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

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 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