Farm Transitions: Valuing Sustainable Practices—Certification Costs

Certification costs involve several different types of fees: application fee, annual renewal fee, assessment on annual production or sales, and inspection fee (1). Since some of the cost depends on gross annual production or sales, costs per acre can vary greatly depending on the value of the crop grown.

This example uses certification cost figures from the Minnesota Crop Improvement Association (2), but note that certifying agencies vary in their charges. The example assumes a U.S. Midwest (MN, WI, or IA) organic farm size average of 190 acres and gross annual sales average of $129,000 (3).

  • Base certification fee: $325
  • Annual membership: $50
  • Inspection fee: $150 (assuming 2 hours at $75/hour)
  • % of gross sales: $645 (0.5% of $129,000 in sales)
  • TOTAL: $1,170 total certification cost for the farm.

The USDA offers 75% reimbursement of organic certification costs once a farm is certified (1).

  • $1,170 x 0.25 = $292.50 certification cost after 75% reimbursement
  • $292.50 total certification cost /190 acres = $1.53/acre (round up to $1.60/acre)

References:

(1) FAQ: Becoming a Certified Operation. 2012.USDA, National Organic Program. www.ams.usda.gov/AMSv1.0/ams.fetchTemplateData.do?template=TemplateN&navID=NOPFAQsHowCertified&topNav=&leftNav=NationalOrganicProgram&page=NOPFAQsHowCertified&description=FAQ:%20%20Becoming%20a%20Certified%20Operation&acct=nopgeninfo

(2) Organic Fee Schedule and Scale of Sanctions. 2011. Minnesota Crop Improvement Association. www.mncia.org/assets/documents/pub/organic/Organic_Fee_Schedule_and_Scale_of_Sanctions.pdf (accessed 8/23/13).

(3) Farms, Land Use, and Sales of Organically Produced Commodities on Certified and Exempt Organic Farms: 2008. In 2008 Organic Producers Survey. USDA National Agricultural Statistics Service. www.agcensus.usda.gov/Publications/2007/Online_Highlights/Organics/organics_1_01.pdf(accessed 8/23/13).