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What they are fed and what they actually eat are two different things. They are fed a vegetarian diet.
They aren't necessarily marketing vegetarianism as in the human dietary sense, but answering consumer concerns about livestock being fed animal byproducts.
The National Organic Plan doesn't allow the feeding of mammalian or avian by-products. The only other option for animal protein is fish meal which can be expensive and there is controversy surrounding the sustainability of the continuous menhaden harvest in the Gulf and Atlantic. For an organic farmer it is much easier to grow or source legumes from the local grain markets and use the "Vegetarian Fed" label as a marketing tool, whether the consumer understands what it means, or not.