1. Industry
Send to a Friend via Email

Your suggestion is on its way!

An email with a link to:

http://organic.about.com/od/OrganicCertificationCosts/tp/Organic-Certification-Costs-To-Consider.htm

was emailed to:

Thanks for sharing About.com with others!

You can opt-out at any time. Please refer to our privacy policy for contact information.

Organic Certification Costs to Consider

Financial issues to consider before you transition to organic

By

There's no doubt that organic certification can increase profits. Organics continue to grow in popularity, with consumers willing to pay more for organic goods. However, getting certified can be expensive, especially in the beginning, although there are also ongoing costs to consider as well. It's not just the certification costs you'll have to contend with but other hidden costs you may not have thought of as well.

With this in mind, before you transition to organic, really consider your financial situation to make sure you can afford the added costs of going organic.

1. 1st Time Organic Certification Costs

Some certification costs can be solely attributed to the actual organic certification process. Cost associated with 1st time organic certification may include:

  • Application fees.
  • Actual cost of organic certification certificate, if approved.
  • Inspections, which may include travel costs of your certifying agent.
  • Certification assessments.
  • Export documents, if you plan on selling out of the U.S.
  • Residue testing.
  • Additional facility fees - for example, if you have two processing plants.
  • Training expenses.
  • Add-on acreage or products.
  • Membership fees.

Costs associated with 1st time organic certification vary wildly, so be sure to ask your certifying agent up front about all costs involved.

2. Ongoing Annual Certification Costs

Like 1st time costs, annual ongoing costs also vary depending on your agent. However, some typical ongoing certification costs may include:

  • Annual application renewal fees (usually less than 1st time fees).
  • Inspections, which may include travel costs of your certifying agent.
  • Residue testing.
  • Training expenses.
  • Membership fees.

3. Time Costs

Time is money, and when it comes to organics, you have to factor this in, because organics simply take more time. An organic operation can expect to spend more time than a conventional operation on tasks such as:

  • Wait periods - for example, your land must be organic for three full years before you can sell any crops as organic. This is a major expense, because you're expected to run your farm organically, which is expensive, without getting to reap the benefits of more profit.

  • Record keeping.

  • Crop production and livestock care.

  • Marketing, which will take longer because people don't know as much about organics as they do conventional products.

  • Paper work associated with organic certification, including your organic system plan.

  • Keeping up to date with standards, policy and the national list.

  • Educating customers about your organic products.

  • Hunting down organic goods, like seed and ingredients.

  • Planning around availability. For example, if you run an organic restaurant, you'll have to factor in menu changes, ingredients and other availability issues ongoing.

  • Training employees about how to handle organics vs. non-organics.

  • Organic practices, such as preventing commingling can take more time.

  • Finding suitable buyers for organic crops and products.

Obviously, the time needed to run an organic operation will vary by scope of the business, but in most cases, organic operations will generally take more time to run than a conventional peer.

4. Organic Land

Finding organic land is a time factor, and thus a money factor all on its own, but affording that land can also be a problem for a new organic farmer. If you already own land, you may need to make time-intensive and sometimes costly changes to your land in order to make it organic-suitable.

If you raise organic livestock, you'll also have to consider if you have enough room on your land for the required assess to pasture and you may need to make structural changes to your livestock housing.

5. Equipment & Other Large Purchase Costs

When you transition to organic, you may need to invest in some large purchases such as new machines and livestock with an organic origin. If you have a split facility that processes organic products, machinery can be an especially major cost as you have to prevent organics and non-organics from commingling, thus may need double machines for some processes.

6. Regular & Ongoing Organic Costs

Organic producers and processors will spend more money ongoing because organic products cost everyone more, even certified businesses. Examples of just some of the ongoing, more costly organic business products you may need include:

  • Organic seed.
  • Organic livestock feed and health care supplies.
  • Organic amendments and other inputs.
  • Organic ingredients (for processors).
  • Non-chemical packaging.

7. Marketing Costs

Above I noted that marketing organics is a big time suck, and that's true, but you'll spend more than time on marketing costs. In many cases, you'll have to spend actual money as well. Advertisements, paper flyers, websites and more all cost money. Less money than many other aspects of going organic, but money all the same.

8. Getting Financial Help

There's a good chance that all of these costs sound overwhelming to you. It would be shocking if they didn't. The good news is that there are some ways to get financial assistance and also some ways to cut your costs.

©2014 About.com. All rights reserved.