Exploring U.S. Organic Food Opportunities

Jessy Beckett Parr:

We really try to keep that core ethic of, "What's good for the farm? What's good for the farmer? How are we going to support this person being successful? How are we going to support them being in business?" because growing food is hard.

MUSIC:

(Instrumental music)

Michael Torrance:

Welcome to Sustainability Leaders. I'm Michael Torrance, Chief Sustainability Officer at BMO. On this show, we will talk with leading sustainability practitioners from the corporate, investor, academic, and NGO communities to explore how this rapidly evolving field of sustainability is impacting global investment business practices and our world.

Speaker 4:

The views expressed here are those of the participants and not those of Bank of Montreal, its affiliates, or subsidiaries.

MUSIC:

(Instrumental music)

Emily Hobbs:

Hi there. My name is Emily Hobbs and I'm a Senior Advisor with the BMO Climate Institute. On this episode of Sustainability Leaders, I'm speaking with Jessy Beckett Parr, the Chief Program Officer at California Certified Organic Farmers, known as CCOF, which is the largest organic certifier in the United States. Jessy and I will discuss the landscape for organic practices and certification and impacts on producers, consumers, and our environment. Jessy, welcome to the show. Would you please introduce yourself to our listeners and tell us about your role at CCOF?

Jessy Beckett Parr:

Sure thing, Emily. Thanks for the warm introduction. Before I tell you a little bit about myself, I want to tell you about CCOF. For those of you all who have not heard of us, we were founded out here in California in 1973 as California Certified Organic Farmers, and we were founded for farmers by farmers with a vision of a world where organic is the norm. And today, we have over 5,000 members across North America. So in every state in the United States and Mexico and Canada, we are bringing forward that mission and vision of a world where organic is the norm through certification, advocacy, education and promotion.

I grew up in Salinas, California, which is known as the salad bowl of the world. If you're on the East Coast, you're probably eating romaine in February that comes from California and it probably comes from Salinas. And my mom and my stepdad operated a large-scale, conventional lettuce operation in Salinas, so I grew up in the packing shed and with a lot of lettuce in our refrigerator and different packages trying to figure out the shelf life, how long you could keep romaine lettuce alive in a bag. And they started to study and go organic in the late 1990s, and so I've been working in the field ever since.

Emily Hobbs:

Thank you so much, Jessy, for that background and introduction of yourself and your family's history in Salinas and lettuce growing. At CCOF, as you said, your team works with a wide range of producers in North America. Can you share what trends CCOF is seeing across its producers? It could be related to overall market demand right now or what you're seeing with specific crops and products.

Jessy Beckett Parr:

Yes, so there is a strong and growing demand for certified organic products here in the United States. It's being driven by millennials and Gen Z, but it's across all categories of age, demographic, geography. And it's so much so that demand consistently outpaces domestic supply. So there's not enough supply in the United States to meet the growing demand for organic, so the United States is a net importer of organic food. And it's of things that we can grow here. Crops like soybeans and blueberries and avocados are all in very high demand as certified organic and there's this missed opportunity for domestic producers to serve this domestic market here in the US.

Emily Hobbs:

That in mind, what opportunities do you expect for organic producers here in the US and abroad over the next few years as we're looking at that increased demand that you're mentioning?

Jessy Beckett Parr:

Yeah, with a focus on the domestic market, there really is a growing opportunity for producers here in the United States to grow certified organic product for a domestic market and that is in the Midwest. If you are a grain grower, folks are looking for certified organic cereals, breads and crackers and cookies, and grain in particular is one of those markets where we have imported a lot of certified organic product. Mostly from Europe, but from other parts of the world as well. And the same is true in fruits and vegetables, so it's both in commodity crops and also vegetables. So it's really an exciting time for people to be able to get into the market and choose to get certified and represent their values and their growing practices under the mantle of organic certification. So in 2023, just to give you a sense, the organic market hit $70 billion in sales. And in 2024, there was multiple percent growth on that. It's the fastest growing sector in agriculture. So organic certification, if you pull out the organic market and products that are certified organic, it is the growing sector in agriculture.

So there's room for domestic producers. Especially with the instability of international shipping and international markets and international imports right now, there's room for domestic producers to get into certified organic growing and sell here for wholesalers, for processor handlers that are looking to make consumer processed goods here, and as well to sell directly to consumers through farmer's markets or CSAs or local food hubs. And the thing that's really exciting about it for me is that we know that when folks choose to go organic and grow in this method, it's creating stronger rural economies, healthy communities, and resilience for family farms here domestically.

