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Organic Consumers Association

Embattled Organic Sector Worries About Regulation

California farmer Tom Willey was first attracted to organic farming 21 years ago after noticing how many chemicals he was using in conventional farming.

As a certified organic farmer selling everything from artichokes to zucchinis from his 75-acre farm in the San Joaquin Valley in California, Willey has become a respected pioneer in the organic farming community.

But now with the deep recession in the United States, farmers such as Willey are worried about the future of organic farming that grew sharply during the boom times.

The industry, which prides itself on delivering wholesome and safe products, also is worried and even a little angry about new food safety rules emanating from Washington.

"There is a lot of transparency in the organic food system and we've had it in place for several decades and we do so willingly," said Willey. "The lack of that is what characterizes industrial producers."

The global market for organic food has grown sharply over the past decade, with the United States accounting for about 45 percent of the global share.

Sales of organic food have soared from $1 billion in 1990 to an estimated $20 billion in 2007 and by 2006 became the fastest growing sector in the industry, according to the Organic Trade Association.

But now growth is coming to a halt as Americans tighten their purse strings and opt for cheaper alternatives.

"Millions of people who were occasionally buying organic products have cut back to save money and we're seeing the real decrease in growth in the last nine months," said Ronnie Cummins, the national director of the Organic Consumers Association.

Whole Foods Market Inc, a chain that sells organic and luxury grocery items, reported in May that quarterly sales fell nearly 5 percent from its stores opened at least one year. Profits also fell but the company said it avoided going into the red by cutting prices to keep consumers coming back.

Neil Currie, an UBS analyst said consumers are seeking lower prices and staying clear from luxury food products.

"Organic food comes at a premium price and Whole Foods sales have been quite negative," said Currie.

Growth in the organic sector dwindled to 12.5 percent last year compared to the 20 percent it used to enjoy.

"We might not see that kind of growth again," said Cummins.

An added worry for organic farmers is a new food safety legislation that passed last month in the Energy and Commerce committee of the U.S. House of Representatives that would be the most sweeping reform of the food safety system in close to 50 years.

The U.S. food supply system has been battered by a series of food recalls -- covering a range of products including lettuce, spinach, peanuts and most recently, cookie dough -- since 2006 that have eroded consumer confidence.

Under the new legislation, the industry would have to pay a $500 registration fee per facility to pay for more plant inspections. Farms, restaurants and retail food establishments that sell their products directly to consumers, not businesses, are exempt from this fee. There would be a $175,000 cap on such fees.

Organic farmers still say the definition of a facility is unclear in the legislation and they worry about additional costs that might be incurred on small businesses. Inspections will be more frequent, taking place every six to 12 months at high-risk facilities and between 18 months and three years for lower-risk locations.

As part of a broader food safety overhaul, the Obama administration recently announced the creation of a new post of deputy commissioner for foods at the U.S. Food and Drug Administration. The position would oversee all food safety activities within the agency.

Most organic farmers believe food safety reforms are necessary, but they worry small and medium organic farmers will be unfairly targeted.

"Based on the escalating cost that would be involved in conforming to this legislation -- administrative fees, record keeping and internal labor requirements -- we can force out of business some of the highest quality practitioners," said Mark Kastel, an analyst at the Cornucopia Institute in Wisconsin.

Kastel said organic farmers are tempering their enthusiasm for food safety reform with some skepticism.

"The same players who helped create the problems that exist today are enthusiastically embracing what they say is the answer," he said.

"It's unsettling when grocery associations and major processed food producers get together and agree with the government that they're going to do this without any regard to the high quality organic practitioners."

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