LaCROSSE, Wis. - Fake organic grain imports are becoming an increasingly heavy weight that could sink some U.S. organic farmers.
Fraud allegations loomed large at the Midwest Organic and Sustainable Education Service (MOSES) conference and trade show in LaCrosse, Wis., on Feb. 21-23. It's billed as the largest event in the U.S. about organic and "sustainable" farming, with dozens of workshops and roundtable discussions. The trade show attracts 170 vendors and 3,000 attendees.
Taking some of the heat was Betsy Rakola, director of compliance and enforcement for the National Organic Program in Washington, D.C., who met privately with a group of about 40 concerned farmers and marketers in an impromptu breakfast meeting, then hosted an open breakout session.
Rakola said the NOP has responded to complaints by the industry, revoking some organic businesses overseas. In some cases, fruits and vegetables are fumigated with chemicals which are prohibited under organic standards. But she said NOP is seeing the "growth in supply chains that are becoming very, very complicated."
"The more 'handoffs' there are, the more potential there is for breakdowns," Rakola said. "If something is grown in a country like Ukraine and passes through Turkey, and first comes to Baltimore and then to Stockton (Ca.) there are just so many parties that kind of touch it."
She says NOP has just a "tiny little team" of about six auditors, but has plans to hire more.
Boatloads of $$
American organic appetites have grown faster than NOP enforcement, and as the counterfeits move in, the price collapses so that U.S. producers can't afford to expand.
John Bobbe, executive director of the Organic Farmers' Agency for Relationship Marketing Inc., was one of the panelists on an organic fraud panel. Bobbe said a shipment of imported soybeans carried a $4 million premium for being organic, but was levied the maximum fine of $11,000 for failing to be genuinely organic, according to a Washington Post investigation.
The NOP has generated a list of 90 fraudulent importers but so far no one has been charged with criminal fraud.
"They're making boatloads of money on this deal," said Bob Stuczynski, an Amherst, Wis., farmer on the panel.
Bobbe said some of the sources of fake organic corn in the Black Sea are from areas of the world where genetically-engineered grain supposedly is not grown. In that case, regulators would need to check for a "residue of a banned substance like glycophosphates," a weed killer and crop desiccant, though the U.S. Department of Agriculture has had "mixed results" in testing on that.
The panel said it appears the majority of the fake imports are going to large-scale "organic" dairies in "arid regions" and to some of the nation's largest chicken producers.
These, in turn, can low-ball prices on other organic dairies who have seen their prices collapse in the past two years.
Six large organic dairies in Texas, produce half of the "so-called organic milk" produced by all of the 450 organic dairies in Wisconsin, audience members chimed. One cheese plant in northwest Wisconsin told a local milk co-op that as of March 1 it will stop taking milk from local farmers and instead will import "organic" milk from Texas at $22 per hundredweight, delivered.
OFARM and the Food and Water Watch organization filed complaints with the USDA's Office of Inspector General in September 2016 and 2017. The OIG report acknowledged that the Agricultural Marketing Service was "unable to provide reasonable assurance that NOP-required documents were reviewed at U.S. ports of entry to verify that imported agricultural products labeled as organic were from certified organic farms," Bobbe said.
Bobbe thinks the weak link is that traders, brokers and importers don't have to be certified organic, Bobbe said.
"Anybody in this room could go out and bring in a shipload of grain," he said. "They're depending on a certifier to pick it (a discrepancy) up when the grain reaches the buyer, which is a very poor way of doing it."
Bobbe is urging the U.S. to replicate a European system of requiring extensive records checking and residue testing from certain suspect countries, including Turkey, before the ships are loaded.
"What it's going to take is electronic certificates, which we don't have now," he says.
Panelest Thea O'Carroll, founder and chief executive of Yield Organic, a Texas company that helps organic growers connect to buyers, said 82 percent of buyers are looking for organic products. Despite proof of fake organics, she knows of no recalls on fake organics.
Andy Allen, a Caledonia, Minn., farmer who was attending the meeting, plans to transition his 460-acre crop farm into organic grains. He said he was surprised to hear about all of the fraud. "That's definitely going to be a factor," he said.
Panelist Carmen Fernholz, an organic leader from Madison, Minn., urged growers to seek more marketing information and work together. He said they failed to do that when they lost Country of Origin Labeling laws.
Rakola said the NOP is asking for more information and is making more "unannounced inspections and testing for everyone along the supply chain," but acknowledged, "we're not there yet" for adequate enforcement.
Rakola says her small compliance staff of six auditors gets about 400 to 500 questions or complaints per year of people suspecting someone isn't following organic standards. The agency deals with third party "certifying agencies" about "certified operators," but noted 75 percent of the complaints are about non-certified sources. The NOP can suspend or revoke organic certification.
Anyone selling more than $5,000 in products and using the word organic in their promotion must be certified. Organic laws specify that it is illegal to even use terms like "produced 'with organic methods,'" and not be certified, because it creates confusion for consumers.