Press Release: OFARM Meets with USDA to Discuss Organic Grain Import Fraud

March 10, 2018

For more information:  Contact John Bobbe, OFARM executive director at 715.467.0031 or johnbobbe@email.com.  Additional information about OFARM may be obtained from Oren Holle, OFARM president at oholle@bluevalley.net or 785.562.7500.

Organic grain farmer members of the Organic Farmers’ Agency for Relationship Marketing, Inc. (OFARM) from across the Midwest recently met with Betsy Rakola, Director, Compliance and Enforcement, USDA’s Agricultural Marketing Service National Organic Program (NOP) in LaCrosse, Wisconsin about fraudulent organic grain imports.

OFARM members, other organic grain and dairy farmers and others, Wisconsin Congressional and Senate representatives as well as Congresswoman Chellie Pingree, (ME), also an organic farmer discussed what needs to be done to protect organic integrity and achieve profitable price levels for U.S. producers.  The U.S. imports about 70% of its organic soybean supply and 40% of organic corn.  At least some of the organic grain imports, especially from Turkey, have been shown to be fraudulent.  Depressed domestic organic corn and soybean prices have cost U.S. producers hundreds of millions of dollars in losses due to imports being used to depress prices.

USDA’s Betsy Rakola reviewed USDA’s NOP’s efforts on curbing organic grain import fraud.

Specifically organic farmers put forth several key recommendations to combat organic fraud.

Oren Holle, Kansas diversified organic grain and livestock farmer and OFARM president said, “AMS-NOP must continue to hold itself to the promised response actions and deadline proposed to the USDA’s Office of Inspector General (OIG)  and to remedy the shortcomings identified.”

A September, 2017 USDA OIG report cited AMS’s NOP as “…unable to provide reasonable assurance that NOP required documents were reviewed at U.s ports of entry that imported agricultural products labeled as organic were from certified organic foreign farms and businesses that produce and sell organic products.”  USDA agreed to correct 8 short-comings the OIG cited.

Holle went on to add, “NOP needs to  put in place a process for identity and tracking of inbound organic cargo’s to identify origins where fraudulent activity is suspected.  This information appears to be available with a limited expending of resources.   NOP also needs to ensure that cargos that may have been rejected at points of loading, enroute, or arrival at other ports are not re-documented and shipped to the US markets which sources have claimed is the market of least resistance.”

Holle went on to add:  “While we greatly appreciate the recent efforts and directives from NOP to the accredited certifiers to remind them of their obligations to protect organic integrity, it is also indicative of the need to follow up with additional scrutiny of the process, particularly directed to the oversite of areas which are most vulnerable to fraudulent activities.”

The farmers present also stressed  that additional funding should be earmarked specifically for greater level of due diligence in enforcement of NOP requirements for organic imports.  There must be an emphasis that if and when these resources become available that they are applied to correct the known deficiencies that currently exist including inter-agency cooperation with other agencies including Customs and Border Patrol and  USDA’s Animal and Plant Health Inspection Service. There also needs to be more personnel that are adequately trained in fraud identification and stop shipment capabilities before these cargos enter the US supply chain.

OFARM is a farmer cooperative incorporated in the State of Minnesota.  OFARM has five-member organic grain and livestock cooperatives with organic producers in 19 states from Montana to Texas and Louisiana, Ohio and Michigan and states in between.

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In spite of only 28 comments supporting withdrawl of the proposed requirements for Livestock and poultry and 70,000 comments opposing it including OFARM, USDA went ahead and pulled the proposal permanently.  An in-your-face to the organic community.  Read their release below.

USDA Decides Not to Impose Additional Regulatory Requirements for Organic Producers and Handlers

WASHINGTON, March 12, 2018 — The U.S. Department of Agriculture (USDA) today announced the decision to withdraw the Organic Livestock and Poultry Practices (OLPP) final rule published on January 19, 2017. The rule would have increased federal regulation of livestock and poultry for certified organic producers and handlers. The withdrawal becomes effective May 13, 2018.

Significant policy and legal issues were identified after the rule published in January 2017. After careful review and two rounds of public comment, USDA has determined that the rule exceeds the Department’s statutory authority, and that the changes to the existing organic regulations could have a negative effect on voluntary participation in the National Organic Program, including real costs for producers and consumers.

“The existing robust organic livestock and poultry regulations are effective,” said USDA Marketing and Regulatory Program Undersecretary Greg Ibach. “The organic industry’s continued growth domestically and globally shows that consumers trust the current approach that balances consumer expectations and the needs of organic producers and handlers.”

According to USDA reports for 2017, the number of certified organic operations increased domestically by seven percent and globally by 11 percent. Industry estimates show that organic sales in the United States reached almost $47 billion in 2016, reflecting an increase of almost $3.7 billion since 2015.

