During the past decade, U.S. organic sales have grown 20 percent or more annually. Organic food and beverage sales are estimated to have topped $15 billion in 2004, up from $3.5 billion in 1997. Sales are projected to more than double by 2009.
“Consumer spending on organic has grown so much that we’ve attracted big players who want to bend the rules so that they can brand their products as organic without incurring the expenses involved in truly living up to organic standards,” says Ronnie Cummins, national director of the Organic Consumers Association, an advocacy group based in Finland, Minn.
Lobbying by large food companies to weaken organic rules started when the U.S. Department of Agriculture fully implemented organic labeling standards in October 2002. Food producers immediately fought the new rules. A Georgia chicken producer was ultimately able to persuade one of his state’s congressional representatives to slip through a federal legislative amendment in a 2003 appropriations bill to cut its costs. The amendment stated that if the price of organic feed was more than twice the cost of regular feed--which can contain heavy metals, pesticides, and animal byproducts--then livestock producers could feed their animals less costly, nonorganic feed but still label their products organic.
That bizarre change in standards was repealed in April 2003 after consumers and organic producers protested, but the fight to maintain the integrity of organic labeling continues. In October 2005, Congress weakened the organic-labeling law despite protests from more than 325,000 consumers and 250 organic-food companies. The law overturns a recent court ruling that barred the use of synthetic ingredients in “organic” foods. It mostly affects processed products such as canned soups and frozen pizza.
The Massachusetts-based Organic Trade Association (OTA), which represents large and small food producers including corporate giants such as Kraft Foods and Archer Daniels Midland Co., supported the amendment. “The issue is whether processed products could use a list of benign synthetic ingredients already approved by the National Organic Standards Board,” says Katherine DiMatteo, executive director of the OTA, “and we do not believe standards will be weakened at all.”
Not all organic producers agree, however. Executives at Earthbound Farm, which has been in the organic business for more than 20 years and is the nation’s leading supplier of specialty organic salad greens, were startled to find their company’s name on an OTA letter supporting the amendment. Earthbound objects to built-in “emergency exemptions” that would allow nonorganic ingredients in organically labeled food if the organic alternative is considered “commercially unavailable.” As with the Georgia chicken-feed case, if organic corn is expensive because it’s in short supply, a soup maker might argue that it is commercially unavailable and get an exemption to use nonorganic corn.
“This presents a risk to the integrity of the organic label that we would have preferred not to see,” says Charles Sweat, chief operating officer at Earthbound Farm.
Other changes in the organic industry are occurring more quietly in the farm fields. Wal-Mart alone gobbles up so much of the organic dairy supply that some producers that have historically accounted for the bulk of organic products on the market haven’t been able to meet the new demand. Suppliers filling the gap are doing so in part by exploiting loopholes in the organic rules, some consumer advocates say.
Organic Valley, a Wisconsin-based national cooperative of farmers that had been one of Wal-Mart’s primary suppliers of organic milk, ended that direct relationship at the end of 2004. “When the first U.S. case of mad cow was discovered in a dairy cow at the end of 2003,” says Theresa Marquez, chief marketing executive at Organic Valley, “demand for organic milk spiked and we’ve been in a short-supply situation ever since, with demand growing at 25 percent annually and supply growing at only 10 percent.”
With supplies limited, Marquez says, the company decided to “stay true to our mission” and give top priority to filling orders from natural-food markets, its oldest customers, leaving it to Horizon Organic and other large competitors to “duke it out figuring out how to service Wal-Mart.”
Horizon Organic is an organic dairy company that was acquired in 2003 by Dean Foods, the leading U.S. dairy processor. Its operations range in size from a 12-cow farm in Vermont to a 4,000-cow operation in Idaho, where animals may be confined in outdoor corrals and given organic feed, grasses, and hay. They graze in open pastures only on a rotating basis instead of primarily grazing in open pastures, as cows are required to do on farms that supply Organic Valley.
Current federal regulations state that organically raised animals must have access to pasture and may be “temporarily confined only for reasons of health, safety, the animal’s stage of production, or to protect soil or water quality.” But that vague language allows large producers to cut corners and compromise on what consumers expect from organic food, consumer advocates say.
The regulations also leave open questions about whether dairy animals could have been treated with antibiotics or consumed feed containing genetically modified grain or animal byproducts prior to becoming part of an organic dairy farm.
Horizon says it uses no antibiotics or growth hormones in its organic herd, though it can’t control what animals eat before they arrive there. And the company says it plans to upgrade its Idaho farm to offer more pasture by 2007. In the meantime, Horizon says, its cows are being kept in good health and treated humanely. “We permit cows to exercise and exhibit natural behaviors,” says Kelly Shea, director of government and industry relations at Horizon. “We would never support lowering the standards.”