlined "Vast Fraud," "Illegal Imports," and "Shadow Certifications," but these stories misalign disputes over organic policy and international trade manipulation with allegations of fraud. Blurring policy distinctions with fraud allegations disregards the repercussions for farmers, consumers and businesses who comply with the strict organic standards every day. To grasp the full picture, let's delve into producer groups, the lawsuit and hazelnut trade with Turkey.
Understanding producer groups
To understand the context of producer groups, it's crucial to recognize the disparities between the farming landscape in the US and abroad. The average US farm spans 446 acres, while over 70% of world farmers cultivate less than one hectare (2.5 acres). You would need to combine 180 international smallholders to equal the land area of one average US farmer. In the United States, over 50% of farms are considered small, with less than $10,000 in annual sales and an average size of 81 acres -- that’s 32 times larger than the majority of smallholders worldwide. If a US farm making $10,000 a year were divided into 32 farms, the annual income for each would be a mere $313.
Annual sales of $313 are insufficient to access international markets. The Land Institute’s Land Inequity Initiative notes that smallholdings of less than two hectares are generally excluded from global food chains. The financial barrier to individual organic certification further restricts smallholders from entering global food chains that value environmental practices. Examining risk per each individual farm operator would equate the risk scale of a one-acre farm to that of a farm operator with 100, 1,000 or even 100,000 acres. The drastically different risk profile for very small growers justifies a certification process tailored to their site-specific conditions. This approach ensures adequate oversight and verification of practices while addressing the unique challenges faced by smaller farms. Here lies the value of producer group certification—it provides assurance that a producer adheres to organic standards and practices by balancing additional restrictions with group inspections. While certification is a risk-based model for oversight, its real value lies in the verified practices, not the certificate. With individual organic certifications being financially prohibitive, group certification is a practical solution for smallholders.
The need for producer groups
Organic farming, rooted in principles that bring value back to the land, offers a more profitable approach that naturally resonates with smaller farmers committed to these strict standards. This commitment supports sustainable livelihoods and plays a crucial role in the cultivation of various crops that ultimately reach grocery shelves.
Crops like cocoa, coffee, vanilla, coconuts, sugarcane, spices, and numerous tropical fruits are predominantly grown by smallholders. Producer groups ensure that consumers can reach for these common products on their grocery shelves Many products are formulated with these smallholder commodities and other ingredients grown domestically by American farmer, such as matching domestically produced organic diary with small holder grown organic chocolate.
Several businesses and influencers actively champion products sourced from smallholder producer groups. Nutiva, for instance, openly promotes its investment in organic coconut producer groups in the Philippines that are organized and certified under the management of a major agribusiness that aggregates and processes coconuts harvested by smallholders for export. Similarly, Living Maxwell, a blog by influencer Max Goldberg, highlights the benefits of Dr. Bronner’s soaps, which sources organic palm from over 500 producers, aggregated, processed, and exported through its agribusiness, Serendipalm. The positive environmental, community and economic impact of organic producer group projects have been highlighted by Frontier Co-op, and by The Organic Center’s Spice, Herb, and Tea’s Report.
In essence, producer groups serve as a bridge for smaller farmers to access international markets. Their collective certification not only ensures adherence to rigorous organic standards but also facilitates the sharing of resources and utilization of centralized processing facilities. The commitment to these principles is not only championed by businesses but also influencers and organizations, showcasing the widespread recognition of the importance of producer groups in sustaining organic practices and fostering fair trade.
Producer group certification
Following a model pioneered by the International Federation of Organic Agriculture Movements (IFOAM) in the 1980s, the concept of group certification was adopted. It has since been used by certification standards covering everything from food safety to environmental and social concerns. Some of the many organizations that have adopted group certification are the 4C Association (4C), Fairtrade Labelling Organizations (FLO, Fair Trade), Forest Stewardship Council (FSC), GlobalGAP, EU Organic Standards, Social Accountability International (SAI), Sustainable Forestry Initiative (SFI), Rainforest Alliance (RA) and UTZ Certified.
Under these various certifications, producer groups, consisting of individual farmers with similar practices, can be certified as a single entity. This group certification approach is crucial for smallholders historically excluded from global supply chains, it allows smallholders to overcome operational restrictions promoting shared resources, centralized processing, and inspections.
How producer groups are certified under USDA Organic
Understanding the intricacies of producer group certification under USDA Organic involves navigating the legal and regulatory landscape set by the Organic Food Product Act of 1990 (OFPA), which defines "organic" in the U.S. OFPA requires the USDA to “establish an organic certification program for producers and handlers of agricultural products that have been produced using organic methods.” The regulation defines a “Producer” as “a person who engages in the business of growing or producing food or feed,” and a “Person” as “an individual, group of individuals, corporation, association, organization, cooperative, or other entity,” making it is clear that the organic certification program should be applicable to those groups.
Producer groups are operational entities comprised of individual farmers sharing similar production practices and marketing channels. Instead of each member pursuing independent certification, the entire group obtains certification as a single entity. Under the Strengthening Organic Enforcement (SOE) rule, producer groups must meet specific eligibility criteria to qualify for group certification. The key lies in the group's strong centralized Internal Control System (ICS), ensuring compliance through internal inspections and sanctions. Certifiers evaluate the group's ICS, conduct on-site inspections of group operations, and directly inspect a sample of individual members. A robust ICS oversees and ensures compliance with organic regulations, conducting internal inspections, maintaining traceability records, and performing various activities related to review, monitoring, surveillance, training, inspection, auditing, and sanctions.
