04 Market report

No. 04

Alarms went off in the organic agriculture industry in spring 2017, when the Washington Post reported that several loads of conventionally grown soybeans and corn shipped from Turkey (and produced in Russia and surrounding nations) had been sold in the United States as organic livestock feed and ingredients for food processing. U.S. sales of organic products from overseas reached $1.65 billion in 2016, according to the USDA’s Economic Research Service. About 40 percent of organic corn sold in the U.S. is imported, and up to 90 percent of the nation’s organic soybean supply is produced in other countries.

No one can estimate what portion of these imports is fraudulently labeled as organic. Even worse, the obstacles to stopping deceptive imports are significant. “The chance of getting caught committing fraud is almost none,” says John Bobbe, who has been studying the problem in his role as executive director of Organic Farmers’ Agency for Relationship Marketing, an organic grain and livestock marketing cooperative. On top of that, an $11,000 maximum fine for using falsified documents to market, label, or sell nonorganic agricultural products as organic is hardly a deterrent when the estimated profit per shipload of imported organic grain is $4 million, Bobbe adds.

Responsibility for all imported goods lies with the law enforcement agency U.S. Customs and Border Protection (CBP). The National Organic Program (NOP), which sets standards for organic certification and oversees the “USDA Organic” label, has no authority to stop shipments or even to track ships carrying organic products destined for the U.S. “CBP can stop shipments, allow shipments in, or put them on hold,” explains Bobbe, who is a member of the Organic Farmers Association Governing Council. “What needs to be worked out is how CBP determines if a shipment is fraudulent or not. The NOP needs to define what criteria should be used.” Solving the problem is even more challenging because the U.S. is one of the few countries that does not require importers, traders, and brokers of organic products to be certified.

In 2017, in an effort to plug these holes in the import system, Representatives John Faso (R-NY) and Michelle Lujan Grisham (D-NM), along with 35 cosponsors, introduced the Organic Farmer and Consumer Protection Act. The legislation would provide the NOP with “resources needed to update [its] tracking technology” and “the authority necessary to crack down on fraudulent organic imports,” says Lujan Grisham. “Fraudulent ‘organic’ grain and feed originating overseas is not only deceptive to consumers, but it artificially drives down the price of real organics, hurting legitimate organic farmers,” Faso says. The bill is now under consideration by the House Committee on Agriculture.

Legislation is not the only recourse to help protect America’s organic farmers, however. Bobbe is advocating for these other measures.

ImplemeNt europeaN guIdelINes The European Commission Directorate-General for Agriculture and Rural Development Guidelines call for complete documentation of imported organic products at the point of entry, and sampling and analysis of each incoming shipment at the port of entry for the presence of residues of prohibited substances.

employ electroNIc records “Electronic transaction certificates would be a big step in the right direction,” Bobbe says. “Europe is moving to this now.” In such a system, the paperwork electronically precedes loading the ship so proper authorities, including regulatory bodies and certifiers, are aware of the cargo and can determine that it is legitimate or request more information. If a fraud alert is triggered, the exchange of information needs to occur between the NOP in the U.S. and other regulatory bodies in foreign countries so that noncompliant shipments can be blocked from entry. moNItor productIoN With weather records, model simulation, and data collection, authorities can accurately project production levels, compare them with the number of products that actually end up in the market chain, and see whether supplies exceed the expected totals.

INspect hIgh-rIsk partIes Focus on where the problems are in the supply chain by permitting NOP-approved inspectors to conduct unannounced visits and testing for certifiers who have previously been found noncompliant or who are the subject of ongoing complaints.

“Imports in large quantities are relegating the U.S. to being a residual source of our organic grain supply instead of a primary source,” Bobbe says. “This has resulted in lower prices for U.S. producers, sending the market signals that less domestic production is needed. We should be encouraging more domestic production, and price is one of the factors that indicates what producers should do.” Massive volumes of fraudulent import shipments saturate the market and diminish the incentives for U.S. farmers to produce organic grains.

9 FARMER VIEWS Protecting the organic seal from fraud— domestic and international—is the leading priority for certified-organic farmers, according to a 2018 survey by Organic Farmers Association. Voting members ranked “enforcement by NOP to ensure organic integrity” as their top concern. They ranked addressing organic import fraud as their second-highest priority. OFA members voted to support the Organic Farmer and Consumer Protection Act, introduced to Congress in fall 2017 by Representatives John Faso (R-NY) and Michelle Lujan Grisham (D-NM) and 35 cosponsors.

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