OFARM Organic Market Update: OFARM continues to fight organic fraud

As we close out 2018 and look to 2019, some organic updates:

Organic Grain Fraud continues, but perhaps two small rays of hope.

The organic fraud saga perpetrated on U.S. organic grain producers continues, but there are some rays of hope as we close out 2018 and look to 2019.


Last February, OFARM received word of a potential questionable shipment of organic grain originating in Turkey and to be unloaded in Stockton, CA.  OFARM filed a formal complaint with USDA’s National Organic Program (NOP).  Subsequently, after several weeks of legal wrangling, the cargo departed and was sent to England where it was reportedly unloaded.
 
In the aftermath, the reported certifier, EcoCert SA reached a settlement with USDA .  French based EcoCocert certifies operations in 26 countries, and certifies 2,000 operations under the NOP’s organic standards. The company expanded its presence in the U.S. organic market in 2010 after it acquired Indiana Certified Organic LLC, one of the first certification agencies accredited by the NOP, and established Ecocert ICO LLC, based in Plainfied, Indiana.  USDA’s NOP delivered a mere slap on the wrist in its settlement over the Stockton shipment which included a fine of $5,000 for selling products as “certified” while suspended. (Sustainable Food News, Nov. 26, 2018)
 
When NOP was asked about the owners of the cargo involved, they had no comment due to the case still being investigated.
 
Basically, this amounts to a slap on the wrist. The NOP often opts for settlements as an easy way out of long court battles and legal wrangling.
 
In September 2018, two ships were unloaded with organic grain in the Port of New Orleans.  A number of questions arose about the cargoes and NOP.  One was that at least one of the cargoes originated in Serbia. Reports about Serbian agriculture from the Serbian government itself are that most Serbian farms are 12-20 acres in size and a majority of the “organic” corn is fed to livestock in the country.  The corn was loaded on a ships in a Romanian port.  One of the ships with a reported mere 40,000 bushels then sailed to a Russian port on the Black Sea, finished loading and then sailed on to New Orleans. Cargoes of organic grain generally range from about 450,000 to 490,000 bushels of grain. Further reports from individuals on the ground in Romania who talked to sources familiar with the situation was that some of the corn actually was snuck in to be loaded from Ukraine. 
 
Ukrainian Ministry of Agriculture information notes that the country has limited organic corn production with about 440 certified organic farms, 80% who sell their production of berries, fruits and other products into the EU.  Ukraine organic corruption has been on the table since the import fraud crisis began in 2015. 
 
To add further suspicion, the reported owners of the cargoes were the same Turkish company cited in the EcoCert case above. OFARM filed formal complaints with the NOP and basically received the third degree questioning why  these shipments were suspicious.  Adding further questions about the NOP’s willingness to take things seriously, was a previous exchange with NOP officials and OFARM about exactly how much organic corn produced with integrity is actually grown in Russia. The answer was less then reassuring with the response that USDA doesn’t know and they are trying to ascertain that.
 
The two New Orleans ships unloaded to barges and were last reported sailing up the Mississippi River. There is no sign of the NOP even bothering to investigate.  Reports are that some of the grain was loaded to rail cars and sent to the West Coast to avoid the scrutiny organic shipments have been receiving in Stockton, CA.
 
Another breach of organic integrity right here at home.  In September, three Nebraska grain producers were cited as part of Federal Court proceedings in Cedar Rapids, Iowa in an on-going scam selling conventional grain as organic.  While an additional party was only cited by its initials, “J.S.” in the court filings, it would appear to be the company, Jericho Solutions whose main office is in Chillicothe, Missouri.  The court filings cite the scam as beginning in 2010 and continuing through at least 2017. Further research shows that Jericho Solutions was cited in an instance in 2007 for loads of suspect soybeans shipped to Nevada Soy that tested 20% GMO contamination.  When caught, the company quickly replaced the beans.  However, it is hard to imagine GMO levels that high in soybeans happening by accident since they are self-pollinating.
 
Information surrounding this case does not indicate whether it was the NOP and certifiers who actually caught this 7-year running fraud case or some other agency stumbled on the information such as the IRS.  In either case, it apparently takes at least 7 years for the Keystone Cops in some cases for the NOP to get up to speed.


Now for some positive news:
 
OFARM has had a conversation with one leading organic grain company in the Midwest and a report of another small one on the West Coast who are no longer willing to import high risk fraudulent imported grains and are only sourcing U.S. grown.
 
Secondly the Farm Bill if passed as proposed by Congress in its Lame Duck session did contain more funding and authority for the NOP with regard to policing fraudulent imports.


OFARM now has a logo that will be attached by the member coops to Bills of Lading, TC’s and other official business documents to assure potential buyers that OFARM member coop producers’ grain is produced in the U.S.  You may see something similar to the logo below in black and white.  If you do your own TC’s contact your member coop to find out how you can also use it.


Going to the market with good planning and hiring a good marketing agent will take you a long ways towards more dollars for your operation in 2019.

OFARM member cooperative contacts:
 
Central Plains Organic Producers
Martin Eddy- 785.829.7771 
Adam Ptachek-785.342.0096
 
Wisconsin Organic Marketing Alliance
Paulette Bradley- 608.427.3351  
Bob Keatley- 715.425.6788
 
NFOrganics
Tim Boortz-515.509.3406 
Mike Schulist- 715.496.3956
 
Midwest Organic Farmers Cooperative
Merle Kramer- 734.649.7172 


If you know of someone, farmer, consumer or group who would willingly contribute to help OFARM in its fight for fairness, profitability and organic integrity, refer them to the OFARM website at www.ofarm.coop and click on the upper right hand corner icon “DONATE” to make a donation for this purpose.  We thank you in advance.


