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Press Release: USDA Asked to Bring Organic Food Regulations into Compliance with 1990 Law
North Carolina Contract Growers Association Meeting Provides Insight on Grower's Rights and Economic Future
Growers Case Against Pilgrim's Pride Faces New Challenges
New RAFI Publication Provides Clarity on Commodity Process
Global Crop Diversity Trust Announces New Executive Secretary

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USDA Asked to Bring Organic Food Regulations into Compliance with 1990 Law
(Press Release)

Court Ruling Finds Some Current Regulations Violate ‘Organic Foods Production Act’

WASHINGTON — Six agriculture, retail and food safety groups have petitioned the U.S. Department of Agriculture (USDA) to update organic food labeling rules following a judge’s ruling in the case of Harvey v. Johanns, which found that existing regulations concerning the use of synthetic substances in food products labeled “organic” and the feeding of new dairy cows violated the Organic Foods Production Act (OFPA) of 1990. The six petitioners are asking for a number of regulatory changes designed to ensure the long-term integrity of the “organic” label, to create an equitable and consistent standard that aids dairy farmer transition to organic, and to bring the current National Organic Program (NOP) regulations into compliance with the federal court’s January 2005 ruling.

“The Organic Foods Production Act is strong as it stands and needs to be defended against weakening through interpretation or unwarranted tinkering,” said Joseph Mendelson, legal director for Center for Food Safety. “Our petition to USDA is intended to resolve inconsistencies between the law and the organic program regulations without opening up the law to wholesale changes. Regulatory changes to the National Organic Program should be pursued and exhausted before any attempt is made to amend the law.”

In October 2002, just days after the rules governing organic under NOP were implemented, Maine blueberry farmer Arthur Harvey filed suit against USDA claiming that the USDA regulations governing foods labeled “organic” contravened several principles of the OFPA. Having initially lost on all counts, Harvey prevailed in January 2005 when the Court of Appeals ruled in his favor on the three counts finding:
Synthetic substances are not permitted in processing of items labeled as “organic,” and only allowed in the “made with organic” labeling category. Provisions allowing up to 20-percent non-organic feed in the first nine months of a dairy herd’s one-year conversion to organic production are not permitted. All exemptions for the use of non-organic products “not commercially available in organic form” must be reviewed by National Organic Standards Board, and certifiers must review the operator’s attempt to source organic.

“We are calling on USDA to ensure the integrity of food products labeled organic,” said Jay Feldman, executive director of Washington-based Beyond Pesticides. “As greater numbers of people flock to food produced without synthetic chemicals, it becomes ever more essential to guard our organic standards against constant and corrosive reinterpretation.”

The petition filed today by the Center for Food Safety, Beyond Pesticides, National Campaign for Sustainable Agriculture, National Cooperative Grocers Association, National Organic Coalition and Rural Advancement Foundation International – USA, provides the USDA with specific corrections that will correct the illegalities currently found in the USDA regulations.

“Both consumers and retailers whom we represent view the outcome of the Harvey lawsuit as an opportunity to strengthen the regulations within the USDA’s National Organic Program and to further differentiate organic products in the marketplace,” noted Robynn Shrader of the National Cooperative Grocers Association.

Michael Sligh, from Rural Advancement Foundation International, and founding chair of the USDA’s National Organic Standards Board concluded: “We believe that consumer and farmer rights and expectations under OFPA should be preserved and defended, and that the organic industry must be willing to adopt practices that maintain the integrity, high standards, and market viability of the organic label in the long term.”

Petitioners are asking USDA to make the proposed regulatory changes complete within 12 months of June 9, 2005.

Contacts:
Center for Food Safety, Joe Mendelson, 202-547-9359
Beyond Pesticides, Jay Feldman 202-543-5450
National Campaign for Sustainable Agriculture, Liana Hoodes, 845-744-2304
National Cooperative Grocers Association, Robynn Shrader, 319-466-9029
National Organic Coalition, Steve Etka, 703-354-3303
Rural Advancement Foundation International USA, Michael Sligh, 919-929-709

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North Carolina Contract Growers Association Meeting Provides Insight on Grower’s Rights and Economic Future

Forty plus growers were able to ask questions and voice concerns directly to key USDA officials at the North Carolina Contract Growers’ meeting in Carthage, North Carolina. The agenda included a question and answer session with JoAnn Waterfield, USDA Deputy Administrator of Packers and Stockyards; followed by presentations by Dr. Bob Taylor, Agricultural Economist of Auburn University, Dan Campeau, NC Extension Agent counties and Kelly Tidwell of Texas, lead lawyer on a class action suit against Pilgrim’s Pride Corporation. Farmers started the meeting by asking representatives from USDA questions to clarify their rights as contract farmers.

