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Update on Origin of Livestock

By Ed Maltby, NODPA Executive Director

Following conference calls with the National Organic Program (NOP) and others, it is now clear that there will be no Final Rule for Origin of Livestock (OOL) this year because it will not make it out of Agency review. Every Federal regulation is subject to internal review at the agency level before being released to the Executive Office of Management and Budget (OMB) for a final review by the administration. Although we are still waiting for an official announcement, NOP has indicated that the USDA Office of the General Council (OGC) has said there are problems with the Final Rule, as proposed, that might cause it to be rejected by OMB and may lead to lawsuits.

USDA has not published any decision on next steps yet but they really have only two choices: withdraw the current proposal for a Final Rule and publish another Proposed Rule or just let the regulation lapse again and leave the confusion and inconsistencies that are currently in effect. NOP has said they are committed to publishing a regulation.

The areas of concern that the OGC raised are the following:

  • In the Organic Food Production Act of 1990 it clearly states that conventional dairy cows need only to be under organic production for 12 months before they can sell organic milk. (7 U.S.C. 6509(e)(2)) Except as provided in subparagraph (B), a dairy animal from which milk or milk products will be sold or labeled as organically produced shall be raised and handled in accordance with this chapter for not less than the 12-month period immediately prior to the sale of such milk and milk products. This has always been an issue since 2002 but it has never been raised as being prohibitive to regulation that further defines the issue in previous Advanced Notice of Proposed Rulemaking (ANPR) and Proposed Rules that have been published for public comment on the Federal Register for the last 15 years.
  • OGC and NOP maintain that it is inconsistent with the NOP certification process that an individual producer is the recipient of the one-time exemption. NOP and OGC maintain that certifiers do not track producers they track certified operations. They question whether they can enforce a regulation that is based on tracking the actions of a producer. They have suggested that the one time exemption to “transition dairy animals into organic production only once” should rest with the certified operation. From the NOP definitions of terms:
    • Certification or certified. A determination made by a certifying agent that a production or handling operation is in compliance with the Act and the regulations in this part, which is documented by a certificate of organic operation.
    • Certified operation. A crop or livestock production, wild-crop harvesting or handling operation, or portion of such operation that is certified by an accredited certifying agent as utilizing a system of organic production or handling as described by the Act and the regulations in this part.
    • Producer. A person who engages in the business of growing or producing food, fiber, feed, and other agricultural-based consumer products.
    • Person. An individual, partnership, corporation, association, cooperative, or other entity.
  • NOP has suggested that they need to change the Proposed Rule to read that once a conventional dairy animal has been transitioned from conventional production it cannot be sold as a certified animal for producing milk. Currently, there is confusion over the status of a transitioned dairy animal about whether they can be sold or transferred to another operation as certified for producing organic milk. Currently, they cannot be sold for organic beef so they have to be tracked by certification agencies right up to their slaughter date.

Over the last 15 years of comments, NODPA has always advocated for a level playing field and strict interpretation of the one-time transition exemption be tied to a producer transitioning their whole herd and their farm to organically certified production (“a conversion strategy for an established, discrete dairy herd in conjunction with the land resources that sustain it” from the preamble of the December 21, 2000 Federal Register National Organic Program Final Rule) This definition is very different from a group of conventional dairy heifers and cows brought together to transition to organic at a new location. This provision enables the producer to maintain the quality and bloodlines they have bred over the years while they transition their herd to organic certification. This interpretation of the exemption maintains the integrity of the organic seal by severely limiting the amount of transitioned milk in the market; ensures that transitioned animals will slowly disappear from the total organic herd; stops continuous transition; and increases the demand for last third of gestation organic dairy replacements. It also safeguards the supply side of organic dairy from being exploited by an influx of rapidly transitioned organic milk that comes from conventional cows that up to 12 months ago were being treated with antibiotics and artificial hormones, and with no grazing required.

As the organic dairy herd has grown, more producers and organic advocates have grown to accept the necessity of a strict interpretation of the one-time exemption. Processors have been slow to support more restrictive transition requirements and some certifiers are still allowing continuous transition of conventional dairy animals, a throwback to the old 80-20 transition requirements and the Harvey lawsuit of the early 2000’s. The frustration grew amongst producers so much so that the Western Organic Dairy Producers Alliance (WODPA) pushed for a change to OFPA. NODPA was supportive of this position and has voted several times at their annual meeting for a change to OFPA.

