Inside D.C.

Organic “welfare,” competition and the “premium”

There is a certain delicious irony in the warning from big organic egg producers that USDA’s latest attempt to layer philosophy over reality in its recent iteration of “animal welfare” standards for organic laying hens could put the big guys out of business.

I admit I’m somewhat cynical about the organic side of food production.  I was part of the team which negotiated on the 1990 Farm Bill when USDA was first given authority to create a federal definition of “organic” production as a means of bringing a single national standard forward to harmonize state programs and bring consistency to organic food production and labeling.   As a lobbyist, I’ve been party to issues in which I was told flat out logical, needed changes in federal laws related to food production, safety and labeling were not politically doable because they “threatened the organic premium,” meaning it would be too easy for others to get into the business, increase production and competition and bring down the price of organic products to consumers.

So listening to the big organic guys talking about lost investment and so forth due to “animal welfare” standards is rich, especially since the new standards being recommended by the National Organic Standards Board (NOSB) have more to do with perception than reality, and more to do with small producers at the expense of big producers.

The recently published proposal on organic egg laying hen animal welfare standards – USDA is taking comments until June 13 – would require about two square feet per hen and constant year-round access to the great outdoors.  This effort is described in one article as “reflect(ing) the bucolic conditions in which consumers expect their organic eggs to be produced,”quoting one member of the NOSB’s livestock committee.  The Organic Trade Assn. (OTA) says the new standards broadly “preserve the organic seal’s reputation as the gold standard for agricultural production practices.”

Perhaps more to the point is this statement:  “This levels the playing field for production,” another statement attributed to the NOSB livestock committee member.  Even in organic production, that bastion of peace, love, and harmony, it ultimately comes down to the marketplace, competition and “premium.”

Going back to the 1990 Farm Bill, I warned the organic folks at the time that to push hard for a federal definition and standards meant the end of their sheltered existence.  The new federal definition meant small, local organic producers would overnight be put in competition with Big Food, national and international companies eyeing the lucrative organic market but unwilling to label their products to meet 20-plus different state “organic” definitions.

The biggest organic egg producers in the country will feel the pain of converting to the welfare systems most acutely given their investment in housing, collection, packaging, etc., is the greatest, and this may ultimately be an unspoken incentive for the rulemaking.

Animal housing is designed to last for years, and because of land costs, taxes, etc., most producers of any stripe maximize the use of their land.  So it’s no surprise a big organic producer in Michigan, Herbruck’s Poultry Ranch, says the current proposal translates to its farms removing about 85% of the birds from houses because the company doesn’t have the land to let the birds roam outside at will.  Herbruck’s produces 42 million dozen eggs per year.  Another big producer in Florida – 5.2 million dozen eggs a year – says his houses are built to current federal organic standards and the new proposal will effectively make them useless, according to an article in Politico, a Capitol Hill news service.

Opponents of the proposed rule, which must be blessed by USDA Secretary Vilsack before it’s finalized, say the 2015 national battle with avian influenza – a conflict which cost the industry $3.3 billion, hit 210 farms in 21 states and saw nearly 50 million birds destroyed – is the best reason why outside access should be counterintuitive in a segment of the food industry which claims to be all about welfare.  Even USDA estimates the new rule would jump organic bird mortality from 5% of hens to 8% — that’s a 62% increase – and that increase would be “chiefly attributed to increased predation, disease and parasites from greater outdoor access.”

Thus Herbruck’s and others contend the rule prevents organic producers from using common sense in guarding against disease exposure.

However, the dire predictions of the big guys in Michigan and Florida are falling on the deaf ears of supporters of the new proposal.  This welfare approach has been rattling around for five years or more, so why didn’t the big guys adapt?   If a producer doesn’t want to meet the new standard, it can get out of organic and switch to cage-free – at a lower price point – say supporters.  Besides, it may take a year or so, but those big guys will be replaced by smaller operations already meeting the outside access requirements and eager to become the new big guys.

Said an unidentified source in the story penned by Politico:  “Any crack in the door for growing into the market will fill quickly…they are ready and willing to increase production to fill that gap.”

It appears to me that when all of the dust settles, these “welfare” rules are less about animal wellbeing and a lot about manipulating the marketplace to “protect the organic premium,” and while conventional agriculture confronts this threat routinely, it’s usually the little guys who take the hit first.  In organics, apparently, the big guys fall first when ill-advised standards are imposed.

And the consumer pays the “premium.”