Question and Answer with USDA
“Is it a fair practice that growers with new chicken houses get paid more per pound?” asked one grower. Growers with chicken houses older than 3-5 years wanted USDA to address the issue of forced upgrades. They stated that growers get a premium just for having different/upgraded equipment - not for performance-based criteria. JoAnn Waterfield stated USDA is currently conducting a preliminary investigation on this issue, based on an influx of calls from growers. Officials will be taking in all factors into account in their investigation, looking at specifics like feed, chicken weights, and physical structure of retrofitted houses. Waterfield expects USDA will make an announcement based on its initial findings sometime in mid-June.

Growers also raised questions about their position as contract employees, they are confused by their inability to get employee benefits such as health insurance when they are under the same constraints that employees would face. “They (the company) control everything I do with those birds. They tell me when to open the houses, and they supervise me in my work. For me if you’re being directly supervised you’re an employee.” Others in the audience noted that the OK Attorney General has issued an option that contract poultry farmers are in fact employees of the company, but to date no court has tested the actual nature of the relationship of the contract farmer and the company. Waterfield acknowledged this is a concern for growers and her department as well.

Another issue raised by growers is their fear of retaliation if they report problems to USDA. Waterfield encouraged growers to call her office at USDA when they have problems. She recalled a recent case when a grower called after being terminated from his company. Representatives from USDA investigated the case, and were able to get the grower back on chick delivery. Since getting birds back, the grower has not reported any discrimination from the company.

Economic Outlook
In the second part of the meeting, growers were given the hard economic facts through Bob Taylor’s agricultural economist’s presentation. Basing his numbers on Alabama Farm Analysis Records for poultry operations on four 20,000 square foot houses, Taylor came up with the following financial analysis. Growers were getting a negative rate of return on equity, management and were bearing the risk for contract production. The grower’s labor was valued at only $6.50/hour and no benefits. “A poultry company can earn a 15 percent to 30 percent return on its investment, while a contract grower would be better off, making $6.50-an-hour and putting the amount of his down payment in a low-interest-paying CD,” Taylor stated.

“I was going to leave my farm to my kids,” one farmer stated mid-presentation, “but it would be considered child abuse.”

Taylor also cited a 2003 analysis by Dan Cunningham -- a University of Georgia agricultural economist – estimated that cash flow, adjusted for inflation, for an average broiler grower dropped to $5,965 in 2003 from $12,065 in 1993.

Taylor has also had the ability to analysis a large sample of data collected by a private agricultural reporting firm by most US poultry integrators. The integrators provide this firm with very detailed information on everything from the quality and performance of each flock, and integrator expenses – including grower’s pay. In return, the integrators receive periodic comprehensive reports allowing them to compare their efficiency and profitability to national industry performance down to their regional competitors. Since the data is privately owned and not public information, Dr. Taylor can only speak in generalized terms and not provide specific examples or publish detailed analysis.

What became evident as Dr. Taylor began studying this large composite of poultry statistics and reports was that the poultry contracts are, for the most part deceptive. “The net income information presented by the integrators does not account for economic depreciation and other costs,” Taylor stated. In general, the “base pay” reported in the contract will be significantly higher than the actual pay most farmers can expect to earn over the life of the contract.

But it is difficult to impossible to provide growers with reliable information on actual grower’s pay. Unlike almost all other agricultural commodities no published collected and reported data is available on the price the farmer is actually receiving at any given time.

Furthermore, grower’s pay is based on a complicated formula which as maintained above, can be easily manipulated or skewed such that actual pay differs significantly from the advertised “basis” or “base pay.”“Both sides (growers and integrators) need information,” Taylor said, “because asymmetric information leads to inefficiency and unfairness. Integrator’s have the ability to influence pay of individual growers by the integrator’s breed/strain, quality of chicks, feed, age, days out, etc. Assignments may be random—probably chaotic—but potential exists for the integrator to instantly bankrupt the grower.” Taylor believes the following changes would help correct this in-balance and provide growers a better perspective of their economic prospects. He would like:

States or geographic regions to provide an average grower’s pay on a periodic basis;
Have organizations develop programs to educate growers about the complex economic and financial issues dealing with investments in poultry houses;

Increase flock information on settlement sheets given to growers, including breed/strain of chicks, amount of days out, condemnations. Most intergrators have hundreds of details but share a small percentage with the growers.“A lot could be done if both sides had all the information,” Taylor stated. He believes that intergrators would make just as much money with fair practices.

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Growers’ Case Against Pilgrims Pride Faces New Challenges

Kelly Tidwell, lead lawyer for a class action suit against Pilgrim’s Pride talked about the case and its current challenges. The three growers, Cody Wheeler, Don Davis, and Davey Williams have accused Pilgrim’s Pride of discriminatory and deceptive conduct. They alleged that Pilgrim’s Pride executives were given more favorable conditions to grow birds than the growers. What is unusual about the case, it that all three growers are consistently top producers, based on Pilgrim’s Pride own accounts.