The Department carefully considered public comments and the relative costs and benefits for both producers and consumers of imposing the proposed additional regulations.

More information on the OLPP final rule is available in the March 12, 2018, Federal Register, and on the USDA National Organic Program web page.

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Fraudulent Grain Imports Are Hurting Profits and Production in the United States

By John Bobbe, Executive Director Organic Farmers’ Agency for Relationship Marketing, Inc. (OFARM)

Introduction

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 five 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 U.S.  (Rural Cooperatives Magazine, January 2012)

The idea of farmers working together in the marketplace on contracts including terms of trade, specifications and price originated in Ames, Iowa in 1997 with OFARM beginning its operations in 2000. 

I have been OFARM’s executive director since 2001.  During our 17 years of existence we have observed and carefully monitored the U.S. organic marketplace with its trends and changes. During the last few years, I have become increasingly concerned at the role imports of organic grain, some of which are fraudulent, are playing in reducing farm profits and slowing growth in organic conversion.

The U.S. organic market

The U.S. organic market is quite large with annual sales at the retail end over $50 billion.  Three retail giants, Walmart, Costco, and Whole Foods (now owned by Amazon) each have about $13 billion in sales. There are also others that have hundreds of millions of dollars in sales. The organic market is projected to grow at an annual rate of 14% per year for the next three years.

Currently on the organic grain production side of the equation, OFARM has organic producers ranging in size from 50 to 3500 hectares (100 to 7000 acres).  Producers with good management are averaging close to 10 metric tonnes per hectare for corn (145 bushels per acre), 3 metric tonnes per hectare for soybeans(45 bushels per acre)  and 2.5-2.7  (about 90 bushels) metric tonnes per hectare for wheat.  However, the conversion to organic from conventional production has been only 2% per year. 

Even with these production numbers, the demand for organic grain production is increasing much faster than conversion of acres to meet the demand.  The market is also not signaling to producers in any significant way that more production is needed or wanted.  This is where imports come into play, especially for corn and soybeans.

Estimates we have seen point to about 40% of our corn needs are met with imports, 70-90% of our soybean needs and about 14% for wheat.  The reason for the low wheat import numbers is that wheat for milling purposes is much more specific as to milling requirements.  Millers are less willing to chance imports that may or may not meet their specifications as opposed to domestic suppliers they have established relationships with. 

I want to make perfectly clear that we are not opposed to organic imports of corn, soybeans or wheat but fraudulent imports which have been identified on a large scale and had disastrous consequences for U.S. organic grain producers. 

U.S. Organic Grain Farmer Perspectives and Damages From International Organic Fraud

The 12 states Midwestern states of North Dakota, South Dakota, Nebraska, Kansas, Minnesota, Iowa, Missouri, Wisconsin, Illinois, Indiana, Michigan, and Ohio produce 77 percent of the organic corn for grain and almost 50 percent of the soybeans.

Market conditions are such that on a farm with 50 hectares of corn, the losses last year amounted to over $30,000 below production costs. This has been the case for the past 3 years.

Our farmers recognize the current necessity of imports of organic corn and soybeans for segments of the industry to meet growing demand.

What is problematic is that imports, some in large quantities are being used to relegate U.S. organic grain production as a residual source of supply instead of a primary source in many cases.  This has resulted in lower U.S. producer prices, sending the opposite market signals that less domestic production is needed.  We should be encouraging more domestic production and price is one of the factors that indicates what producers should do.  This is compounded by what appears to be massive volumes of fraudulent import shipments.

The United States Department of Agriculture (USDA) Foreign Agricultural Service (FAS) has published reports on organic markets including an assessment of fraud potential in at least one country in the Black Sea region.

The most frequently cited countries of origin for exports to the U.S. for corn and soybeans includes countries in the Black Sea Region.  The fraud exposed has also been from shipments originating from countries in this region.

Washington Post Investigative Reporter Peter Whoriskey published an article titled, “The labels said ‘organic’.  But these massive imports of corn and soybeans weren’t,” (May 12, 2017).  The article contained copies of actual manifests and their alterations from conventional to organic enroute to the U.S.  This shipment plus documents from two others indicating they were fraudulent of over 16,363 metric tonnes each, some of which got into the U.S. domestic market supply chain.

We in OFARM have been tracking shipments and have actual pictures of ships, ports of origin, cargo, volumes and port of delivery.

Over this same two-year period OFARM has received direct testimony from numerous sources corroborating OFARM’s concerns about audit trail integrity.

# An organic trader recently lost a 1200 metric tonne consignment of sunflower seed which had a dodgy residue test in Europe.  This consignment was diverted to the United States.

