U.S. farmers stalk fraudulent imports to save their markets
by Adam Belz, Star Tribune (MN)
July 6, 2019
The massive freighter left a port on the coast of Turkey in April, bound for the United States with a cargo of grain for farmers to feed to organic livestock.
From a desk at his farm in rural Wisconsin, John Bobbe was suspicious.
He wasn’t convinced that the cargo of the M.V. Andalucia, en route from the Black Sea to North Carolina, was legitimate. The ship’s itinerary, the owner of the grain, and the fact that the European Union had stopped recognizing the grain’s likely organic certifier stoked his doubts. He fired an e-mail to the U.S. Department of Agriculture, as he has done often over the past four years trying to turn back a rising tide of counterfeit imported organic grain.
“This thing gets more bizarre as you go along,” Bobbe said. “The problem is that consumers are being potentially defrauded, and the price for farmers is going down.”
Sales of organic food have more than doubled in the United States in the past 10 years, to $48 billion a year, but U.S. acreage devoted to organic grain has not kept up. Less than 1% of row crops in the country are certified organic, so U.S. organic grain farmers can’t produce enough feed for the animals that supply organic eggs, milk and meat.
Into this void have stepped a small number of importers, the largest based in the Black Sea region and Middle East, and fake organic grain has become a major problem.
Consumers pay more for organic foods but may be buying products that were tainted in their growing and feeding. U.S. farmers get less for genuine organic grain when fake imports flood the market. Grain brokers, livestock farms and grocery chains are all at risk.
Even so, the premium prices and profits brought by organic products give the industry reason to downplay or ignore the problem.
“Everybody in the supply chain is profiting from cheaper fake organic grain. The profits are huge,” said Anne Ross, a lawyer who monitors organic imports at the Cornucopia Institute, an organic watchdog. “Grain buyers aren’t incentivized to seek the truth. They are casual accessories to the fraud.”
With organic soybeans and corn fetching two or three times the price of conventional grain, incentives for fraud abound. The penalties are small, and oversight relies on paperwork that can be falsified. The U.S. Department of Agriculture’s National Organic Program, the main government regulator, is playing catch-up to the industry’s rapid growth.
Agency officials say that while they have eyes and ears at ports through other federal agencies, inspecting all ships at U.S. ports for organic integrity would require thousands of new inspectors and isn’t practical. The National Organic Program instead focuses on rooting out fraud at farms in countries such as Ukraine and Russia with the help of organic certifiers.
The agency traces the paperwork of shipments back to organic farms to verify the grain is organic, and it has ramped up unannounced visits and farm inspections. That has caused 180 operations in the Black Sea region to surrender their organic certifications since 2016, the agency says.
Bobbe, a 67-year-old who chooses his words carefully, has watched the problem grow from a closet-like home office at his little farm near Stevens Point, Wis.
He’s uncovered millions of bushels worth of suspect organic grain destined for the United States as director of OFARM, a Minnesota-based umbrella group for organic farmer cooperatives in the Midwest. Even since retiring in February, he’s kept up the pressure, following up on tips from abroad, sending e-mails, coordinating with organic groups and overseas watchdogs, trying to push the National Organic Program to swifter action.
He has become a nuisance to the organic industry and its regulators, but a hero to organic farmers.
“Unless the rank and file out here in the country stay on top of it, they’ll get lost in the dust, and that’s what John is making sure doesn’t happen,” said Carmen Fernholz, an organic corn and soybean farmer west of Montevideo, Minn.
‘It’s our reputation’
Fraudulent organic grain keeps slipping through the cracks. Just last year, a Missouri man was charged in federal court with selling $140 million in fake organic grain over nearly a decade.
The case is ongoing. None of the grain buyers, all of whose organic credibility would have been undone by the fraud, have been identified in court documents.
“The single biggest threat to the organic seal is the loss of consumer confidence due to fraud,” said Ken Dallmier, president of Clarkson Grains in Cerro Gordo, Ill.
His company decided nearly a decade ago to stop importing organic grain, because there was no way to be confident of its integrity. “It’s our reputation,” Dallmier said, “and we want to make sure that we’re the strong part of the supply chain.”
American farmers sacrifice time and money to switch from conventional to organic row crops.
In a process they call “the transition,” they must eliminate most herbicides and pesticides from their farms. Then they must grow grain using organic methods for three years before they can sell it as organic.
A misstep, or chemical drift onto their crops from a neighboring farm, can force them to start the three-year process over.
The financial payoff comes when the grain is certified organic. A bushel of organic soybeans fetches about $18.70 per bushel, well over double the price for conventional soy. Organic corn fetches $8.88 per bushel, about twice the price for conventional corn. And organic grain prices are down dramatically from peaks in 2012, thanks in part to imports holding down demand.
Meanwhile, the organic industry keeps growing, from about $2 billion in sales in 2002, to about $50 billion last year.
“It’s gone from a farmers market, roadside-stand kind of industry, to a global supply chain in the blink of an eye,” said Betsy Rakola, organic compliance director at the U.S. Department of Agriculture (USDA). “If you read our law and if you read our regulations, you can tell [that] the folks they were thinking about when they wrote the rules were those small farms. We are catching up, capacity-wise. The industry is as well.”
In 2009, the National Organic Program was an eight-person organization with a $1 million budget. Now its head count is 40 with a $14 million budget.
“If this sounds complicated, it is,” Rakola said. “Overseeing a global supply chain with 40 people is no joke.”
Corn on Lake Michigan ...
Red flags ...
Suspicions but not proof ...
Path of the Andalucia ...
more, including links, photos, charts, map