Our good friend Harriet Behar, who was formerly with MOSES and now is an Outreach Specialist for OGRAIN, Organic and Sustainable Cropping Systems Program University of Wisconsin-Madison was recently elected National Organic Standards Board chair.  We look forward to working with her as we move forward in the coming year.


Congratulations to De Etta Bilek who was elected to the Organic Farmers Asssociation Policy Committee  and to John Mesko, MOSES executive director who was recently elected to the position of advisor to the Organic Farmers Association (OFA) Governing Council.


Upcoming dates:
OFARM annual meeting- February 19-21, Courtyard by Marriott, LaCrosse, WI

Plan to also attend the MOSES conference next door at the LaCrosse Convention Center, Feb. 21-23, 2019.

National Farmers Union - Growing for the Future Online Conference - Dec 3-6

Save the date! Growing for the Future, a unique online, interactive virtual conference focused on beginning farmer and rancher issues, will be held December 3-6. The conference includes farmer-to-farmer webinars, live Q&A sessions, a discussion board, a resource center, and giveaways and prizes!

Experts, educators, and agricultural leaders will lead sessions on a wide variety of topics, including cooperative development, drought management, food safety, and farm technology.

Learn more and register for free: https://nfu.org/growing-for-the-future/

Comments to the Upcoming National Organic Standards Board and National Organic Program

October 24-26, 2018
St. Paul, Minnesota
On behalf of the Organic Farmers’ Agency for Relationship Marketing (OFARM, Inc.)

OFARM first raised the issue of organic imports and fraud in 2015.  It is now almost three years since we began focusing on protecting U.S. organic grain producers’ markets and organic integrity.  So, what has changed?
 
At that time the response from the NOP was basically that the paper work was all in order and there was no problem.  It was only after the Washington Post article in May 2017 where Investigative Reporter Peter Whoriskey blew the lid off organic grain fraud that OFARM was taken seriously.  Prior to that time, our farmers knew what the problem was.  The last entity to admit there might be a problem was the National Organic Program.
 
Since that time the NOP and NOSB have had several events such as a panel discussion last fall with agencies involved and in Spring, 2017, a panel, including corrective actions which I participated in.
 
The NOP has issued several memo’s or guidance documents over the past two years about imported products.
Again, the general attitude has been that quote, “The system is working.”  There is always a report at the NOSB meetings by the NOP about the number of revoked certificates, surrenders and fines levied.
 
What hasn’t changed is the number of suspected shipments of potentially fraudulent grain.  The NOP has sometimes pointed to reduced shipments from suspected countries of origin but has provided no positive proof that paper memos and the appearance of enforcement is working.  The shipment reductions may in fact be due to crop production variations and time of the marketing year.
 
As recently as the first week of September 2018 and September 25, OFARM filed complaints over two bulk shiploads of supposed organic grain arriving in the Port of New Orleans.  Both shipments (MV Carolina Bolton and MV Oceanus) listed Serbia as a country of origin with loading out of a Romanian port.  One of the ships with 1000 MT of supposed organic corn left Romania, traveled to a Russian port on the Black Sea to finish loading its cargo then proceeding to New Orleans. This is following reports OFARM has received of shifting to other ports than Turkey to hide under grains coming out of the EU.  On the U.S. side, OFARM received reports that the shippers involved in previous questionable organic imports were switching away from the Port of Stockton, CA because shipments there were coming under too much scrutiny.  
 
When an NOP employee was asked how much organic corn is grown in Russia, the response was they didn’t know because reliable information is so hard to acquire.  NOP’s response to OFARM’s complaint was to ask us to reveal our confidential sources and what made us think the shipments from Serbia through Romania with further loading in Russia was suspect.  A little math shows the numbers don’t add up.
 
The average farm size in Serbia is 12-20 acres and over 50% of the corn grown is fed to livestock domestically.  In 2015, there were 334 supposed certified organic farms. (Organic Agriculture in Serbia at a Glance, 2017.)  There was one large farm appearing in the USDA’s Integrity Database in 2018 which could account for one shipment of 7500 MT of organic corn which arrived in the U.S. in June and July.  It does not account for the other two shiploads of grain originating, at least in part in Serbia.
 
In summary, OFARM has had to work with organic grain producers to develop the means to insure the integrity of the crops they produce because farmers have found out they cannot depend on the USDA and NOP to protect them.
 
My statement to the NOSB and NOP in November, 2016 still stands over 2 years later. “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 because the market signals to producers are to produce less, not more.  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. (Statement to the NOSB, St. Louis, MO. November 16, 2016)”
 
The cost to U.S. organic grain producers now totals almost $500 million with not much end in sight to the current situation.
 
After three years, what has changed?  Not much. People intending to cheat the system because of over $4 million profits per shipload versus an $11000 fine or about 2 cents a bushel if caught could care less about memos and “all the paper work is in order.”
 
The NOP is still trying to push most of the blame for the situation on certifiers.  And to a degree certifiers and inspectors have also not done due diligence on these large shipments of grain.
 
NOP has more authority than it apparently has the will to use.  It is also apparent that the NOP does not have the institutional fortitude or will to stand up to organic fraud.   Secondly, there is no question the NOP is vastly out-numbered and needs additional resources.  OFARM has worked with a lot of other to procure additional resources and authority. We cannot correct an institutional laxness to protect organic integrity.
 
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)

 
Sincerely,

Untitled.png

 OFARM Executive Director
*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)  

USDA Extends Deadline for “Product of U.S.A.” Comment Period

FOR IMMEDIATE RELEASE
August 20, 2018

 

USDA Extends Deadline for “Product of U.S.A.” Comment Period


Washington, D.C. — Citing “significant interest from stakeholders,” the United States Department of Agriculture (USDA) Food Safety Inspection Service (FSIS) approved a request from the Organization for Competitive Markets (OCM) and American Grassfed Association (AGA) to extend the public comment period for the groups’ petition to stop imported meat from being mislabeled “Product of U.S.A.” The new deadline for comments is Sept. 17, 2018.