# A presenter at Expo West stated that the U.S. is a dumping ground for organic imports due to the lax paper work.

# OFARM keeps getting information and offers to provide information on organic fraud.

#OFARM representatives have had extensive conversations with people who have travelled to countries that export to the U.S. and they have reported highly questionable practices including, such things as wild birds flying around in processing facilities and questionable protocols regarding sanitation.

The problem of fraud has many aspects.  First is fraud along the supply chain closer to the point of origin and secondly, current weaknesses in the U.S. regulatory oversight to detect and take actions regarding fraud.

U.S. Consumer Perspectives

Over 70% of U.S. consumers will buy at least some organic food products during the year.  Their opinion weighs heavily on the future of organics.  The most comprehensive data for the amount of imports is for corn, soybeans, and wheat.  Other major imports relative to their size of the market include lentils and edible beans for which there is currently little or no data.  They are buying organic because they perceive it as better, healthier food.  Large segments of consumers are becoming aware of potential fraud in what they are buying.  Here are some perspectives from major organizations whose membership is primarily organic consumers on organic fraud:

“So let’s keep policing the organic industry, exposing the fraud, working for stronger standards and better enforcement of those standards.”  Katherine Paul and Ronnie Cummins, Organic Consumers Association. associate director and international director respectively

“Consumers support organic agriculture because of its promise to deliver not only safer and more nutritious food but also to protect the environment and the livelihoods of family-scale farmers.  In general, imports that undercut domestic production challenge many of the foundational beliefs that lead consumers to willingly pay premium prices for organic food.”  Will Fantle, Cornucopia Institute

“Consumers rely on the USDA organic label to show that the products they feed their families were produced according to rigorous standards that are backed up by a strong system of enforcement. In a crowded marketplace, where many labeling claims compete for consumer dollars, USDA organic has stood apart as a credible label with integrity. But if the USDA does not increase its oversight of organic imports, consumers will lose trust in organic and it will be hard to win them back.” Patty Lovera, Food and Water Watch assistant director

Collectively these organizations represent over 3 million U.S. consumers who are directly concerned about the organic products they buy and organic fraud and integrity.

On a global level, Consumers International with global membership of over 200 organizations in over 100 countries states “With our members, partners and consumers around the world, we're challenging unfair, unsafe and unethical practice to ensure all consumers are treated safely, fairly and honestly.”

Too often consumers are left at a disadvantage with the companies and governments they encounter, leaving them exposed to unsafe, unfair or unethical practice.

Market Transparency and Implications of Fraud

OFARM organic grain and livestock producers adhere to the following principles on prices the marketplace needs to reflect in order for them to continue to grow and be profitable:

  1. The full recovery of all actual production inputs including those unique to the production, handling, and marketing of organic livestock.
  2. A return to labor and management that provides family income at levels that allow for the full involvement and adequate compensation of all members of this partnership in the operation of an organic production unit.  This compensation must extend to the education, training and transition to a future generation of organic farmers.
  3. Return to investment that provides for the acquisition and ownership of the land and related infrastructure required for organic food production.
  4. Income enhancement to provide for support for the social and economic viability of the community.
  5. Organic premium for production of healthy, wholesome food in an environmentally responsible manner.

 These principles should apply anywhere in the world.

Supply chain integrity, steps to eliminating organic fraud

Supply chain transparency from farm and fields of origin through to the consumer purchasing the product is needed in every step.  The U.S. domestic organic market is fully transparent.  From my international experience, there is much that can and must be done to improve transparency which will in turn reduce the massive amounts of fraud we have seen assault our U.S. markets.   As a cooperative representing organic producers, steps that should be taken in our opinion include:

1. We fully support adoption of and implementation of the European Commission Directorate-General for Agriculture and Rural Development Guidelines as put forth for 2016 and 2017 by USDA’s National Organic Program.  They include:

(1) Methodologies and identification of all consignments of imported organic food and feed.

(2) Complete documentation check at the point of entry including implementation and use of electronic data and certified document transfer to facilitate inspection at the port of arrival in the U.S. 

(3) Sampling and analysis for the presence of residues of each incoming shipment at the port of entry.

2. Technologies to monitor supplies using weather, model simulation, and data collection to accurately project production versus what is actually being supplied into the market chain.           

3. Increased transparency by using electronic platforms such as outlined in the April 18, 2017 European Commission press release to be able to physically trace organic products, especially grains, through the system from field to final use.

4. Use of International Maritime Laws regarding cargos and documentation of shipments. This should include requiring proof of insurance that cargos that are organic are insured at organic rates.

5. More consistent oversight of  USDA’s National Organic Program (NOP) - NOP should submit to on-going, third party oversight similar to certifiers and operators; complete with non-compliances and deadlines for corrective actions to better ensure consistent NOP enforcement and standards of interpretation by all of their accredited agents, operators and inspectors. 