While producer groups can be utilized by entities of any size, certain restrictions are imposed on producer group operations. These restrictions, such as sharing resources, utilizing centralized processing, distribution, and marketing facilities, submitting to inspections, and only selling products through the group are essential and onerous. These limitations aim to offset the challenge of inspecting numerous individual producer group members. If a producer were large enough to operate independently without utilizing a group, they would likely choose to do so to retain more control over operations and marketing strategies.
In essence, the regulatory framework for producer groups ensures that organic certification remains rigorous and meaningful, even for collective entities, while acknowledging the necessity of such groups for smaller holders to access organic markets.
Have producer groups been a secret?
Far from being hidden, producer groups are openly discussed by companies like Frontier and Nutiva, influencers, and organizations such as the USDA and National Organic Standards Board (NOSB). NOSB discussed them publicly in 2002,again in 2008 and published recommendations. The USDA issued a policy memo in 2011, a training in 2015, and took comments on the proposed additional rules on producer groups under SOE in 2020 and promoted the final rule and in its media fact sheet in 2023.
What about the allegations of fraud?
The lawsuit and various articles surrounding this issue have unfortunately blurred the lines between allegations of fraud and policy opposition against producer groups. It's crucial to emphasize that fraud is not merely a policy disagreement; it involves the deceptive representation, sale, or labeling of nonorganic agricultural products or ingredients.
The Organic Trade Association (OTA) has consistently taken a firm stance against fraud within the organic system. This commitment is evident in OTA's proactive measures, including lobbying to increase USDA authorities and oversight in the 2018 farm bill. Additionally, OTA has created a private sector best practice reference for due diligence and fraud prevention, underlining its dedication to maintaining the integrity of organic practices.
Fraud within the organic system, whether occurring domestically or internationally, has far-reaching consequences, harming the entire organic sector and eroding consumer trust in organic products. Mixing fraud allegations with policy disagreements tarnishes the hard work of organic growers and processors who diligently adhere to the stringent standards of organic farming on a daily basis.
Recognizing the severity of this issue, OTA and the organic community continuously advocate for actions that help detect and prevent organic fraud. This advocacy is evident in the wholehearted support for the USDA's new Strengthening Organic Enforcement (SOE) rule, which aims to bolster organic regulations and protect organic integrity throughout the global organic supply chain. OTA is actively collaborating with its members to ensure successful compliance with USDA's significant new rule. Ongoing monitoring of the global supply chain is a priority to prevent any instances of organic fraud. The commitment extends to advocating for responsive and continuously updated organic standards that align with the ever evolving and advancing organic sector.
While the USDA Organic label is the gold standard in agricultural systems, instances of fraud coming to public light underscore the system's transparency and rigorous regulation. All credible allegations of fraud should be vigorously investigated by the USDA and if found true be subject to decertification, financial penalties or jail time for the fraud committed. While fraud prevention is paramount to maintaining consumers trust it's crucial to emphasize that the vast majority of certified organic producers, both in the United States and abroad, adhere strictly to the organic standards. Transparent and factual reporting and coverage of fraud within the system are essential elements in maintaining the integrity of organic practices and fostering trust among consumers.
What about the hazelnut complaint?
Much like the imperative not to mix organic policy matters with fraud, care should be taken not to intertwine international trade concerns with organic policy considerations. The hazelnut trade has long been dominated by Turkey as the world's largest producer of hazelnuts. In 2003, the United States International Trade Commission (USITC) determined that Turkey had engaged in hazelnut dumping, and Turkey has intervened in its hazelnut market since then as well.
Recent trends reveal a challenging landscape marked by an excess hazelnut crop and soaring inflation, resulting in hazelnut crops from 2022 being exported from Turkey with uncharacteristically low prices. This trend is observable in both organic and conventional hazelnut markets, raising concerns about potential unfair competitive practices.
Given these circumstances, it becomes imperative to address this issue with the United States International Trade Commission, specifically in the context of hazelnut dumping. It is essential to draw a clear distinction between trade manipulation and unfair competitive practices in hazelnut markets and instances of organic fraud. These are separate issues with unique implications and should not be obfuscated. Trade practices, such as dumping, require targeted interventions through appropriate channels, emphasizing fair competition and adherence to international trade regulations.
What is OTA doing and what can our members do?
In the dynamic landscape of organic advocacy, the Organic Trade Association is not merely an observer; it is an active participant, working diligently to safeguard the integrity and growth of the organic sector. Currently, OTA is closely monitoring the ongoing lawsuit. As it progresses through the legal system, OTA is gearing up to step in wherever and whenever necessary.
The trade association is preparing to engage on multiple fronts, ensuring that its members, Congress and USDA are well-informed and have a deep understanding of the significance of the issues at hand. OTA recognizes the importance of fair competition in international trade and is steadfast in supporting its members in navigating the complexities of the global market. OTA members benefit not only from the information shared but also from the advocacy that actively champions the growing and protecting the organic marketplace from farm to shelf.