The OCM and AGA joint petition, filed on June 12, 2018, would restore the original FSIS handbook definition of “Product of U.S.A.,” which was based on the origin of the ingredients being labeled. Sometime between April 1985 and August 2005 the ingredient-based standard was repealed by FSIS and replaced with an undefined processing standard. Following the repeal of mandatory Country of Origin Labeling in 2015, global meatpacking corporations began abusing the label by misbranding meat and meat products from foreign countries as “Product of U.S.A.” after moving them through USDA-inspected processing plants.

The proposed policy change has received almost exclusively positive comments from a wide-ranging base of nearly 2,000 farm and food stakeholders. Supportive comments were submitted by farm organizations including National Farmers UnionNational Family Farm Coalition, and U.S. Cattlemen’s Association; more than 50 members of the National Sustainable Agriculture Coalition, including Farm Aid and Union of Concerned Scientists; policy and community organizations, including theInstitute for Agriculture and Trade Policy and Western Organization of Resource CouncilsUnited Food and Commercial Workers, a leading labor organization; The Humane Society of the United States, a leading animal welfare organization, and businesses including Natural Grocers and Strauss Brands. Comments submitted by individual farmers and consumers have been overwhelmingly positive. In the minority are a couple of organizations whose representation and interests lie with multinational meatpacking corporations that profit from the deceptive standard.

In a video posted on OCM’s Facebook page, consumers’ outrage over the misbranding of the origin of meat is clear as grocery shoppers are told the “Product of U.S.A.” label does not mean the meat products actually originate from the U.S.A.

OCM encourages everyone to lift their voices and file comments before the September 17, 2018 deadline.

###

Organization for Competitive Markets is a national membership-based research and advocacy organization working for open and competitive markets and fair trade in America’s food and agricultural sectors.

Media Contact:
Angela Huffman
(614) 390-7552
ahuffman@competitivemarkets.com


The Organic Farmers' Agency for Relationship Marketing, Inc.  (OFARM) supports the Organization for Competitive Markets position on restoring the original definition of "Product of the USA" by USDA.  Consumers identify with products legitimately produced and grown in the USA and have a right to truth in labeling.

OFARM is a farmer cooperative incorporated in the State of Minnesota as a cooperative marketing-agency-in-common with five organic farmer cooperatives as members in 19 states from Montana to Texas and Louisiana to Kentucky, Ohio and states in between.  Our organic livestock producers are directly impacted by the "Product of the USA" definition correctly applied and used for their customers.

 

 

Information on Proposed Tariff Damage Payments to Farmers

What you should know about the proposed $12B payments to farmers for economic harm caused by President Trump imposing tariffs on imports and responding countries imposition of reciprocal tariffs.

This is the link with information provided to me by Dr. Jennifer Tucker, USDA Deputy Administrator for the National Organic Program.

https://www.thefencepost.com/news/usda-announces-12-billion-trade-mitigation-plan-for-ag-producers/
 
The article notes that Labor Day will remain the potential date for the kick-off of these programs – so I imagine more information will become available as that date approaches.  

It should be noted that Secretary Sonny Purdue has stated that this will not fully compensate farmers for injury.  

How this will impact organic producers and what the payment rates might be remains to be seen. FSA will be taking the lead on this so it would be good for you to contact your local FSA office and let them know you want to be informed about this program and how it impacts you as an organic producer.

Nothing is certain yet other than the announcement.  One stumbling block could be that the World Trade Organization (WTO) rules are such that a country causing a "trade war" cannot use subsidies to its producers which these payments would be viewed as.  If this plays out, nothing is certain.

We will continue to provide you with updated information as we receive it.

New Report: EU Shuts Down Organic Fraud -- Floodgates Open into the U.S.

Below is the press release that Ann Ross and Cornucopia Institute put out Monday, June 18, 2018 about organic fraud. Also attached here is the full report which is extensively documented.

Some of the grain on the Mount Park apparently came from farms whose certification was revoked as announced by USDA. 

I worked with Ann on this by providing some of the details. She put it all together.  

OFARM was the initial filer of the complaints to the NOP on both the Diana Bolton shipment in Bellingham, Washington last fall that was rejected and also the Mount Park on Feb. 23, 2018.

--John


FOR IMMEDIATE RELEASE
Contact: Mark Kastel, (608) 625-2042
Anne Ross, JD, LLM, (843) 209-1732

Looking at Fraud: Industry Watchdog Releases Comprehensive Report Documenting Suspicious Organic Grain Imports

Failures in USDA Oversight Rendered U.S. Markets Vulnerable to Fraud by Eastern European Cartels

Some Implicated Major Players Quietly Exit Market

https://www.cornucopia.org/2018/06/looking-at-fraud-industry-watchdog-releases-comprehensive-report-documenting-suspicious-organic-grain-imports/

Cornucopia, WI — An organic industry watchdog, The Cornucopia Institute, has released a groundbreaking, comprehensive report chronicling how a small number of multibillion dollar agribusinesses came to dominate the U.S. organic grain industry following the systemic failures of the USDA’s National Organic Program (USDA-NOP) to curb the infiltration of questionable organic grain imports.

During the latter part of Cornucopia’s two-year investigation, it appears that the two largest players in importing feed grains into the U.S., Turkey-based Tiryaki Agro Gida Sanayi Ve Ticaret A.S (“Tiryaki”) and its wholly owned organic division, Diasub, FZE, have quietly “surrendered” their organic certification, reducing their exposure (it should be noted that many of their corporate affiliates remain in good standing with the USDA).

