Fraud cases in the US: how conventional became organic

Picture ©transgen.de: Worldwide production of GMO and Non-GMO soybean

In an article in the Washington Post, the investigative journalist Peter Whoriskey reports the case of three shipments of so-called organic corn and soy to the USA After thorough research, it established the origin of the shipments and revealed organic fraud on a massive scale. In response the Organic Trade Association (OTA) calls on the U.S. Department of Agriculture and the National Organic Program to thoroughly and immediately complete investigations of any reports of fraudulent imported organic livestock feed either alleged in the story or otherwise reported by trade.

Three faked shipments

Peter Whoriskey wrote the first shipment of 46 million pounds “organic” corn arrived in the USA a year ago. The Romanian company that provided the corn is not certified organic and receipts show that the corn was initially purchased at the conventional, not the organic price. The second shipment, soybeans from Ukraine that passed through Turkey, arrived in December 2016. With the help of certificates The Post was able to trace the soybeans from California to Turkey and to their origin in Ukraine. The documentation indicates that this cargo was not organic: the soybeans were fumigated with tablets of aluminium phosphide, a pesticide prohibited under organic regulations. Some of the soybeans originated from ADM Ukraine, a company that does not produce or trade organic soybeans and claims it did not sell or label them as such. Although originally priced at the level of conventional soybeans - about $360 per ton - when they arrived in the United States the price was almost $600 per ton. So while in transit the cargo acquired the USDA Organic label and their value rose by around $4 million.

The third consignment that arrived in March involved 46 million pounds of organic corn shipped from Romania to Turkey and then to the USA. The Romanian company that produced the corn is not a certified organic company and sold the corn at conventional prices. By the time it reached the United States, it was labelled organic and its price had risen by 72 percent. When The Post contacted the broker, over half the soybeans had been been distributed to customers.

The Post has demonstrated the failure to ensure that USDA Organic really means organic. The three shipments constitute a substantial proportion of these commodities entering the US. All three were presented as organic, and all three were from or passed through Turkey, one of the largest exporters of organic products to the United States.

USDA controls

USDA officials maintain that their system for combating fraud is robust. Although most food sold as “USDA Organic” is grown in the United States, at least half of organic corn, soybeans and coffee come from as many as 100 countries. A company importing an organic product must verify that it comes from a supplier with an “USDA Organic” certificate, but the importer does not have to trace the product back to the farm. The system is open to fraud because of weaknesses in the enforcement of the rules. Importing often involves middlemen who are in a position to relabel conventional goods as “organic”. Products with an “USDA Organic” label sell for a much higher price than their conventional counterparts. In recent years, the volume of organic corn and soybean imports has more than tripled, but the USDA has not issued any major sanctions for importing fraudulent grain and the chance of getting caught is not very high. In Europe and Canada the import rules for organics are much stricter.

The onus is on USDA to detect fraudulent imports and to prevent these products reaching consumers. It was 4 months  after The Post began making its enquiries that officials acting on behalf of USDA  took samples to test for  pesticides. While John Bobbe the executive director of the Organic Farmers’ Agency for Relationship Marketing, or OFARM, a farmer cooperative explains that in Europe and Canada import rules for organics are much stricter, he said:.“The U.S. market is the easiest for potentially fraudulent organic products to penetrate because the chances of getting caught here are not very high.” The OTA urges: „The oversight of foreign organic suppliers and the enforcement of organic standards must be rigorous and robust. Consumers trust in the organic label.“

Further the trade association call for to protect a „growing industry from any potential activities that are exceptions to the rule requires a modernized approach to trade oversight. Such an approach utilizes the latest technology to audit imports back to the farm and facilitates investigations where certifiers, inspectors, the National Organic Program, and other government agencies share information readily to investigate and resolve allegations of fraud quickly and effectively.“

See more at the OTA website.

Turkey criticized by international authorities

The shipments of organic corn and soybeans examined by The Post passed through Turkey, a country whose organic exports have have been criticised by international authorities. For example, in 2013 a report by the Swiss Research Institute of Organic Agriculture found that half of European importers and Turkish handlers had detected pesticide residue on organic products from Turkey.

USDA statistics show large spikes in the organic corn and soybeans entering from Turkey: between 2014 and 2016, the volume rose from 15,000 metric tons to more than 399,000 metric tons and organic soybeans rose from 14,000 metric tons to 165,000.  Since it can take three years for conventional land to be converted to organic, where did this huge increase come from?

Conclusion: ”The theme of organic Integrity is still hot”

Goods relabelled organic, customers unaware of the fraud, the economic effects on American organic farmers of the huge increase in organic imports from Turkey – Miles McEvoy, chief of the USDA's organic programme, commented to US organic farmers at a conference earlier this year that, given the complex supply chain of organic grain, “there are challenges.”The theme of organic Integrity is still hot”, a European organic market insider says. Till two years export of organic soybeans from Turkey to the USA increased very much and nobody knows where in Turkey so many organic soybeans could be found. “I hope that the US authorities will finally take action and protect their markets with similar measures as the EU does”, he says.