Organic Industry at a Crossroads


  When members of Congress hold a hearing, it’s usually not a sign of good news. However, when the House Subcommittee on Horticulture and Organic Agriculture convened on April 18 to discuss the status of USDA’s National Organic Program (NOP), it heard some very good news: organic products accounted for nearly 3% of all retail sales in 2005, pulling in just under $15 billion for the year.


When members of Congress hold a hearing, it’s usually not a sign of good news. However, when the House Subcommittee on Horticulture and Organic Agriculture convened on April 18 to discuss the status of USDA’s National Organic Program (NOP), it heard some very good news: organic products accounted for nearly 3% of all retail sales in 2005, pulling in just under $15 billion for the year.

“Industry watchers agree that the organic industry is at a new tipping point,” said Organic Trade Association (OTA; Greenfield, MA) executive director Caren Wilcox. “Never before has it experienced the degree of acceptance and interest from mainstream supermarkets and consumers. Many supermarkets, in fact, have added private-label organic lines to their offerings.”

To keep up with demand, farmers are planting about twice as many acres of organic crops as they were just a few years ago. In 2005, the United States had about 4 million acres under organic management, Wilcox noted, compared with only about 2.2 million acres in 2003. The number of certified-organic farms in the United States also rose, from 8035 in 2003 to 8445 in 2005.

Even with the increased acreage, however, demand is still outstripping supply. The U.S. marketplace is meeting the need for some goods with organic foods imported from abroad, Wilcox said. But in many cases, she added, “U.S. farmers are missing an opportunity, and the United States is not reaping the full environmental benefits of organic production.”


According to OTA’s 2006 manufacturer’s survey, organic sales are surging in all product categories. In 2005, U.S. sales of organic meat jumped by 55.4%, while sales of organic sauces and condiments increased by 24.2% and sales of organic dairy foods rose by 23.5%. Sales of other organic items, such as personal care products, dietary supplements, household cleaners, and pet food grew by 32.5%.

Moreover, consumers are more likely to see organic products on the supermarket shelves. Mainstream retail stores sold about 46% of all organic products in 2005, while natural food stores and independent groceries sold about 47%, according to the OTA survey. Local farmers markets sold an additional 4%. One promising sign is that more than half of the respondents in the OTA survey said that USDA’s organic seal and NOP certification had helped boost sales of their products (see sidebar on p. 28).

On the other hand, not all of the news is positive. Slightly more than half of organic product manufacturers say the lack of a dependable supply of raw materials is standing in the way of greater sales. Another problem is that growers and processors of organic products receive less USDA assistance than conventional growers and processors. The government does not collect statistical data on organics and provides little funding for research.

“In the years since passage of the Organic Foods Production Act, there have been consistent calls for parity in research efforts for organic at a level that would provide a fair share as contrasted with the hundreds of millions devoted to research on conventional and biotechnology agriculture,” Wilcox told the subcommittee. “However, most of the research has been defined and carried out via private sources and by organic farmers and processors themselves.”

Wilcox added that while that situation is slowly changing, the costs of building up the organic marketplace should not be borne solely by the private sector. “Organic agriculture and its processors should not be disadvantaged in access to and use of technical assistance, capital, research, marketing, and insurance,” Wilcox said. “We should not have to struggle for data collection distinctions so that we-and the Congress-can understand the organic marketplace.”


Organic products manufacturers foresee a rosy future for the industry if USDA decides to more fully implement the concepts envisioned by the legislators who drafted the Organic Foods Production Act of 1990.

At OTA’s 20th anniversary celebration in 2005, manufacturers predicted that the industry would continue to grow and thrive over the next 20 years, albeit at a slower pace than its current 17–20% annual growth rate. However, they also thought that consumer confusion about organic labels, governmental biases in favor of conventional agriculture, and competition for land could pose major challenges.

At the April 18 meeting, the subcommittee’s first-ever hearing on organic foods, Wilcox proposed several recommendations for Congress to consider as it begins work on the 2007 Farm Bill. OTA’s suggestions include a four-point “farm-to-table” plan to assist farmers and processors making the transition to organic agriculture.

The plan calls for providing technical assistance for organic farmers, eliminating hurdles to organic trade, initiating and funding research, and enhancing agency programs. The technical assistance would include help in the conversion to organics as well as aid formulating business plans. USDA efforts to collect statistical information such as organic crop acreage and pricing would also assist growers, enabling them to recoup more-accurate insurance losses by providing actuarial data not based on conventional crops. Additionally, OTA’s plan calls for more robust funding to hire USDA staff that can oversee NOP certification and accreditation programs.

“Through both strong consumer and government support in parity with other agriculture, the organic industry can continue to thrive and grow in the innovative and unique way that’s all its own,” Wilcox said.


Natural products companies are flocking to USDA’s National Organic Program (NOP), despite the extra effort involved in earning the agency’s organic seal. The seal is becoming an increasingly important symbol to consumers who are worried about issues like genetic engineering, pesticide contamination, and environmental sustainability. This is particularly the case for supplement consumers, whose health concerns often drive them to purchase the products in the first place. Manufacturers looking to allay these concerns find the seal a useful option.