6. More focus where the problems are in the supply chain: - More risk-based inspection protocols are needed that require more unannounced visits, mass balancing, check-backs, and testing for certifiers with high levels of non-compliances or on-going complaints. 

In conclusion:

The originators of the U.S. Organic Food Production Act never envisioned 20 years down the road, weaknesses in our system that would be exploited for financial gain through fraud.

Organic integrity and elimination of fraud will benefit everyone including those who wish to export to the U.S. organic markets.  Continued fraud will be damaging in the long run to everyone.

U.S. producers do feel that the USDA’s National Organic Program and its rules and procedures regarding certification and use of the USDA organic label put them at the forefront in the U.S. and the world when it comes to high standards for organic production that our consumers can have confidence in.

There are some big weaknesses we in OFARM are working in cooperation with the NOP and Mr. McEvoy, USDA Deputy Administrator of the National Organic Program, as well as other segments of the U.S. industry including buyers and consumers to insure organic integrity throughout the entire supply chain.

We have our work to do in the U.S. and to work with international partners to clean up the fraud.  

This will result in fairness to everyone through the entire supply chain.  It will result in fairness to organic farmers in a marketplace that is fully transparent and reward them for the risks they take. Consumers will have confidence that when they make the decision to buy organic they are getting the value and integrity they are paying for with their dollars.

Finally, on behalf of the Organic Farmers’ Agency for Relationship Marketing (OFARM), I would like to extend a formal invitation to the Anti-Fraud Initiative and its sponsoring organizations to hold a future conference in the U.S.  We, in OFARM would be happy with our partners and collaborators to facilitate such a conference including visits to some of our organic grain farms and cooperative facilities as well as the conference itself.

We look forward to continued collaboration.

Thank you for the invitation to be part of this conference.

Fall Meeting

Organic Imports and Maintaining Organic Integrity
You are invited and bring along your organic neighbors.
Friday, September 8, 2017
9 a.m.-12 noon

Best Western Plus University Park Inn and Suites conference room
2500 University Blvd, Ames, IA.

Agenda:

·   A brief historical review of the economic impact of imports and related fraud issues to producers and others partners in the organic industry.

·  Update on OFARM’s current efforts to address these issues to maintain our current high standard of organic integrity

·  Exploring innovative ways to get our industry partners to better understand how the global organic market attitude stymies potential growth for the domestic organic industry

·  Future actions that need to be taken to address current and potential issues that threaten the integrity of our high organic standards.

Adjourn by noon.

For more information contact: Oren Holle, OFARM president (785-562-7500, Email: oholle@bluevalley.net); Carmen Fernholz (320-598-3008, E-mail:  fernholz001@gmail.com); Tom Bilek, (218-693-2312, E-mail: tom@bilekzone.com) or John Bobbe ( 715-467-0031, johnbobbe@gmail.com)

Directions:  The Best Western Plus University Park Inn is located off Hwy. 30 south on University Blvd.  This is west of I-35. 

Organic Fact Sheet and Talking Points for Organic Producers to Protect Their Bottom Lines and the Integrity of “Organic”

Currently, the U.S. produces only about 60% of the required organic corn and 10-30% of the organic soybeans the market requires.  Yet the organic trends show the demand increasing at about 14% a year.

For over two years organic grain producers have seen their prices, market opportunities and bottom-lines on their farms decline due to fraudulent imports.

The losses to the twelve Midwestern state organic grain producers (ND, SD, NE, KS, MO, IL, IA, WI, IN, MI, MN, OH) totals over $150 million in lost income for the crop years 2015 and 2016 and if all 48 states and 2017 income losses are included, it is over $250 million.

This situation is unsustainable and will not grow the domestic supply of organic grain.

As documented by the Washington Post investigative reporter, Peter Whoriskey, (May 12, 2017) “The label said ‘organic’ but these massive imports of corn and soybeans weren’t” the profits on one shipload of imported fraudulent grain was over $4 million.

Here are what actions you can take to help put pressure on the solve the problem!

Organic farmers need to reach out to their members of Congress, especially those on the Ag committees for the following:

**Explain what fraudulent imports have done to you, your family and profitability.  Be specific about the dollars and cents losses which helps make your story personal.

**You need to strongly express support for greater resources, tools and staffing for NOP to protect American interests. More resources need to be devoted for more NOP staff including auditors and more “boots on the ground” in problem areas such as Turkey, Ukraine, Russian Federation and other countries in especially the Black Sea Region.

**Additional tools are needed to re-enforce the NOP’s ability to take a tougher stance on fraudulent imports.  This includes the ability to develop new rules to include requiring importers to be certified and more comprehensive inspection and testing for banned substances at the ports.

