Don't Get Buried by Organic Claims

By Jeffrey D. Knowles and Todd H. Halpern

Over the past decade, annual sales of organic food has grown by almost 80 percent to $17.7 billion. Demand for organic personal care products, nutritional supplements, textiles, household cleaners, flowers and pet food grew more than 32 percent in 2005, accounting for more than $750 million in sales. Driving this incredible growth are consumers willing to pay a premium for the perceived health and environmental benefits of using organic products. "Organic" has become more than a style of farming. It is a lifestyle choice and a potential pot of gold for marketers.

However, a claim that a product is organic is subject to special rules set forth in the Organic Foods Production Act of 1990 (OFPA). OFPA describes an extensive regulatory scheme, which the U.S. Department of Agriculture (USDA) enforces, that lays out specific rules with which all "agricultural products" must comply in order to be characterized as organic.

FOUR ORGANIC CLAIMS
OFPA defines four specific organic claims, which can be made depending on the percentage, by weight, of the product's organic ingredients. The four claims are "100% Organic," "Organic," "Made with Organic Ingredients" and the identification of certain ingredients exclusively in the ingredient statement as "organic."

"100% Organic" products must be wholly comprised of organic ingredients and processed exclusively with organic processing aids. These products may use the USDA organic seal and the seal of the certifying agent.

"Organic" products must be at least 95-percent organic by weight (excluding water and salt). These products may use both the USDA seal and the seal of the certifying agent.

"Made with Organic Ingredients" products must contain at least 70-percent organic ingredients, and may list up to three organic ingredients on the Principal Display Panel (i.e., the front) of the label and may use the certifying agent seal, but not the USDA seal.

Products that are less than 70-percent organic may only use the term "organic" to identify up to three organic ingredients on the label's ingredient statement. The term "organic" may not appear anywhere on the Principal Display Panel of the label, and the product may not use either seal

Although the OFPA originally contemplated only foods, some consider the definition of "agricultural product" broad enough to cover all consumer products. Ensuring OFPA compliance, even for non-food products, is an option marketers should not ignore. Knowingly violating OFPA can result in a civil penalty of up to $10,000 per violation, and the USDA is not the only organization monitoring compliance.

Marketers who comply with labeling guidelines can gain access to the lucrative and rapidly expanding market for organic products. However, running afoul of OFPA regulations can damage both a company's reputation and its bottom line.

Jeffrey Knowles manages Venable LLP's Government Division and heads the firm's Advertising and Marketing Practice Group. He can be reached at (202) 344-4860. Todd Halpern is an attorney with Venable. He can be reached at (202)344-4984.