Emily Hobbs:

To build on that, in thinking about the transition to organic, what types of price premiums are available to producers that become certified in organic or regenerative practices?

Jessy Beckett Parr:

So organic certification consistently provides price premiums for farmers, but those premiums vary by crops, by region, and markets. So it's going to be a significantly different price premium structure and fluctuation if you're growing grain crops in the Midwest or if you're growing vegetables in Southern Florida. So you really want to do your homework and check in with agricultural extension with the USDA Agricultural Marketing Service, and there's also private companies that hold cross-sector data on organic versus conventional price premiums. Really do your homework on what you're going to grow, where you're growing it, where you're marketing it, and what the price premium is. Those premiums, we know, help offset the cost of certification and they result in better margins for farmers.

Something that people have been thinking a lot about recently is inflation and there's been a lot of inflation in the food category here in the United States. People are really feeling it. And we know historically that Americans pay a very small portion of their overall household budget towards food, but it's grown significantly over the last five years. And what happened in the United States is that conventional prices for produce rose faster than those in the organic category. So there is less of a price premium right now than there ever has been between organic products and conventional products. So that has put a lot of pause into folks' business planning of, "All right. Well, if I'm going to invest more in these business practices to go organic, what's the price premium looking at?" And what we're seeing right now in the spring of 2025 is that there is a market-wide readjustment happening for price premiums, and that's happening in conventional and organic. It's also happening at the retail level. Folks are getting into the swing of how much things cost to produce right now and adjusting their prices accordingly.

You also asked about regenerative. So we offer regenerative organic certification, which is a baseline of organic certification and then additional specifications to meet the regenerative mark. And the regenerative mark for us is livestock integration and fair labor on top of an organic certification. We've had incredible interest from our members in adding that scope of certification to meet buyer demand. It's really opening up new doors for folks.

Emily Hobbs:

How much of our fruits and vegetables in the US or other products are certified or being sold as organic?

Jessy Beckett Parr:

Yeah, so the share of US fruits and vegetables sales that are certified organic is now at 15%. So that's from the Organic Trade Association's US Organic Industry Survey in 2024, so that's 2023 sales data. And it was consistently climbing year-over-year so we actually think that's going to be improving for 2024 data. The share of US dairy and egg sales that are organic is 8%. And then the total share of US grocery sales, so that's looking at your entire grocery basket and includes bread, grains, condiments, packaged goods, soup, baby formula, the whole thing is 7%. So across all categories, US grocery sales, 7% of it is certified organic. And then the other thing I want to share is that the percent of US households that buy organic is 82%. So 82 out of 100 people in the United States are buying some organic product and they've got organic product in their refrigerator.

Emily Hobbs:

To switch gears in thinking about consumer education and market demand, CCOF was recently awarded funding to launch a national organic education campaign. What will you convey to consumers about organic farming, ranching, and certification, and what market opportunities does your team hope to create?

Jessy Beckett Parr:

Yes. So CCOF just launched our Choose Your Farmer, Choose Organic consumer education campaign. It's a national campaign that's done in partnership with the US Department of Agriculture and the intention behind it was to connect everyday Americans who share organic values, even if they don't know that those are organic values. And so the way that we structured it is that we put out a call to our 5,000 members across the US. We had over 100 certified organic farmers send in profiles and say, "We'd love to be profiled," and we picked five farms. And we wanted to focus on consumers who really cared about healthy foods, strong family farms, thriving rural communities, and clean soil and air. And so we looked for farms that matched those consumer profiles.

We've got a small-scale vegetable grower who sells direct into beautiful, high-end restaurants, we have a Midwestern CSA, folks who have a U-Pick, we have an olive orchard that also has animal livestock integration. So all of these different profiles of farms are real farms, they're CCOF members, and then we had them tell their stories. And so with this campaign, we'll be reaching millions of American consumers through streaming, YouTube, Roku, and we're aiming to grow demand in every corner of the country to create new markets for organic producers. And so it circles back to that idea that we have the power and the potential in American producers here domestically to meet the demand for organic.

Emily Hobbs:

Sounds like an exciting campaign. How long will it run for?

Jessy Beckett Parr:

We're in the first test phases of it right now over the first quarter of 2025, and it'll be running for the rest of the year for 2025. So look forward to it on YouTube, Roku, or your favorite streaming platform.

