Organic food costs more to grow and more to buy. Even so, there's growing demand for food produced without synthetic pesticides, fertilizers or genetically modified seeds. The U.S. Department of Agriculture estimates the U.S. market for organic food is $39 billion.
However, of the more than 2 million farms in the country, only about 15,000 are certified organic. That's less than 1 percent. If organic is such a hot market, why don't more farmers switch to it?
It's a hassle.
Under the USDA rules to become a certified organic farm, a conventional farm has to spend three years in transition. During that period, the farmer must institute organic practices, behave like an organic grower, but he or she cannot sell the produce as organic. The food has to continue being sold as conventionally grown, which means lower prices. In essence, for three years, the farmer is spending more to grow something that sells for less. "They're not getting the premium that they would get if it was USDA certified organic," said David Denholm, CEO of Kashi.
Kashi makes cereals and other plant-based foods and has been a pioneer in healthy eating. It sources about a third of its portfolio from organic growers, and it would like to boost that percentage. So the Kellogg-owned brand has started a new label that it hopes will encourage more farmers to switch over. It's called Certified Transitional, a new process in which a third party certification company will monitor and approve farms that are transitioning from conventional to organic.
While Kashi has helped develop the protocol, it is making the process and the label available for everyone, even rivals. "We sent out over 50 care packages to companies, including competitors and noncompetitors, including food and nonfood companies," Denholm said. He wants the idea to catch on so more farmers will sign up. Farmers will still have to pay the certification company to become certified transitional, though Forbes reports they'll pay half what it costs to become certified organic.
At least one wheat farm is already on board, and its certified transitional wheat is going into Kashi's new Dark Cocoa Karma Shredded Wheat Biscuits. The cereal box carries the new certified transitional label and a provocative caption that says, "This cereal is not organic." The idea is to grab consumers' attention.
"A lot of consumers know about organic, they have a lot of intellectual curiosity around organic food, but many don't know that farms face challenges," said Denholm. He said Kashi will release more certified transitional products this year, and the company is paying certified transitional farmers a price that is "somewhere between the price for conventional and the price for USDA certified organic."
This isn't the first time someone has tried to create a type of "in between" label. Whole Foods started "Responsibly Grown" for nonorganic farmers who follow certain practices established by the grocery giant. Whole Foods has also started buying up farmland to create its own organic supply. "We could do that," said Denholm. Instead, Kashi decided it was better to create a standard protocol that anyone could use. "We much prefer the open-source model."
Kashi will have to see if consumers understand the label and take to the idea, if more farmers find it an inducement to switch over to organic and if rivals join in and support the program. That's a lot of ifs, but long term, the goal is to increase the amount of organic farmland, adding more supply to the market, to drive down prices. Denholm said a key part of the Certified Transitional program is that farms become Certified Organic at the end of three years. "A farm can't stay in transition in perpetuity."