Inefficiencies of, and Obstacles to, Organic Farming

There are people that, as soon as they go into the market, the first that they look for is that white and green “USDA Certified” mark on their meat and produce.  However, only about 1% of US farms are organic certified, so why are some people so worried about that label? 

           Well, good afternoon, and Happy Tuesday to everyone!

            Today we are going to dive deep into the idea of organic farming, and we are going to explain why it should not matter to you.

            Really, it shouldn’t – the “USDA Certified” label in its proper font with green lettering and a white background looks nice on a package, and as such it makes a pretty nice marketing piece (indicating scarcity), but in the end it does not matter as much as you might think!

The Northforker

            A great article was written in the Northforker recently; the article dives into a local farm, owned by two local farmers (Abra Morawiec and Chris Pinto).  Now, these are two farmers who, by all accounts, have done everything right.

            By everything right, we mean that these two farmers acted ethically and appropriately; they used no pesticides, they fed their animals food that was not pesticide laden, everything is antibiotic free, GMO free, and they maintain pasture-raised processes.

            What is more interesting – Abra and Chris have not lost a single customer according to the original report, they have not a single customer by switching off of being organic.

           Thanks to Cyndi Zaweski for doing such a great article on such great people!

           The real takeaway here is simple; these are farmers that were certified to operate organically and then stopped.

           Why would anyone stop, you ask?  Well…

The Cost of USDA Organic Certification

            As a bit of a precursor to the overall costs of USDA certification, it is important to mention one key point:

 

In the United States, 99% of farms are small farms, and these farms produce 89% of food yield

 

            Now, why does this matter?

            Let’s think about the income of the small family farm, and let’s think about what they earn.  If we look at these figures we can see that:

·       Half of all of these small farms earn less than $10,000 a year

·       80% of these farms earn less than $100,000 per year

·       Only 8% of these farms earn $500,000 or more per year

           It is important to note that these are SALES figures, not PROFIT figures – it can look much worse if you consider expenses.

           If we look at page 4 of the 2017 Iowa Farm Costs and Returns report, you can see (by doing a little math) tat profit is around 13% of the revenue.  This means that 80% of farms are averaging $13,000 a year in income after all expenses. 

           This does make sense; these farmers have to hire hands, feed animals, repair and maintain equipment… there is a lot that goes into maintaining a farm!

           This is not a pretty picture, and it leads to the importance of understanding the cost and time associated with USDA organic certification.

           What are these costs?

           Well, this can vary, but normally what you are looking at is as follows:

·       Application fees: $250 - $300

·       Inspections: Approximately $500

·       Annual certification: Based on production values, this can be from $400 to $1,500

           If we go with the low-ball end of this, then the $10,000 farms (that are netting $1,300 on average) have to spend $1,150 in fees to become organic certified.

           If you are looking at our $500,000 farms, then they are probably paying for the full amount of $2,300 per year for inspections and certifications.

           (This is where we could talk about the government oppressing small farms… but we will refrain)

           While those prices look like they might not be too terrible, there are other things to consider.

           Often, you will want to get a pre-inspection done to tell you what you need to do – this will be another $500 per inspection.

           Now, imagine that your initial application is rejected… it can take up to 10 weeks for another inspection to occur.  If you cannot wait you can request and expedited inspection…

…for over $1,400…

            Suddenly, this does not look quite as affordable as we originally thought, right?

But Wait… There’s MORE

            If the costs of inspection and maintenance of the certifications were not enough of a cost, if someone has a farm that was not previously an organic farm, there is a 3 year period where you have to go through all the processes and inspections, meeting all of the criteria, before you can call yourself a USDA certified organic farm.

            Now, another fun caveat… let’s say you are near another farm that does pesticide spray, and that gets on your crops, and when tested and inspected you come in over the limit to be classified as organic.

            You lose your organic certification, and now you have to enter the 3 year waiting period before recertifying fully.

            Does this seem balanced?

            I didn’t think so, either…

One last thought…

            I love farmers, because I would not be able to eat without them.  I would not have access to healthy foods, and I would be very unhappy.

            However, most farmers do not write their own business plans – many hire technical writers or CPA’s to write these up, and the cost for this can be as much as $150 an hour.  If you consider that a business plan indicating how the farm plans to become (or stay) properly qualified yearly, and it takes a writer 10 hours, this just increased your cost again.

            Hiring your writer to make sure you can even start this process might cost you another $1,500 in expenses.

Our Conclusion

            The sum up our conclusion, let’s look back at our dear friends Abra and Chris, right here in the Northfork.

            They acted ethically, they acted properly, and they dropped their certification.

            They did not drop customers at the same time… so what does this tell us?

            We don’t know about you, but what it tells us is that this mark is literally nothing more than the willingness and ability to pay more for a stamp that is a marketing tool.

            Now, marketing is important, but there are other ways for small farms to market… and the biggest of these ways comes down to one simple word.

Trust

            Ethical farmers that will allow their customers to have access, or they allow their small butcheries to have access before they sell goods to their customers, builds TRUST.  Trust is based on word-of-mouth, which is still the best form of advertising and marketing in the world.

            Really, what does this tell us?  Giving your customers real, solid, and good reasons to trust you, your animals, and your processes negates the need for a mostly meaningless stamp on some packaging.

            Dear buyers; shop local – buy from your farms, or buy from your local and small-town butcheries and meat markets…. Buy from farmer’s markets.  Rather than asking the meaningless question of “is your food USDA Certified”, just ask them to explain their process, or where and how they get their food.

            When you see their chest puff with pride, the glint in their eye, and hear them quickly and happily recount all of the steps and the manner in which their food is processed you will know all that you need to know.

            You will know trust, and that matters so much more than a USDA certification!