U.S. Shift on Organic Rules Proved Costly

May 30, 2004

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News Story

4:48 p.m. 05/29/2004

By Samuel Fromartz

WASHINGTON (Reuters) - Bart Reid had been struggling hard to keep his West Texas shrimp farm afloat since April, when U.S. regulators relaxed the rules covering organic food.

Reid was suffering because the rules under the U.S. Department of Agriculture's National Organic Program were altered, taking seafood out of the program.

It meant he couldn't label his Permian Sea Shrimp product "USDA organic," which prompted retailers to cancel purchases.

That, in turn, scared off investors interested in his business -- the first organic shrimp farm in the rapidly expanding $11 billion U.S. market for organic foods.

But Reid and the organic industry won a reprieve on Wednesday, when Secretary of Agriculture Ann Veneman rescinded the April rule changes made by the National Organic Program.

And, that means Reid will be able to use the USDA label after all.

"It may be too late, but at least it will give us a ray of hope," said Reid, speaking by telephone from Imperial, Texas.

The April ruling that Veneman reversed had removed a number of industries -- including personal-care products, dietary supplements, and pet foods -- from the organic program's purview.

"Everybody who was looking to do business with me ran like cockroaches under a spotlight," Reid said, when the April rule change was made.

His friends, family and lenders had chipped in to invest $1 million in his business.

CONTROVERSIAL RULINGS

The ruling was one of several the USDA issued in April, raising alarm among consumer groups and the organic industry, which expressed concern that the rulings diluted "organic" standards.

Before Veneman's decision, the USDA had said the changes were only interpretations of existing regulations.

What also had organic proponents up in arms was that the USDA issued the rulings by fiat, rather than in consultation with the National Organic Standards Board, an advisory panel of industry, consumer, farmer and environmental representatives.

Veneman directed the department's National Organic Program to revisit the issue with input from the board and the public.

Reid said he had worked for two years to make sure his own practices met the standards of the organic law.

He avoided chemicals and antibiotics, did not crowd his pens and fed the shrimp organic feed -- all in line with U.S. regulations.

Marty Mesh, executive director of Florida Organic Growers in Gainesville, Florida, said his U.S-accredited group certified the shrimp "USDA organic" because Reid followed the rules.

Reid thought this label might help his products compete with foreign shrimp flooding into the United States from Asia and South America.

He said he could charge $5 a pound wholesale for the organic shrimp, compared with $2 for conventional shrimp.

Consumers have been willing to pay a premium for organic products to avoid chemicals in conventional food production.

If aquaculture were to be placed outside of the U.S. program -- as the USDA ruled in April -- any producer could have labeled its fish "organic" without having to follow any regulations.

The same would also have been true for makers of pet food, supplements and personal care products, rendering the organic label meaningless in those segments.

Although it's unclear whether those industries will permanently be part of the USDA Organic program, at least now the producers have a chance to be heard.

ORGANIC FISH FUTURE?

The NOSB advisory panel approved recommendations for organic aquaculture in 2001, but the USDA never acted upon them -- in part, observers say, because they were contentious.

Recently, the USDA suggested forming another working group to develop organic standards for aquaculture.

This may have been prompted by competition.

European countries already certify organic fish and could capture the bulk of the developing global market, especially in big seafood-consumer countries like Japan.

"Chile is also moving very fast," said Richard Nelson, vice president of Nelson & Sons Inc., a fish food company in Murray, Utah, participating in the new organic working group. "They will have an organic salmon product, probably in six months."

Until the USDA comes up with new rules -- perhaps in two years -- Reid will be able to sell his product under the USDA Organic label, barring other action from the department.

But the reprieve might be too late.

"I'm in dire straits," he said.

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