September 1, 2016

Inspector General Phyllis K. Fong
U.S. Department of Agriculture
Room 117-W Jamie Whitten Building
1400 Independence Avenue SW
Washington, DC 20250

Dear Inspector General Fong,

We are writing to draw your attention to an emerging trend that is dramatically impacting organic markets in the United States. The Organic Farmers’ Agency for Relationship Marketing (OFARM) is a cooperative incorporated in the State of Minnesota as a marketing-agency-in-common and operates under the Capper-Volstead Act of 1922. OFARM has six member organic grain and livestock marketing cooperatives with organic producers in 19 states from Montana to Texas and Louisiana to Tennessee, Kentucky and Ohio and all states in between. USDA has cited OFARM as the largest organized block of farmer controlled organic grain in the United States.[1] Food & Water Watch is an advocacy organization that works to ensure that our food is produced sustainably, which includes advocating for strong organic standards and healthy markets for organic producers.

We are aware that the Office of Inspector General is conducting an audit into the USDA National Organic Program (NOP)’s oversight of an organic equivalency agreement between the United States and the European Union (EU). The audit was described in your annual plan as an effort “to ensure that European Union products marketed as organic in the United States meet the standards established in the arrangement.” In the annual plan, the review of the equivalency arrangement is listed as a step to “reduce program vulnerabilities and strengthen program integrity in the delivery of program assistance.” [2]

As part of this audit, we urge you to examine the dramatic increase in the import of organic commodities, especially grains. A key area of concern for U.S. organic grain growers, and increasingly for consumers, is whether these increased imports present an opportunity for fraudulently labeled organic products to enter the United States, undermining the opportunity for U.S. producers to get a fair price in the market.

The trend of increasing imports of organic soybeans and corn is dramatic:

From 2013 to 2015, the dollar value of imported organic soybeans (except seed) more than doubled, from $110 million to $240 million.
During the first six months of 2016, 12 countries exported organic soybeans (except seed) to the United States. Turkey was the leading exporter, followed by India, and Ukraine. In 2015, Turkey was the sixth largest exporter.
During the first six months of 2016, there was a dramatic increase in the dollar value of imported organic soybean (except seed) imports from Turkey, with more than thirty-six times the value of imports from Turkey in the first six months of 2016 than the same time period in 2015.
From 2013 to 2015, the dollar value of imported organic yellow dent corn (except seed) more than tripled, from $36 million to $112 million.
During the first six months of 2016, 8 countries exported organic yellow dent corn (except seed) to the United States. Turkey was the leading exporter, followed by Romania and the Netherlands.
During the first six months of 2016, the dollar value of imported organic yellow dent corn (except seed) nearly doubled from the same time period in 2015.
During the first six months of 2016, there was a dramatic increase in the dollar value of imported organic yellow dent corn (except seed) from Turkey, with more than five times the value of imports from Turkey in 2016 than the same time period in 2015. The imports from Turkey during the first six months of this year were close to double the value from Turkey for the entire year of 2015. [3]

As organic exports grow, so do concerns about the potential for fraudulent organic products to enter the United States, due to lack of inspections and the opportunities for fraud that occur in more complicated supply chains. These long international supply chains increase the opportunities for breaks in the chain of recordkeeping, organic certification and verification that the USDA organic seal is built upon.

We are aware that your audit focuses on the agreement between the United States and the EU. But there are connections between major exporters to the United States, such as Ukraine and Turkey, and the EU. Specifically, the rise of imports from Turkey raises concern. 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.”[4]

One Turkish organic certifier, ETKO, has been decertified by the EU.[5] 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.[6]

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 the establishment of an Anti-Fraud Initiative to “improve cross border communication among inspection and certification bodies, trade companies, label organizations and authorities to strengthen organic integrity.”[7] 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,”[8] should provide sufficient motivation to the NOP to dedicate more effort to this issue.

The dramatic increases in imported organic grains are having impacts on the potential for U.S. organic farmers to sell their products for a fair price:

One major international grain company attempting to make inroads into the U.S. domestic organic market recently told NFOrganics and OFARM member organization marketer Tim Boortz that he needed to get the prices for organic grain he was offering for sale down to the price they could pay for imported grain.
Merle Kramer, Midwest Organic Farmers Coop organic grain marketer notes “many larger buyers of organic corn contracting 50,000 bushels from import brokers offer local farmers 20%-25% less then what they pay for imports, often not having room in their bins to buy domestic corn putting financial pressure on those farmers not being able to sell when they need cash.”
John Bobbe, OFARM’s executive director had discussions with a major organic grain marketer in Ontario, Canada. The firm markets grain into U.S. markets as well as Canada. The marketer confirmed that in recent months any imported shipment with the semblance of “organic” in the documentation has been sold as organic, no questions asked as to the origin.

We urge you 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. 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?

We appreciate your attention to this critical issue for both organic consumers and farmers in the United States. Please contact John Bobbe from OFARM, (715) 467-0031 or johnbobbe@gmail.com, for more information or if you have any questions.

Sincerely,

John Bobbe
Executive Director
OFARM

Patty Lovera
Assistant Director
Food & Water Watch

[1] U.S. Department of Agriculture. Rural Cooperatives Magazine. January, 2012.

[2] U.S. Department of Agriculture Office of Inspector General. “Annual Plan: Fiscal Year 2016.” 2016. https://www.usda.gov/oig/webdocs/2016_Annual_Plan.pdf.

[3] Data compiled from USDA’s Economic Research Service.

[4] USDA Global Agriculture Information Network. “Report # TR601, Turkish Organic Market Overview.” January 26, 2016.

[5] IOAS. “IOAS withdraw ISO 65 accreditation of ETKO Turkey.” May 25, 2016.

[6] Personal communication. Email to John Bobbe, OFARM Executive Director, from a U.K. organic farmer-owned company. August 8, 2016.

[7] Anti-Fraud Initiative. http://www.organic-integrity.org/

[8] Anti-Fraud Initiative. “Meetings and Events.” http://www.organic-integrity.org/meetings/#c2716