The ROI On An Organic Checkoff [Opinion]
June 29, 2015 
Richard Jones
Organic agriculture is more profitable for farmers than conventional agriculture, according to a recent study published in the Proceedings of the National Academy of Sciences. This news may not seem surprising. Organic growers typically see a nice premium for their fruits and vegetables, and deservedly so, since the costs of production are often significantly higher. Without those premiums, many organic growers would find the additional investment just isn’t worth the return.
According to the study, organic farmers receive a premium of 29%-32% over conventional prices, well above the 5%-7% it cites as needed to break even.
When things are going that well you might think people would be pretty happy just maintaining the status quo. But the Organic Trade Association (OTA) is doubling down on that success, leading an effort to create a national checkoff program for organics.
OTA CEO/Executive Director Laura Batcha presented the concept to attendees at United Fresh 2015 in June, and said the bottom-line objective of the Generic Research And Promotion Order For Organic — GRO Organic — is to grow domestic production and acres, research pest management solutions, and clarify market confusion among consumers.
The costs of the program — that’s always the first question with these things, right? — would be borne throughout the supply chain, Batcha said. All mandatory organic certificate holders including producers, handlers, brand manufacturers, co-packers and importers with a gross organic revenue of more than $250,000 a year would pay the assessment. Organic producers would have the option of paying 1/10 of 1% of either Net Organic Sales or Producer Net Profit. The expectation is GRO Organic could raise as much as $36 million per year to help grow the industry.
At least 50%-75% of the checkoff funds would be allocated specifically for research or for other activities that work hand-in-hand with research, such as technical assistance and disseminating research findings, Batcha said.
GRO Organic would represent all organic products (not just produce), and would have to be renewed through a new referendum every seven years in order to continue. All research, innovations, and inventions resulting from the checkoff would remain in the public domain.
That last part is important, because some of the biggest challenges organic fruit growers face involve problem pests that can’t be controlled easily with existing tools. Organic producers who lost the use of antibiotics for fire blight control last year can attest to that. Anything we can do to improve the science and help growers produce quality crops more effectively is worth investing in.
I’m a little less certain about the ultimate benefits on the promotion side. There is debate about how effective commodity promotion programs are in increasing consumption. And developing new pest control tools may be an easier hill to climb than re-educating consumers about things like the difference between “natural” and “organic” products — especially when a growing number already seems to love organic produce as they understand it.
The organic segment as a whole is flying high, and that’s not likely to change. As an organic grower, the question is whether the individual return will be worth your 1/10 of 1% investment.
Subscribe Today For