Emily Hobbs:

Jessy, how does CCOF support or work with producers as they're weighing the cost-benefit analysis of certification? And if we could focus, too, on examples for smaller producers as we've talked about, that more family-focused farm, going all the way up to large-scale production as they think about the cost of transitioning and the price premiums they will get in the long run.

Jessy Beckett Parr:

Absolutely. The way that we approach it is from a farmer's lens. We're a farmer-governed organization that was started by farmers for farmers. And so we recognize that running a farm business is hard and we want to make sure that we are transparent about the process and the cost of certification upfront so people can make really good farm decisions. And at CCOF, we work with six-acre farms and we work with 60,000-acre farms. So we certify the largest organic vegetable growers in the country, and we're talking about tens and tens of thousands of acres of organic vegetables. And when those producers are thinking about cost-benefit or when they're thinking about transitioning, it's very different to transition farms at scale and to invest in the infrastructure and resources that you're going to need to manage your land organically.

In particular, we have farmers really focus on where they're going to get their inputs and what type of resources they need to support their soil biology, soil health and nutrient cycling at scale.

So a big part of what we do at CCOF is work with producers to weigh out that cost-benefit analysis. We have transparent certification costs up on our website. If you're a tiny farm, if you're a huge farm, you can see how much it's going to cost. We offer grant programs, educational resources, one-on-one support, technical assistance to lower the barrier to entry for folks who want to get into certification.

We actually have a national mentorship program that we're running in concert with a whole lot of other organizations through the USDA Transition to Organic Partnership Program and we've matched people across state lines, livestock producer to livestock producer, grain farmer to grain farmer. So people can talk about, "All right, so how are you shipping your grain? Where are you going to store your product? What about the handling? What does the market look like right now? What's your projection for next year?" Because like I said earlier, price premiums vary by region.

Emily Hobbs:

You're talking about your largest-scale producers. Is the time horizon similar for them to be able to transition compared to maybe the 100-acre farm that you mentioned?

Jessy Beckett Parr:

It depends on the complexity of the operation. So the 60,000-acre organic vegetable operation that I was mentioning earlier, they have a 25-crop crop rotation. It's very complicated. But some large scale producers are only growing three things, one, two, three, things in crop rotation. So it really depends on how many things you're growing and how many people you're selling them to and what you're doing with them. So those are the types of questions we ask as people are coming into organic certification. And at CCOF, we have a lot of split operations. We have a lot of operations that manage part of their business conventionally and part of their business organically and it gives them flexibility to market to different folks to sell at a different price, to grow different things that they maybe can't in that climate without fungicides.

And we really try to keep that core ethic of, "What's good for the farm? What's good for the farmer, how are we going to support this person being successful? How are we going to support them in business?" because growing food is hard. Selling food is hard. It's hard to be a farmer in the United States. You've probably talked about this before on this show, but year-over-year the United States is losing farms. And so we as an association, as a certification entity, but really a membership association of certified organic producers, we are looking at how do we keep people in business so that they can continue to grow, so that we can realize that vision of a world where organic is the norm one step at a time?

Emily Hobbs:

Jessy, through our research at the BMO Client Institute, we've explored how different sectors are impacted by extreme weather. For example, right now our team is researching the impact of water scarcity. How are CCOF producers impacted by water scarcity and how do organic methods protect against drought and water scarcity?

Jessy Beckett Parr:

Water scarcity is a huge challenge, especially here in the west. So if you're not a farmer, you may not know, but water doesn't just effect crop yields. It also affects long-term crop health, so if you have perennial crops, trees. If you have livestock, it also affects their health and long-term farm viability. In major drought periods, some farms can't get from one year to the next if they're running debt on their books from not having been able to harvest their crop or having to drill a deeper well.

We know that certified organic farmers are better prepared to adapt to a hotter, drier climate and that is because they invest in their soil. So building healthy soil results in soil that acts like a sponge. It holds more water when it's dry outside and then it drains better when it's wet. So when you have soil that has healthy microorganisms in it and a high organic matter content, it's going to be more resilient both to intense flooding and also to intense dry periods. And the way that organic farmers invest in that soil is through practices like cover cropping, composting that improve soil structure and organic matter, and that means that those farms over time need less water to stay productive. So we believe here at CCOF that going organic is a long-term investment in farm resiliency, and it's good for producers and it's also good for that US food security/food supply.

