The Gazette (Montreal)
By Lynn Moore

MONTREAL – Not so long ago, Canada’s organic products sector was fertile ground for freewheeling opportunists, if not outright fraudsters.

While some farmers stuck to organic protocols and other industry players followed voluntary standards or certification programs, the overall situation was so iffy that key trading partners didn’t want to do business with Canada.

The European Union in particular was wary of entering into equivalency arrangements with Canada that would allow this country’s organic producers full access to EU markets, said Stephanie Wells, senior regulatory affairs adviser for the Canada Organic Trade Association.

“The European Union said … ‘While you have very nice national voluntary standards, they aren’t recognized by your government.’ And they were threatening to stop trading with us,” Wells recalled.

“Without that federal enforcement factor, they just didn’t want to do business with us any more.”

The association, whose membership includes growers, processors, certifiers and importers, also hoped to pave the way for an agreement with the United States as the U.S. and EU markets represent about 96 per cent of the global organic trade, now pegged at an estimated $55 billion per year.

Even as Canada moved into the new millennium, its organic sector was akin to the “wild west,” said Dave Lockman, certification manager for the eastern office of Pro-Cert Organic Systems Ltd., a Saskatchewan-based company.

“You could claim to be certified organic and nothing could be done about it if you weren’t. There was a lot of that happening,” he recalled

It was against that wobbly backdrop and amid growing consumer and retailer interest in organics that Agriculture Canada was lobbied to create organic regulations with enough substance to satisfy other jurisdictions.

On June 30, 2009, the Organic Products Regulations came into effect under the Canadian Food Inspection Agency.

The regulations provided for a transition period, a two-year span that would allow everyone to align their operations to the new reality and take care of practical matters such as using up existing packaging.

Even in their soft-enforcement mode, the federal regulations yielded an immediate harvest.

In June 2009, CFIA and the U.S. Department of Agriculture (USDA) signed the first organic equivalency arrangement, which opened the U.S. organic market to Canadians.

Last month, as Canada’s new organic regulations hit full stride, Canada and the EU announced the conclusion of a similar arrangement.

That deal was described as “an absolute game-changer for Canadian farmers and food manufacturers,” by Matthew Homes, executive director of the Canada Organic Trade Association, in a media release at the time.

“With full access to European markets, suppliers, and ingredients, Canada’s organic sector now has a strategic edge.”

The agreement would also help eliminate “the burdensome costs of multiple organic certifications” and help convince consumers that Canada standards are strong, he added.

The ink had barely dried on the EU-Canada accord when the Canada Organic Office announced the first significant enforcement action on the organic front since the federal regulations took effect in 2009. Not that the announcement came with any fanfare.

In a July 27, 2011 notice, the office said Jirah Milling and Sales Inc., of Ormstown, was no longer authorized to market organic products or use the Canada Organic logo (the logo that would now be recognized by the U.S. and the EU).

The notice of suspension of organic certification was sent to industry and certification bodies, but the document was not publicly disseminated by the federal body on a website or via a media release.

The Gazette found Ottawa’s suspension notice about one of eastern Canada’s most significant international organic dealers on the “newsroom” page of USDA’s website. It wasn’t deemed newsworthy in Canada, but it was in the U.S.

The handling of the Jirah file by the Canada Organic Office may not be a test case, but it certainly can serve as a case study.

It raises an array of questions about the federal program, especially about its transparency and sanctions.

Michel Saumur, the office’s national manager and program spokesman, would not provide information about the scope of Jirah’s corporate activities, wouldn’t discuss complaints received about the company, wouldn’t say why its certification was suspended – and subsequently cancelled — and would not even disclose which certifying body had accredited Jirah.

And straight information about possible sanctions for offenders could not be obtained during interviews with Saumur.

E-mail inquiries to CFIA’s media office finally got a response Friday afternoon. The Organic Products Regulations “do not have provisions for fines and additional penalties at this time.”

So it’s something like getting caught for driving so fast you lose your license but no fine.

The “closed posture” of Canada’s organic regulators puzzles and frustrates a U.S. farm advocacy group that says it has been probing complaints about Jirah for about two years on behalf of U.S. and Canadian farmers.

Among other things, they questioned how Jirah could consistently sell organic commodities, particularly soybeans, significantly below the cost of production.

One problematic area in the organic sector concerns non-organic product being illegally added to organic material to bump up a company’s output and increase its profits, according to a host of industry participants and observers interviewed recently.

Although Mark Kastel, co-founder of Wisconsin-based Cornucopia Institute, contends there is room for improvement with the U.S. National Organic Program, it does publicly disclose information. Sanctions include fines and the fined companies are fully identified and their fines disclosed.

Kastel’s group is now working to prepare a class-action lawsuit seeking damages for any marketplace injury on behalf of U.S. and Canadian farmers.

Under the U.S. organic program, civil penalties can reach up to $10,000 per violation, a NOP spokesperson, Soo Kim, said in an e-mail.

Since 2010, NOP has issued 17 civil penalties through settlement agreements, totalling $84,500. Violations have included incorrect labelling, false representation of a product as organic when not certified, fraud, and application of a prohibited substance.

The NOP’s policy is to refer all criminal cases to the USDA office of the inspector general, she said.

Last year, a Texas businessman, Basilio Coronado, was convicted of fraudulently selling conventional grains and beans as organic produce. He was sentenced to 24 months in prison and ordered to pay almost $524,000 in restitution.

Although Canada and other countries accredit companies that undertake to provide organic certification, it is those companies that grant or cancel certification.

Entities that seek certification must disclose all relevant information and it must be truthful, Lockman said. Reasons for certification suspension range from a failure to pay a certifier’s fees to fraud.

Argentina-based Letis S.A., a company recognized by Canada and Quebec, certified Jirah. It isn’t saying why the certification was yanked. Nor is Jirah’s owner, Andrew Eastwood, an ambitious businessman whose recent projects included a bid to build a $15-million hub for organic grain exports in the economically challenged town of Huntington.

Confidentiality between clients and certifiers is paramount, Lockman said, noting that certifiers have access to all company documents including financial records.

Governments have access to certifiers’ findings about transgressions.

“We are under a strict confidentiality rule, (but) the government can do what they want with that information. In Canada, we have no idea what kind of info CFIA will disclose,” Lockman said.

Canadians should have easy access to an accurate list of accredited organic businesses as well as listing of those who have lost their certifications, Lockman, Wells and others industry participants said in recent interviews.

“If people commit fraud, we would favour that they be prosecuted accordingly, whether it be fines or jail time. Organic integrity is very important to us,” Lockman said.

John Hopkins, the owner of À votre santé, sells organic products in his NDG shop, which has organic certification because he buys organic products in bulk and repackages them.

After 30 years working in the natural foods sector, Hopkins has seen an increasingly health-conscious public grow the organics sector into an industry where there may be competitive pressure to put profits ahead of principles.

“Regulations have to be as tough as possible because there is no trust anymore,” he said. “I would hope that (the industry) is all honest but I know what reality is and the world just doesn’t work that way.”

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