**The U.S. currently has no requirement that importers, traders or brokers doing
the importing be certified.  Canada and Europe require that.  Why not the U.S.?

**Shipments upon arrival at our ports need to be inspected including documents for authenticity.  As the recent Washington Post investigation revealed, shipments left Turkey as conventional grain and by the time they arrived in the U.S. forged documents had them as "organic."  Currently there is no inspection at the ports for "organic.

**A system of electronic transaction certificates needs to be put in place such as in Europe.  This allows the necessary documentation to arrive well in advance of the physical shipment.  Adequate procedures can be put in place for when it arrives for inspection and to reduce and eliminate fraud.

**Start talking to your certifiers and asking questions.  Were they involved in any import transactions?  What are they doing to insure the imported shipments they certify meet the same standards you have to meet?

The time is NOW! Even if you are busy, call from your tractor or combine.

Here is the number to call to contact your Senators and Congressman.  The Congressional switchboard number is (202) 224-3121.  You can use your zip code to be connected to your Representative’s office, then call back and do it again for the Senate by picking your state.  The menus are easy to follow.

August is another Congressional Recess and it is critical that organic farmers invite their members out to your farms and establish relationships that can hold them accountable to you – if not  --- the solutions proposed may not be in the farmer’s best interest!  And the industry is proposing solutions for you!

There is an urgent need to protect the bottom-lines for existing organic farmers while building a more attractive and durable roadway for the next generation of farmers to close this domestic supply and demand gap for organic.

Farmer leadership and regular communications to your members of Congress is the best tool for speeding this up!  Not just a single call, but repeated calls demanding action.  Ask to talk to the Congressmen or Senators agricultural policy person and keep calling and checking in about developments and what is being done.

If you need additional information please contact Oren Holle, OFARM president at 785.562.750
(E-mail: oholle@bluevalley.net), Carmen Fernholz, OFARM vice president at 320.598.3010
(E-mail: fernholz001@gmail.com) or John Bobbe, OFARM executive director at 715.467.0031
(E-mail: johnbobbe@gmail.com)

Letter to Miles McEvoy, Deputy Administrator, AMS National Organic Program

John Bobbe, executive director
E149 Cty. Rd. B
Scandinavia, WI  54977
E-mail:  johnbobbe@gmail.com
Tel.  715.467.0031  Cell:  920.493.3339

June 12, 2017

To:  Miles McEvoy, Deputy Administrator, AMS National Organic Program
From:  John Bobbe, OFARM Executive Director

Dear Miles,

This letter is our follow-up to your recent reply letter regarding the continuing harm to US organic grain farmers due to continuing threats from dubious grain imports into US.

For nearly two years now Organic Farmers Agency for Relationship Marketing (OFARM) has been investigating issues surrounding the significantly increasing amounts of imported organic grain into the United States.  Our findings show that the source for much of this grain appears to be centered in Eastern European countries, specifically Ukraine, Romania and Turkey.  OFARM’s concerns center around the lack of organic audit trail integrity given the current political unrest in these countries. 

The recent Washington Post investigation and results with actual altered documents, not only confirms what we in OFARM have been saying for almost two years, but should throw up flags about the holes and deficiencies in the current NOP protocols.

Over this same two year period OFARM has received direct testimony from numerous sources corroborating OFARM’s concerns about audit trail integrity.

# An organic trader recently lost a 1200 metric tonne consignment of sunflower seed which had a dodgy residue test in Europe.  This consignment was diverted to the United States.

# A presenter at Expo West stated that the U.S. is a dumping ground for organic imports due to the lax paper work.

# OFARM keeps getting information and offers to provide information on organic fraud.

#OFARM representatives have had extensive conversations with people who have travelled to countries that export to the U.S. and they have reported highly questionable practices including, such things as wild birds flying around in processing facilities and questionable protocols regarding sanitation.

We feel your recent letter offered no assurances that the audit trail integrity of imported products is in fact uncontestable.   In conversations in LaCrosse, you indicated that while investigations such as those that may be needed in countries like Turkey are on hold due to civil unrest and uncertainty United States imports from these countries continue.

 “ (AMS)…working with APHIS PPQ Program to identify better ways to oversee organic products at Ports of Entry into the United States.”

“AMS does not have the resources or specific authority to inspect products at Ports of Entry into the United States.”

Currently the NOP system relies on entities in the supply chain (certifiers) to do the verification because NOP either does not have the authority, resources or personnel to conduct intense oversight as practiced in other major organic market countries in the world.

OFARM is concerned about the fact that NOP’s steps in dealing with the massive amounts of organic imports, especially grains, appears to be on a cosmetic level and wholly inadequate to stem this rising tide of questionable imports. The consequences of protocol violation seem miniscule in comparison to the overall value of the imported product potential.  

