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Producing and Selling Organic Food Products - A Five Step Regulatory Primer

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Producing and Selling Organic Food Products - A Five Step Regulatory Primer

By Caron_Beesley, Contributor
Published: September 24, 2009

Take a walk down any supermarket aisle and you'll notice that more and more organic food products have found their rightful place alongside 'conventionally' produced foods - testament to the fact that organic food production is now the fastest growing and most profitable segment of American agriculture.

In fact, approximately 2% of the U.S. food supply is grown using organic methods. Over the past decade, sales of organic products have shown an annual increase of at least 20%, the fastest growing sector of agriculture (Source: *Organic Farming Research Council).

And while many may still consider organic food production as a niche market, others see entrepreneurial opportunities to lower input costs, improve sustainability, capture high-value markets, and boost income.

Of course, by its very nature, organic food production is a heavily regulated industry. Producers must obtain a certification and comply with production handling standards, labeling laws, and so on. Organic food retailers also face regulatory responsibilities that carry hefty fines for non-compliance.

Whether you are new to organic farm production or wish to scale your existing operation, below is a primer of some of the key federally mandated standards for the production, handling and retailing of certified organic food products.

1. What is a 'Certified Organic' Food Product?

Organic food is commonly described as crops and animals produced and fed with natural food and without the use of chemical additives.

Most food labeled and sold as 'organic', '100 percent organic' or 'made with organic ingredients' must be officially certified as such (see below for exceptions). In fact, 'certified organic' refers to agricultural products that have been grown or processed according to uniform standards verified by independent state or private organizations accredited by the USDA. To read more about what constitutes a 'certified organic' product refer to the USDA's national list of allowed and prohibited substances.

2. How to get Certified as an Accredited 'Certified Organic' Producer or Handler

If you produce or handle any organic food you will need to apply for certification through a USDA certified agent. Your application will need to include specifics about the history of the agricultural land, products being grown, raised or processed, as well as an organic system plan (OSP) describing the practices and substances used in production. A certified agent will review this information and conduct an on-site inspection to determine eligibility. You can download the relevant application form and learn more about the certification process from the USDA's National Organic Program here or search for the nearest USDA-accredited certifying agency here.

You should be aware that the certification typically involves an annual inspection/certification fee (currently starting at $400-$2,000/year, in the U.S., depending on the agency and the size of the operation). Fortunately, the Organic Cost Share Program offers reimbursement for up to 75% of the certification fee (not to exceed $500) - but is only available in 15 states. More on this program here.

3. Who doesn't Need to Be Certified

Low volume producers and handlers of organic agricultural products (those that sell less than $5,000 a year in organic products) are exempt from certification but can still label their foods as organic. Do note that if you do fall into this category, you will still need to comply with national standards and labeling requirements. Learn more about the exemption process (which also applies to certain handlers and retailers) in this USDA fact sheet (or check out the USDA organic certification Web page here).

4. Steps for Complying with Organic Food Production and Handling Standards

Once you are a 'certified organic' producer or handler, you will need to comply with National Organic Program (NOP) regulations, which ensure that organically labeled products meet consistent national standards. Standards for the organic production and handling of crops and livestock are all described in this quick fact sheet from the USDA (or view this and other NOP fact sheets here).

5. Organic Labeling and Marketing Guidelines

Labeling requirements for 'certified organic' products and non-certified (discussed above) are based on a percentage of organic ingredients in a product. Here's how it works:

  • The '100 percent organic' label - To use this label, products must contain only organically produced ingredients and processing aids (excluding water and salt).
  • The 'organic' label - These products must consist of at least 95% organically produced ingredients. The remaining ingredients must consist of non-agricultural substances approved by the USDA.

If your product meets either of these criteria, you may display these labeling terms on your packaging and in advertisements.

  • The 'made with organic ingredients' label - Processed products that contain at least 70% organic ingredients can use this label. However, while you can use the label and the seal of your approving certification agent on the package, you cannot use the USDA seal on the package.

Any processed product that contains less than 70% organic ingredients cannot use the term 'organic' anywhere on the label, but in these instances you can identify the specific ingredients that are organic on the information panel.

Other labeling provisions and penalties for misuse are described by the USDA National Organic Program here.

Additional Resources

  • Business.gov Small Business Agriculture Guide - These resources provide information on how to comply with federal regulations that apply to farms and agricultural producers, including organic food production.
  • *Why Americans Are Turning to Organic Foods (Organic Consumers Association)
  • *Organic Trade Association - A membership-based business association that focuses on the organic business community in North America. Its mission is to promote and protect the growth of organic trade to benefit the environment, farmers, the public and the economy.
  • *Organic Marketing Resources (National Sustainable Agricultural Information Service) - Market resources for organic food and fiber products, including organic prices, sales data, market trends, and other market data, organic trade associations, directories, and other organic marketing publications and resources, with contact information for ordering them.
  • Business.gov Farm Loan Guide - From start-up loans, marketing assistance loans, to disaster loans, these resources describe farm loan programs provided by FSA.

* Note: Hyperlink leads to non-government Web site.

About the Author:

Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Comments:

hefty fines for non-compliance is a major challenge.
while many may still consider organic food production as a niche market
while many may still consider organic food production as a niche market
Thank you for the useful article, it helped me a lot in the production and sale of organic products.
Thank you for the useful article, it helped me a lot in the production and sale of organic products.
Sales of organic products are truly new form, everyone should learn and be tested.
while many may still consider organic food production as a niche market
Great !, it's very helpful
Organic food is great for users, minimizing toxic, cost savings, I advocate using organic methods.
while many may still consider organic food

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