In addition to setting rules for organic growers, NOP also sets rules for handlers-companies that receive, process, package, or store agricultural products. Certified-organic handlers must meet special requirements for each step of food production, including receipt of raw materials, food or supplement processing, packaging and labeling, cleaning, waste disposal, and pest management. Other requirements include developing an organic plan that describes operational details, maintaining records for at least five years, and submitting to annual on-site inspections by an accredited certification provider.

According to Alex Moffett, founder and president of Renaissance Herbs (Chatsworth, CA), demand for certified-organic products has been tremendous throughout the industry, and interest in standardized botanical extracts is especially high. However, he adds that some manufacturers essentially gave up on finding standardized organic extracts over the past few years because the supply was so scarce. Renaissance obtained organic certification from Control Union (Rotterdam, The Netherlands) in March for two botanical extracts, AmlaPure and GojiMax, and the company plans to announce certification for two additional ingredients later this year. “We expect that as the word gets out that these extracts are available, demand is going to soar,” he says.

Manufacturing standardized botanical extracts can pose some unique challenges, Moffett says, noting that many of Renaissance’s standardized extracts are made using ethanol. Organic ethanol is not available in Bangalore, India, where the company’s manufacturing facility is located. “In India, as in many countries, the importation of ethanol is highly regulated,” he says. “For organic certification, you are allowed a few substances for processing, such as pure water and so it was much easier to produce our organic AmlaPure where only water, not ethanol, was required for extraction.”

Lucy Ackerman, vice president of sales at supplement manufacturer Indigo Labs (Vista, CA), which earned organic certification for its facility through California Certified Organic Farmers (Santa Cruz, CA) in March, says that demand for certified-organic liquids, such as juice blends and oils, is also high. “In the liquid market, which is our area, these whole-food products are where the opportunities are.” Ackerman adds that many of Indigo’s customers have been asking for more information about certified-organic products and ingredients.

Organic certification generally begins with an application from the manufacturer to a certification agency. The agency then inspects the manufacturer’s facility at length to verify that it meets NOP requirements.

“The process of certification is fairly standard among all NOP-accredited certifiers,” says Moffett. “There needs to be a careful handling of organic materials at all stages in the manufacturing process to prevent contamination. In addition, a chain of custody documenting each step is maintained. As with most certifications, it comes down to developing a detailed system that will preserve organic integrity and then documenting that process.”

According to Erin Silva, RD, technical marketing manager for NexGen Pharma Inc. (Irvine, CA), which earned organic certification for its Tempe, AZ, manufacturing facility in March through Quality Assurance International (San Diego), coordinators from the certification agency lead the manufacturer through each step of the process. “After the initial inspection, site inspectors examined our facility, processes, personnel, cleaning procedures, and documentation,” she says. “Once we finalized an organic product’s master formula, we submitted a separate application for each product containing each raw material’s organic certificates, and a breakdown of each ingredient by weight.”

Certification providers will also want to examine standard operating procedures (SOPs) before granting certification. “Applications are required to relate all aspects of their manufacturing process, from receiving raw materials to logging them into their system and storing and using them,” Ackerman says.

NOP rules even cover the use of packaging materials. To prevent the comingling of organic and nonorganic materials, the program forbids the use of packaging and containers exposed to prohibited substances, such as synthetic fungicides or preservatives. The rules also prohibit the use or reuse of containers that have come into contact with conventional materials or pesticides, unless there is no chance of contamination.

According to Anthony Gentile, director of art and marketing at XelaPack (Saline, MI), there is a significant demand for handlers that are qualified to meet NOP’s packaging requirements. The contract packaging company, which specializes in environmentally friendly packaging, recently obtained organic certification from the Global Organic Alliance (GOA; Bellefontaine, OH).

“A lot of our customers and potential customers were asking for us to get certified so we could produce samples of their organic products,” says Gentile. “Since our environmentally conscious packaging complements natural and organic products, we decided it would be a good thing to offer.”

Before handling organic products, XelaPack sends information about the product company’s certification to GOA, which vets the information to ensure the company is certified by an accredited agency. XelaPack also sends a copy of the product art to GOA, which verifies that the artwork meets NOP rules governing the use and placement of the USDA organic seal. “GOA assists to make sure that all restrictions are properly met with every single product,” Gentile says.

Organic certification does require extra effort on the part of manufacturers. However, that effort pays off by increasing confidence in product quality and attracting consumers. “We see organic certification as being yet another validation of our company commitment to quality management systems,” says Moffett. “The very rigorous certification process for our ISO 22000:2005 food safety and ISO 9001:2000 quality management systems certifications created a solid framework for organic and other quality certifications.”

“Focusing on organic certification of our facility and organic product production opens up new opportunities for us and our customers,” adds Silva, who notes that NexGen’s recent launch of four new organic products has already generated a high level of interest. “By gaining organic certification, we’re able to offer our customers more possibilities and options to help grow their business and maintain or uphold their positioning in the market.”

Related Videos
Related Content
© 2024 MJH Life Sciences

All rights reserved.