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021030 USDA to Label Organic Foods

October 21, 2002

Washington - New labels appearing on some organic foods this week will tell consumers the products were grown by a specially certified farmer who does not use conventional pesticides, fertilizers or biotechnology to produce them.

The labels are part of a set of standards the Department of Agriculture adopted to eliminate consumer confusion over which foods are organic. Until Monday, standards had varied from state to state and company to company.

"Today, when consumers see the USDA national organic seal on products, they will know that the products labeled organic will be consistent across the country," Agriculture Secretary Ann Veneman said in a statement.

Foods that are from 95% to 100% organic will be labeled as such and may carry a green USDA organic seal. Farmers and food processors must be certified by USDA-approved agents in order for their meat, grain, fruit and vegetable products to carry the labels.

Products that are at least 70% organic may be labeled as "made with organic ingredients" or "contains organic ingredients" but will carry no USDA seal.

Many specialty grocery stores that offer hundreds of organic foods celebrated the new standards, holding press conferences and offering consumers leaflets explaining the new labels. But the reaction from stores that view organics as a small niche market was more subdued.

Alternative grocery stores and leading chains have different goals in mind when serving their customers, said Ron Margulis, a spokesman for the National Grocers Association.

Specialty stores usually focus on serving certain ethnic groups or consumers with special preferences, Margulis said. Chain stores, though, tend to have contracts with food manufacturers to carry certain products, he said.

"If I'm a chain store, I might not have as much leeway to address that need because my corporate headquarters has made all sorts of agreements with manufacturers that may or may not include natural organic foods," Margulis said.

The major chains have better economies of scale and can offer lower prices on food, he said. Small alternative stores, on the other hand, have more freedom to tailor their supplies to address consumer demand.

Organic products are becoming more popular and are part of an expanding market. Organic food sales have increased steadily, from $3.5 billion in 1996 to $7.8 billion in 2000, according to the Agriculture Department.

The Midwestern supermarket chain Hy-Vee Inc. hopes to profit from the increase in demand for organic foods by adding to the 40 different organic products it already offers, said Hy-Vee spokeswoman Ruth Mitchell.

"We've been expanding our organic line now pretty seriously for the last two years," Mitchell said. "We've added a new private label called Hy-Vee Health Market. Five years ago we didn't even have that label."

Hy-Vee did not hold any special events Monday to educate consumers about the new standards, but Mitchell said most organic shoppers are well-informed about the rules.

Robert C. Blattberg, a marketing professor at Northwestern University's Kellogg graduate school in Illinois, said he can't say why more conventional grocers haven't tapped into the organic market more. "It baffles me," he said.


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