Statement of the Organic Farmers’ Agency for
Relationship Marketing, Inc. (OFARM) to the
National Organic Standards Board (NOSB)
Nov. 16, 2016, St. Louis, MO
By John Bobbe, OFARM Executive Director
Added November 16, 2016. The Organic Farmers’ Agency for Relationship Marketing, Inc. (OFARM) is incorporated in the State of Minnesota as a cooperative marketing-agency-in-common. OFARM has six organic grain and livestock marketing cooperatives as members. OFARM represents organic producers in 19 states from Montana to Texas and Louisiana to Kentucky, Michigan and states in between. USDA has cited OFARM as the largest farmer controlled block of organic grain in North America (Rural Cooperatives, January-February, 2012).
The U.S. organic market has been deluged with imports of organic corn and soybeans that are highly suspect as to their organic integrity.
Current USDA FAS GATS data shows that Turkey and, Ukraine up until last year as being top exporters of organic corn and soybeans to the U.S. in 2016 (July, Turkey, 930,000 bushels of corn, 333,265 bushels of soybeans; August, Turkey 1,178,308 bushels of corn, 215,210 bushels of soybeans) This trend is on pace to be almost a million bushels of corn into the U.S. per month in 2016.
The rise of imports from Turkey especially raises concern as have imports from the Ukraine and Romania. A 2016 report by USDA’s Foreign Agriculture Service summarized the potential for fraudulent activity in the Turkish organic sector:
“According to a EUROPOL report, some Turkish companies have been involved in relabeling or repackaging products as organic and bringing the counterfeit products into the European Union, even though the products do not meet the EU’s organic standards. Reports from the Research Institute of Organic Agriculture (FiBL) in 2013, Eurofins Scientific in 2012, the Cornucopia Institute in 2013 and the French Ministry of the Economy in 2015 uncovered fraud or unapproved production methods in organic products from Turkey. There have also been instances where a few Turkish companies were found to have been using fraudulent organic certificates. Turkish news articles report that consumers may be misled by conventional products that are marketed as organic, mostly in open air bazaars or independent stores where a vendor could more easily sell a fake organic product. Although inspections and transparency in the Turkish organic food sector are improving, the integrity of organic farming, production, shipping and marketing is not always guaranteed.” 1
One Turkish organic certifier, ETKO, has been decertified by the EU.2 The introduction of additional testing regimes in the EU has reportedly led some traders to prefer to ship to non-EU destinations (including the United States), as there is less risk of rejection in U.S. markets.3 In addition, the Canadian Food Inspection Agency has also decertified ETKO. Yet ETKO remains on the USDA Integrity Data Base with no mention of its decertification elsewhere in major world markets.
In the words of one western Asian certifier regarding the situation in the Ukraine, they consider the situation too dangerous to do on-farm certifications. The civil unrest in Turkey with 32,000 people currently in jail or under arrest and it is hard to see how “organic integrity” in the market chain can be maintained with the biggest exporter to the U.S.
As the organic market grows rapidly around the world, resulting shortages in the supply of various commodities can create a tempting situation for those who do not value the integrity of the organic standards and see a potential to ship products fraudulently labeled as organic. The potential for fraud is being acknowledged by some participants in the organic sector. With regard to both Turkey and Ukraine, an Anti-Fraud Initiative has been established to “improve cross border communication among inspection and certification bodies, trade companies, label organizations and authorities to strengthen organic integrity.”4 The fact that fraud is a serious enough concern to trigger the creation of this network, and international workshops with titles such as “Best practice examples to guarantee integrity of organic exports from Turkey,”5 should provide sufficient motivation to the NOP to dedicate more effort to this issue. An attendee at the Ukrainian workshop that I met with from a Western Asian country (NOP accredited certifier) wondered why they were even there when the focus was on what to do about the widespread fraud in organic.
In meetings I have personally had in both Europe and western Asia, with farmers and a certifier, (NOP accredited), statements were made that the U.S. is an easy mark with less chance of getting caught for fraudulent organic exports then most anyplace in the world. Although the NOP reminding importers of handling regulations is commendable, (July 13, 2016), simply reminding importers is not enough. Threats of fines and other enforcement actions have been publicized. A fine of the stated maximum of $11,000 amounts to about 2-2.4 cents per bushel on a shipload of organic grain, a mere cost of doing business.
What is needed to begin correcting potential fraud and integrity of organic imports is for the NOP to be pro-active instead of reactive. A first step would be to require importers to be certified by an NOP accredited certifier.
Additional steps beyond this are needed to re-establish U.S. organic using the European Union’s protocols as a model.
In December, 2015, The European Commission issued the fol-lowing document to cover 2016: GUIDELINES on additional official controls on organic products imported from Ukraine, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Uzbekistan and Russian Federation
Specifically, the document requires the following:
(1) Tracking and identification of all consignments of imported organic food and feed
(2) Complete documentation check at point of entry. The complete documentation of these consignments shall be verified systematically:
a. Certificate of inspection, boxes 1 to 15
b. Documents of custom declaration
c. Transport documents
d. Operators and product traceability: verification of names, addresses and valid certification of all operators in the trade flow
(3) Sampling and analyzing for presence of pesticide residues each incoming consignment at point of entry
In a joint September 1, 2016 letter submitted by Food and Water Watch and OFARM to the USDA’s Office of Inspector General, we called attention to this major problem and urged the OIG to take a careful look at the potential for non-organic products, especially bulk commodities like grains, to enter the U.S. market and be sold as organic. The letter stated, “Specifically, we urge you to examine:
What procedures does NOP have to assess whether the EU’s processes for accreditation and certification are adequate to ensure the integrity of bulk shipments of commodities that are pooled from many farms?
Does NOP have an adequate system to track bulk commodity shipments produced in other countries outside the EU that are certified by EU-based certifiers, or shipped through EU countries?
What other data collection should NOP set up to have a better understanding of source of imports, back to the certifier and farm level?”
The fact that the NOP is discussing requiring certification of importers is an important step, but late in the game. The widespread fraud in Turkey has been publicly known for at least a year or more and met with total silence and very little action on the part of NOP to address these issues until now.
Prices of domestic organic corn have dropped from $12 a bushel 18 months ago to $7.50 to $8 per bushel today with some bids as low as $6. A reason often given by buyers is the amount of imported grain available. The cost to U.S. organic producers is an average of $300 per acre due to a drop in prices, far below their cost of production which is around $10 per bushel. This amounts to $30,000 for corn alone on a small operation on up to hundreds of thousands of dollars in losses on larger organic operations. This does not account for additional losses due to the drop in organic soybean prices.
The result of this has the potential to set back the U.S. organic market due to lack of consumer confidence in USDA’s “organic” seal and creating an environment with even more reliance on imports of organic corn and soybeans. The market signal to organic farmers is to produce less, not more when we are encouraging increased transitions to organic production domestically. Unless immediate steps are taken by the NOP to strengthen organic import protocols to be equivalent to what U.S. producers and the industry face here, in the EU and Canada, this stands to be a major economic train wreck setting back the growth of the industry for years to come.
*John Bobbe, is OFARM’s Executive Director. He holds a Master’s Degree in Agricultural Economics from the University of Missouri-Columbia. John is the author of “Marketing Organic Grain, A Farmers Guide.” (Levins Publishing, December, 2015)