Emily Hobbs:

I'm going to build on your comments around CCOF's grants program. At BMO, we're proud of our philanthropic partnership with CCOF, which supports the CCOF Foundation and its Organic Transition Program. Can you tell our listeners about that program and what it solves for?

Jessy Beckett Parr:

Yes. We are grateful for BMO's support of our Organic Transition Program. We recognize that while many farmers are interested in organic, not everyone has the resources, tools, and capital to be able to make that transition on their own. Organic certification is complicated. There's a three-year window for transition. So from the date of last prohibited materials, folks have three years to get their soil biology in good shape to be able to make the certification. During that three-year window, there's usually a decrease in yield and there's no increase in price premium for transitional product. We've tried. A few companies have been very innovative about, "How do you market that you're in transition?" but for the most part it's not consumer recognized and folks don't get a price premium. So they're making all the investments, they're using all organic inputs, they're really investing in that soil biology and health and ecosystem, and they're not able to get a price premium for it.

So our transition program looks at how do we lower that barrier to entry and bridge that gap to get people across that three-year transition. So it's a three-year commitment of financial support with direct grants that go right to farmers. And then we provide wraparound technical assistance to support farmers in their successful transition. So we have a few organic transition specialists that will go through and create the organic system plan with folks. We'll help look at what are their barriers, really kind of tailored one-on-one technical assistance. And we have worked with over 100 farmers in that program, and part of the way that we're able to do that and give away the money that we're able to give away and support farmers is through support of companies like BMO.

Emily Hobbs:

Congratulations on reaching 100 farmers with that program, Jessy. Another area we've explored through our work at the Climate Institute is biodiversity. How does organic production impact on-farm biodiversity?

Jessy Beckett Parr:

Biodiversity is one of the core values of organic agriculture. That's how a lot of farmers that got into organic got into it. They're really looking at, "How do we create ecological balance and rely on nature for support systems?" So our farmers are cultivating and stewarding that ecosystem, cultivating and stewarding beneficial insects, diverse crop rotations, healthy soil microbial communities. And one of the ways that they do that is that organic farmers are not using synthetic pesticides and fertilizers that are longer-lasting in the environment. And so they're creating healthy habitats where pollinators, birds, and soil microorganisms can thrive. And so it's not just safer for insects. It's also safer for farmers, for farm workers, for rural communities. And as I was speaking to earlier, it's creating a more resilient farm system less dependent on outside inputs.

One of the ways that farmers really speak to the value of organic is that by creating a biological system, an ecological balance system, they're not relying on the inputs coming from the outside as much. They're growing their own nitrogen. They're creating their own beneficial insectaries where the biological insects are managing pests. And with this healthy, resilient, ecological framework of managing a farm, farmers are better equipped to handle pests and climate stress.

Emily Hobbs:

As we close out our discussion, Jessy, is there anything else you'd like to leave our listeners with today?

Jessy Beckett Parr:

I would love to leave you all who are listening with this sense of hope and optimism. The organic movement is 50+ years old and we're seeing more interest than ever in the principles that made organic certification what it is: an interest in human health, in soil health, in planetary health. And while not every farm in the US is going to consider getting certified, most farms these days are thinking about soil health and that's a huge difference from what there was 50 years ago, the concept of soil being a living organism and being important to care and steward. So I feel a great sense of optimism that these conversations are happening at the farm level across the United States where folks are saying, "How can we improve our practices and how can we do so in a way that feeds our soil, but also feeds our family?" And like I said at the top of the hour, there's just an immense opportunity and consumer interest in supporting farmers being successful and I look forward to working with domestic producers to enhance their farm viability and the potential that they would choose organic.

Emily Hobbs:

Jessy, thank you so much for those reflections and for this incredibly thoughtful conversation today and really bringing the topic of organic to life for our listeners.

MUSIC:

(Instrumental music)

Michael Torrance:

Thanks for listening to Sustainability Leaders. This podcast is presented by BMO. You can find our show on Apple Podcasts, Spotify, or your favorite podcast player. Press the "Follow" button if you want to get notified when new episodes are published. We value your input, so please leave a rating review and any feedback that you might have or visit us at bmo.com/sustainabilityleaders. Our show and resources are produced with support from BMO's marketing team and Puddle Creative. Until next time, thanks for listening and have a great week.

Speaker 6:

For BMO disclosures, please visit bmocm.com/podcast/disclaimer.