Below is the pricing history of organic corn and soybeans in the Midwest, two years prior (2013 and 2014) average prices to compare with the years 2015 and 2016 when massive amounts of imports started to impact the markets. The damages to U.S. organic producers in the 12-Midwestern states that produce 77 percent of the organic corn for grain and almost 50 percent of the soybeans is staggering.

Actual prices received by OFARM member cooperative organic grain producers are as follows:

Year               Corn (bu)                  Soybeans (bu)
2013               $14.63                      $24.46
2014               $13.25                      $23.00
2015                 $9.76                      $20.00
2016                 $8.50                      $18.00

Table 1 is the 2015 organic acreage for 12-Midwestern states as part of the SARE North Central Region. Acreages for 2016 will not be available until September 20, 2017.  For purposes of this analysis, 2015 numbers were used for 2016 although organic acreage has been increasing at about 2 percent per year.  The numbers for 2016 should be considered conservative.

Table 1-North Central Region state corn and soybean acreage-2015

State     Corn for Grain     Soybeans
IL           9244                    6682
IN          5016                    2394
IA          24553                  16255
KS         3736                    1100
MI         12077                   7085
MN        21750                  10546
MO        2755                     562
NE         8475                    4857
ND         2416                    3177
OH         8222                    5643
SD         4577                    3903
WI         26322                   7691
Total     129143                 69895
US        166841                140345
% of Total 77.4                   49.8
Source:  Table 9: Certified Organic Field Crops Harvested and Value of Sales-2015; USDA-NASS

Table 2-Estimated damage calculations to 12-Midwestern state organic corn and soybean producers for 2015 and 2016.

                              2015                 2016                 2015                 2016
                              Corn                 Corn                 Soybeans         Soybeans
Acres-12 states
(Table 1 above)     129143             129143             69895               69895

Yield (1) bu/acre    125                   125                   35                     35

Total bushels-
12 states                16,142,875       16,142,875      2,446,625          2,446,625

Price per bu.
Losses with
2014 as the
base price (2)         $3.49                $4.75               $3.00                 $5.00

Total estimated
losses                     $56,338,633     $76,678,656    $7,339,875        $12,233,125

Estimated
12-state two-year
losses (3)                Corn                 $133,017,280  Soybeans           $19,573,000

  1.  Yield estimates by a former University of Minnesota Organic Outreach Coordinator and organic farmer.
  2. Prices are used from above with 2014 used as the base year to calculate price declines.
  3. Total losses are rounded for discussion purposes that follow.

Total losses to these 12-state organic producers conservatively estimated is about $ 152.6 million for 2015 and 2016.  This is for only 12 states.  If all the states with their acreages were included for organic corn and soybeans, the losses would be close to $250 million.

When compared to other major importers of organic products, it is OFARM’s conclusion that NOP may be severely lacking when it comes to protecting and upholding the integrity of imported certified organic products.  Based on the accumulation of conversations, documents, data and political climates of several countries engaged in high volumes of organic product exports over these past two years, OFARM questions the veracity of assurances from Washington DC that “everything is just fine,” or up until the Washington Post article denying that a problem may even exist because the system is in place.

We would offer the following points based on our continuing discussions with knowledgeable individuals in Europe and within the U.S. organic industry:

NOP should increase communication; listen to what the EU Commission has to say. It is our understanding that Turkey has now been added to the list of “high risk countries.”  NOP should take heed that when a certification body is delisted for the EU, there might be something wrong with it.

1. Does the NOP currently have an implemented “high risk country protocol” that mandates further actions and investigations based   EU, Canada or other equivalency partners assessments?
There appear to be a very small number of certification bodies that are involved in certifying these grain farms at their origin, and the traders and supply chain steps, especially from the Black Sea region.

2. Is the NOP aware of this and are you tracking them sufficient to ensure that they are indeed in full compliance?
NOP should inform U.S. certifiers that there should be an extra level of scrutiny to anything coming from Hakan Organics, which is based in Dubai but with offices in Turkey, or Tiryaki, the largest Turkish grain exporter, or any of the many companies associated with them.

3. Has NOP/USDA issued any additional guidance or instructions to certifiers that would require greater scrutiny of actors with history of non-compliance?
NOP should enforce rigorous and more complete audit trails including - Certificate of Inspection, Certificate of Origin, (there is way that so much grain is be originating from Turkey), as well as Certificate of Conformity, (which we understand should include a seal of the UA Ministry of Agriculture).

