Trade gap between domestic and imported organic soy & corn raises questions about fraud
According to data presented at the USDA Agricultural Outlook Forum in Washington, DC, late last month, US organic acreage grew to more than 5 million in 2016, including a 12.9% increase in organic corn production and a 12.3% increase in organic soy from 2014. Even with this increase though, US imports of organic goods grew 21.4% in 2017 to $2.1 billion, including a 13% increase in imports or organic soybean worth $271 million and a 5.9% increase in imports of organic corn worth $121 million.
As the founder of Florida organic consulting service Agromeris Peter Golbitz noted at the forum, this is odd because US is the world’s largest producer of both of these crops and because the quantities labeled as organic coming in from some countries exceeds how much they can produce.
“Those of us who have been in the industry kept wondering how is it possible for an organic producer in Turkey or in Eastern Europe to be able to produce and get it to the US shore at a lower cost than a US producer can sell it off his farm?” he said.
He also noticed in some cases product labeled as organic imported from certain countries exceed the total amount of that product the country could even produce.
“That started raising questions and people were [asking] is it really organic? Is it really certified? There was some testing done and some loads rejected because of pesticide or chemical residue on a crop,” that also indicated some product may not be what it was labeled as, he said.
Last Spring, a reporter from The Washington Post pulled on these strings and uncovered massive fraud, which USDA also discovered. Since then, the government and industry stakeholders have taken steps to address the risk.
“The USDA has been very aggressive in terms of increasing audits, training and improving training of the certified agents in other countries” to reduce the risk of fraud, Golbitz said.
Closing loopholes
Similarly, he noted, the National Organic Program has asked the National Organic Standards Board to close holes in the supply chain such as loopholes that considered closed shipping containers as excluded operations that did not require certification for organic status.
Trade groups also have worked closely with legislators and agency officials to increase inspections and improve oversight of global organic trade, such as the measures described in the Organic Farmer and Consumer Protection Act introduced by Rep. John Faso, D-NY, in September.
Since The Washington Post article revealing fraudulent organic imports, the government and industry stakeholders have acted fast to address the problem.
Golbitz also says he is hopeful that the upcoming Farm Bill will include more funding for enforcement, which could be a longshot given how heated negotiations around the bill can become. Still, he notes that the President’s budget proposal included additional funds for the organic program to boost enforcement and other legislators have also requested funds through special marker bills.
Identifying opportunity
Regardless of what happens in Congress, the trade gap between domestic organic production and imports represents a significant opportunity for US farmers – but they need help from buyers, Golbitz says.
Looking at corn and soy alone, he said he “clearly identified at least 600,000 acres that were reported last year,” which is likely higher now. However, to supply that domestically some farmers need help making the three-year transition from conventional to organic, which is where he says buyers come in.
He recommends buyers and manufacturers look for ways to ease the financial burden on farmers transitioning by helping to pay for infrastructure or guaranteeing a market.
