Exception to Organic Shortages: Coming Glut in Milk

I should have made clear in the previous post that there is no shortage of organic milk, or there won't be soon. A record number of farmers started to transition last year to organic production and will be done within a year, producing a glut. The Burlington Free Press had the story last Saturday and the New York Times caught up with it today.

The Times story makes clear that the rush of dairy farmers to transition to organic was largely the result of a lawsuit brought by Arthur Harvey, a Maine blueberry farmer. (He won the suit for stricter dairy regulations that will take effect this June). In the article, Nancy Hirshberg of Stonyfield Farm called the jump in organic milk supplies "a gift from above." Considering how much the organic industry spent to fight Harvey and his lawsuit, which I discuss in my book, Organic Inc., I found this quote highly ironic, to say the least. But the fact is, Stonyfield and others needed milk. At one point last year, Stonyfield CEO Gary Hirshberg said he could increase output of organic yogurt by 100 percent if he could get the milk. (As it turns out, Stonyfield is now buying 48 percent more organic milk this spring).

What neither story mentions is that this farm conversion is going to lead to a severe shortage of organic livestock feed in the fall of 2007 and into 2008 -- so any farmers out there might want to investigate this issue. Organic Valley is suggesting farmers take land out of conservation reserves (where it has not been cultivated) and putting it into organic production immediately. A press released issued by Organic Valley and the grain co-op OFARM states:

The growth of organic livestock across the country over the last two years has been estimated to be 50 percent, while organic feed acres have increased by only 8-10 percent. This rate of growth, combined with the increase in conventional grain prices, has meant that on farm prices for organic goods have continued to stay strong.

"For those farmers new to organic methods, taking land coming out of CRP (the Conservation Reserve Program) and putting it into certified organic production is an easy way to enter the organic marketplace," said Organic Valley CIEIO Geoge Siemon. He noted that land must be free of synthetic pesticides and fertilizers for a three year transition period in order to be certified organic. CRP land usually qualifies immediately and provides the organic premium to the grower in the first year of production.

Next winter, after all, the newly converted cows will need to eat and the lush pasture grasses they graze upon during the growing season won't come up until the spring.

- Samuel Fromartz

US House Told of Organic Shortages

By Samuel Fromartz

The first-ever US House hearing on organic agriculture convened on Wednesday with the focus squarely on shortages of organic goods and how federal agriculture programs could be designed to help farmers transition to organic farming and increase supplies.

Across the board at the hearing, farmers and processors reported that demand for organic food is swamping supply, because US farmers are not converting to organic agriculture at a fast enough pace. Organic food now represents about 3 percent of retail food sales, but only 0.5 percent of all farm land is organic.

Caren Wilcox, executive director of the Organic Trade Association, told the Subcommittee on Horticulture and Organic Agriculture that more than half of those members polled in a recent survey said that they would increase production if they could locate more organic ingredients.

To meet consumer demand in the $15 billion industry, imported organic goods have increased - an issue raised repeatedly by Subcommittee Chairman Dennis Cardoza, a Democrat from the Central Valley of California. "I'm concerned about imported organic products, especially from China," Cardoza said.

Livestock farmers appearing on the panel mentioned that organic feed was in tight supply and expected overseas sources to rise later this year and into 2008. One egg producer mentioned that organic soybean feed from China now costs 25 percent less than feed from the Midwest.

The lawmakers zeroed in on a number of policy issues, most critically, the costs to farmers of transitioning to organic methods. To become certified organic, farmers must refrain from using chemical pesticides and fertilizers for three years, but during that window they cannot sell any products from those fields as "organic." After three years, they qualify for the organic label and usually get a market premium.

House Agriculture Committee Chairman Collin Peterson, a Minnesota Democrat, asked if there were any funds specifically available to help farmers through the transition period.  He was told there were not, although this is something the organic food industry is seeking in the current round of the farm bill.

Research also came under discussion, since Mark Lipson of the Organic Farming Research Foundation pointed out that it could help farmers in many ways. Organic agricultural research gets about $18 million, compared with $2 billion for conventional agriculture.

The lack of research was also creating impediments to national organic regulations, since the USDA does not have enough science-based studies to back up its decisions. This was especially evident in establishing a minimum grazing standard for organic livestock, Lipson said.

Plus, the panel was told repeatedly, the USDA's National Organic Program is sorely understaffed, with a half-dozen staff responsible for everything from writing regulations to enforcing certification standards in China.

