Is Your Company Certifiable?
A Sane Approach to Organic Certification

By Peter Murray


I have heard it all before. How much will it cost to become certified? Do we really have to allow another auditor on the premises? Do I have to create more paperwork to pass the inspection? The organic law sure seems confusing—just what can we legally say on our product package?

These questions are just a few of the queries I receive every time I am asked to help a company decide whether or not it makes sense to become certified to the U.S. Department of Agriculture’s (USDA) National Organic Program (NOP) standards. However, unless you only want a back panel ingredient claim, facility certification has become a basic requirement to produce and market organic food products since the implementation of the NOP.

When to Opt In
That doesn’t mean it makes sense for every manufacturer to become certified. For example, I once advised one of the Midwest’s largest conventional bread bakeries that it would not make sense for them to become certified, even though at the time they were producing numerous bread products labeled as “made with organic wheat.” In fact, they had recently constructed two dedicated, 10,000-lb. silos for the storage of their certified organic wheat. They proceeded to request assistance to begin the process of certification in order to comply with the impending national law.

After reviewing their facility and processes, it was obvious that this company was a poor candidate for certification. Their bread-making facility utilized one continuous operation production line, working seven days a week, three shifts per day. While we were able to resolve a number of tricky materials issues and a one major commingling problem, the fact remained that they could not shut down the plant to perform the necessary sanitation procedures between production runs. They also wanted to be able to run organic bread whenever their orders required, making it even harder to justify the time and expense of performing complete line sanitation procedures.

This company chose to honor the law and make only back panel ingredient claims, although they were well above the percentage ingredient threshold for the “made with organic ingredients” claim. They would have had to dedicate the plant to organic production to make this facility suitable for certification, which, given their current sales of organic products, could not be justified.

Obviously, this is a worst-case scenario for consideration of facility certification. Typically, only facilities that cannot properly segregate and clean between production runs on shared equipment will have difficulty becoming certified. But becoming certified and profiting from certification can be two entirely different propositions. The key to making a good decision about whether or not to become certifed organic is to consider three factors: the market, financial and regulatory aspects involved in this process. The example above illustrates financial and regulatory considerations, but what about the market considerations?

Unfortunately, like it or not, the organic food industry is following closely on the heels of its conventional counterparts. Mergers and acquisitions are rapidly consolidating the structure of the industry and making it harder for smaller players to successfully engage the market. Moreover, while the upfront costs of certification are not onerous, particularly for single locations, the placement of new products on grocery shelves and subsequent marketing of these products can be very significant. The advantage goes to the product or company that either is established in the market or has deep pockets.

A recent example of the changing face of the organic market can be found by looking at the recent acquisition history of Dean Foods, a national dairy distributor. With the purchase of White Wave, maker of the organic soymilk, Silk, Dean not only became the country’s largest producer of soymilk but changed the rules of the game by selling a fresh product out of the dairy case. Previously, almost all soy beverages were packaged in aseptic cartons and merchandised on the grocery shelf. With Dean’s recent purchase of Horizon Organic, the company has now captured approximately 75% of the organic fresh milk market. With this much market control in the hands of one player, it becomes very difficult to break in with new fresh milk or soy beverage products.

Besides the obvious market benefits, challenges and regulatory requirements for organic product labeling of food and beverages, what other opportunities and pitfalls await the operation considering certification? For those companies that produce and export organically labeled products, NOP certification has not had the desired effect of facilitating international trade, except for those products coming into the U.S. bearing a USDA seal. Differing organic standards in the European Union (EU) and Japan continue to present technical barriers to the export trade. While the U.S. now accepts any organic product produced to NOP standards under a USDA-accredited certifying scheme, domestic products still must often undergo a case-by-case review. In Japan, at least, there are complex procedures by which U.S. certifiers can become approved to send their certified products overseas. However, Europe is still a regulatory maze to be overcome. Although the International Federation of Organic Agriculture Movements (IFOAM) accreditation eases this burden somewhat, the costs and efforts of an additional accreditation have been prohibitive for all but the largest U.S. certifiers.

Equivalency negotiations have begun between the U.S. Foreign Agriculture Service (FAS) and the EU negotiators. However, this resource-intensive effort may require years to complete. Until that time, each country’s competent authorities must still approve imported organic products arriving at European shores, unless that country appears on the EU list of approved countries. Until the U.S. gains this list approval, or equivalency becomes a functional reality, exporters will continue to be hamstrung with regulatory barriers.

The other side of this coin is that a number of foreign countries have begun reviewing NOP standards in order to construct bilateral agreements that will enhance trade partnerships. Australia, Canada, England and others are actively involved in discussions with U.S. officials to facilitate these agreements. The important thing to remember is, regardless of country origin, some form of certification and accreditation is now necessary to participate in international trade of organic products.

What used to be a relatively inexpensive path to the organic food consumer has now become a costly and complex route—one that requires a regional marketing strategy, at minimum and with all its concomitant costs, to gain access to the mainstream consumer where the biggest growth in organic sales is occurring. With this in mind, it is fair to state that the greater economies of market access now exist in the emerging organic fiber and personal care industries.

