USDA earmarks additional funds for organic transition, processing to meet consumer demand

By Elizabeth Crawford

- Last updated on GMT

Source: Getty/Tom Werner
Source: Getty/Tom Werner

Related tags Organic Usda Sustainability Organic trade association

The US Department of Agriculture promises to shoulder more of the cost for farmers and ranchers transitioning to organic and develop additional processing and aggregation facilities to ease supply chain bottenecks holding the organic industry back from meeting consumer demand fully.

Building on last fall’s launch of USDA’s Organic Transition Initiative and in response to stakeholder feedback, the Farm Service Agency will once again cover up to 75% of costs associated with organic certification, up to $750 for crops, wild crops, livestock, processing and handling and state organic program fees in California, USDA Sec. Tom Vilsack announced earlier this month at the Organic Trade Association’s annual Summit in Washington, DC.

He also announced the availability of $75m in organic market development grants to help businesses transitioning to organic and which are initiating new production and processing options for the organic industry.

Both efforts are “reflective of a desire to send the message to the organic community that we understand and appreciate the important role that you are playing, not only in providing quality and nutritious and healthy foods, but as importantly creating a value-added opportunity for farmers,”​ Vilsack told conference attendees, who applauded the announcement.

USDA’s decision to expand its financial support of the organic industry comes at a time when consumer demand for organic is outpacing the segment’s production capabilities. Fueled partly by inflation-related price increases, organic sales last year surpassed $67b, reflecting a four-percent increase that was nearly twice the pace of growth in 2021, according to OTA’s 2023 Organic Industry Survey released May 10.

While volumes in some categories did slip due to higher prices, consumers’ willingness to continue paying a premium for organic even during economically challenging periods reflects organic’s value and consumer demand for the products, according to OTA.

Grants aim to ease uncertainty about market access, ingredient supply

Despite strong consumer demand, some producers are unwilling or unable to transition to organic because due to high costs and risks associated with the transition period, acknowledged USDA.

“USDA has heard that producers may be less willing to commit to the three-year transition to organic certification because of risks related to inadequate organic processing, storage, and handling capacity, cost barriers due to limited markets for rotational crops, a lack of certainty about market access, and insufficient supply of certain organic ingredients,”​ the agency explained in a statement.

The additional funding announced this month should help ease those concerns and encourage more producers to transition to organic, Vilsack told attendees at the OTA conference.

He explained the additional $75m earmarked for the organic market development grants program will focus on “trying to promote organic grain, livestock feed production, for rotational crops, dairy, and ingredients that are used in organic products, all of which in areas where they may be currently unavailable. We’re also going to take a look at places where there are existing organic producers who lack market access because of bottlenecks in processing.”

He urged those interested in the funding to apply​ by July 10 to take advantage of the $75m.

OTA lauded the announcement, noting that the grants will “strengthen the supply chain and expand organic processing capacity to create critical new paths to market for climate-smart organic farmers and increase consumer access to organic foods and products.”

Vilsack also expressed his hope that the program would ease the current concentration of processing resources and by extension the concentration of income, which he described as a “deep concern.”

Grants are critical for attracting new, young farmers, OTA argues

OTA also applauded USDA’s decision to return the Organic Certification Cost Share program to the 75% reimbursement allowed by statute, but which were reduced to rates of 50% due to funding shortfalls.

“The Organic Certification Cost Share program is critical for attracting new, young farmers to organic,”​ OTA said in a statement, adding that “additional funding for this important long-standing program is a priority of OTA’s for the 2023 Farm Bill”​ as it “will help build a diverse and thriving organic agriculture community.”

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