Overall, the lawmakers appeared receptive to organic agriculture – a vast change from 1990, when the Organic Foods Production Act that governs the industry was first passed amid heated opposition in the House. What's changed is that many of these lawmakers now have organic farmers in their home districts.

Cardoza even mentioned that he belongs to an organic CSA in California and requires his kids to finish the box of food they get from the farmer each week. "That's how we get them to eat fruits and vegetables," he said.

For testimony, see the House Agriculture Committee web site.

Ethanol and Biotech: Into the Future

By Lisa M. Hamilton

Ethanol’s future seems to go hand-in-hand with biotech, as evidenced by reports including a recent article by AP’s Paul Elias. But within all the news, there’s a worthwhile distinction to be made about what’s being genetically engineered.

One strain of research aims to make corn more compatible with fuel production. For instance Syngenta has genetically modified corn plants to include the alpha amylase enzyme, which performs the first step in the process of turning kernels into fuel. With this corn, ethanol plants would require one less additive, and therefore one less cost.

Of course this corn carries the issues that come with genetically modifying crops used for food. But it could also extend corn’s life as an ethanol source by making it more efficient—something that will matter a lot to corn farmers as better, non-corn sources like switchgrass rapidly displace corn as the preferred feedstock over the next decade. 

Other research focuses on bio-engineering the non-feedstock components of the ethanol process, to make them, in part, less expensive. Elias reports that with much of the research, “The idea is to genetically engineer microscopic bugs such as bacteria and fungus to spit out enzymes that will break down just about every imaginable crop into ethanol.”

This “inside” approach to genetic engineering, so called because it deals with components used inside the ethanol-producing plant, could dramatically change the ethanol-farm economy. When enzymes and other additives for the processing of cellulosic ethanol become affordable, corn will fall out of sight as a feedstock—and corn farmers know it. Whether the inside approach is safer in terms of unintended consequences to the food system and beyond?  That remains to be seen.

Ethanol Fuels Boom in GM Corn

Chews Wise welcomes Lisa M. Hamilton, a California-based writer who is working on a book about American farmers.

By Lisa M. Hamilton

The current generation of corn-based ethanol involves familiar players, particularly Monsanto’s Roundup Ready and Bt corn, which are genetically modified. It remains to be seen what effect this year’s planting boom has had on the adoption of biotech varieties (the USDA’s Economic Research Service will release the numbers in July), but I haven’t found a person yet who doesn’t foresee an increase.

Possible early evidence is found in Monsanto’s Q2 report, released on April 4, which showed record profits attributed to “the strong demand that we've seen for our higher-yielding corn seeds and our higher-margin, triple-trait corn technology.” Indeed, their sales of corn seed and traits (patented GMO traits such as Roundup Ready-ness) increased 46% over the second quarter last year. As the report states, “Monsanto technology trait acres were up across the board, with triple-trait corn technology expected to be grown on an estimated 16 million acres, or up more than 160 percent when compared with the 6 million acres the technology was planted on in 2006.”

As an extension agent at University of Wisconsin explained, one reason could be that many of those extra 12 million acres will be planted “corn on corn” instead of being rotated with soybeans. “Putting pressure on the rotation like that means more pest pressure,” he said, “and transgenic corn will be a better tool for farmers to deal with that.”

An increase in GMO adoption could also stem from the fact that selling corn for ethanol releases any export-related pressure for the crop to be GMO-free. It could also simply be that in an economy of $4/bushel corn, the extra expense of transgenics is worth it. 

For some, however, the growth might be a matter of what seed was available. Last fall, foreseeing an ethanol-induced planting boom, seed companies sent their hottest seedstocks (likely the majority of them with GMO traits) to South America to grow out even more seed for this season. Even so, this spring seed dealers across the Midwest literally sold out of corn, meaning in many cases farmers bought—and plan to plant—whatever they could get their hands on.

Energy Sucking Birds

Kudos to Ethicurean for taking a close look into whether organic chicken farms use more energy than conventional farms. They might, but before the cheerleaders of confined chicken production gloat, all sources point out that chickens are the one exception to the rule that organic farms use far less energy overall than their conventional counterparts. As Ethicurean quotes from one report:

Organic field crops and animal products generally consume less primary energy than non-organic counterparts owing to the use of legumes to fix [nitrogen] rather than fuel to make synthetic fertilisers. Poultry meat and eggs are exceptions, resulting from the very high efficiency of feed conversion in the non-organic sector.