 25,000 metric tons of "organic" corn, sold by Tiryaki and  shipped on the M/V Mountpark, were rejected at a  California port in April 2018. Image courtesy of VesselFinder/Cengiz Tokgöz

25,000 metric tons of "organic" corn, sold by Tiryaki and
shipped on the M/V Mountpark, were rejected at a
California port in April 2018.
Image courtesy of VesselFinder/Cengiz Tokgöz

Cornucopia’s report finds that the U.S. became a dumping ground for imports of fraudulent organic corn, soybeans, and other commodities after the European Union cracked down on abuses originating in former Soviet Bloc countries including Ukraine, Kazakhstan, Romania, and Russia. What makes this particularly problematic is that imports now make up the majority of feed grains fed to domestic certified organic livestock.

“With industry experts estimating that over 50% of organic corn and 80-90% of soybeans are being imported, there is speculation that if the USDA, at this point, wakes up to do their job, feed shortages in the organic marketplace could occur,” said Mark A. Kastel, codirector of The Cornucopia Institute.

Kastel lamented that the USDA had “looked the other way” on documentation concerning fraud from China and Eastern Europe for over a decade. “The timing couldn’t be worse. The marketplace will likely create incentives for U.S. farmers to convert more acreage to organic management, but this news is coming too late in the 2018 growing season.”

The story unveiled by Cornucopia is one of a U.S. market plagued by feeble, often non-existent, enforcement by federal regulators and organic certifiers, despite repeated calls for stricter oversight and legal reform.

After the European Union enacted more stringent protocols in 2015, following a controversy involving fake organic sunflower cake originating in Ukraine, a lax regulatory system made the U.S. an attractive receptacle for potentially corrupt actors seeking a less burdensome market with fewer trade controls.

In 2014, the U.S. imported 14,000 metric tons of organic soybeans from Turkey. That number skyrocketed to 165,000 metric tons in 2016. Organic corn imports from Turkey increased more dramatically, going from 15,000 metric tons in 2014 to more than 399,000 by 2016.

According to Cornucopia’s analysis of maritime shipping records, a small but powerful group of multibillion dollar companies has capitalized on importing organic grain into the U.S. One of those companies, Tiryaki and its organic division, Diasub, has consigned over 40% of the bulk vessel shipments of organic corn which have flowed into the U.S. since 2015.

Tiryaki_logo.png

“When you connect the dots, this one company, under market pressure and now apparently reducing their profile, could be controlling 20% of the certified organic corn supply in the U.S.,” said Kastel.

Tiryaki and Diasub made news recently as the seller of 25,000 metric tons of suspicious organic corn that was the subject of a legal case made public by Cornucopia in April 2018. The lawsuit was brought by Sunrise Foods International, which is another Tiryaki-affiliated company. Two Tiryaki executives sit on the board of Sunrise Foods International.

SunriseLogo.jpg

Governmental agencies rejected the Mountpark’s cargo on the basis that the corn was harvested in Russia, Moldova, and Kazakhstan, all countries from which it is illegal to import whole corn seed (shelled corn) into the U.S. due to pests and pathogens endemic in those regions. This loophole appears to be exploited as a work-around in the organic marketplace.

Since reporting on the Mountpark shipment, Cornucopia uncovered corporate filings prepared by Tiryaki and records housed by the USDA’s National Organic Program database that show Tiryaki’s ownership interests and/or associations with farms in Russia and Kazakhstan.

In an interesting series of events, at least five foreign operations showing affiliations with Tiryaki also surrendered their organic certifications after U.S. authorities rejected the Mountpark shipment, including those operations in Russia and Kazakhstan from which the corn carried aboard the Mountpark was harvested. The operation located in Moldova, which supplied Sunrise’s Mountpark shipment, also surrendered its organic certification.

“The fact that these operations surrendered their organic certifications on the heels of the problematic Mountpark incident raises serious concerns about the organic integrity of not only that shipment, but the massive quantities previously imported by the same supply chain” said Anne Ross, a staff attorney and researcher with Cornucopia, and primary author of Cornucopia’s white paper.

Organic acreage and production data for Turkey, Russia, Moldova, and Kazakhstan substantiate these concerns, as these numbers cannot be reconciled with the quantities that are being imported into the U.S.

John Bobbe, Executive Director of Organic Farmers’ Agency for Relationship Marketing (OFARM), an umbrella organization representing organic grain marketing cooperatives in 19 states, noted, “Serious questions as to whether some countries, like Kazakhstan, even have organic production acreage are alarming, considering reports that imports from these regions have filled the U.S. organic supply chain.”

Turkey is of outsized concern. According to USDA statistics, it is one of the largest exporters of organic feed and food to the United States. Based on available data sources, in the year 2015, the U.S. imported over three and half times as much organic corn as the country purportedly produced.

“What we have is a mathematical impossibility,” said Ross. “When the organic acreage reported for these countries cannot produce the organic grain yields that the U.S. is importing, either the product is fake or the data is so unreliable that the U.S. ought to ban organic shipments from countries where meaningful records on organic production can’t be extrapolated.”

The Cornucopia Institute has repeatedly called upon the USDA to implement reforms and execute stricter enforcement protocols to prevent the infiltration of fraudulent organics across U.S. borders. In July 2017, the group submitted a Citizen’s Petition calling for agrichemical residue testing of every bulk shipment from high-risk regions.

Although the National Organic Standards Board, an expert industry advisory panel, has sponsored dialogue on remediating the fraud exposure in the U.S., as required by Congress, the USDA has not asked the body to help promulgate new rulemaking to date.

In a letter submitted to USDA’s Secretary Sonny Perdue, the watchdog group renewed its calls to the USDA for emergency rulemaking, which would require that every entity in the global supply chain be certified and required to conduct full-audit tracebacks.

