Stemilt Sees Potential in Transitional Organic Label

AMY SUNG

WENATCHEE, Wash. — Stemilt here has become one of the first major growers to launch a transitional organic label, and according to industry experts, their move may help chart a course that other large farms and orchards could follow to defray expenses while converting to organic production.

Shortly after the company announced its decision to convert 100% of its peach and nectarine trees to organic production, it introduced its new Artisan Naturals label, intended to highlight the fruits' transitional status. Many of Stemilt's cherry and apricot crops are also going into the Artisan Naturals program now.

“We want to be known as the most premium product you can buy in the country, so our idea was to go 100% organic, and by going organic, we do a couple of things,” said Roger Pepperl, spokesman for Stemilt.

“By going to farming the product naturally with organic farming practices, we'll tend to get a deeper flavor. We were also looking at taking the organic segment, which is a growing market, and saying, ‘Can we convert some customers to 100% organic, who traditionally buy conventional?’”

In marketing the products as transitional, Stemilt has also been able to command a premium of about 10 cents per pound. The company hopes to earn a premium of 20-25 cents per pound once all of its peach and nectarine crops are fully converted to organic, but prices will ultimately be up to the market, Pepperl said.

Converting land to organic production is an expensive, labor-intensive process that requires farmers to do without artificial fertilizers and artificial pesticides for three full years. Many organic industry advocates supported the concept of transitional labeling when the U.S. Department of Agriculture was developing its certification rules, arguing that by allowing farmers the opportunity to sell their harvest at a slight premium during transition, the label would offer a major incentive to those interested in converting their land. USDA ultimately left that issue unresolved, and there are no provisions for transitional organic in the current national laws.

Washington, however, is one of five states that oversee an inspection and certification program for transitional organic products.

“In the last two years, we've seen a definite increase in operations and businesses interested in the transitional label,” said Brenda Book, organic certification coordinator at the Olympia, Wash.-based Washington State Department of Agriculture's Organic Food Program.

The WSDA Organic Food Program began in 1988 and a transitional label was developed in the 1990s, Book said. Even after the USDA decided not to require transitional certification, the WSDA continued implementing its program.

“We continued to have our transitional program, due to the fact that it's our mission to support the organic foods industry by ensuring the integrity of organic products,” Book said. “One of the best ways to do that is to be inspecting and … overseeing the process during that 36 months.

“So, I think it's really exciting that we're seeing consumers actually responding to that transitional label, whether they're responding because it's a bit less expensive than organic — they know it's free of any prohibited materials — or whether they're supporting those farmers who are making that jump to organic.”

Consumer unfamiliarity with transitional labels could pose a challenge, one industry observer noted.

“Transitional is an issue that consumers have been virtually unaware of for the last 10-15 years that we've been looking at organic and natural,” said Michelle Barry, president of Tinderbox, a segment of Bellevue, Wash.-based The Hartman Group that is dedicated to trends.

MAKING THE SWITCH

Only 10%-15% of the population is even aware that a farm needs to go through any sort of a period between being conventional and being organic, Barry said. That lack of consumer knowledge about organic standards, certification and farming techniques makes the transitional label less meaningful or powerful than it might otherwise be.

“Having said that, we are starting to see a slight increase in consumer awareness about the differences between conventional, natural and organic, and this idea of transitional — we've seen some retailers and manufacturers start to use it, so I think that as more and more begin to talk about it, we might see the awareness go up a little bit,” Barry said.

In the meantime, growers and retailers marketing transitional products will need to focus on communicating that narrative themselves, describing how the products are grown and harvested differently, and what other aspects of the product make it stand out from its conventional competitors, she added.

Book agreed, noting that, just like the USDA Organic label, a lot of education is involved. Unfortunately, even as shoppers are becoming more familiar with what “organic” means, the term “transitional” presents another educational hurdle. Under WSDA rules, the transitional label can be used if products have been free of artificial pesticides, fertilizers and other prohibited materials for at least one year, compared with three years for a USDA organic label.

“All the other requirements are the same, but [due to USDA certification requirements] they can't call it organic at all,” before completing the three-year transition period, Book explained. “Without that term ‘organic’ in there, transitional might be a little confusing to folks without that education.”

Pepperl said Stemilt believes that the Artisan Naturals boxes and logo communicate three messages that the company felt were important.

“We wanted to get a closer tie to the consumer to try to explain the program to them really quickly,” he said. “So we wanted a box that gave the feeling that it was natural … we wanted to exude that feeling through the box and through the label. A lot of these boxes get used in waterfall displays, so the boxes are seen by the consumer.

The boxes are sustainably manufactured and say at the bottom, “Naturally farmed for ultimate flavor.” Flavor has been another key component of the labeling, Pepperl said, noting that the colder winters in the Pacific Northwest make the region produce more intensely flavored tree fruit.

“The last reason is an obvious reason — we wanted to have a consumer label that we could market against.”

EDUCATIONAL CHALLENGE

Some in the industry note that educating consumers about the process farms must undergo to become organic has been a challenge, but transitional labels could be a boon for the industry.

“There definitely is a need,” said Holly Givens, spokeswoman for the Organic Trade Association. “I think it's helpful for shoppers to be able to know if someone is moving in the direction of more ecologically sound farming practices, and to be able to support them while they're undergoing their learning curve or while they're still switching over. For some shoppers, I'm sure that they would want to be able to encourage those businesses that are taking the steps toward organic production. If the labeling of those products is helping with that, then I think that's a good idea.”

Book said she believes transitional regulation is “a way that the organic integrity can be protected, because the product is under an inspection system those whole 36 months. In the long run, these products will eventually become organic. Transitional certification is just a very temporary thing, where organic is the end goal,” she added.

Pepperl noted that there is currently a shortage in organic stone fruit supply, leading to a steeper price gap between conventional and organic than shoppers may be used to seeing with other types of produce.

“We're hoping to bring that spread in pricing down to a more realistic level, where it can compete as a premium product,” Pepperl said.

The decision to convert 100% of Stemilt's peach and nectarine trees to organic was made approximately 18 months ago. The Artisan Naturals label was created last fall, during the off season, to be ready for this summer's crops, making its debut on Stemilt cherries in June 2007, according to Pepperl.

Stemilt expects its organic acreage to more than double by 2009, Pepperl noted.