Centralized chicken farming, however, is one of the reasons for pollution in places like the Chesapeake Bay in the mid-Atlantic region. Nitrogenous waste seeps from these chicken factories and into the bay, leading to algae blooms and dead zones. Essentially, sea life is choked off.

Truly organic chickens, out on pasture, do not produce as much waste in one locale simply because they are not massively concentrated. In other words, considering the energy quotient alone without regard to other issues only muddies the water further.

Wal-Mart Organic Push Fizzling

I have been saying for quite some time that it was questionable whether Wal-Mart's push into organics was really working. Business Week  now points out that it is not.

A number of organic farmers across the country say that Wal-Mart hasbacked off of aggressive plans to offer more organic foods. After placing large orders for organic apples and juices last year, the retailer is cutting back or stopping orders altogether.

So maybe the worries about Wal-Mart corrupting organics were overblown?

End of Organic Java, Part Deux

I'm republishing in full an excellent bit of reporting on grower group certification on Gristmill Blog - an issue I wrote about in previous posts and which may well mean the end of organic coffee in the U.S.

Java justice

Posted by Stephanie Paige Ogburn at 3:08 PM on 12 Apr 2007

Fair Trade producers in Mexico depend heavily on organic certification to reap price premiums for both labels, and will be hurt on more than one front by the recently released USDA rule requiring them to change certification practices, researchers say. In a recent article in Salon, later followed by a post on Gristmill, Samuel Fromartz detailed the consequences of a USDA ruling that would force a radical change in the way grower groups in the global South certify their products. The USDA ruling, Fromartz writes:

[T]ightens organic certification requirements to such a degree that it could sharply curtail the ability of small grower co-ops to produce organic coffee -- not to mention organic bananas, cocoa, sugar and even spices.

In his blog on the subject, Fromartz says he only hit the tip of the iceberg. So I hunted around a bit, seeking to find out more about how the ruling would impact producers in developing nations. I contacted Aimee Shreck and Christy Getz, two researchers who have published on organic and Fair Trade in developing nations. And notably, I got in touch with Tad Mutersbaugh, a professor of geography at the University of Kansas. Mutersbaugh's research focuses on international certification standards, and he's worked with organic and Fair Trade certified grower groups in Oaxaca, Mexico. He was familiar with the recent USDA ruling, and expressed his concern about the implications the ruling would have for small farmers in organic and Fair Trade grower groups.

In the email exchange we had, Mutersbaugh made a distinction that I had not yet heard. It is written in the USDA ruling, and refers to grower groups' use of "internal inspectors" versus "external inspectors."

Internal inspectors generally come from the region they certify, but are specially educated by the larger grower organization in how to certify farms. They are usually true believers in the organic project, says Mutersbaugh, and work for low wages in order to get the job done, charging as little as $1 per inspection. In contrast, external inspectors cost $150 per day, and are also much slower.

"I once attended an external inspection where we managed to do four fields in a day (at $150/day rate) because the inspector simply could not take all of the walking," Mutersbaugh wrote in an email message. "I then went on an internal inspection where we literally ran down through a canyon and up a mountain, performing 10 inspections in a day at the cost of just $1 per inspection!"

But the USDA ruling prohibits use of internal inspectors, a move that, according to Mutersbaugh, will have dire consequences for small-scale producers. "The only way to do inspections is by using 'internal inspectors'," he said. "If external inspectors are used, the cost will be absolutely prohibitive."

Costs are a big deal to small growers involved in these cooperative groups. Mutersbaugh notes that the $15 organic premium per 100 pound sack can significantly help these farmers, who often earn less than $1,000 a year. He also notes that many of these farmers are indigenous women whose husbands have migrated in search of work. And, Mutersbaugh says, because only a percentage of Fair Trade coffee is actually sold as Fair Trade, since the supply of Fair Trade exceeds the demand, the organic certification is that much more important for these growers.

Organic certification, Mutersbaugh writes, "is ... the key for farmers who want to get Fair Trade market access. If they produce coffee that is 'double certified' as Fair Trade and organic, and their coffee is gourmet quality, they will gain market access. This is why farmers spend so much -- and it really is costly -- to gain access to Fair Trade Certified/organic markets."

In response to worries about organic standards being broken, Mutersbaugh admits this is a "concern" not held only by the USDA -- Mexican grower groups worry about it as well. But external certification has its own problems. Mutersbaugh cites an example where a village had been offered certification by an external inspector, but without actual inspections. "Basically," Mutersbaugh said, "the external inspector would simply invent the paperwork! These [organizations] have come to be called 'chafa' (as in wheat chaff) certifiers, but they pose a real challenge."

