Markets enter lull period; USDA tries to root out fraud

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By Terry Fries
CNS Canada

With many farmers out in fields and buyers sitting on their hands, organics markets have entered a slow period.

Laura Telford, organic sector development specialist with Manitoba Agriculture, said yellow peas may have strong potential to attract more acres once new processing plants begin operating at Portage la Prairie and near Saskatoon, but for now she’s not hearing many reports from anybody, which she said is typical for this time of year.

“I’ve not gotten a tonne of outreach from farmers or from buyers recently, so that signals to me that we’re in kind of a quiet phase.”

Most grain buyers likely have enough in storage to get them through the summer and have done most of their contracting already, she said.

Telford added that organic crops’ strong prices during the last few years are attracting attention. She said she is fielding a lot of calls from conventional farmers wanting information about transitioning to organic production.

“I’ve heard from more conventional farmers this summer than organic.

“It (organic price) is high, and more importantly, more steady than usual. We’ve been going on three, almost four years of strong price differential between conventional, so that’s enough time for people to notice.”

She said trade uncertainty adds more sluggishness to the industry, as it does for conventional markets, but a crackdown on organic fraud by the U.S. Department of Agriculture may provide some opportunities for Canadian organic producers.

She cautioned, however, that it’s too early to tell how the situation will be resolved.

A report by the Cornucopia Institute, a self-professed organic farming watchdog, recently called the U.S. a dumping ground for imports of fraudulent products, and singled out corn, soybeans and other commodities from Eastern Europe.

USDA is presently testing a pilot project with a small collection of organic stakeholders that will test prevention, detection and mitigation strategies aimed at stopping fraud.

“The U.S. has 50 per cent of the global market in organics, so you can imagine they are pretty big buyers and right now they have about a two-million-acre deficit in organic feed grains, so they have been looking to Eastern Europe to fill that gap.”

She said with the fraud reports and stepped up detection measures, U.S. buyers may need to look elsewhere to fill supply shortfalls.

“The American organic buyer might look more to Canada as a safe haven for high-quality organic grain,” she said.

Tristan Gill, commodity trader at Westaqua Commodity Group, said the fraud reports out of Eastern Europe are the talk of the organics industry, but he doubted the USDA’s ability to control the problem.

He said anything short of having U.S. inspectors on the ground in former Soviet-bloc countries, where problems are said to be most common, will likely prove ineffective.

— Terry Fries writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.