While the E.U. acted promptly to control cross-border import fraud, U.S. domestic grain producers lost hundreds of millions of dollars in revenue, as they faced increasing competition from suspicious grain being imported to feed certified organic livestock in the U.S.

The financial reality for the multinational Tiryaki is far different. Tiryaki, with a fully integrated supply chain and its corporate affiliations with Sunrise Foods International, has a stronghold on the organic grains imports market. Tiryaki reports revenues in excess of one billion dollars, with millions in financing dedicated to expanding their organic operational infrastructure.

Another company, Lansing Trade Group (“Lansing”), based in Overland, Kansas, is also a formidable player in organic grain imports, particularly in the importation of organic cracked corn. Forbes lists it as one of America’s largest private companies, boasting revenues of approximately $5 billion in 2016.

Feed Factors, a subsidiary of Lansing, is identified as the shipper in over 20% of bulk vessel shipments of organic corn since 2015, positioning it only behind Diasub as a leading shipper.

Both Tiryaki and Lansing are associated with Zivana, SA, a Swiss company that has served as consignee for over 40% of bulk vessel shipments of organic corn from January 2017 to May 2018. Little is known about the company, as its website represents it trades in animal hides and sausage casings and is family-run by a Turkish national.

Tiryaki and its affiliates dominate the organic corn market. Maritime shipping records identify these companies in over 85% of U.S. organic corn imports since January 2018—possibly comprising over 40% of the corn in this country being fed to certified organic livestock.

Cornucopia’s Kastel stated, “The USDA could have followed, years ago, the template provided by our European counterparts, but instead the story in the U.S. is one of a decade of missed opportunities by our regulatory authorities and lost opportunities for U.S. farmers.” He continued, “Just think of the thousands of U.S. farmers who would have been incentivized to convert to organic production in a fair market, creating financial security for their families and rural communities.”

The USDA announced that on July 17 they will hold a webinar to explain new rulemaking designed to remediate the systemic problems related to the credibility of the organic supply chain—a problem that The Cornucopia Institute report clearly alleges is the responsibility of malfeasance by the agency’s National Organic Program.

-30-

MORE:

“When we first published the Behind the Bean report, over 10 years ago, outlining improprieties in organic Chinese soybean exports, the USDA ignored the problem,” said Mark Kastel, a senior farm policy analyst with The Cornucopia Institute. “Until embarrassing revelations in the media last year about counterfeit organic corn and soybeans, the agency’s National Organic Program, along with the industry’s leading lobby group, the Organic Trade Association, have done nothing but crow about ‘organic integrity.’”

Cornucopia’s report outlines how Tiryaki and its affiliates’ domination of the market coincides with the disintegration of another imports supply chain involving the Turkish supplier Beyaz Agro, which was ultimately decertified by the USDA-NOP after a 2017 Washington Post investigative story exposed fraud involving their shipments of fraudulent corn and soybeans.

The fraudulent shipments documented by the Post resulted in a lawsuit in Maryland, which Cornucopia recounts in its report. The complaining party in that case, Global Natural, LLC, alleged a Turkish supplier and its affiliates duped it into selling fraudulent organic grain, which resulted in $20,000,000 in losses and Global Natural’s total demise. The legal filings also allege that Beyaz Agro’s Turkish competitor, Tiryaki, orchestrated the collapse of Beyaz Agro and its supply chain to retain market dominance.

Not only do the organic acreage and U.S. import data defy Turkey’s reasonable production capacity, the use of Turkish free trade zones to transship organic grain has made complete audit-trail traceback more challenging.

While free trade zones can stimulate investments through financial incentives, they are outside customs boundaries and can be used to carry out illicit activities due to less stringent regulatory controls.

According to Ross, Cornucopia has seen instances where Turkey is listed as the country of origin on an organic transaction certificate, when the grain was, in fact, harvested in another country. “The NOP must require certifiers to issue uniform, standardized transaction certificates that identify the farm where the grain was harvested and require that these certificates accompany the shipment’s entire journey throughout the supply chain.”

Data on organic acreage in Russia is equally problematic. The European based Research Institute of Organic Agriculture, an independent, non-profit that focuses on data collection on organic farming, reports that in 2016 there were 4,852.60 hectares (11,861 acres) of Russian land dedicated to organic corn production. Not only is this a very small area, Russia does not collect and report data on organic agriculture.

Although the Sunrise/Diasub/Tiryaki shipment of cracked corn carried on the Mountpark did not make it onto U.S. soil, large quantities of cracked corn have been imported into the U.S.

During the years that Cornucopia and OFARM rang the alarm bell, the industry’s leading lobby group, the Organic Trade Association (OTA), along with the USDA’s National Organic Program (NOP), continued to praise the performance of federal regulators. The NOP staff director, Miles McEvoy, told Politico in 2014, concerning the rumblings about Eastern European grain being shipped through Turkey, “…he is confident the global organic control system is ‘rigorous and comprehensive.’”

After the scandal was documented last year by the Washington Post, the OTA formed a task force and created a voluntary system for traceback of imported commodities. In response, Cornucopia said the OTA members, through their patronage, had spent over a decade conveniently “looking the other way,” and now they want organic farmers and consumers to have confidence in their voluntary system which amounts to the “foxes watching the organic chicken coop.”

In addition to concerns associated with shipments moving through free trade zones and insufficient transaction certificates, Cornucopia’s report also illustrates how processing corn from countries from which the importation of raw corn seed is prohibited could be an act of subterfuge employed by unscrupulous importers. “Cracking” corn can serve to obfuscate questions about the organic corn’s true country of origin, since processed corn is allowed to be imported into the U.S. (even if from prohibited countries), as long as USDA-APHIS is satisfied with the extent of the processing.

