New Regulations Bring Changes to Organic Food and Ingredients

By most accounts, consumer interest in organic food continues to rise, with a growing number of Americans willing to shell out more money for what they perceive to be healthier options for themselves and for the planet.

Organic food sales in the U.S. reached a new record in 2022 of $61.7 billion in sales, a four percent increase that was nearly twice the pace of growth in 2021, according to a 2023 survey from Nutrition Business Journal (NBJ) conducted on behalf of the Organic Trade Association. (FN 1)

Consumer demand for organic supplements is rapidly growing too, at least in some category segments. For example, Transparency Market Research placed the global organic sports supplement market at $2.2 billion in 2022, estimating a CAGR of 5.8% from 2023 to 2031, with a $3.7 billion valuation for the category by the end of that period. (FN 2)

But sales aren’t the only thing rising for the organic industry. In an analysis of USDA retail pricing data from 2022 and 2023, LendingTree.com reported that “organic food prices are rising quicker than their conventional counterparts.” (FN 3)

And now, there’s more reason for concern that organic ingredient prices may rise even higher throughout the supply chain and that ultimately consumers will pay the price.

On March 19, 2024, a new Final Rule for the importation and exportation of all products labeled organic went into effect under the USDA National Organic Program’s (NOP) Strengthening Organic Enforcement (SOE) initiative. This change requires that all organic imports into the U.S. be declared as organic and certified as such, specifically associated with an NOP Import Certificate. (FN 4)

According to materials posted to the SOE website, there’s good reason for this amendment to the regulation. SOE advises the new regulation for organic product exports and imports “will strengthen oversight and enforcement of production, handling and sale of organic agriculture products.” More specifically, the aim is “to protect integrity in the organic supply chain and build consumer and industry trust in the USDA organic label by strengthening organic control systems, improving farm to market traceability and providing robust enforcement of the USDA organic regulations.” (FN 5)

This new rule is a big deal—in fact, in a press release, USDA’s Under Secretary for Marketing and Regulatory Programs, Jenny Lester Moffitt, called this new rule “the biggest update to the organic regulations since the original Act in 1990.” (FN 6)

Why are these changes important for our customers and potential customers? The answer is both simple and complex. But whichever the case for you, it’s important that you are made aware of how this new rule might impact your business—and how it is already impacting ours.

While the bulk of the responsibility lies with the importer and exporter, the simple fact is that things are changing with this new rule. A lot.

Whenever any new regulatory action goes into effect, there is a certain amount of, to put it mildly, everyone getting used to it. At Vitajoy Group USA, we’re working hard to ensure that our organic ingredients will be properly documented.

For instance, our organic ingredients imported to the U.S. from India will now all require Transaction Certificates of Products from Organic Production. You likely know these forms as TCs.

Our organic ingredients imported to the U.S. from China will all need to carry Certificates of Inspection for Import of Products from Organic Production, more simply referred to as Import Certificates.

If these TCs and Import Certificates are not properly executed, or aren’t included with the shipment of organics, they will likely be turned back at U.S. Customs and Border Protection by FDA.

Willie Tang, operations manager, Vitajoy Group USA, explains that specifically the TCs and Import Certificates demonstrate that the local government has verified not only that the manufacturer has an organic certificate on hand, but also that their raw materials and the land on which the ingredients were grown (which may include a vendor’s land) has an organic certificate issued by their local government as now required under the new rule.”

Here are three specific ways that as a customer, your business may be impacted:

Potential cost increases for organic ingredients—there is a lot of time and labor involved in fulfilling the requirements of this new rule. It’s also possible there will be the need for additional consultants to help with certification, shipping transactions, and customs. We also anticipate added costs associated with more rigorous on-site government inspections and the need for additional record-keeping.
Shipping delays—no doubt this new rule may impact the ability of exporters/importers to move product as quickly as has been done in the past, until everyone, including us, is up to speed on the new requirements. For our customers, you may want to consider whether you will substitute conventional ingredients for organic, at least in the short run, if not permanently.
Slowdown at customs—likewise for customs agents, this will be a new process and we anticipate a learning curve. So even if your shipment gets to its location, you may be wise to anticipate delays in getting the product out of customs, even if all the rules are properly handled.

Although the rule went into effect on March 19, Green Worldwide Shipping reported on their website that the USDA Agricultural Marketing Service (AMS) is fielding a high volume of importer questions about the new SOE certification process. Jennifer Tucker, deputy administrator of the NOP at AMS explained that while AMS will initially exercise enforcement discretion beginning on March 19, importers not following the rules for valid certification or failing to file the proper certificates, may face progressive implementation enforcement measures. (FN 7)

We realize this is a lot to take in as new regulations always are. So, if you have questions or concerns, please reach out to us. For example, from our perspective, we’re interested to learn whether this new rule might make you think about shifting your organic portfolio to conventional ingredients and products. Conversely, might it lead to new trust in organic ingredients, guiding you to stick with or increase that portion of your business?

Let’s start a conversation. Casey Crane, our vice president of sales and marketing, is here to work with you.

Footnotes:

New Regulations Bring Changes to Organic Food and Ingredients

Vitajoy USA

New Regulations Bring Changes to Organic Food and Ingredients

Here are three specific ways that as a customer, your business may be impacted:

Slowdown at customs—likewise for customs agents, this will be a new process and we anticipate a learning curve. So even if your shipment gets to its location, you may be wise to anticipate delays in getting the product out of customs, even if all the rules are properly handled.

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