NOP has also become more flexible in its willingness to allow many different and contradictory interpretations from its certifiers, so much so that they now refuse to support any non-compliances tied to the onetime exemption. In 2008, NOP included provision for OOL regulation in its Pasture Rule ANPR. Any OOL provisions failed to make it into the Final Pasture Rule as it was seen as too complicated to mix the two. With the passage of the Pasture Rule in 2010, then USDA Deputy Secretary Kathleen Merrigan promised that the OOL would be next and a priority for their administration. When she left the administration, the importance of organic production became less of a priority. NOP withdrew their guidance document for OOL in 2013. A subsequent investigation by the Office of the Inspector General highlighted the many different interpretations of the one-time transition allowances and NOP committed to publishing a regulation to bring consistency. A Proposed Rule was published in 2015 and comments submitted. The new and current administration took the publication of a Final Rule off its work plan and it wasn’t until the collapse of the organic dairy market brought Congress to support and insist upon the publication of a Final Rule by June 15, 2020 that it became a priority for NOP. We now face the prospect of another Proposed Rule which hopefully might lead to a Final Rule in 2022.

A Critique of the two provisions now proposed by NOP

Transitioned animals

If there is a continuation of the onetime exemption to transition conventional dairy animals, NODPA does support the provision that transition dairy animals cannot be transferred to another operation or sold as organic dairy cows. Allowing transitioned animals to be sold or transferred to another operation as certified organic creates a loophole that will be exploited. Transitioned animals are, technically, not organic. A transitioned animal is certified to produce organic milk, but cannot be sold for organic slaughter, and shouldn't be allowed to be sold or transferred to different operations as an organic dairy animal. If culled from the herd, a transitioned animal should be sold into the conventional market. There will be no decrease in the asset value to the producer as the original value of the livestock was as a conventional animal and the producer has recouped any expense incurred in transitioning to organic certification through the premium received for organic milk produced.

A transitioned animal, by definition, did not have organic management throughout its life. It did not have equal inputs to an animal that was raised on organic feeds and management (virtually always more costly than non-organic inputs) its whole life and therefore should not have as high an economic value as dairy stock that are organic from the last third of gestation. To equate transitioned dairy animals to last third organic animals decreases the value those animals raised organic from the last third of gestation. It discriminates against the producers who had to invest more money in raising the last-third-of-gestation dairy animals and unfairly rewards the producer of transitioned animals. This unfair economic advantage of transitioned animals is what has driven the abuse of the current rule and it will continue to drive abuse of a new rule if the door on transitioned dairy replacement animals being equal to last third dairy animals is not tightly shut.

Tracking of transitioned animals versus last third of gestation animals will require no more record keeping or work for producers or certifiers than should already be done. Organic slaughter stock and dairy stock will become the same category, and transitioned dairy animals that will not be able to be sold as either organic slaughter or dairy replacement stock will be tracked separately. Those certified entities that transition conventional animals would be categorized as such on their certification certificate which would be part of the central database of the NOP. There does need to be standard certificates for transitioned animals for ease of recognition to prevent sale or transference to another operation. These certificates can be cross referenced to a central database similar to that used by pure bred breed associations to ensure effective enforcement.

Unfortunately, certifiers have many different criteria for what they require from organic dairies. If this becomes part of a new regulation, NOP will need to mandate better identification of dairy animals to ensure that they can be tracked as they move from operation to operation or to slaughter. Mandating RFID tags or injectable ampoules inserted at the time of transition or within 6 months of birth would be one answer to make enforcement possible.

If NOP wishes to more accurately reflect OFPA, it should change the definition of a Transitioned Animal to only a lactating dairy animal rather than the more loose definition of a dairy animal:

§ 205.2 Terms defined: The following changes (bolded) to the definition of transitioned animals in the 2015 Proposed Rule would more accurately reflect OGC concern;

  1. Transitioned animal. A lactating dairy animal that was converted to organic milk production in accordance with § 205.236(a)(2); offspring borne to a transitioned animal that, during its last third of gestation, consumes third year transitional crops; or offspring borne during the one-time transition exception that themselves consume third year transitional crops. Such animals must not be sold, transferred to another operation, labeled, or represented as organic slaughter stock, organic dairy animals or for the purpose of organic fiber.
Operation as the transitioning entity

NODPA accepts that if there was consistency in enforcement, a producer with an established conventional herd can use the onetime exemption to transition their whole herd in order to maintain the genetics and inbred immunities that the herd has developed. Because there is a lack of and/or inconsistent interpretation of the regulation there needs to be further depth to the definition of the entity using the onetime transition allowance. While we understand that the intent of tying the transition exemption to the producer is to prevent organic dairies from transitioning multiple herds, NODPA has advocated that the intent would be more directly and effectively accomplished by tying the transition to the “responsibly connected person(s).” This would not be a perfect situation but would work to the intent of the exemption as closely as is practical. Their certification certificate would identify them as having transitioned conventional animals which would be part of the central database of the NOP. It would require the creation of a central database of operations that has transitioned conventional dairy animals and any producer who is a partner, officer, director, holder, manager, or owner of 10 percent or more of the voting stock of an applicant or a recipient of certification or accreditation. There would also need to be a central database of transitioned dairy animals with as much detail as required by purebred breed associations.