Mutersbaugh hammered home two points related to corruption and certification:

1. "Internal inspectors do not, in my experience, certify their own villages: They certify other villages outside of their regional organizations."
2. "Internal inspectors are accredited. They must receive training and pass examinations approved by the national level certifier."

Mutersbaugh also tied the USDA ruling into the bigger picture of international conservation, development, and the global economy. He wondered why it took ten years for the organic price premium to increase by five cents a pound. (In June of 2007, the price for a 100-pound sack of organic coffee will jump from $15 to $20.) The cost for certification over this 10-year time period has "skyrocketed," he said, but "this price is simply not reflective of ... the cost to certify."

In addition to this, he added, certified-organic producer families are often key partners in crafting conservation infrastructure. These farmers not only produce coffee, but also habitat. Their fields and conserved lands offer water filtration services, and their conservation support preserves biodiversity and endangered species. Grassroots environmentalists in Mexico often work with networks of certified organic growers to preserve prime conservation land. "What of the songbirds protected, butterflies?" he asked.

Mutersbaugh offered a two-part compromise as a way to alleviate some of the USDA's concerns and strengthen certification processes:

1. There should be a "thoroughgoing accreditation process" for internal inspectors, he said. This would allow internal inspectors to be accredited by external bodies, therefore making the system more credible, but still affordable.
2. The organic premium should be increased to $30 a sack (30 cents a pound) "so that internal inspectors can afford to be inspectors rather than migrants to the U.S" Many good inspectors, he said, leave the business because it is such a low-paying and thankless job. A premium increase to 40 dollars a sack would be a "better bet," he adds, but he doesn't think that's realistic.

But as Mutersbaugh and the other researchers I contacted noted, barriers to entry in organic production are high, and U.S. consumers need to be willing to compensate grower groups in order to help them develop the infrastructure needed to support organic. If it takes 40 dollars a sack -- well, for U.S. consumers, that's just 25 cents more per pound than we're paying now. "Imagine," Mutersbaugh says, "getting a raise only once a decade!"

Spring Planting

It's been freezing on the East Coast lately, well below average, and farmers are taking a hit. But I did visit one farm last week, which produces a lot in greenhouses. Their produce shows up in Whole Foods stores in the mid-Atlantic and at other retail outlets as well. Here's a glimpse of Help From Above, a family farm in Pennsylvania:

One of several greenhouses

Sprouting basil in flats

Shuffling in the Pet Food Pantry

“Because of the recall, people are asking more questions, wondering what is in this bag of food"
- Jen Buhler, manager of The Pet Shop Girls

This quote appeared in a New York Times story on the rise of organic pet food sales, following the huge recall last month. It was predictable. Just about every food scare in the past has produced a spike in sales of organic food, though this is the first time it has occurred with pet food. A scare over the pesticide alar, on apples, gave a major boost to the organic food industry in 1990. "A Panic For Organic" headlines read. More recently, Mad Cow disease in Europe led to a dramatic rise in demand for organic meat.

What sets off this reaction? The desire of consumers for a higher bar of food safety and a mistrust of a system that is anything but transparent, as expressed in the quote above.

But these food-scare reactions do not last. The story fades and eventually - as in spinach - people return to what they ate before, unless there's an underlying sense that an alternative is better. Some will switch to raw pet food, still others to homemade concoctions (recall that pets ate table scraps for thousands of years before the invention of the pet food industry).

But many consumers will want the convenient alternative they can pour into a bowl. Organic pet food sales were already one of the fastest growing categories before this food scare, and I expect that will continue, even after this story fades.

- Samuel Fromartz

A Spotlight on Farm Subsidies

Farm subsidies don't get a tremendous amount of news coverage and now it's clear why: a lot of the data has remained out of sight until very recently. The numbers are embarrassing, not to say, unfair.

In the US, we have Environmental Working Group to thank for enlightening us on this issue. It has an easy-to-use database to find out who is enriched by subsidies. WaPo has also done a fine series on this issue too, with a recent article this week detailing USDA guaranteed loans that paid for resort attractions near major cities.

In Europe, another project is underway that has forced open the farm welfare rolls and - surprise! - revealed that most go to large farms just as in the US. "Farmsubsidy.org, which campaigns for full disclosure about who gets what under the Common Agricultural Policy (CAP), calculates that 85 per cent of the €32.5bn handed out in direct payments went to just 18 per cent of Europe's farmers in 2005," the London Observer reported recently.