“This is only happening for organic corn. The U.S., as a major exporter of conventional corn, does not have a demand for conventional corn imports,” said Ross.

Recent congressional efforts have echoed industry concerns. The draft of the Farm Bill presented by the Senate Agriculture Committee includes provisions addressing information sharing between governmental agencies and the development of electronic tracking systems.

The Cornucopia Institute is currently finishing up extended research in developing a web-based tool which shoppers can use to identify brands of certified organic eggs, dairy products, and poultry where producers and marketers have gone out of their way to procure 100% North American-grown feed. “Consumers can reward high-integrity domestic farmers while simultaneously protecting their family’s food supply by flexing their muscles in the marketplace,” said the Cornucopia’s Kastel.

“Cornucopia’s online buyers guides are intended to empower consumers and wholesale buyers in shifting their purchasing to organic livestock-derived brands produced exclusively with domestic feed and to highlight companies that have gone out of their way to patronize U.S. farmers,” said Kastel. One example is Bell and Evans, a modern, family-owned Pennsylvania poultry processor, whose products are available in the eastern half of the U.S. through member-owned cooperatives and specialty stores such as Whole Foods. The Cornucopia guide should be released to the public sometime in late June or early July.

Who’s Who

Tiryaki Agro Gida Sanayi Ve Ticaret A.S. is a Turkish company headquartered in Istanbul. It is the self-described “top grains, pulses, and oilseed producer, exporter and supplier for certified agriculture in the world.”

Diasub, FZE is a wholly owned subsidiary of Tiryaki, and is its organic division. Diasub is headquartered in the United Arab Emirates (UAE).

Sunrise Foods International, Inc. is a Canadian corporation with affiliations to Tiryaki and Diasub. Corporate disclosures reveal Ertan Akbulut, CFO of Tiryaki, and Suleyman Tiryakioglu, CEO of Tiryaki, are board members/directors of Sunrise Foods.

Lansing Trade Group, based in Overland, Kansas, is one of the largest private companies in the U.S. Lansing wholly owns Feed Factors, a UK-based trading company that focuses on agricultural commodities. Lansing, along with The Andersons, Inc., based in Maumee, Ohio, acquired Thompsons Limited, a grain and agronomy input provider headquartered in Blenheim, Ontario.

Zivana, SA is a small Swiss company whose principal is Turkish. Zivana’s stated its business is selling raw hides and sausage casings and is a frequent consignee on shipments of organic grain involving both Lansing and Tiryaki affiliated companies. From January 2017 to May 2018, Zivana is listed as a consignee on over 40% of organic corn and cracked corn imports.

To view financial and court documents related to Tiryaki and the content of this release: https://www.cornucopia.org/tiryaki-reading-room/

Legislation Introduced to Fight Back Against Fraudulent Organic Imports, Ensure Fair Playing Field for American Farmers

In front of the MOSES conference in LaCrosse, WI last February, OFARM convened a meeting of organic leaders including representatives of both political parties. Both Wisconsin Senators Baldwin and Johnson had representatives present.  

Earlier this year, Representative John Faso (R-NY) and Michelle Grisham (D-NM) introduced the Organic Farmer and Consumerr Protection Act (HR3871).

Subsequent to the LaCrosse meeting, OFARM's Executive Director John Bobbe has been involved in discussions with both Wisconsin Senators offices about the organic import fraud situation and its cost to organic grain producers.

Below is the press release from Senator Tammy Baldwin's office citing OFARM as a supporter of this legislation. OFARM remains committed to working across both political parties to strengthen enforcement of organic integrity.

Please contact your Senators and Representatives and ask them to support both the Faso and Baldwin legislation for including in the new Farm Bill.


For Immediate Release
Wednesday, May 23, 2018
Contact: press@baldwin.senate.gov
202-224-6225

U.S. Senator Tammy Baldwin Introduces Legislation to Fight Back Against Fraudulent Organic Imports, Ensure Fair Playing Field for American Farmers

Baldwin legislation fights back against fraud, delivers on Inspector General recommendations, and protects integrity of USDA organic standards for consumers and Wisconsin farmers

WASHINGTON, D.C. – Today, U.S. Senator Tammy Baldwin introduced legislation to combat imports of fraudulent organic products that undercut American farmers, in response to media reports and recommendations from the USDA Inspector General. Baldwin’s legislation would protect U.S. consumers and farmers to ensure that all products marketed as organic uphold the strong standards necessary to bear that seal.  

“Wisconsin is home to the second-largest number of organic farms in the country, and they are a strong driver of our state’s agricultural economy,” said Senator Baldwin. “Our farmers work extremely hard to make sure their products meet the strict requirements of the USDA organic standard, and we must make sure that all organic products sold in the U.S. meet those same rigorous standards. This reform is about leveling the playing field to help American farmers and standing up for American consumers to ensure they are getting the high quality, organic food products they expect.”

In the past year, reports by the Washington Post, the Milwaukee Journal Sentinel and the USDA Office of the Inspector General have revealed concerns about the integrity of agricultural products imported into the United States to be sold as organic. In their May 2017 article, the Washington Post reported on substantial fraud in imported grain from Turkey destined to be sold as organic in the United States. Fraudulent organic imports have the potential to seriously and unfairly damage the strong reputation of organic products and undercut sales of domestically produced organic products, posing a threat to U.S. farmers and consumers alike.

Senator Baldwin’s Organic Farmer and Consumer Protection Act would take on these unfair trading practices and update protections against fraud.  The legislation works to ensure that all organic products admitted at ports of entry in United States are authentic and to prohibit the entry of products labeled as organic that do not meet National Organic Program standards. It addresses the threat that fraudulent imported organic products pose to U.S. farmers and consumers and ensures that farmers importing products to the U.S. must abide by robust organic production standards, just like domestic organic farmers. 

