Washington Insider-- Friday

New Label War: Organic vs Non-GMO

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

Cotton Industry Pushing for Cottonseed to be Declared ‘Other Oilseed’

Representatives of several parts of the U.S. cotton industry are pushing for USDA to declare cottonseed an “other oilseed” and make it eligible for the Ag Risk Coverage (ARC) and Price Loss Coverage (PLC) safety net programs created under the 2014 Farm Bill. The views were presented to lawmakers in a hearing Wednesday before the House Subcommittee on General Farm Commodities and Risk Management.

Language in the 2014 Farm Bill allows the Secretary of Agriculture to designate “other oilseeds” to be eligible commodities for the safety net options. Without this designation, Southern Cotton Growers President Kent Wannamaker said, “I think cotton is going to leave the United States if we don’t get this.”

U.S. cotton prices are “at the mercy of the Chinese government’s decisions with their huge stockpiles,” said Shane Stephens, vice chair of the National Cotton Council. U.S. cotton acreage is at its lowest point in 30 years, exports the smallest in 15 years, and prices are at levels not seen since the 2009 recession.

Cotton producers are being hit by low commodity prices, rising input costs and distorted markets, subcommittee Chairman Rick Crawford, R-Ark., said. “Most farmers in America face these challenges at some point, but cotton farmers are trying to weather all of these conditions at once, in their severest form, and without the benefit of an effective farm safety net. I am hopeful Secretary Vilsack will use his authority to take administrative action like he has in the past to help cotton farmers,” he noted.


Biodiesel Tax Incentive Update

The issue of the biodiesel tax credit remains a hot topic in ag policy circles in Washington and around the country.

Two tracks are still viable. First would be a major tax extender package, which could include making some provisions permanent and extend others. The “backstop” plan is the tax extender package readied by House Ways & Means Committee Chairman Kevin Brady, R-Texas, in the event that the larger package fails to materialize.

The omnibus spending plan is also still an option. Depending on the outcome relative to the larger package of tax provisions, the tax extenders still could be melded into the omnibus spending package for Fiscal 2016 lawmakers are still working on.

As for the producer versus blender credit for biodiesel, this issue remains murky in terms of the outcome. Some biodiesel-producing companies are signaling to investors that they see the credit shifting from a blender credit as it is now to a producer credit. The latter has been proposed by Sen. Chuck Grassley, R-Iowa, who is seen as key to biofuels issues in Congress.

While the biodiesel incentive is still expected to be retroactively extended for 2015 and through 2016 and potentially beyond, any shift to a producer credit would not be retroactive for 2015 and would most likely not start until April 1, 2016.

On the trade front, Argentine biodiesel producers are saying they will fight any shift in the credit to a producer credit, a provision aimed at preventing foreign-produced biodiesel from qualifying for the $1 per gallon incentive. The Argentines will likely lobby US lawmakers to prevent the shift and if that would fail, action on the trade front could be their next step. And, it would likely take the form of a WTO challenge.

Washington Insider: New Label War: Organic vs Non-GMO

The so-called “healthy” food brands have opened a new front in the battle over labels, the Wall Street Journal opined this week. Various groups of healthy food makers have attempted to cast doubts on other food ingredients for years, but now they are turning on each other, the Journal says.

It notes that sales of foods marketed as free of genetically modified ingredients are outpacing those labeled “organic,” to the dismay of some organic companies and farmers who invest to meet government standards.

The organic industry is fighting back with marketing campaigns touting that its foods, in addition to being made without genetically modified organisms, also abide by other tough requirements. For example, USDA requires that producers also avoid use of most synthetic pesticides and certain fertilizers and that animals used to produce organic food can go outdoors year-round and aren’t given hormones or antibiotics. “Organic is non-GMO,” said Cathy Calfo, executive director of California Certified Organic Farmers, a trade group that recently started promoting a new label to highlight the difference. “Non-GMO is not organic.”

It is true that the government does set standards for organics but not for Non-GMO labels, the Journal points out. For example, the Non-GMO Project, a Bellingham, Washington, nonprofit doesn’t prohibit the use of synthetic pesticides on crops used as ingredients or ensure animal-welfare standards. But it claims “more stringent testing.”

The distinctions are important market factors, the Journal says. Earning the Non-GMO Project’s imprimatur or USDA’s organic certification can take months or years, depending on the item and the applicant backlog. Each can cost thousands of dollars initially, and must be renewed annually. Prices for organic and non-GMO ingredients also are significantly higher than regular ones.

GMOs have become a focus of skeptical consumers recently in spite of the fact that US government agencies and international bodies, including the World Health Organization, long have said that they are safe. Even so, the Journal suggests that it is surprising that non-GMO food sales are surpassing those of certified organics, which also are free of GMOs.

Non-GMO sales are expected to top $13 billion this year, reflecting a growth rate that is “five times the rate” for certified organics, which was nearly $11 billion for the 52 weeks ended Nov 1. Last year, foods labeled non-GMO claimed 3.7% of food sales in U.S. grocery stores, more than the 3.5% for organic items, according to Nielsen NV. About 49% of consumers polled by Nielsen called non-GMO an important factor in food-and-beverage shopping, versus 47% for organic.

Organic-food companies say many consumers are confused about the labels’ meanings. The Journal cites Vernon Peterson, owner of Abundant Harvest Organics in Kingsburg, Calif., who says, “Even though we [are] a 100% organic company, I get a question or two a week, ‘is any of your produce genetically modified?’” he said. “We see the consumer putting a higher value on the non-GMO than the organic label.”

Megan Westgate, executive director of the Non-GMO Project, said “…we’re careful not to undermine consumer trust in the organic label.” She said consumer confusion around the definition of organic predates the Non-GMO Project, but acknowledged that some organic-food producers have expressed concerns about her group infringing on their turf.

Rising non-GMO food sales are “a two-edged sword,” Oren Holle, a longtime organic farmer in Bremen, Kansas, told the Journal. He worries about “a perception out there that if I buy the non-GMO it’s a little less costly when you run up to the checkout counter, and it’s just about as good.”

Holle last year participated in an online-video campaign trumpeting organic food’s purported superiority over items that are only non-GMO. The Organic Farmers’ Agency for Relationship Marketing Inc., a cooperative that funded the campaign, is now discussing marketing materials that brand organic as “the real non-GMO.”

Peterson hopes the new label, which he has added to Abundant Harvest products, will clarify things. “When you have a confused public, it’s never good,” he said.

So, it will be interesting to watch this battle play out. Critics accuse organic producers of hyping the label in order to support higher prices for food that actually provides little in the way of health benefits. Now, it seems the non-GMO label may be attempting to lead consumers to believe their product is as healthful as organic but less costly to buy.

Right now, it seems that the two brands are confusing, and that the one that can offer the best prices likely will build the greatest market share. Still, this particular fight has just begun, and it will be important to see how it plays out in the longer run, Washington Insider believes.

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