Canadian producers keep wary eye on U.S. organic fraud allegations

Photo: Alfribeiro/iStock/Getty Images

By Terry Fries
CNS Canada

A report in the U.S. alleging widespread fraud in American organic grain imports damages the entire industry including Canadian businesses, according to Jason Charles, North America organics director at Pipeline Foods.

Charles said the findings released by the Cornucopia Institute, a U.S. organic industry watchdog, should come as no surprise to anyone in the industry.

“We see it every day. We track vessels. We know what countries produce what, and what they’re exporting. If you’re in the space, it’s common-sense, common knowledge.”

Organic certifications for shipments from certain regions often don’t match up, he said, and even if they do, many are from countries that aren’t allowed in North America.

The Cornucopia Institute did not respond to interview requests.

In its report, it outlined how the U.S. Department of Agriculture’s National Organic Program was vulnerable to abuses from a small number of large agribusinesses exporting organic grains to the U.S., mostly corn and soybeans for feed.

The report said 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 the former Soviet Bloc countries, including Ukraine, Kazakhstan, Romania and Russia.”

In the U.S., most organic livestock producers rely on imports for feed. About 50 per cent of organic corn and 80 per cent of organic soybeans are imported.

Mark A. Kastel, a director at the institute, said in a news release that USDA plans to step up monitoring and control measures could lead to feed shortages.

Charles, whose company is based in Minneapolis with facilities in Canada, said Canada imports little organic feed, so it was never an issue here, but he added the damage to the organic industry’s reputation overall is concerning.

“We’re trying to raise the bar and trying to change things because (to) those folks that act in that particular way, it’s only money that matters, and in a short amount of time, you destroy the space.”

If organic traders lose their belief in the system, he said, why would they continue to pay two or three times more for it?

“So, it hurts. It’s a lie to the consumer and it hurts organic farmers, grain companies, processors, millers, bakers and the whole supply chain. It is not sustainable.”

He said he’s not sure how the U.S. will make up for shortfalls in organic feed as USDA begins to look at tougher measures to improve oversight of organic imports.

Most Canadian organic production already heads to the U.S., he said, so any new markets for Canadian growers will come from industry growth.

“I’m also Canadian. I farm in the southeast corner of Saskatchewan, I have for 23 years. I farm 12,000 acres down there and most of the grain comes south.”

But he added that U.S. producers confronted with an organic corn shortage could turn to other crops, such as barley or feed wheat, which could give Canadian growers a new entry point in the U.S. market.

Laura Telford, organic sector development specialist with Manitoba Agriculture, also speculated about where American producers would get new supplies.

She said the U.S. makes up 50 per cent of the global organic market and has about a two-million-acre deficit in organic feed grains for which it had been relying on Eastern Europe to fill.

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

Tristan Gill of Westaqua Commodity Group said few people in the organics industry found the fraud reports surprising. As well, he expressed doubts that any measures by USDA to clamp down on organics fraud would be effective, short of placing U.S. inspectors on the ground in exporting countries.

Charles, meanwhile, welcomed the USDA changes and called a pilot project for increased prevention and monitoring a step in the right direction. He credited a stricter regulatory system in Canada for rendering organics less susceptible.

“I would say that as Canadian farmers go, we’re certainly not insulated, but we certainly have, I believe, a stricter policy, or a clearer view of what’s out there, and what’s not and what’s truly organic and what’s not.”

In the Cornucopia report, one Turkish company was singled out as one of the biggest offenders; both the company and its organic division have since given up their organic certification.

The report outlined how U.S. organic soybean imports from Turkey rose to 165,000 tonnes in 2016 from 14,000 tonnes in 2014. Organic corn imports rose to 399,000 tonnes in 2016 from 15,000 tonnes in 2014.

Cornucopia said in a news release that some of the organic product from Turkey was actually harvested in Russia, Moldova and Kazakhstan, countries from which it is illegal to import whole corn seed into the U.S. because of pest concerns.

The U.S.-based Organic Trade Association did not respond to interview requests.