Time for a new label on ‘organic’ eggs?

 With food prices up 8.2 percent since September of last year, why would AMS do such a thing? And why would a group that represents consumers like mine, the Consumer Federation of America, urge it to act as quickly as possible even though acting quickly will, in all likelihood, cause prices to increase even more? The reasons have to do with what consumers expect from USDA certified organic products, and food safety.

This rulemaking has attracted a lot of attention. The AMS had received more than 38,000 comments as of this writing. The proposed rule updates several regulations related to livestock production under USDA’s National Organic Program (NOP), but the most controversial provision concerns laying hens. Eggs.

Full disclosure: I buy organic eggs. I am also very, very cheap. I am so cheap that I struggle with visceral reactions to price tags at the grocery store: $3.49 a pound for cabbage? Outrageous! $3 off a six pack of sardines? Truly providence shines upon us!

This has made for some tense moments with my wife over the years.

Anyway, you may be thinking now, if he’s so cheap, why does he waste his money on organic eggs? The answer is complicated. Despite my acute price consciousness, I accept that I should pay more for food that reduces some of the “externalities” that modern industrial agriculture foists upon the environment, farmers, workers, animals, rural communities, you name it. Organic production has its problems, but overall, it helps. The biggest factor driving my purchase of organic eggs, however, is my family’s exposure to pesticides.

In this respect, I am not alone. In his book, “Resetting the Table,” Harvard professor Robert Paarlberg traces back the creation of the NOP to pesticide scares amplified by popular TV programs like 60 Minutes. In surveys today, consumers continue to cite health concerns as the main motivation driving their purchase of organic products. And as one group of commentators puts it, “the presence of pesticide residues in conventional food is the main difference between organic and conventional food.” Critics like Paarlberg point out that the pesticide residues on conventional crops are miniscule, and pose no health risk. Even proponents of organic food shy away from characterizing organic food as safer, partly because the NOP allows some pesticide use.

Even so, pesticides are scary. Measuring the risk associated with chronic exposure is rife with uncertainty. And because pesticide residues on food crops bioaccumulate in animal tissue, including chicken eggs, many consumers have heightened concerns about pesticide exposure from animal products.

What does this have to do with the AMS rulemaking? Good question. The AMS rule is nominally about animal welfare. In 2002, a large egg producer called “The Country Hen” sought to certify its Massachusetts facility as organic. As far as we know, chickens at The Country Hen were fed an exclusively organic diet and otherwise enjoyed all of the other benefits of living in an organic production facility. But they did not have outdoor access. Rather, they had access to a porch, like the one pictured here. The NOP rules require that organic producers provide “year-round access for all animals to the outdoors, shade, shelter, exercise areas, fresh air, clean water for drinking, and direct sunlight, suitable to the species, its stage of life, the climate, and the environment.” 7 C.F.R. 205.239. The auditor at The Country Hen did not agree that the porch met those criteria. But the owner of The Country Hen appealed to higher authorities at USDA, and he won!

Twenty years later, according to USDA’s proposed rule, 35 percent of hens have outdoor access via a porch system or covered area. According to a more recent report, over half of certified organic eggs come from porch facilities where the hens never go outside.

Without a doubt, these operations have lowered the cost of “organic” eggs. Miserly, pesticide paranoid consumers like me should thank The Country Hen and its imitators, right? Wrong! Just because I am cheap does not mean that I do not value institutional integrity. The NOP regulations are clear. The 15-member National Organic Standards Board has been clear, recommending way back in 2002 that “outdoor access” should mean access to open air and sunshine and exclude porches. And the popular conception of what organic eggs entail is clear. It’s not just feeding the chickens organic feed. According to a Consumer Reports survey, 83 percent of consumers who buy organic products say it is “extremely” or “very” important that eggs labeled “organic” come from hens that were able to go outdoors and move freely outdoors.

This is a classic case of market failure, where a few sneaky companies are taking advantage of consumers’ incomplete information. AMS needs to fix the situation, and thankfully, the proposed rule will fix it. Except that it will provide an extremely slow fix. In its cost-benefit analysis, AMS has evaluated two options — implementing the rule over five years, and implementing the rule over 15 years. At the risk of pointing out the obvious, the fact that AMS would even entertain the idea that large, sophisticated companies should have 15 years to continue duping consumers while they figure out a contingency plan smacks of corporate capture.

Consumer advocates and other proponents of the rule, which was first introduced during the Obama administration and then withdrawn, have endorsed a three-year implementation timeline. But what about food inflation you ask? It’s true. Closing this loophole will make the price of organic eggs go up. However, a new label can help with that.

Currently, the burden is on consumers to investigate whether eggs labeled “organic” comply with the NOP regulations. The market has responded with claims like “pasture raised” and “regenerative organic certified,” but for many consumers, spending more on these lesser known certifications is a bridge too far. A “100 percent organic diet” or “produced with organic feed” labeling claim would segment the market without undermining consumer confidence in the organic label. For consumers with concerns about pesticide residues in conventional eggs, who may care less about animal welfare and find themselves struggling to afford USDA certified organic eggs, a “100 percent organic diet” claim could present real value, and command a premium.

For their part, companies could take advantage of USDA’s Process Verified Program (PVP) to add an air of legitimacy to a “100 percent organic diet” claim. The PVP provides independent verification of production practices and allows companies to use the USDA PVP shield on their products. Already, many egg companies participate in the PVP to make the claim that their hens eat a “100 percent vegetarian diet.” Why not a “100 percent organic diet”?

One objection may be that this claim could undermine organic, but that seems farfetched. Organic is an economic juggernaut at this point, with annual sales projected to exceed $125 billion by 2026,  and nearly a quarter of consumers reporting that they always or often buy organic food. Demand for organic products will hold up, as long as USDA resists efforts to weaken the standards.

Another objection is that a “100 percent organic diet” claim on eggs will not make money for companies like The Country Hen. But we will only find out if that is true once USDA restores integrity to the NOP. Let’s hope that we do not have to wait 15 years for that to happen.