“The National Organic Coalition recognizes the urgent need to modernize and strengthen USDA oversight of organic products to prevent fraud and make sure that everyone in the supply chain is playing by the same rules. We appreciate Senator Baldwin’s strong leadership on this issue by introducing the Organic Farmer and Consumer Protection Act,” said Abby Youngblood, Executive Director of the National Organic Coalition. “This bill will provide the USDA’s National Organic Program with additional authorities and resources to crack down on fraudulent organic imports. The bill is critical to both farmers, especially those who are being harmed by fraudulent imports, as well as consumers, whose trust in the organic seal depends on effective enforcement of clear and consistent standards across the board.”

“For organic to advance, it is critical that we protect organic’s integrity. We applaud Senator Baldwin for introducing this important bill. Our farmers deserve to have a level playing field, and organic consumers deserve to be able to trust that they are getting what they pay for when they buy organic. Today’s organic industry operates in a growing global market. We have to modernize and get up to speed to prevent organic fraud and to ensure that every stakeholder in the organic chain is playing by the rules, and this bill takes important steps towards making that happen,” said Laura Batcha, Executive Director and CEO of the Organic Trade Association.

“Organic Valley is glad to see Senator Baldwin champion this piece of legislation.  It is smart policy that will allow USDA to be more effective in investigating, tracking, and executing enforcement against those who might try and cheat the US organic regulations.  Organic agriculture is important to Wisconsin’s state economy and this legislation helps respond to threats that could compromise the integrity of organic.  Consumers trust organic and that is a trust we have built over the years. Any risks to that covenant we take seriously at Organic Valley. This is good legislation and timely as organic production and consumption continues to grow worldwide,” said Melissa Hughes, Chief Mission Officer/General Counsel of Organic Valley in La Farge, Wisconsin.

“As an organic grain farmer I applaud Senator Baldwin for introducing the Organic Farmer and Consumer Protection Act which improves international organic trade oversight,” said Sandy Syburg, Organic Valley Grower Pool Member from Oconomowoc, Wisconsin. “Organics has grown to be global in scope and, with that growth, we need to update both the authority and resources of the National Organic Program to better track and bring enforcement on any suspected fraud in the international arena. Ensuring organic integrity is key to my livelihood and key to the relationship we in organic agriculture have with consumers.  The USDA organic seal means real standards, and real consequences, if you don’t follow the regulations. This Act improves that reality.”

The Organic Farmer and Consumer Protection Act is supported by a wide array of organic farming organizations and businesses, including the Organic Trade Association (OTA), National Organic Coalition (NOC), Organic Valley and Organic Farmers Agency for Relationship Marketing (OFARM). Learn more about our industry supporters here.

Learn more about the Organic Farmer and Consumer Protection Act here.

OTA's Proposed Organic Checkoff Proposal Stopped

In the words of one of the leaders of the No Organic Checkoff effort, Ed Maltby, Northeast Organic Dairy Producers Association (NODPA) , "Thanks to everyone that made this grass roots effort to stop the organic check-off work. A great collaborative effort."

OFARM joined with a organizations such as the Organic Consumers Association, NODPA, NOFA-NY, Cornucopia Institute, Family Farm Defenders and others to oppose the checkoff.

OFARM cited commodity checkoffs riff with abuse and mis-spending of producer money along with opposing classifying "organic" as a commodity to fit under current commodity checkoff provisions.  Organic has long sought to differentiate itself as not  being a single commodity.

One only needs to look at how well the current conventional commodity checkoffs are working.  Dairy farmers are drowning in overproduction with tanker after tanker of milk being dumped and milk consumption continues to decline even with hundreds of millions of dollars appropriated from farmers milk checks each month for "advertising and promotion."

The checkoff was not even organic farmers idea for the most part, but proposed by the Organic Trade Association (OTA) which primarily represents the trade side of organic.

USDA language from its press release on Friday, May 18, 2018 announcing termination of proceedings for rulemaking regarding a proposed organic checkoff:

“This action terminates a rulemaking proceeding that proposed to establish a national research and promotion program for certified organic products under authority of the Commodity Promotion, Research and Information Act of 1996 (1996 Act). The program was proposed by the proponent group, the Organic Trade Association (OTA). Based on uncertain industry support for and outstanding substantive issues with the proposed program, USDA is terminating the proceeding.”

OFARM Continues to Battle Organic Import Fraud-Another Ship Stopped!

May 1, 2018

On February 21, 2018, OFARM received information that the Mountpark (pictured below) was to arrive in the Port of Stockton, CA on about March 6, 2018 with a cargo of supposed organic corn and soybean meal originating in Turkey.  OFARM immediately filed a complaint with USDA’s National Organic Program, Chief Compliance Officer that this cargo was highly suspect as fraudulent.

The ship was turned back and not allowed to unload by Customs and Border Patrol. The ship moored in San Francisco Bay about a mile and a half off shore until pulling up anchor and heading towards Panama on Wednesday, April 25, 2018. Subsequently, Sunrise Foods, owner of the cargo filed a lawsuit in the Federal District Court of Eastern California arguing that they had gotten 16 prior shipments into the U.S. At least one of other shipment was caught by OFARM thanks to our overseas contacts and the corn cargo supposedly originating in Turkey was turned away the last week of September, 2017. Washington Post investigative report Peter Whoriskey found 3 fraudulent ships in May 2017 as reported in the Post which may or may not be related. USDA NOP administrator at that time, Miles McEvoy told OFARM’s executive director at the time that NOP was unaware of the shipment because NOP doesn’t track ships. 