4.  What are the NOP’s plans for insuring organic integrity for commodities in addition to corn and soybeans that don’t currently meet the threshold for being assigned a specific ITC code?
An example is dry edible beans.  It is our understanding that ITC does not assign a specific separate code for a commodity to be organic unless it meets a specific dollar threshold.  One of the farmers at our annual meeting in LaCrosse supplies a good share of dry edible organic beans to a major restaurant chain.  Large amounts of imported beans are putting immense downward pressure on the markets.  At the same time other than industry reports and rumors, there is no specific data on amounts, country of origin or being able to verify the organic documentation that is supposed to accompany the shipments.

5. Does the NOP/USDA have current authority to require such full chain audits trails now for “high-risk” countries, and if so has this been implemented and if no – what is necessary for this to be established?
NOP should implement residue testing on the pesticides that are regularly found in these shipments, share these results with the EU (and demand it the other way around). NOP should put goods under embargo until questions are answered and dare to reject goods when dubious in nature.

6. Has NOP/USDA implemented any such additional testing requirements and can USDA embargo and/or reject such shipments under your current powers?
NOP should not be accepting Ukraine, Russian, or Kazakhstan product to become Turkish when they are moved through Turkey – this one is also a problem for the EU Commission that is not, resolved, SEE NEW EU-GUIDELINES http://www.gfrs.de/fileadmin/files/eu/Guidelines-on-additional-official-controls_UA_KZ_RU.pdf

7.  Does the NOP/USDA plan to take actions regarding this specific critical control point, where it seems that aggregated grain being shipped from Turkey is failing to meet organic standards?
We understand that Turkey has not yet changed the origin of their certificates that has been addressed in that new EU guideline. Ukrainian and Russian product still becomes stated as Turkish origin. As we have long suspected Turkey is producing more organic corn and sunflowers than it possibly can. USDA’s FAS should be able to further verify this.  Authorities should insist on a proper Certificate of Origin. The Turkish certificates are provided by the Turkish Ministry of Ag – as it seems that Tiryaki has good relations with minister.  As the January 2016 USDA FAS report notes, fraud is rampant in Turkey.

 8. What actions is NOP/USDA taking to address this address this problem?
Accreditation bodies such as EA, UA and in particular Turkish) and competent authorities (Ukrainian, Turkish) should provide proof of participation in the Anti- organic Fraud Initiative and then provide proof of implementation of protocols to prevent fraud. Russians probably will not come to AFI workshop scheduled for Odessa, Ukraine in September. However, it is hoped that when they hear of AFI initiatives and that this will also bring them additional scrutiny, then they will hopefully change their behavior. NOP should participate in AFI meetings where inside or outside the meeting these kinds of developments are shared.

9.  Will NOP/USDA now engage with AFI in such meetings to become more informed?
Patty Lovera, Michael Sligh and I look forward to meeting with you on July 6, 2017 in your office.

Sincerely,

John Bobbe, OFARM Executive Director

Press Release: OFARM and Food & Water Watch Request Audit of Imported Organic Grain

PRESS RELEASE
For Immediate Release

OFARM and Food & Water Watch Request Audit of Imported Organic Grain

An organic grain producers group and a citizens’ advocacy organization are urging the USDA’s Office of the Inspector General (OIG) to investigate the integrity of imported organic grains.

OFARM and Food & Water Watch wrote to USDA Inspector General Phyllis K. Fong about the potential for fraudulent organic imports to undermine consumer expectations and the market for domestic organic producers. The Office of Inspector General is currently auditing the USDA National Organic Program (NOP) oversight of an organic equivalency agreement between the United States and the European Union (EU). 

As part of their letter, OFARM and Food & Water Watch requested that OIG “…examine the dramatic increase in the import of organic commodities, especially grains. A key area of concern for U.S. organic gain growers, and increasingly for consumers, is whether these in creased imports present an opportunity for fraudulently labeled organic products to enter the United states, undermining the opportunity for U.S. producers to get affair price in the market.”

The letter noted particular concern about dramatic increases in the import of organic grains from a few countries. During the first six months of 2016, there was a dramatic increase in the dollar value of organic soybean 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. During the first six months of 2016, there was a dramatic increase in the dollar value of imported organic yellow dent corn from Turkey, with more than five times the value of imports from Turkey in 2016 than the same time period in 2015.

The groups’ letter to USDA’s OIG further noted “As the organic market grows rapidly around the world, resulting shortages in the supply of various commodities can create a tempting satiation for those who do not value the integrity of the organic standards and see a potential to ship products fraudulently labeled as organic.”

“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,” said John Bobbe, executive director of OFARM. “We need the USDA to make sure that organic imports are meeting the same organic standards that U.S. producers do.”

The OFARM/Food & Water Watch letter concludes with a request for the OIG to examine whether:

- NOP’s procedures 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;

- NOP has 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;

- NOP should collect other data to gain a better understanding of source of imports, back to the certifier and farm level.