Certified operation. A crop or livestock production, wild-crop harvesting or handling operation, or portion of such operation that is certified by an accredited certifying agent as utilizing a system of organic production or handling as described by the Act and the regulations in this part.

Tying the transition to the certified operation opens the door to owners of operations from individuals to families to investment capital partners/groups having multiple operations under multiple names transitioning conventional dairy animals at the same time. The same producer/person/corporation could make multiple transitions at the same location or at different locations by changing the name of the certified entity. The size of those operations may vary but could well be numbered in the thousands of animals all milked at the same location on a rotating basis.

To enforce this one-time exemption the certification certificate would identify the certified operation as having transitioned conventional animals which would be part of the central database of the NOP. Certifiers would then have to check the database of certified operations plus archived operations that are no longer certified to ensure that the named certified operation had never used the onetime transition. Clearly someone wanting to exploit this loophole would not use the same name twice. If the NOP ties a change to a certified operation as the holder of the onetime exemption with a regulation that stops transitioned animals being sold or transferred as organically certified, they would also need to track which animals were part of the operation at the time they were transitioned. This tracking would also have to record the owner of the animals if they were not owned by the transitioning certified operation to ensure enforcement. This would require significant investment in a central database and more mandated regular update by certifiers into the system.

Ownership of certified dairy animals

There is no reason why the certified operation would own the transitioned animals. There are many different examples where ownership of the operation, land and the animals is not in the name of the certified entity. The certified operation may not own any of the assets. The certified operation would just change its name and transition more conventional animals at another location and then transfer them to the main herd whose name has been changed to match the newly transitioned operation, probably some form of LLC. Under current regulation there is nothing stopping transitioned animals being sold or transferred to another operation and there is nothing tying location to the transitioned animals only the name of the certified operation. In order to enforce the one-time per operation transition, the USDA NOP would need a searchable central database of certified operations that have used the onetime transition provision that has the capability to archive operations that have allowed their certification to lapse. They would, of course, need complete records which identify each transitioned animal cross-referenced to the operation that they transitioned with and the owner of the animal.

More transitioned organic dairy animals in total organic herd

Using the certified operation as the transitioning entity will increase the number of transitioned animals in the organic dairy herd and continue the practice of transitioning conventional animals indefinitely. The ease and low cost of transitioning conventional animals rather than growing organic replacement animals from the last third of gestation will encourage start-up operations and those expanding to use the ‘one-time’ exemption. If there is a spike in demand for organic dairy there could be a large number of transitioning herds which will make a proportionally higher volume of transition milk in the organic dairy pool of milk. This would affect the consumers’ belief in the integrity of the organic seal and production methods. Those large scale operations that have economies of scale can afford to accept a lower pay price than smaller operations which do not have those economies. If you also give them the added advantage of not bearing the increased cost of rearing replacement from the last third of gestation, they will be able to manipulate the organic regulation to their economic benefit at the expense of small to mid-size operations.

Conclusion

There is a reason why we still do not have an Origin of Livestock Rule 18 years after the 2002 Final Rule. It’s complicated. Those that wrote OFPA wanted to jump start the building of an organic dairy herd with no knowledge of the dynamics of a future organic dairy industry, and there might have been some self-serving market-based thinking, as well. In 2020, the organic dairy herd is approximately 5% of the total US dairy herd, and growing enough organic dairy last-third-of-gestation organic replacements that there is no need for transitioning conventional animals to maintain adequate growth in organic dairy supply. Those that wanted the one-time whole herd transition allowance to encourage well established and genetically sound dairy herds to transition to organic are very justified in their thinking about growing organic production. Unfortunately, as organic grew and became more commercial and consolidated, those good intentions were abused. The exemption was interpreted to allow continuous transition, which is a cheaper and quicker way to expand the organic dairy herd than using last third of gestation replacements.

Perpetuating easy transition of conventional dairy is not the answer and threatens the very basic integrity of organic dairy. Increasing recordkeeping requirements and updating the databases to accommodate enforcement may be a long term goal but not immediately practical. Why do producers/certified operations use loopholes for their benefit? Cost is usually the answer. What if we levelled the playing field by charging a market fee to transition a conventional animal? If USDA AMS were to charge a $500 market fee to transition a conventional animal that would need to be under transition for a year, it would make buying last third of gestation dairy replacements more attractive. It would also jump start the expansion of the supply of last third of gestation dairy replacements by making the cost of the organic animal equal to the cost of transitioning a conventional one to organic. Yes, there are some problems to that but there is no easy or comprehensive solution if we are to have a growing and prosperous organic dairy industry.