Thanks to Ann Ross, Cornucopia Institutes farm policy analyst and an attorney, she uncovered all the court documents filed by Sunrise Foods and Customs and Border Patrol and USDA’s APHIS responses.

Part of the corn cargo is alleged to have originated in Kazakhstan. There is no organic corn or soybean production produced for export in Turkey and absolutely none in Kazakhstan. Other countries listed in CBP and USDA filings indicate Russia and Moldova are involved. Sources also say there is no organic corn production in Moldova.

In other actions OFARM has taken, OFARM representatives met with U.S. Senator Ron Johnson (WI) along with Westby Creamery board members and management to discuss organic fraud in both grain and organic dairy CAFO’s.  Subsequently, Senator Johnson has met with USDA Secretary Sonny Perdue number of times drawing attention to these issues costing U.S. organic producers millions of dollars.

To date, losses to U.S. organic grain producers due to fraudulent organic grain imports are mounting up to over $400 million dollars. OFARM along with various sources has uncovered a total of 10 ships with supposed organic grain since May, 2016. Seven of those ships have been fraudulent or a rate of 70%. Two additional ships with some of the same companies involved and origin of cargo got into the U.S. but suspicion is high for those two. 

On April 26th, OFARM’s executive director, John Bobbe was on a National Organic Standards Board meeting panel to discuss the problems and solutions to bring integrity and profitability back to organic producers. Stay tuned.

OFARM Continues to Fight Organic Grain Fraud

On Wednesday, Feb. 21st. our source provided us with two ships scheduled to dock in Stockton, CA on about March 6. One cargo was organic grain, possibly mislabelled as organic corn and soybeans from Argentina.  It was allowed to unload and we suspect it was feed wheat.

The second ship originating in Turkey had the same cargo makeup as similar ones previously rejected. OFARM provided information to USDA in a formal complaint on Feb. 21st

From our source on April 3rd, "Word today is the Turkey boat is being rejected by the usda. Importer is filing a objection. Not sure what that means"

The ship left Stockton, CA and is now anchored a mile and a half off in San Francisco Bay. It has been off the West Coast since late February meaning the demurage is running up the costs big time.

This is perhaps the third ship Acting AMS Administrator Bruce Summers was referring to when people met with him about two weeks ago.

Without OFARM providing USDA with the information, USDA would have probably missed it as well as the other two ships they found last fall.  If we in OFARM can pin point the exact location of a ship and watch it, why can't USDA?

There are no additional ships with organic cargo listed to dock in Stockton, CA.

Now if USDA actually went looking instead of OFARM having to provide them with information, what might they find?


The Organic Farmers' Agency for Relationship Marketing (OFARM, Inc.) submits the following comments to the NOSB.

OFARM has been monitoring incoming shipments of organic grain since discovering our first shipload of supposed organic corn in late May 2016. In the almost two years since, OFARM along with Washington Post Investigative Reporter Peter Whoriskey in his May 2017 article on organic import fraud, has uncovered a total of 10 shiploads of organic corn and soybeans. There are probably many more. A total of 7 out of those 10 shipments have been shown to be fraudulent or a rate of 70%. USDA AMS has stated that they have identified 3 ships. In fact without OFARM providing the initial information, the chances are minimal that the agency itself would have found these ships. As former NOP Administrator Miles McEvoy stated, "We (i.e. NOP) don't track ships."

Those identified as fraudulent have mostly originated in Turkey which produces no organic corn or soybeans for export and in fact is a net importer of U.S. grain.

OFARM along with Food and Water Watch filed two formal complaints with USDA's Office of Inspector General (OIG), the latest May 17, 2017. The report concluded that AMS was unable to provide reasonable assurance that NOP required documents were reviewed at U.S. ports of entry to verify that imported agricultural products labeled as organic were from certified organic foreign farms and businesses that produce and sell organic products.

In an August 10, 2017 letter, AMS Acting Administrator Bruce Summers response to the OIG report, agreed to the nine recommendations for correction. AMS is required to take action within 1 year on each recommendation. When OFARM asked for an update in late February, 2018 on specific progress on this, the presentation made was less then reassuring. OFARM intends to hold AMS NOP accountable through its elected Senators and Congressional Representatives on these corrections. Simply agreeing with the OIG findings is one thing. Action to correct the problems is required.

NOP needs to take further actions regarding detection of organic fraud. The recent listings and warnings about fraudulent certificates by NOP in the recent issue of the Organic Insider are commendable. However, where there is a lot of smoke as these warnings indicate, there is also a big fire of undetected fraudulent shipments falling through detection.

NOP needs to begin examining captains logs on ships as this is a record of everything that happens to cargos including fumigation and what the cargo is. NOP needs to begin requiring examination of what cargoes are insured for. No insurance carrier is going to insure a conventional shipment of grain at organic rates. Insurance coverage would be one more indication of potential fraud. The ships records should also include use of prohibited subtances such as fumigants.

Another emerging issue is the credibility of the USDA Organic Seal. OFARM has received calls from writers for major consumer publications such as Good Housekeeping and others asking how consumers can be assured of organic integrity. The answer at the present time is that consumers can only be assured of U.S. grown grains as meeting the standards. This is causing immense damage to organic integrity. This is in addition to the NOP's lax oversight which has cost U.S. organic grain producers over $400 million.

OFARM is a farmer cooperative with five member cooperatives and organic grain and livestock producers in 19 states from Montana to Texas and Louisiana and Kentucky and Ohio and states in between.

OFARM's Executive Director, John Bobbe will be participating in a panel at the National Organic Standards Board meeting (NOSB) in Tucson, AZ on April 26, 2018 to discuss what needs to be done to stop fraudulent organic grain imports. The panel consists of certifiers and industry representatives to give their perspectives. OFARM will be the only organization selected to give organic grain producers perspective on the costs and damages.