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OPN Connect Newsletter 2 · March 8, 2017

What is GRO? Part II


Last week we introduced some of the basic components of the GRO Organic program, and its potential impact on the organic produce community. This week, in Part II, we dig further into the proposal, assessment and funding.

To briefly recap a few highlights from Part I:

  • GRO Organic is a proposed federal research and promotion marketing order to create an assessment of 1/10 of one percent for all certified organic products sold.
  • Growers and handlers with less than $250,000 in organic sales are exempt from participation.
  • Those who have existing commodity marketing orders can choose which to support.
  • Those who have existing state commodity promotional programs will owe both but receive a discount toward GRO.
  • April 19 is the deadline for comments to USDA about the proposed assessment.
  • If you missed Part I, click http://www.organicproducenetwork.com/news to catch up.
Nature Safe

Why is GRO Organic Being Proposed Right Now?

The Organic Trade Association actually started working on this proposal years ago and it was part of the 2014 Farm Bill.

According to the proposal as published in the Federal Register, the reasons the assessment was proposed to USDA include:

  • domestic supply shortages
  • challenges with viable pest management
  • market confusion
Organic Ag Products

The Order proposed to solve these challenges by:

  • developing and financing an effective and coordinated program of research, promotion and industry
  • information and consumer education regarding organic commodities
  • maintaining and expanding existing markets for organic commodities

How Much Money Will Fund GRO Organic Through the Assessment?

Estimated annual revenue is $30 million dollars.

Ocean Mist

GRO Organic Checkoff Assessment Worksheet Use the sample worksheet from the Organic Trade Association to learn how much you may owe if the Organic Checkoff passes. 

How Will This Money be Spent? Who Decides How it is Spent?

GRO Organic will be governed by a Board of Directors. The proposed Board will be made up of 17 members including:

  • eight U.S. producers from seven regions
  • seven U.S. handlers
  • one importer
  • one non-voting public member

Organic stakeholders will nominate board members and the Secretary of Agriculture will appoint members from among the nominees. At least once every five years, the composition of the board will be reviewed to ensure board seats:

  • for producers are representative of the geographic distribution of the volume of organic agricultural commodities produced in the U.S.
  • for importers are representative of the value of organic products imported into the U.S.
  • are made up of 50 percent producers and 50 percent handlers

Producers will select their regional representatives through direct balloting.

Spending assessment funds are proposed as follows:

  • at least 50 to 75 percent of the funds will be earmarked specifically for research or for activities that work hand-in-hand with research (ex. technical assistance and sharing research findings)
  • twenty-five percent of the assessment from producers will be required to be used for local and regional research. A Board sub-committee of regional seat holders will recommend how those funds will be used

When a processor handles product like an organic spring mix under a retailer's private label program who pays the assessment – the processor or the retailer whose brand is on it?

Retailers, as they are exempt from certification, will not be assessed under the GRO organic program. In the case of private labels packed for retailers, the final handler who must be certified (i.e. the packer in the case of fresh produce), will be assessed on gross organic sales minus cost of organic goods. The likely scenario is that the final handler will pass along the cost of the assessment to the retailer they are packing for, but the retailer themselves will not be writing a check for a direct assessment to the GRO organic checkoff program. If a retailer owns and operates a handling operation that must be certified (remember that on-site food preparation like delis and bakeries in grocery stores are also exempt activities and not covered under the GRO organic checkoff), then they would be assessed, but only because they are operating a facility that must be certified under the USDA organic regulations.

What if the Current Assessment for My Farm's Commodity R&P Order is More Than GRO Organic's Proposed Assessment of One-tenth of One Percent of Net Sales?

If you grow organic, you will be able to choose which marketing order your assessment will support.

What if like many produce farms, only part of their output is organic; the rest of their crop is conventionally grown? Currently, the organic part of their crop is exempt from the commodity research and promotion assessment, but if they are large enough, the conventional part is assessed. When GRO Organic is passed, will the grower get to pay a total crop assessment to either GRO or the commodity assessment? Or does the grower pay GRO for the organic sales and the commodity assessment for the conventional portion?

In this case, if the grower is required to pay into both the commodity assessment and the GRO organic checkoff because their production of both conventional and organic exceeds the de minimus exemptions for both checkoffs, then the grower can choose to either pay into both programs based on the respective programs' assessment schedules or pay into the commodity assessment exclusively based on combined sales of organic and conventional. If the grower sells less than $250,000 per year in organic, they can either opt into the organic program or elect to claim an exemption from the commodity assessment.

If Smaller Growers and Handlers Are Exempted and Those Growing/Handling Organic Commodities with an Existing R&P Order Can Choose Which They Will Support, Who's Left?

The media has reported that the bulk of the funding will come from California organic produce growers and handlers, specifically the packaged salad category.

Is there something I can do to show my support or my lack of support for this?

Yes, you can visit www.regulations.gov to provide your comments directly to USDA about the proposed GRO Organic Assessment. If you are a grower, handler or even a retailer of organic fresh produce, it is important that your voice be heard. As of mid-February, USDA has received 1,656 comments on their website about the assessment. 97 percent of these comments are from consumers. Only three percent of these comments are from growers and only one is from a retailer. Your comments are important!

Some Additional Facts:

  • There will be a referendum of all U.S. producers, handlers and importers if ten percent of those affected vote yes to holding the referendum.
  • If the referendum passes by a simple majority (501 out of 1000, ex.), the GRO Organic assessment will go into effect.
  • Every single certificate holder subject to an assessment will have a direct vote. There is no bloc voting.
  • Assessments will be made throughout the value chain: producers, handlers, processors & retailers (source: https://ota.com/resources/organic-check).
  • All of the research, inventions and innovations resulting from organic check-off programing will remain in the public domain.
  • A referendum is required every seven years to decide whether or not to continue the program.
  • If your organic produce sales are less than $250,000, you are officially exempt from the assessment, although you may opt to contribute voluntarily.
  • The deadline for submitting your comments about the proposed assessment has been extended to April 19, 2017. As a stakeholder, your comments are very important!
  • To submit comments online, go to https://www.regulations.gov/comment?D=AMS-SC-16-0112-0001 or mail to:

    Promotion and Economics Division
    Specialty Crops Program -- AMS – USDA
    1400 Independence Ave., SW, Room 1406-S/Stop 0244
    Washington, DC 20250-0244

  • Or submit by fax to (202) 205-2800.
  • Note for Comments: All comments should reference the docket number: AMS-SC-16-0112 - PR-A1 along with the date and page number of the Federal Register (Starting Printed Page 5746).

If you want to read the full GRO Organic proposed, visit https://www.federalregister.gov/documents/2017/01/18/2017-00601/organic-research-promotion-and-information-order. The proposal has 43 pages.

YOUR VOICE COUNTS! Make sure you submit your comments about GRO Organic to USDA by April 19! Just click: www.regulations.gov

 

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