Food Company Offers a Carrot to Farmers Considering Organic Certification

Kashi's new 'certified transitional' program promises to help growers earn premium prices more quickly as they move toward organic production.
(Photo: Avalon Studio/Getty Images)
May 17, 2016· 3 MIN READ
Tove Danovich is a journalist based in Portland, Oregon.

From the farmers market to Whole Foods to Walmart, it may seem like organic foods are everywhere these days. But behind the scenes, some food manufacturers are struggling to meet demand.

Since the 1990s, consumer demand for organics has grown by double digits in most years, according to the USDA—amounting to more than $39 billion in sales in 2014. Yet it still represents only 4 percent of total food sales in the United States, and only about 1 percent of all farmland in the U.S. is used to grow organics. That means sometimes there just isn’t enough organic corn or soy or kale to go around.

Food manufacturers that rely on organic ingredients are increasingly taking supply challenges into their own hands. In 2015, Nature’s Path Foods paid $2 million for 2,800 acres of cropland to grow organic grains, The Wall Street Journal reported. Now, Kashi, another organic food manufacturer, wants to grow the organics industry as a whole through a program that will make it easier for farmers to transition from conventional agriculture—and give them both credit and a price premium for starting the shift. A new cereal product, Dark Cocoa Karma Shredded Wheat Biscuits, will be the first of Kashi’s products to receive a “certified transitional” label to show that the majority of grains used came from “organic farms in training.”

“Implementing an organic system generally takes both time and effort,” said Betsy Rakola, USDA organic policy adviser, in an email. Farmers must adhere to organic growing standards for pest control, avoid prohibited substances, and find ways to keep soil healthy. But that’s not all—the land used to grow organic foods has to have been free from prohibited substances for a waiting period of three years. While farmers in transition are using organic farming practices, they aren’t allowed to call their food “organic” but receive premium prices. Unlike a company buying up farmland to convert it to organic, the hope is that this label will increase overall organic sales and keep control of the farm with the farmer.

Related: Suddenly We Like Organic Corn So Much We Have to Go to Romania to Get It

Farmers selling in a local market might be able to describe this to consumers, “but at the larger scale, it’s a real problem and a barrier,” said Nicole Nestojko, senior director of supply chain and sustainability at Kashi. During this waiting period, farmers often have lower yields and increased capital investment, and “when they do sell the crops, they sell them as conventional,” she said. The goal of the program is to incentivize farmers to make the transition to organic certification by giving them a higher price during that in-between period than they’d get for conventionally grown food—though likely still lower than the certified-organic premiums.

For informed, bargain-savvy consumers, certified transitional could be a way to eat organic foods for a lower price. But in a world where consumers are already bombarded with labels describing food as “healthy,” “gluten-free,” “GMO-free,” and “humane,” why would a company add anything to the mix?

Kashi’s idea isn’t new. USDA-certified accreditation agencies such as California Certified Organic Farmers and Oregon Tilth already offer farmers a chance to become certified transitional. The USDA has even issued recommended guidelines for what farms should be eligible for the label. Since late 2015, the Organic Trade Association has been creating a proposal for an “industry-led” version of this label that it will bring to the USDA for approval.

Thus far, certified-transitional programs may have been marginally beneficial to farmers, but there has been a lack of consumer awareness for what the term meant. It may not be a new idea, but with a manufacturer’s backing, this version of certified transitional has a new way of reaching consumers. Without consumer demand, the label may exist, but companies aren’t charging (or spending) premium prices to use it. Kashi, however, may have enough clout in the organic food sphere to teach consumers about this middle ground between conventional and organic food. In 2002, for example, Kashi launched the first organic cereal on the market, said Nestojko, and “now there are hundreds or thousands of them.”

Sarah Krol, the global managing director for QAI, which will provide the third-party certification for the new label, said the point of purchase would likely be customers’ first exposure to the program, which is why additional information on the packaging and manufacturer’s website are so important.

After all, a label is only as good as the marketing around it. Before gluten-free eating became a trend, grocery aisles were devoid of the now ubiquitous “gluten-free” label shown even on foods or beverages that were not made with gluten to begin with. It wasn’t that long ago that “organic” seemed to be a stand-in for “less aesthetically appealing hippie food.” Today it’s a multibillion-dollar industry. It all comes down to what the consumer wants.