Organics: Fad or For Real Dr. Rick A. Phillips, D.V.M., M.A.M, Diplomate ACPV Director, Worldwide Technical Service in the Poultry Business Unit of Schering-Plough Animal Health

Production and marketing of agricultural products identified as úorganicî began nearly four decades ago, but organic poultry is relatively a newcomer in this marketplace.

Officially, organic chicken production in the U.S. can be accredited to Allen Shainsky, the founder of Petaluma Poultry in Sonoma, California. On a visit to France, in the summer of 1986, Shainsky was introduced to European poultry husbandry. Upon his return to the states, Shainsky created a diet for his chickens very similar to the feeds used in the U.S. in the 1950's. The feed was based on vegetable proteins of corn and soy with no animal byproducts, animal fat or antibiotics. By 1988, Shainsky began working on the creation of national standards for organic meat and poultry. In 1989, Petaluma Poultry raised its first organic chickens. The USDA immediately declared that organic labeling was not permitted and forced the organic chickens off the market. One year later, in January of 1999, USDA, Secretary Dan Glickman announced the decision to allow the use of a certified organic label on meat and poultry. By May of that same year, Petaluma Poultry became the first poultry integrator to market a certified organic chicken in the U.S.

So what exactly is úorganicî? Organic agriculture is an ecological production management system that promotes and enhances bio-diversity, biological cycles, and biological activity. It is based on animal use of off-farm, synthetic inputs.

This definition of úorganicî sounds nice and harmonious, but what does it mean? Because of these vague definitions there was considerable variation in practices, attitudes, and philosophies of those involved in the organic movement.

Because of these differences, organic producers recognized the need for uniform standards. In general, organic is a labeling term that denotes products produced under the requirements of the Organic Foods Production Act (OFPA) passed in 1990 as part of the Food, Agriculture, Conservation, and Trade Act. The OFPA mandated the Secretary of Agriculture to establish an organic certification program for producers and handlers of agricultural products who use organic methods. The responsibility for developing the National Organic Program was assigned to USDA's Agricultural Marketing Service (AMS). Currently, the AMS is finalizing the regulations and standards for the use of the term úorganicî on the labeling of food products. The official regulation, a 560-page document, will be released on October 21, 2002.

Basically at this time, in order for a chicken to be a certified organic chicken, the following standards must be followed:

1. Poultry or edible poultry products must be from animals that have been under continuous organic management beginning no later than the second day of life

2. Each bird must be fed certified organic feed from 2-days of age to the end of its life. Organic feed contains grains and soybeans that were grown in soil that has been free of pesticides and chemical fertilizers for a period of three years. All fed ingredients must be certified as acceptable by the third party certifier.

3. A third party certifier must verify:

   • Growing farms and farm plan used in growing birds

   • Feed mill where organic feed is mixed and equipment that delivers the feed

   • Processing plant where birds are processed and cut up

4. A complete audit trail must be maintained at all times that can trace a chicken from the time it was a hatching egg through growing, processing and distribution to the end user.

5. No drugs or antibiotics of any kind can be used in the growing organic birds.

6. All organic chickens must have outdoor access

U.S. organic industry sources estimate the annual growth rate of U.S. organic agriculture production at more than 20 percent annually since 1992. The total U.S. sales for 2003 of organic agriculture are forecasted to reach $13 billion. Organic crop products account for over 60 percent of the U.S. domestic market. Organic dairy and meat products are expected to capture 15 and 5 percent, respectively of the total domestic organic food sales by 2003. The U.S. is the largest consumer and the second largest producer of organic food products after the EU.

With that in mind, organic crop and livestock production together still only accounts for little more than 1 percent of the total U.S. production. High barriers to entry, such as large start-up and managerial costs; smaller, profit limiting economies of scale; and risks of shifting away from conventional farming, have prevented more widespread adoption of organic farming.

According to a recent USDA Economic Research Service study, certified organic production in the United Sates more than doubled from 1992 to 1997, bringing total land converted to organic production systems to more than 1.3 million acres in 49 states. Approximately two-thirds of this farmland was dedicated to growing crops, with the remaining amount used as pasture and rangeland.

Organic poultry and meat production had not experienced the same growth rates as dairy and eggs and, in fact, declined over the 1992-1997 period. This was partly due to the industry's inability to label meat and poultry as organic until February 1999. Currently, the food crops and non-meat animal foods (eggs and dairy products) are regulated by the Food and Drug Administration (FDA) and have been allowed to carry an organic label throughout the 1990's. A recent Organic Trade Association 2001 manufacturers' Market Survey of its members indicated that sales for organic poultry and meat grew 151 percent from 1999 to 2000, and were projected to grow 89 percent from 2001 to 2002.

Even with this sudden rapid growth in organic poultry production, the current organic poultry market is still less than 0.5% of the total U.S. domestic poultry market. This has not stopped large U.S. integrators such as Tyson Foods and Fieldale Farms from developing there own line of organic products. The major drive for these large integrators to enter the organic market is to maximize product mix. Retail customers like to buy a full line of product from a single producer. Even though the organic poultry sales may be a very small fraction of these large integrators total sales they remain important to the retail customer because of product diversity.

The entry of the large producers in this market has caused quite a stir. For example, Georgia's Congressman Nathan Deal recently asked the USDA to loosen organic standards to allow farmers to feed poultry conventional, non-organic grain while labeling their product úorganically grown.î Other southeastern states are requesting modification of the outdoor access requirements. Petaluma Poultry, perceiving the attempts of the larger companies to lower the organic standards as a major threat to the organic market, have opposed their efforts.

No matter how strong the smaller organic poultry companies protest, the inevitable is going to happen. The larger integrators will continue to become major players in the organic market to help strengthen their product mix and to continue to satisfy the ever increasing retail demands. Or as Yvonne Thaxton, the executive editor of Poultry, puts it, úLooking for creative ways to increase consumption both locally and internationally sometimes means looking for big opportunities in smaller places.î