USDA Bookkeeping Snafu Leaves Certified Farms with Less Cash in Their Pockets
Many certified organic farmers and handlers received a rude and expensive shock last summer when they submitted their request for reimbursement on their certification fees. For many of us, that reimbursement—historically, 75% of the fee we paid—has helped keep the financial burden of certification manageable.
But in the summer of 2020, USDA’s Farm Services Agency (FSA), which administers the reimbursement program, cut reimbursement rates for 2020 certification costs to 50%, suddenly raising the costs of certification for most operations by hundreds of dollars.
“This action left organic operations burdened with an unplanned expense, in the midst of a period of higher costs and disrupted markets caused by the pandemic,” said Patty Lovera, Policy Director for the Organic Farmers Association. “The cost share program is particularly important to small and mid-sized organic farms, and those who are just starting out with organic certification.”
How did this happen?
As it has for many years, the most recent Farm Bill, passed in 2018, provided funds for certification reimbursement calculated at 75% of costs. The money to pay for that reimbursement is drawn from two pots—new money, and previous-year funds not spent and carried over. “The carryover funds appear to be the source of the problem,” Patty said. You might think that tracking those funds should be straightforward, and that one of the oldest and largest of federal departments wouldn’t find itself caught short, but that is in fact what happened.
The problem seems to be in the way the cost-share funds are handled at the state level, Patty continued. Some states disburse money through offices of the Farm Services Agency, a federal agency. Other states, for historical reasons, receive a lump sum from the federal government and disburse it through the state agriculture department or even the certifier.
Not every penny sent to the states is spent, and that unspent money is a significant source of the carryover funds that the federal cost-share program was relying on it in determining its budget. Unfortunately, the amount of unspent money left in those multiple state-level accounts was over-estimated, leading to a smaller-than-necessary request for new money. FSA was rather late in discovering its error; hence the mid-summer announcement.
The Organic Farmers Association is trying to get Congress to rectify the situation, and has written to the Biden administration to urge them to act. “While this is a relatively small amount in the scope of the USDA’s budget, restoring the reimbursement level could make a big difference to many small organic operations,” Patty said. While OFA has not yet heard of farms who have decided to forego certification this year because of the drop in reimbursement, “that is our fear.”
Want to help? You can urge your Senators and Representatives to take action to restore full funding for organic cost-share reimbursement. “They may need a little education to get them up to speed on the issue,” Patty noted. Those calls and letters may be especially helpful coming from constituents of Representatives Chellie Pingree of Maine, Jim McGovern of Massachusetts, Jahana Hayes of Connecticut, Ann McLane Kuster of New Hampshire, and Antonio Delgado, Sean Patrick Maloney, and Chris Jacobs of New York, who sit on the House Agriculture Committee, and Senators Patrick Leahy of Vermont, Cory Booker of New Jersey, and Kirsten Gillibrand of New York, who sit on the Senate Agriculture Committee.
You can write your own letter, or use the form at OFA: https://organicfarmersassociation.org/take-action/
This takes about one minute, and will be delivered to your Representative and Senators. Do it today!