Organic Grain Imports Threaten Domestic Markets and StandardsSeptember 22nd, 2016
Cornucopia’s Take: The flood of cheap “organic” imports of questionable authenticity into the U.S. is pushing American certified organic farmers out of the market. This is a very disturbing development.
by John Bobbe
During the third week in May 2016, the Nakagawa — a cargo ship docked in Indiana on Lake Michigan with a cargo of 450,000 bushels of supposedly organic corn. The Nakagawa took on that cargo from a Turkish port, a fact that raised even larger questions about the “organic integrity” of the shipment. Other reports indicate that additional ships docked on the East Coast with similar “organic” grain cargos. These combined “organic” cargoes resulted in dumping up to 1.2 million bushels of corn on the U.S. organic market. That’s an amount equal to 336 rail cars of organic grain.
Romania and Turkey are the top two exporters of “organic” corn to the U.S. during the first six months of 2016. Compared to the same time period in 2015, corn exported to the U.S. from Romania declined by about 50% — from $28.4 million to $13.9 million. However, those organic corn exports from Turkey to the U.S. went from $11.7 million to $68.6 million –nearly a 500% increase, when comparing first half 2015 to Jan-June 2016 organic corn import data. (Source: USDA Economic Research Service)
Organic soybean import data reflectss a similar, unfortunate story. In the first six months of 2016, the dollar value of soybeans imported from Turkey is 36 times greater than a similar period for 2015 ($1.4 million vs. $51.4 million). India is the Number 1 organic soybean exporter to the United States. Ukraine comes in second, followed by Turkey at Number 6.
Tim Boortz, NFOrganics grain marketer, notes that imported grains have been a part of the overall bushels used in the production of U.S. organic food products for some time now. Record import volumes of organic soybeans and corn for the past 18 months have devastated U.S. organic grain farmers prices. Incentives for U.S. food procesors to use imported “organic” grains include: a high Dollar Value Index, much less expensive shipping costs for ocean-going cargo, and the willingness of U.S. feed and food manufacturers to use the cheapest ingredients regardless of origin. These factors have conspired to created a price structure for organic U.S. corn and soybean producers not seen since 2009-2010, when those prices were torpedoed by the Great Recession.
Import volumes have impacted the entire organic grain market. Food-grade wheat, corn and soybean markets have dropped by $5 to $6 per bushel from price levels seen only 18 months ago. Feed-grade grains have fared no better, with prices falling similar amounts for the major grains and $2-$3 on small grains. Low corn and soybean prices have also stifled a once-bustling, small-grain feed business, causing large backlogs of oats.
In Boortz’s opinion, organic corn has been most affected by the staggering volumes of imports during the past two years. These imports are causing slow movement of domestic organic grains and unacceptably low prices. Right after Labor Day 2016, many tens of thousands of bushels of U.S.-produced, organic grain are unsold. U.S. corn inventory remains in bins across the Midwest.
USDA’s Foreign Agricultural Service, in a January 26, 2016 report, stated “As organic production and consumption in Turkey grow, so too do the concerns about fraudulent organic products and lack of inspections. 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 organic standards.
Meanwhile, 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 are not always guaranteed. Consumers are advised to look for organic labels and be cautious of unpackaged products marketed as organic. (January 26, 2016 ; “GAIN Report # TR601, Turkish Organic Market Overview” by USDA”s Global Agriculture Information Network).”
Turkey and Ukraine have exported significant amounts or corn and soybeans to the U.S. Both those countries are currently involved in massive civil unrest. It raises the question of how organic on-farm inspections and integrity can be maintained in those circumstances.
Turkish certifier ETKO has been decertified. It certified approximately 70% of the Ukrainian grain supply. The EU has introduced additional testing regimes. A source out of Europe tells me that for some products, traders are now preferring to send to non-EU destinations (including US), since there is less risk of rejection. Shifting to non-EU destinations would explain the drastic swings in organic grains exports to the U.S. in comparable, year-to-year data. There is an apparent perception that the U.S. is an easy target to dump “organic” grain.
The U.S. organic industry has long touted 14% annual growth. USDA’s Economic Research Service (ERS) data shows that 40% of organic corn and up to 70% of organic soybeans processed or fed to livestock and poultry in this naiton are imported.
A legitimate question must be addressed: “Will the continued growth be at the expense of keeping U.S. organic producers profitable thus further stifling domestic growth in organic acres? For U.S. organic grain producers, there are a number of actions they can take.
- Ask your potential buyers if they are importing grain and why?
- Why are they using imports to lower domestic prices to unprofitable levels for you?
- Call your Senator and Congressman and ask them to inquire what USDA’s NOP is doing about the potential fraud in organic imports. Why is the U.S. viewed as an easy destination to ship (organic) grain?
U.S. organic grain producers produce the highest quality organic grains. Producers are subject to rigid certification standards and an audit trail back to the fields the grain was grown on their farm. It is what the organic label has come to mean to consumers. To insure the organic integrity, all organic imports and producers in other countries should meet the same standards that U.S. producers proudly meet, not just through so called “equivalency agreements”.
John Bobbe is the Organic Farmers’ Agency for Relationship Marketing, (OFARM) executive director and the author of “Marketing Organic Grain, A Farmers Guide.”
OFARM and Food & Water Watch Request USDA/OIG Audit of “Organic” Grain Imports
By Pete Hardin
An organic grain producers group and a citizens’ advocacy organization have filed a complaint with USDA’s Office of the Inspector General (OIG) requesting a deeper look at the integrity of imported organic grains.
The two organizations are OFARM and Food & Water Watch. Their complaint was stated in a September 1, 2016 letter to Inspector General Phyllis K. Fong. OIG 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 to USDA/OIG, 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 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.”
Of particular concern to OFARM and Food & Water Watch are imports of organic grains from nations such as Turkey and Ukraine.
The 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. 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 communications among inspection and certification bodies, trade companies, label organizations and authorities to strengthen organic integrity.’ 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,” should provide sufficient motivation to the NOP to dedicate more effort to this issue.
The OFARM/Food & Water Watch letter concludes with a request the USDA’s OIG 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?”