Washington Insider-- Friday

An Organic Checkoff

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

RFS Announcements Expected from EPA and Vilsack on May 29

Biofuel stakeholders have waited a frustratingly long time for the EPA to officially unveil volume requirements relative to the RFS. The agency has not followed the timeline specified by law, has said that the topic is “complex” and has pledged to issue multi-year volume requirements “by June 1” this year. Some contacts have said an announcement from EPA could come by noon ET on May 29.

Meanwhile, USDA Sec. Tom Vilsack will reportedly hold a briefing around 10 am ET on May 29 for a “major announcement.” Several contacts said Vilsack will unveil USDA funding, perhaps via the Commodity Credit Corporation, to boost installation of tanks and pumps at gasoline station facilities for the use of ethanol blends beyond 10% up to E85.

If that is the case, the Vilsack announcement could signal an EPA announcement regarding the RFS that will not be what the corn-based ethanol lobbyists want. Some contacts note that biodiesel producers should like the coming RFS announcements.


Initial Reaction to EPA’s Final WOTUS Rule

While major farm groups like the American Farm Bureau Federation and the National Corn Growers Assn. Took the practical approach to the May 27 release of EPA’s Waters of the US (WOTUS) rule, it didn’t take long for some lawmakers to fire off their criticism. Link for EPA-issued details.

Initial reaction suggests negative lawmakers will accelerate their push for legislation to stop the rule. House Speaker John Boehner, R-Ohio, called the final rule “a raw and tyrannical power grab that will crush jobs.”

The rule “unfortunately still considers many prairie potholes as waters that it will regulate, which doesn’t address all of the serious concerns of farmers and ranchers,” Sen. Heidi Heitkamp, D-N.D., said.

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House Agriculture Committee Ranking Member Collin Peterson, D-Minn., said he was “disappointed but not surprised that the EPA has decided to move forward with a rule that would increase confusion and red tape. Farmers, ranchers, local communities and businesses all expressed concern with the negative impacts of this rule.”

House Committee on Ag Chairman Mike Conaway, R-Texas, and Conservation and Forestry Subcommittee Chairman Glenn ‘GT’ Thompson, D-Pa., released the following statement: “America’s farmers and ranchers deserve a government that will review and address their concerns. Instead, the process by which this rule was established ignored them.”

Bob Stallman, the president of the American Farm Bureau Federation and leader of its campaign against the draft proposal, said the organization would review the final rule. But Stallman said the regulation was the product of a flawed process in which he said the agencies exceeded their authority.

Environment groups offered praise for the rule, but a bipartisan group of lawmakers were just as quick to criticize the action. “These long-overdue protections… will ensure cleaner wetlands, headwaters, brooks and streams that we use for swimming, fishing and other recreational activities,” said Rhea Suh, president of the Natural Resources Defense Council.


Washington Insider: An Organic Checkoff

There has been relatively little notice recently as the organic industry has petitioned USDA to allow a check-off program focusing on research and promotion of organic food and products. The Organic Trade Association says it has been working on the proposal for three years and envisions that its Generic Research and Promotion Order for Organic could raise more than $30 million for future programs.

The Association argues that consumers don’t understand the difference between the organic seal and several “unregulated” marketing claims like “natural,” according to Laura Batcha, chief executive officer and executive director of OTA. She wants to “educate consumers about what organic means, which also enhances appreciation of products in the marketplace.”

She notes that US organic production isn’t keeping pace with demand, and believes that an organic check-off program would give industry the opportunity to invest in research, build domestic supply and “communicate the value of the organic brand to advance it to a new level.”

The proposed check-off would collect funds from the entire organic value chain, including growers, processors, certifiers, distributors, importers, exporters and retailers. The assessments would be “mostly” calculated on net organic sales, and businesses making $250,000 or less could choose to opt out of the program.

Industry advocates argue that the proposal contains reforms to improve upon older check-offs and to reflect the diverse needs of the organic community.

USDA already oversees more than 20 check-off programs for commodities from watermelons to beef. Now, USDA must review the OTA proposal, publish proposed program details in the Federal Register, and evaluate and consider public comments before organic stakeholders will be allowed to hold a vote on its adoption.

It is true, industry experts say, that demand for organic products has grown rapidly in recent decades, with sales up from $3.6 billion in 1997 to more than $39 billion in 2014. The Organic Trade association now represents more than 8,500 organic businesses, such as Whole Foods Market Inc., Whitewave Foods Co. and Earthbound Farm LLC.

Organic stakeholders say they often face tight supplies of ingredients and products. “Organic wheat and dairy have become increasingly more difficult due to more big players coming into this space,” said Keely Fadrhonc, spokeswoman for Annie’s Homegrown, Inc. that in 2014 was bought by General Mills Inc. At times, producers say they have been forced to import corn from Romania and soybeans from India to meet growing needs.

Still, it is not clear what the OTA actually expects from the proposed check-off and how it could boost supplies and “accelerate the rate at which organic production practices are adopted.” The comment Ms. Fadrhonc made about the impact of “big players” on available supplies certainly suggest even more intense fights over available products in the future.

In addition, since most check-offs support promotion efforts—such as the dairy industry’s “milk mustache” ads designed to boost fluid milk sales--efforts to promote organics at the expense of foods produced with traditional methods are likely to be extremely controversial, a fact that is likely to give USDA considerable heartburn as it considers the OTA request. The question of who benefits from “everybody’s money” is a frequent one and can be expected to be even more difficult this time around.

The proposal has several important steps to complete before it can go into effect and each one will likely to be opposed. Check-off programs have become increasingly controversial in recent years, although they seem to have continuing support in Congress. So, organic check-off issues are important to producers and should be watched carefully as the debate gets underway, Washington Insider believes.


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