The Mastodon in the Room: A Critique of the Proposed Organic Checkoff

By, Diana Kaye, Terressentials

Terressentials is a personal care company of artisan hand-crafters making a wide range of authentic certified organic products: organic skin care, hair care, organic baby products, and other goods made with certified organic oils, herbs and butters.

As a long-time, 25-year participant in the organic products marketplace, a USDA National Organic Program organic certified processor of personal care products, and a former Organic Trade Association (OTA) member, we’ve had the opportunity to observe how various industry created committees and promotions have worked, and how grant awards have been utilized. Too often, we’ve seen big businesses and their lobbying partners dictate the game plan using communal or grant funds to promote insiders and/or big business and it is usually the case that small businesses get no voice and no benefit.

From our perspective, as certified organic personal care product crafters, the OTA’s proposed Organic Check-Off Application, as it is currently written, raises a huge red flag. After reviewing the proposal, we’ve determined that this Check-Off would be a grossly unfair tax imposed upon small personal care processors, and we question the legality of its application to non-food personal care businesses.

In most Check-Off blog posts and articles, the primary focus of the Organic Check-Off discussion is focused on farmers and food producers and there has been no discussion of the exclusion of organic non-food businesses or how a Check-Off tax would benefit non-food, NOP certified organic personal care product companies. It is a major concern that there has been no mention of how this Organic Check-Off might affect and burden small NOP-certified organic personal care handcrafters.

There are a number of points in the OTA Check-Off proposal that have not been articulated in the many Check-Off discussions across the web that should raise serious concern for small non-food, NOP certified organic operations. Here are those troubling items from the OTA Organic Check-Off Proposal:

1. There is no specific exclusion for organic personal care producers (and there should be).
According to the OTA’s Organic Check-Off Application, “The proposed assessment rate from [sic] is one tenth of one percent of Net Organic Sales (i.e. total gross organic sales minus the cost of certified organic goods). This will apply to all assessed organic handlers, and importers of organic products. Small farms, with gross organic revenue of less than $250,000 annually, would be covered but not assessed…” AND “In order to administer the program, all mandatory organic certificate holders throughout the supply chain, including producers, handlers, brand manufacturers, co-packers, and importers, with Gross Organic Revenue in excess of $250,000 per year, would be subject to a mandatory organic check-off assessment.” (see page 16 in OTA’s Organic Check-Off Application)

Why is there no exclusion for certified organic personal care handcrafters? Why is the phrase “brand manufacturer” used, but not the NOP descriptor “processor?” This ambiguous terminology does not specifically exclude organic personal care product processors and this is a loophole no organic non-food business should be comfortable with. There is not one mention of personal care companies or personal care products in the OTA Check-Off Application or on the Gro Organic web site or in Gro’s Check-Off summaries. We can find no language anywhere that details how NOP certified organic personal care companies could benefit from a check-off program. In fact, ALL of the discussions surrounding check-off have centered around farmers and food. Why should a certified organic personal care business be forced to pay a tax that has been clearly described as intended for the promotion of organic commodity food products?

It seems that many have not considered that NOP-certified organic personal care product companies are part of the Check-Off discussion due to the crafty wording of the OTA’s proposal. Perhaps the omission of an exclusion for certified organic personal care companies from the Organic Agricultural Commodities Check-Off was an oversight on the part of OTA. However, in ignoring the lack of specificity pertaining to the role of organic personal care in the proposal, we are paving the way for OTA to impose another burden upon small organic personal care businesses.

2. The OTA’s proposed use of the funds collected from the Organic Check-Off program is unrealistic and seems insincere considering the organization’s failure to initiate or oversee similar efforts in the past.
According to the Program Objectives section of the Organic Check-Off Program Application, the OTA proposes that “The assessed funds would be dedicated to promoting organic goods and researching solutions to problems facing the organic industry. Initial goals of the program are to educate consumers about what organic is and its benefits, distinguish organic from other claims and unregulated seals like ‘natural’…”

However, the OTA does not have a reliable track record of advocating for strict adherence to NOP certification for personal care products. In fact, rather than strictly advocating for and encouraging commitment to the NOP for personal care companies, the OTA has directed the public to refer to other inferior and controversial industry-created “organic” certifications for personal care products, such as Ecocert and NSF, despite overwhelming evidence that NOP certification for personal care products is readily achievable.