Under the Packers and Stockyards Act, it is illegal for packers or processors to engage in unfair or deceptive practices. Tidwell, speaking at the NC Contract Growers Associations Meeting, stated that company’s records show Mr. Pilgrim (an executive with Pilgrim’s Pride) was paid $17.50 cents per pound for his broilers. If Cody Wheeler would have had the same arrangement as Mr. Pilgrim’s pay sheet on 9/13/99, Wheeler would have received a net payment of approximately $109,825.73 for one flock, instead of the $27,492.28 he did receive. In response to the grower’s allegations, Pilgrim’s Pride argued that Mr. Pilgrim had to take greater financial risks. Unlike the growers, Mr. Pilgrim must pay for all the medicine, feed and chicks. Tidwell discounts this claim, stating that the executives including Mr. Pilgrim did not have to pay for the medicine, feed or chicks upfront. He explained that the executives were given sixty days terms, letting them reimburse the company well after they received payment for raising chickens.

In the current process, the growers are reliant on the company for the chick’s feed, delivery and weight measurements. The grower provides the housing, but can be ordered to make physical changes by the company at the farmer’s expense. The growers don’t believe they have enough of a say in the production process, and feel it has led to unfair business practices.

The growers would like to be able to test feed if their chickens’ weight becomes an issue. The company has refused. The growers with 12 chicken houses want to put scales in their houses to document their chickens’ weight before they leave the farm. The company has said no.

Tidwell said that employees of Pilgrim’s Pride are not under the same constraints. Employees have more access to information, are not ranked in the growers’ system and are paid more for their chickens.
As the case continues through the court system, Pilgrim’s Pride has initiated internal changes. The company has asked all Alabama farmers to sign a new contract with binding arbitration clauses that would prevent them for fighting any conflict with the company through the courts. Effectively the farmers would be barred from joining the current class action lawsuit or taking Pilgrim’s Pride to court for any future unfair practices.

Tidwell states that farmers refusing to sign this new contract are being told they will not get new chicks. These farmers, already in significant debt after buying the houses and other production equipment, can not risk losing their contracts. One farmer signed a deposition that stated the integrator would not deliver his next batch of chicks if he did not sign the new contract. Tidwell has asked US District Judge David Folson, who has oversight over the case, to send notices to all Pilgrim’s Pride farmers informing them about their rights.

Asked about his prediction on the outcome of the case, Tidwell stated that “my guess is that we’re going to die.” “But someone (like in the Battle of Normandy) has to be the first guy on the beach. If we just keep coming, someone is going to make it. So we decided to give it a shot.”

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New RAFI Publication Provides Clarity on Commodity Process

Since the passage of the 2002 farm bill, groups from all points on the political spectrum have criticized the billions of dollars that the government spends in commodity payments. However, for many, the nature of these payments remains a mystery. Understanding these payments is especially important as we prepare for discussions of commodity payments for next farm bill in 2007. In response to this need, Scott Marlow of RAFI-USA has created the Non-wonk Guide for Understanding Federal Commodity Payments.

This user-friendly guide explains the payments that farmers receive under the commodity title of the 2002 farm bill. Through this guide, the reader is provided step-by-step navigation through the commodity system. At the end of the publication, the readers can apply their new knowledge to the farm model’s crop and payment budget.

The publication is available in PDF format from the Publications page at the RAFI-USA website (www.rafiusa.org) or in print version by mail from the RAFI-USA office.

*(For the uninitiated, a “wonk” is the policy equivalent of a computer nerd or math geek.)

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Global Crop Diversity Trust Announces New Executive Secretary

The Interim Panel of Eminent Experts has announced the appointment of Dr. Cary Fowler as the Global Crop Diversity Trust’s Executive Secretary. Cary Fowler is an American National who has devoted the past 30 years of his career to the conservation and use of crop diversity. He was formerly Program Director for the Rural Advancement Fund, a US-based NGO, engaged in plant genetic resources education and advocacy.

Dr. Fowler led the secretariat of the International Conference and Program on Plant Genetic Resources at the Food and Agriculture Organization (FAO) of the United Nations, which resulted in FAO’s first ever global assessment of the state of the world’s plant genetic resources and the adoption of the Global Plan of Action for crop diversity conservation and use by 150 countries at an international conference in Leipzig in 1996.

The Global Crop Diversity Trust was established to help eradicate poverty and sustain our environment, through ensuring the conservation of the crop diversity that underpins food security. Cary Fowler will be leading a global effort to raise $260 million dollars to set up and endowment for the world’s major seed banks – so that they will operate without financial crisis, and in perpetuity. He will take over the position of Executive Secretary on August 1, 2005.