To read the full letter, go to previous post.

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The Organic Farmers’ Agency for Relationship Marketing (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.

Food & Water Watch champions healthy food and clean water for all. We stand up to corporations that put profits before people, and advocate for a democracy that improves people’s lives and protects our environment.

CONTACT: John Bobbe Executive Director, OFARM 715.467.0031 johnbobbe@gmail.com www.OFARM.coop 

Letter to USDA's Office of Inspector General

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

Organic Checkoff

OFARM has consistently maintained that there are better ways to promote "organic" then a federally mandated Organic Research and Promotion Order as proposed by the Organic Trade Association (OTA).  Here is another reason why.

“For Our Common Ground” is a website and Facebook page supposedly dedicated to “helping consumers sort through the myths and misinformation” about the food they buy.  It does have a token organic farmer or two and brief discussions of organic. However, one could read the statements on the website and conclude it is simply a ruse to cover the dismal track record of conventional agriculture regarding food safety and the merits of organic food produced with no pesticides, antibiotics or genetically engineered seeds.

Here are a few examples:

“Organic or traditional, all milk contains the same valuable nutrients.”  Yes, but studies show organic milk to be better and most consumers don’t want hormones and antibiotics used in production of their milk.

“The USDA, which certifies organic production, makes no claims that organically grown food is more nutritious than conventionally grown food. Organic food proves to be only different in how it is grown, handled and processed.” True but independent research shows otherwise.

Then there is an entire article devoted to dispelling the myths of GMO foods that consumers go to the grocery store to buy.  Read that, consumers are mis-informed and need to be told.

Here is another statement:

“Do I need to buy the most expensive food to get the best for my family

  • While organic food prices are often higher than conventional food, there is no difference in nutritional value, according to a review of 400 scientific papers on the health impacts of organic foods, published in the journal Critical Reviews in Food Science and Nutrition.”

The bottom line is that some of the people on this website will viciously attack anyone who challenges the status quo of conventional agriculture and readily op disparage organic.  And there is always a strong defense of GMO’s and Monsanto.

The best part is their by-line:  “Brought to you by America's soybean and corn farmers and their checkoffs.”

Organic checkoff funds could not be used to rebut the false and misleading statements made on this website or any other. The idea of a conversation about food is always welcome.  Using farmer checkoff funds under the guise of a conversation about food to disparage “organic” is very questionable to say the least. For example, there is no discussion of alterative research about the food safety issues surrounding GMO’s and glycophosphates.  The attitude is just “trust us.”  Never mind that the World Health Organization (WHO) recently declared glycophosphates as a probable carcinogen.  

This is just another reason why the OTA proposed checkoff is a very bad idea and a waste of organic farmer’s money. 

Organic Checkoff Position

A proposal has been submitted to the USDA by the Organic Trade Association (OTA) for USDA to conduct a referendum for an organic research and promotion order checkoff.  OFARM along with a number of other organizations are not opposed to funds for research and promotion, but are opposed to the OTA proposal as presented for a number of reasons.

First, and foremost is why farmers have spent a lot of time decrying the intrusion of government into their business through rules and regulations  Now comes along a proposal that would require organic farmers to fund more government rules and regulations for research and promotion. Ultimately, organic farmers will be footing the bill. OFARM has been working with a number of like-minded organic farmer groups as there simply has to be a better way to do this. The conventional commodity checkoff programs have been rife with misspent money and lack of accountability. In the case of the pork checkoff, farmers voted out the checkoff and the courts blocked those efforts so farmers still are paying into a checkoff program they voted to do away with.

For years, the organic community has sought to make "organic" stand out to consumers.  Now to get a checkoff, OTA (an industry trade group) had Congress classify organic as a single "commodity" just like dairy, pork or beef.

To continue to be informed of the latest developments on this issue, go to www.noorganiccheckoff.com and also like the site on Facebook.

GENERAL MANAGER POSITION GRAIN FARMERS CO-OP

Midwest Organic Farmers Cooperative is seeking a general manager for its operations, including marketing division, grain cleaning plant, feed mill, seed division, logistics operations, and administrative office.  To qualify, the applicant must have prior management experience and proven personnel supervisory skills commensurate with the duties of this position.  Knowledge of grain farming and organic practices is a plus.

MOFC is a fast growing cooperative that markets organic grain for members and non-members throughout the U.S. midwest to buyers all over the country.  It has developed its own organic seed lines and markets them widely.  It cleans grain for farmers and end users, and is in the process of a large expansion of the cleaning plant to service the developing business.  Its feed mill is also expanding capacity to meet increasing business.

For a complete description of the general manager duties, salary parameters, or to submit a resume with references, contact:   johnx@midwestorganic.com