It is important to note that the FDA does NOT recognize any non-governmental, industry-created or foreign “organic” certifications as acceptable for the labeling of personal care products making organic claims. Yet for years, OTA and far too many of its personal care industry member partners have failed to acknowledge the NOP regulations and the FDA organic personal care product labeling guidelines that state, “Cosmetic products labeled with organic claims must comply with both USDA regulations for the organic claim and FDA regulations for labeling and safety requirements for cosmetics.” (see http://pages.citebite.com/l5x2c6w9g5qje )

Furthermore, the OTA web site’s online directory directs consumers to many OTA member personal care companies which make organic claims and yet have no NOP certification, and to other companies that offer conventional chemical products with company and product branding that boldly uses the word “organic.” (see http://theorganicpages.com/topo/index.html)

The misleading organic and natural claims from a significant portion of the OTA’s personal care product members not only degrade the word “organic”, but they also directly oppose the OTA’s own code of ethics. According to the OTA web site, members must sign a code of ethics which requires them to “actively promote and encourage the highest level of integrity within the organic industry” and to “adhere to honesty in advertising and in all representations to the public concerning organic agriculture and products.” (see http://www.ota.com/about-ota/governance/code-ethics) Yet, the OTA directly promotes personal care product company members who are misusing the word “organic”. This misuse has become so widespread and so outrageous that the resulting effect is major consumer confusion and distrust over the use of “organic” for most product categories—including food.

It appears that the OTA cannot even enforce its own code of ethics. How can we trust them to manage millions of dollars in Organic Check-Off taxes or to direct a consumer organic education program?

3. The Organic Check-off Program is an invasion of privacy.
According to the OTA’s Check-Off proposal, “Each organic producer, organic handler and organic importer shall maintain any books and records necessary to carry out the provisions of this subpart and regulations issued there under, including such records as are necessary to verify any required reports. Such books and records must be made available during normal business hours for inspection by the Board’s or Secretary’s employees or agents.” (see page 44 of OTA’s Organic Check-Off Application PDF)  Not only does the OTA’s Check-Off proposal require unrestricted access to a company’s confidential sales data, but the cost of providing this data to OTA each quarter will pose a financial burden, especially to small organic personal care businesses.

All small, privately-held organic businesses should protest this invasion of privacy and should object to having their confidential company financial records violated by a trade association/lobbying group’s corporate representatives.

4. In the OTA Organic Check-Off Application, there is only a vague outline of how OTA would utilize $25-30 million Check-Off tax dollars, and there is NO mention of promoting certified organic personal care companies or eliminating organic abuse within the personal care marketplace.

For such a large amount of Check-Off tax dollars, there should be a publicly-posted and finely detailed report that outlines with specifics, not generalities, exactly how and where $30 million dollars would be spent. (see pages 13, 18 and 27 of OTA’s Organic Check-Off Application PDF)
It’s appalling that OTA expects everyone to accept their absurdly weak explanation of how they would use such a large sum of money. No bank or investor group would ever make a loan for the huge sum of $30 million dollars based upon such a loosely-written and non-specific plan.

5. The OTA would be the primary controller of revenues collected via this Organic Check-Off program and would review and recommend Check-off board members.
This unusual authority appears to suggest that small certified organic operations that are not OTA members will likely not have a presence on the Check-Off board and a voice in the use of the Check-Off tax funds. Furthermore, the OTA’s proposal essentially says that, if you are a small independently-owned business, you have to pay the OTA Check-Off Board to have a vote and give up your right to privacy, thus restricting the participation of small, independent businesses in the governance of the Check-Off program:

Nominees must be organic producers, organic handlers, or organic importers with gross organic revenue of at least $250,000 who produce, handle or import in excess of $250,000 of organic products in a marketing year, except for the voluntarily assessed entity and the non-voting at-large public members.” (see page 30 of the OTA Check-Off Application PDF)

We’d love for OTA to tell us all how the outrageous fake organic personal care problem will be resolved with a check-off tax.

In light of the alarming holes in the OTA’s Organic Check-Off proposal, it will likely be a challenge to convince us, committed organic purists, working every day of the past 25 years deep in the organic personal care production trenches, attempting to compete in a marketplace where virtually every “organic” competitor is actually an “organic” poseur, that we should enthusiastically hand over our hard-earned dollars to the Organic Trade Association for their Check-Off scheme.

OTA must re-write their proposal to exclude certified organic personal care companies from their Organic Agricultural Commodities Check-Off Application.
In our vision of an ideal organic world, we’d love to see specific details about how a check-off tax would finally eliminate fake organic personal care products in the murky marketplace and help small NOP certified organic personal care businesses to be able to finally compete fairly with a level organic playing field. When is someone is going to do something about the gigantic mastodon in the room?