The United States Department of Agriculture (“USDA? recently released its final National Organic Rule which is scheduled to come into effect on October 21, 2002. The USDA under the final rule will implement a program of uniform national standards of production and certification, as mandated by the Organic Foods Production Act of 1990 (OFPA). Accordingly, the food makers in compliance with the rule qualify for a “Certified Organic?seal and to use the terms ?00% Organic?and “Organic?(at least 95%).
Need for the National Standards
Over the last several decades, a patchwork of State and private initiatives have resulted in a fairly robust system of Organic standards and certification which partially addressed consumer difficulties in verification of the label claims. Currently, 13 State and 36 private certification programs are operating in the United States, and about half the States currently have some form of regulation. While most States still do not mandate third-party certification and many organic producers still market goods without certification, large food processors, grain traders, and retailers are increasingly requiring certification, and many growers have turned to certification as a marketing tool.
However, with the mounting pressure to use third-party certification services and increasing availability of these services from State and private certifiers, the discrepancies between the certifiers on organic standards and between the States on certification requirements created several impediments to market development. The varying standards essentially created for the producers an uneven access to both domestic and international organic markets. Further, the inconsistencies, particularly in Multi-ingredient certification standards, created sourcing problems for food. Also, with the absence of a national standard, U.S. producers have taken on costs of private accreditation or shipment-by-shipment certification required to gain access to some foreign markets. Even with these actions, the U.S. organic products continue to face some difficulties entering other foreign markets due to high information and search costs on the part of foreign buyers to determine the compatibility of standards and certification. Such costs have discouraged purchases of U.S. organic products.
The USDA in an effort to ameliorate the prevalent situation created the final rule to:
a) establish national standards governing the marketing of certain agricultural products as organically produced products;
b) to assure consumers that organically produced products meet a consistent standard; and
c) to facilitate interstate commerce in fresh and processed food that is organically produced.
The final rule follows the structure established in the OFPA. All products marketed as organic will have to be produced and handled as provided in the OFPA and these regulations. Compared to current organic practices, the final rule sets a somewhat more stringent system of requirements. USDA's final rule will be implemented by the National Organic Plan staff in the Agricultural Marketing Service (AMS).
Major features of the rule include:
Accreditation and Certification
The rule specifies the accreditation and certification process. Persons providing certification services for organic production and handling must be accredited by USDA through the National Organic Plan (NOP). Applicants for accreditation must document their abilities to certify according to the national standards and to oversee their client's compliance with the requirements of the OFPA and NOP regulations. Producers and handlers of organic products must be certified by an accredited certifying agent. In addition, producers and handlers are required to document their organic plans and procedures to ensure compliance with the OFPA. All certifying agents would have to be accredited, and certification by producers and handlers would be mandatory.
The exceptions are:
(a) growers and handlers with gross organic sales of $5,000 or less would be exempt from certification, and
(b) a handling operation may be exempt or excluded from certification according to provisions described in the rule's subpart B, Applicability.
USDA will charge applicants for accreditation and accreditation renewal (required every 5 years) a $500 fee at the time of application. USDA will also charge applicants for costs over $500 for site evaluation of the applicant's business. The applicant would be charged for travel costs, per diem expenses, and any miscellaneous costs incurred with a site evaluation. USDA will also charge accredited certifiers at an hourly rate to review their annual reports. Producers and handlers will not pay certification fees to USDA. Certification fees will be established by the accredited certifying agents, and thus USDA will not set fees. The rule requires certifying agents to submit a copy of their fee schedules to USDA, post their fees, and provide applicants estimates of the costs for initial certification and for renewal of certification.
Production and Handling
The rule establishes standards for organic production of crops and livestock and handling of organic products. The final rule establishes a number of requirements for producers and handlers of organic food. These requirements will affect farming operations, packaging operations, processing operations and retailers. Some of the major provisions are:
(1) land requirements;
(2) crop nutrient requirements;
(3) crop rotation requirements;
(4) pest management requirements;
(5) livestock management requirements;
(6) processing and handling requirements; and
(7) commingling requirements.
The National List names allowed synthetic substances and prohibited nonsynthetic substances that may or may not be used in organic production and handling operations. The list identifies those synthetic substances, which would otherwise be prohibited, that may be used in organic production based on the recommendations of the National Organic Standards Board (NOSB). Only those synthetic substances on the National List may be used. The National List also identifies those natural substances that may not be used in organic production, as determined by the Secretary based on the NOSB recommendations.
When certifying agents have reason to believe organic products contain a prohibited substance, they may conduct residue tests.
The rule also states how organic products may be labeled and permitted uses of the USDA organic seal. In addition to the USDA seal and the certifying agent's seal, information on organic food content may be displayed. Small businesses that are certified may use the USDA seal.
The rule requires certifying agents, producers, and handlers to keep certain records. Certifying agents are required to file periodic reports with USDA. Producers and handlers are required to notify and submit reports to their certifying agent. While recordkeeping is a standard practice in conventional and organic farming, the final rule adds recordkeeping and reporting requirements that do not exist for growers and handlers operating without certification. Similarly, certifying agents would face additional recordkeeping and reporting requirements, particularly those certifying agents operating without external accreditation. The rule permits certifying agent logos and requires the name of the certifying agent on processed organic foods.
Organic operations that falsely sell or label a product as organic will be subject to civil penalties of up to $10,000 per violation. The provisions of the final regulation apply to all persons who sell, label, or represent their agricultural product as organic, including operations that aren't certified, and the civil penalties of up to $10,000 apply to these operations as well. Certifying agents, State organic programs' governing State officials, and USDA will receive complaints alleging violations of the Act or these regulations. In States where there is no State organic program, USDA will investigate allegations of violations of the Act.
Benefits of the Final Rule
The benefits of implementing national uniform standards of production and certification include:
a) providing a common set of definitions on organic attributes and standardizing the manner in which the product information is presented, which may reduce the cost associated with enforcement actions in consumer fraud cases;
b) reduced administrative costs; and
c) improved access to organic markets.
Thus, the final rule focus on standardizing the definitions and the manner in which organic product information is presented to consumers, which may reduce the cost associated with enforcement actions in consumer fraud cases. The final rule may also improve access to domestic and international markets by harmonizing the various State and private organic standards and elevating reciprocity negotiations to the national level.
For more information on the final rule, please go to
http://www.ams.usda.gov/nop/nop2000/Final%20Rule/nopfinal.pdf or contact the firm.