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Organic Grain Fraud

The Real Organic Project was formed by organic farmers to address five major lapses in USDA Organic integrity:
1) The certification of hydroponic production,
2) The certification of confinement livestock operations,
3) The lack of enforcement of the “pasture rule” in organic dairy,
4) The failure to implement the Origin of Livestock Rule and,
5) The import of large quantities of fraudulent organic grain.

This week’s featured farmer, along with every other U.S. organic grain farmer, has been personally impacted by the fifth failure. When he isn’t farming, Carmen Fernholz helps organic grain farmers receive fair pricing in the marketplace as the Vice-Chair of OFARM (Organic Farmers Agency for Relationship Marketing). OFARM is a marketing cooperative, but it also works to defend the integrity of the organic standards so that real organic farmers will not have to compete with fraudulently certified grain.

This week’s guest writer is Anne Ross from the Cornucopia Institute. Anne has worked closely with OFARM to help address the ongoing problem of fraudulent imported organic grain. Her important white paper explains how failed regulations and enforcement by the National Organic Program made the U.S. ripe for fraud and organized crime. Despite recent farm bill funding to address import grain fraud, the problem persists.

U.S. organic grain farmers lost over $400 million from 2015 to 2017 to fraudulent organic imports. Image courtesy of VesselFinder/Cengiz Tokgöz

Letter from Anne Ross:

Almost three years ago, I stood on the floor of the La Crosse Center Arena at the MOSES conference in Wisconsin. I had recently been hired by Cornucopia to investigate organic grain import fraud.

The organic grain farmers I met that day were tackling a mounting crisis facing the organic sector – the flow of fraudulent organic grain into the U.S. from overseas. Many were disenchanted, feeling like they no longer lived in a free market relative to organic grain trading, and were becoming increasingly despondent about what they perceived as the passive attitude of government regulators.

Without question, these organic grain farmers feel the impact of fraudulent imports and so do other producers. The tentacles of import fraud reach far and wide.

Approximately 70% of the U.S.’s “organic” soybean supply and 40% of “organic” corn supply is imported.

When fraudulent organic grain is used by industrial-style dairies that violate the Pasture Rule, real organic dairies that comply with the law’s grazing requirements suffer a competitive disadvantage.

When mega-sized poultry operations that house hundreds of thousands of chickens use imported grain of dubious authenticity, egg producers that provide their birds meaningful access to the outdoors suffer a competitive disadvantage.

And, of course, consumers don’t get what they pay for. When bad actors put fraudulent grain into the supply chain, it travels all the way from the foreign farm to the American family’s fork.

So “cheap,” “fraudulently certified,” “organic” grain actively puts real organic farmers out of business, damaging the farmers, the eaters, and the trust in the brand. In the end, this failure will compromise trust in the National Organic Program. Some farmers are constantly checking in with their grain suppliers to make sure it is grown in America. How long can this continue?

Everybody in a bad actor’s supply chain is financially profiting from fraudulent organic grain. Everybody outside of that chain is financially hurt by it. Factory-style industrial farms that buy cheaper, imported grain aren’t necessarily incentivized to seek the truth about the origin of the grain, nor have they necessarily been required to by law. They become casual accessories to the fraud as beneficiaries of cheaper imported grain.

“I was involved in writing some of the rules and Organic was always founded on principles as well as production practices. Organic is 95% integrity and we need proper oversight.” – Carmen Fernholz

To address these problems, Cornucopia has publicized the identity of certain foreign companies and their certifiers, calling upon the USDA to investigate the integrity of these supply chains.

Cornucopia has tracked vessels, notified authorities of questionable incoming shipments, and testified at NOSB meetings to impress upon the USDA the urgent need to act.

The organic community has called attention to the ongoing struggle of organic grain farmers to compete with confirmed cases of import fraud and with incoming shipments of unverified authenticity.

After all of this, I’m often asked what has been done to curtail import fraud. The 2018 Farm Bill expanded resources and authority for enforcement mainly through $5 million in funding for data collection. Although there are provisions in the 2018 Farm Bill that should improve supply chain traceability and data collection, suspicions remain.

The USDA promised to publish a proposed rule that would enhance supply chain traceability, but that has long been delayed.

To this day I get calls about traders located in high risk regions where international crime syndicates are big players in fraud. I’ve traveled to some of these locations. I have been warned that these networks will do anything to protect their money.

After all, it’s a LOT of money. Our money.

Throughout my work on import fraud, it’s been suggested to me not to talk too loudly about fraud for fear that talking about it will completely undermine consumer confidence – that consumers will abandon organics altogether.

But it is only as a result of our speaking out that this issue has come to light, and ultimately has become an issue addressed by Congress. Fraud against American farmers and consumers is a bipartisan issue. And yet it continues. And continues. And continues…

I’ve come to believe that many in the organic sector operate under the false assumption that exposing fraud of this scale would do irreparable damage to the organic label. To the contrary – it is calling out bad actors and exposing the truth that protects real organic farmers and consumers. And ultimately, that is protecting the organic brand.

And, yes, sometimes the truth hurts, but not nearly as much as quietly looking the other way.

  • Anne Ross, J.D., LL.M.
    Farm Policy Analyst, The Cornucopia Institute
Carmen is also growing Kernza, a deep rooted perennial wheat that sequesters carbon because the ground does not need to be tilled each year.

Carmen has all the qualities of a Real Organic Project farmer. He understands the connections between soil, climate, and health, and works with his farming community to turn that knowledge into action. His latest project involves learning to grow and market Kernza, a perennial wheat that requires no tillage between harvests.

The major failures of the NOP that brought us together continue to impact Real Organic farmers today. ROP’s “add-on” certification program is a farmer response to these failures, but for some, it is too little, too late. Many organic farmers following the rules are still being put out of business.

Thousands of farms remain and applications for Real Organic Project certification continue to come in. Thank you to all who generously donate to allow us to differentiate ourselves in the marketplace.

Yours in the dirt,
Linley

In the past 10 years, the National Organic Standards Board has passed 20 final recommendations to advance the organic practice standards, yet USDA has not completed rulemaking on a single one of them… The failure of government to keep pace with consumers and the industry is harming and fragmenting the market. Inconsistent standards are becoming the status quo. Advancing organic standards is essential to a healthy market and credibility of the USDA Organic seal. The future of organic depends on fixing this partnership and getting USDA to work better for the organic community.”

  • Organic Trade Association statement before the 2019 NOSB meeting in Pittsburgh.

Linley Dixon
Associate Director / linley@realorganicproject.org
Real Organic Project / realorganicproject.org