Farmsubsidy.org was started by a former UK official fed up with the secrecy surrounding subsidy payments in the European Community. According to the Guardian,

The idea that all this should become public originated in 2000 - not from a journalist but from a Labour special adviser, Jack Thurston, who worked for Nick Brown, then agriculture minister. One afternoon, fed up with a rather tedious EU agriculture negotiation, Brown demanded from his permanent secretary, Sir Richard Packer, a list of the top 20 people getting all these EU subsidies. After much trepidation Sir Richard produced the list and allowed the minister to glance at it for 10 minutes. Thurston remembers looking over his shoulder and seeing the royals and multinationals heading the list.

When Brown asked to take it away, the request was refused and he was warned that to publish such information breached the Data Protection Act. After Thurston left his job he wrote a pamphlet for the Foreign Policy Centre think-tank challenging the need for the subsidies and calling for the details to the published. At the same time, a Danish journalist, Nils Mulvad, used a provision under the Danish freedom of information act to demand the release of documents sent to the tax authorities that listed EU subsidy payments. At the third attempt, in 2004, he won his case and Denmark became the first country in the EU to release subsidy payment data. Last year he was voted European Journalist of the Year in European Voice's awards.

Journalistic sleuthing through the farm subsidy rolls has also won attention in the US. Last month, the IRE, Investigative Reporters and Editors, awarded Farmsubsidy.org its highest medal for investigative reporting. IRE published the following judges comments:

Nils Mulvad, a Danish investigative journalist, led a two-year effort to open archives all over Europe to expose the closely guarded secrets of farm subsidies. With help from journalist Brigitte Alfter and researcher Jack Thurston, records on subsidies were acquired from 17 of 25 of the European Union countries. The resulting information was put on a website and made available to reporters and others throughout the EU. It resulted in a number of important stories, including showing how millionaires were among the top recipients and how dairy subsidies were undermining farmers in the Third World. A truly important and groundbreaking effort that will pave the way for the opening of other European Union records to the benefit of journalists worldwide.

And not just journalists, I would add, but also farmers and the public.

- Samuel Fromartz

Food V. Fuel

The Wall Street Journal, in a wide-ranging round-up, has a page one story (subscription required) on the growing tensions between demand for food and fuel:

Soaring prices for farm goods, driven in part by demand for crop-based fuels, are pushing up the price of food world-wide and unleashing a new source of inflationary pressure.

The rise in food prices is already causing distress among consumers in some parts of the world -- especially relatively poor nations like India and China.

The article points out that biofuels are altering food economics, since ethanol and biodiesel can be made from corn, palm oil, sugar and other crops. Food inflation in Hungary is running 13 percent a year, in China, 6 percent, triple the rate of a year ago. China has only about 2-3 months of surplus food, meaning a bad crop could be disastrous.

Some economists say China will have to take moreaggressive steps to prevent future food problems. These changes could include allowing the proliferation of large -- but more efficient -- corporate farms similar to the ones that drove many small growers out of business in the U.S. in recent decades. Such a push would be extremely difficult for China because it needs to preserve jobs for the tens of millions of people who live in rural areas.

It's interesting though not surprising that large-scale farms are viewed as the unquestionable answer to this issue rather than the small-scale farms which are far more productive per acre of output. (Grains in large-scale farms go to produce other foods or animal feed rather than being eaten directly by people -- not a terribly efficient food chain or use of an abundant labor pool).

Meanwhile in the U.S.,

... consumers are likely to see higher prices at the supermarket for everything from milk to cereal to soda pop, since corn is used to feed livestock and make high-fructose corn syrup, a key ingredient in many soft drinks. A spokesman for the National Chicken Council, a poultry-industry group, recently testified to a congressional subcommittee that Americans should expect higher chicken prices because of what the group described as "the ethanol crisis."

The somewhat silver lining to the trend is that the higher prices "could help boost incomes for the rural poor in developing nations, who have been bypassed by gains in the manufacturing and service sectors." But I wonder if that's the way it will shake out -- whether the benefits will, indeed, trickle down, or whether the farmers will be bypassed on the upswing as they have been when prices tank.

- Samuel Fromartz

Latte Thread on Grist

I blogged about the coffee story on Grist and an interesting discussion thread started. The question I now have is whether any other media will pick it up and run with it - I think the implications are quite large and I only hit the tip of the iceberg. Any enterprising reporters in the global south might be able to fill out the picture substantially.