A Few Bad Actors are Ushering in a new Organic Scene

It shouldn’t have come as much of a surprise. Organic corn and soybean growers across the Midwest have been kvetching about cheap imports fouling up their markets for years. USDA import data showed an enormous rise of organic soy and corn from Eastern European markets, quickly surpassing the traditional countries of origin like Argentina and Canada. When the Washington Post story on organic fraud hit, organic advocates winced, and the farmers uttered “I told you so.”  But the actions of a few unscrupulous performers may provide an opportunity for organic in the long run.

A Few Bad Actors

Author Peter Whoriskey had been investigating the situation for quite some time. His article patently outlined how 36 million pounds of soybeans started out as conventional from the Ukraine but were “transformed” into organic by Turkish handlers when they arrived in California. There were at least two previous shipments that had allegedly already entered the U.S. supply chain.

The Post article outlined some of the weaknesses in USDA organic when middlemen are involved. Under the USDA regulations, an import company must verify that organic product has come from a supplier that has a USDA Organic certificate. They must keep receipts and invoices, but they don’t always trace the product back to the farm.

The Motivation to Cheat

Organic corn and soy has a 30-50% premium over conventional prices. That can mean millions of dollars in profit for those bad actors who want to cheat the system. There isn’t enough organic corn and soy to satisfy the domestic market, so imports have more than tripled to meet the demand. The enforcements in place haven’t been vigorous enough to thwart the temptation, and domestic farmers have paid the price to compete with unscrupulous players.

The USDA Gets the Show on the Road

For centuries Turkey has been the artery of commerce between East and West, Asia and Europe. As organic imports jumped from countries like Ukraine, Romania and Croatia they all came through the Turkish “Golden Horn.” USDA had been investigating reports of fraud on organic soy and corn from Turkish handlers for nearly a year.

The Washington Post exposé led to further investigations, and ultimately the USDA revoked the organic certification of Beyaz Agro, the Turkish handler who sold the shipment of fraudulent soybeans into the U.S. The USDA investigators found that the soybeans had been fumigated with aluminum phosphide, tacitly prohibited by the National Organic Program.

USDA investigations on additional fraudulent activities are ongoing and may lead to more revocations and penalties.

In an attempt to prevent other bad actors, the USDA is hosting a webinar on Wednesday, June 28^th from 1-2 pm Eastern to review Organic Integrity in the Supply Chain. This training is for organic handlers who play a vital role in the global organic control system. It will help prevent fraud inside and outside of the United States and help assure that the oversight of foreign organic suppliers is rigorous and robust.

OTA Sets the Stage for Action

The Organic Trade Association (OTA) was swift in setting up a Global Organic Supply Chain Integrity Task Force to address the vulnerability displayed in the fraudulent imports of soy and corn from Turkey. The mandate of the task force is to develop a best practices guide to use in managing and verifying global organic supply chain integrity and to help brands and traders manage and mitigate the risk and occurrence of organic fraud. The task force will report on their findings this September at Expo East in Baltimore.

The OTA is also advocating in the Farm Bill that USDA/NOP give Congress a formal review each year on enforcement activities and practices especially as it pertains to imports.

Future Organic Supply Waiting in the Wings

After all the unlawful tragedies many U.S. companies want to source more organic grains from American farmers, but there aren’t adequate supplies to satisfy the huge demand required for feed in organic dairy, eggs and meat production.

There simply aren’t enough organic farmers or organic acreage in the U.S. The three-year barrier to organic certification is risky and expensive for many organic growers to endure.

That is the very reason the OTA pushed the USDA for a certified transitional organic program last year. So producers could identify their transitional product and get better prices during the three-year transition period. During the last Administration the USDA signed off on the program, but it is still under review by the current Administration.

The Show Must Go On

It is essential that we develop better enforcement tools and oversight of organic producers and handlers. Monitoring the entire global supply chain is essential for the integrity of the USDA organic seal. Let’s determine what best practices and models already exist that we can utilize for organic verification and enforcement. Adopting stronger processes will only make the USDA organic seal stronger.

We must urge the USDA to begin certifying operations to the transitional organic program so we can begin fostering the next generation of organic soy and grain farmers. U.S. farmers should have the opportunity to enjoy the economic benefits of organic production. More U.S. organic farmers will create brighter, stronger rural economies.

Let’s turn the drama of a few bad actors into a new scene for organic.