Organic Market Development Grants

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This program will support the development of new and expanded organic markets by providing additional resources for businesses transitioning to organic or initiating new organic production and processing capacity. These investments in certified organic infrastructure, expanding capacity for aggregation, processing,[1] manufacturing, storing, transporting, wholesaling, distribution, or consumer markets, and supporting activities which develop new markets, are anticipated to increase demand for domestically produced organic agricultural products and provide additional market paths. Domestic organic producers and handlers have identified the development of new and expanded organic infrastructure, capacity, and markets as critical needs through public comments and listening sessions.Organic production and markets play a critical, expanding role in further diversifying food systems. Consumer demand for organically produced goods surpassed $63 million in 2021, and multi-year trends of strong growth in the sector provide market incentives for U.S. farmers across a broad range of products. Organic sales account for over 4 percent of total U.S. food sales and organic products are now available in nearly 20,000 natural food stores and nearly 3 out of 4 conventional grocery stores.However, stakeholders have conveyed that producers may be less willing to commit to the three-year transition to organic certification because of risks related to inadequate organic processing, storage, and handling capacity, cost barriers due to limited markets for rotational crops, a lack of certainty about market access, and insufficient supply of certain organic ingredients. The organic livestock and processed product markets depend heavily on imported agricultural products for feed grains and key ingredients. These longstanding market issues facing organic livestock feed stocks, rotational crops, dairy, fiber, and ingredients were brought into sharp focus due to the impacts of COVID and international conflicts in critical overseas organic supply areas, resulting in limitations on certain organic products in the face of rising demand.Further, existing organic producers lack market access because of bottlenecks in certified organic processing, storage, specialized equipment, and handling/shipping, which have not kept up with the growth in organic crops or the demand for organic products.  Producers of organic commodities often lack the resources or the capacity to build processing infrastructure, which is also outside the business model for end-use consumer food manufacturers or animal feed buyers. Certain regions also lack certified organic processing capacity, meaning that local and regional organic producers must either pay increased shipping costs or sacrifice organic price premiums by processing their commodities at non-organic facilities, which removes the ability to sell the product as “organic” to the consumer.  These middle-of-the-supply-chain bottlenecks limit markets for raw organic commodities and cause some producers to sell organic commodities at conventional prices, missing premium prices for organic animal feed and processed consumer products.Implementation of the Organic Market Development Grants program is intended to align with numerous policy goals and objectives across government, including, but not limited to: Ensure equitable access to USDA programs and benefits from USDA-funded projects and support the policies of Executive Order 13985 (Executive Order on Advancing Racial Equity and Support for Underserved Communities Through the Federal Government).Contribute to the resilience of the food and agricultural supply chains through support for diversified, value-added agriculture such as organic production and support the policies of Executive Order 14017 (Executive Order on America’s Supply Chains).Promote competition in the organic sector and support the policies of Executive Order 14036 (Promoting Competition in the American Economy).Implement the Build America, Buy America (BABA) Act. Guidance on BABA requirements for USDA award recipients is available here.    [1] As defined in the USDA Organic Regulations at 7 C.F.R. § 205.2, processing includes cooking, baking, curing, heating, drying, mixing, grinding, churning, separating, extracting, slaughtering, cutting, fermenting, distilling, eviscerating, preserving, dehydrating, freezing, chilling, or otherwise manufacturing food and agricultural commodities. Processing also includes packaging, canning, and jarring food.

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