Certifying Personal Care
As with food, personal care or cosmetic production typically takes place in one facility. Having just one location facilitates the implementation of quality management procedures for compliance with organic standards. Moreover, while it is true that there are currently no approved organic standards for personal care, there are a number of companies that have manufacturing facilities certified to the NOP. A select few even have formulated products that meet these handling requirements.

One might ask, “Without a common organic standard, why should a cosmetic or personal care company even bother with certification?” A number of reasons come to mind, not the least of which is the need to implement quality procedures for continuous improvement, regardless of certification drivers. Companies that have not developed and achieved a reasonably effective internal quality program will definitely benefit by certification. Additionally, the credibility that an independent, third-party certification brings can only enhance a company’s image in an industry fraught with bogus claims and customer disbelief.

Even though the typical personal care product made with organic ingredients cannot be legally labeled in the same manner as food companies label their products, the conscientious consumer will recognize the commitment of a manufacturer that not only uses organic ingredients but also produces its products in a certified facility. Arguably, organic certification will place the manufacturer in an excellent market position once organic personal care standards are adopted and enable the proper labeling of organically produced cosmetics and personal care items.

Unfortunately, there a number of cosmetic companies making organic product and ingredient claims without the benefit of a certifier’s oversight. Without proper enforcement of current organic regulations, scrupulous manufacturers are put at a disadvantage. California has even gone so far as to enact regulations that allow manufacturers to make organic claims on the principle display panel of the product with a minimum of effort. The only restriction this state’s law places on manufacturers is that their products carry a minimum of 70% organic ingredients. There is neither language requiring certification nor restrictions on the use of non-agricultural materials, such as surfactants or preservatives.

If credibility is important to the personal care manufacturer, facility certification can be an meaningful first step to building market acceptance for the company’s organic products. Similarly, if continuous improvement plays a part in the company’s quality assurance program, certification certainly can have a positive impact.

Certifying Fiber
Organic fiber production presents an entirely different set of challenges for the manufacturer or operator wishing to certify their production. Unlike food or cosmetic production, the typical garment or apparel item requires up to five discrete manufacturing operations that may be completed in five separate locations. From the spinning of raw fiber into yarn to final assembly of a finished product, each manufacturing procedure would have to undergo a certifier’s inspection and review in order to comply with the impending American Organic Standard (AOS) fiber processing standards. Consequently, it is not hard to understand the difficulty, expense and effort required to certify these numerous operations.

In fact, the consolidation and offshore movement of the U.S. textile industry places additional burdens on those manufacturers wishing to produce organically produced apparel or home furnishings. The remaining domestic textile operations are becoming so large (and few) that they typically eschew the production needs of smaller organic producers. This forces these producers overseas to secure manufacturing capacity. This problem, coupled with the cost and effort required to achieve certification, results in a significant disincentive to become certified.

This inherent difficulty is the reason the AOS fiber processing standards include an 18-month moratorium on certification once the standards are approved by the Organic Trade Association’s (OTA) membership. The logistics for getting the spinners, fabricators, dyers and finishers, assemblers and others certified are daunting, indeed. The hope is that this period will allow the entire textile manufacturing chain to become knowledgeable and subsequently compliant with the AOS standards.

Since the AOS standards process is very near to completion, this is not a back burner issue for companies currently marketing organic fiber products. Although these are voluntary standards, OTA members are honor bound to comply as part of their ethics agreement. I also am aware of at least one NOP-accredited certifier that is prepared to implement its fiber processing certification program once the standards gain OTA acceptance. When this happens, the reality of organic fiber certification will be irrevocable. Once one company implements a certified production matrix, other companies will likely feel compelled to follow the same path.

The Bigger Picture
One also must reflect on a larger issue of why certification is important. In this writer’s humble opinion, manufacturing organic products represents a commitment to sustainable business practices that outweighs any short-term monetary rewards or penalties. And though it would be nice to think that Dean Foods’ purchase of White Wave and Horizon Organic was environmentally motivated, the reality is, I’m sure, quite different. However, regardless of the reason why one makes certified organic products, it is my belief that the underlying values of sustainable agriculture will inform and influence future business decisions, albeit in ways unrecognized by the conventional manufacturer.

In Sex, Economy, Freedom, & Community, author Wendell Berry states that, “The economic system that most affects the health of the world…is that of food.” If it is also true, as Paul Hawken avers in his book, The Ecology of Commerce, that unless big business begins the hard work of engaging in sustainable business practices, we will be unable to reverse the environmental degradation brought on by the late 20th century industrial complex, then perhaps convincing companies so able, large and small, to become certified organic producers represents one of modern society’s best hopes in creating a healthy planet.

Peter Murray, president of Sustainable Systems Design, has more than 25 years’ management and consulting experience in the organic food, fiber and personal care businesses. He has worked in the manufacturing, wholesale, retail and distribution sectors of the food and fiber industries. He has an extensive background in organic certification and policy development, which includes serving with the world’s largest private certifier as chair of the International Certification Committee for four years. Murray can be reached at petermurray@comcast.net.