Organic Industry Watchdog Response to USDA on Import Fraud

July 17th, 2018

[Read the USDA’s Office of Inspector General review of the NOP’s oversight of imports.]

The USDA’s National Organic Program, under increasing criticism regarding wholesale fraud in organics under their watch, today conducted a “virtual town hall” to present proposed rulemaking to address the improprieties.

Port of Oakland
Image source: Travis Leech

For most of the past decade, since The Cornucopia Institute rang the alarm bell over apparent fraud in the importation of organic commodities, the USDA’s National Organic Program (NOP), and the industry’s powerful lobby group, the Organic Trade Association (OTA), had nothing but praise for the federal oversight of exponentially increasing imports.

Their wake-up call, in 2017, was a scathing investigative story published by The Washington Post documenting large-scale fraud in the importation of feed grains from former Soviet Bloc countries with documented records of other forms of international crime. Last year the USDA’s Office of Inspector General also released a highly critical review of the NOP’s oversight of imports.

Now, over a year later, the USDA is proposing taking some constructive steps. Their timetable for publishing a new rule is spring 2019. After public comment is received and considered it could be another six months or year before implementation (without any phase-in period).

However, The Cornucopia Institute is strongly advocating for “emergency” rulemaking enabling enhanced enforcement measures to go into effect on an immediate basis.

Furthermore, Cornucopia is pressuring the USDA to follow the intent of the enabling legislation that gave the agency the mandate to regulate the industry, the Organic Foods Production Act (OFPA). That law mandates that the Secretary of Agriculture consult with the National Organic Standards Board (NOSB), a 15-member expert advisory panel set up by Congress, before promulgating new regulations. The NOSB would then, thoughtfully, collaborate with stakeholders in the organic industry to create permanent rules while the emergency measures are already in place. The NOSB has discussed this topic but has not been allowed to formulate specific recommendations on new regulations.

Emergency rulemaking would temporarily bypass some of the legal noticing requirements, and public input, that might otherwise delay implementation for one to two years. This would give the NOSB, in collaboration with the industry, time to act.

The Cornucopia Institute recently published a comprehensive report illustrating how a lax regulatory system, overseen by the USDA, made the U.S. an attractive receptacle for potentially corrupt actors seeking a less burdensome market for dubious organic grain.

Following the European Union’s implementation of stringent protocols in 2015, U.S. imports of organic corn and soybeans skyrocketed, particularly imports from Turkey, which has long been identified with suspicious organic imports.

Cornucopia’s report illustrates how the Turkish company Tiryaki Agro Gida Sanayi Ve Ticaret A.S (“Tiryaki”) came to dominate the market.  Tiryaki is a multibillion-dollar agribusiness giant and has shadowy connections to shipments of grain grown in Kazakhstan, Russia, and Moldova often transshipped through Turkey and the United Arab Emirates.

Tiryaki and its wholly owned subsidiary, Diasub FZE, made news recently as the seller of 25,000 metric tons of suspicious organic corn that was the subject of a legal case made public by Cornucopia in April 2018.  Just weeks after Cornucopia’s publication of the legal filings, at least five foreign operations showing affiliations with Tiryaki surrendered their organic certifications.  Shortly after the rash of surrendered certificates, Cornucopia reported that Diasub and Tiryaki reemerged with a new certifier, the Netherlands-based Control Union Certifications.

Is the lack of attention on Turkish imports by the U.S. government rendering organic farmers “collateral damage” in our tenuous relationship with the totalitarian regime in that country? Just having gone through a contentious election, where the opposition was prevented from fully participating, the U.S. Defense Department is supplying advanced combat aircraft to Turkey at the same time they have procured sophisticated anti-aircraft missiles from Russia. The concerns of U.S. farmers would appear to be small potatoes compared to the international chess game being played.

Given the USDA’s long-term failure, for whatever reason, to judiciously oversee the massive amounts of grain being imported from countries with a history of fraud, investigative efforts like these have been left to public interest groups and farmer cooperatives.

Although the NOP’s efforts to address regulatory and enforcement failures, through the discussion on new rules that just took place, is a constructive step, it is long overdue.  Had the USDA followed the example of the EU, the harm inflicted upon domestic producers suffering at the hands of cheaper, illegitimate imports could have been averted, rendering the recently concluded webinar entirely unnecessary.

More:

  • These are important and complex questions on an issue vital to the future value of the organic seal. The dialogue is being highly controlled by USDA bureaucrats. If they sincerely wanted substantive input from the public, why didn’t the agency brief the industry on the scope of the questions in advance? During the call, stakeholders were all just shooting from the hip. And this is what the regulators say they are going to use to promulgate new rulemaking.
  • The NOP is breaking with decades of precedent in bypassing the NOSB in creating rulemaking and industry-wide dialogue on important issues.
  • In the past, the NOSB did not just gather feedback. It was charged by the NOP to create tangible rule recommendations. That is now being bypassed. This is in stark contrast to the intent Congress had in creating the multi-stakeholder expert panel.
  • The webinar was replete with generalities, and vague notions of reform, and largely lacking in substance other than what the public offered.  For example, increasing unannounced inspections is a positive step.  The important question to be answered is not whether more inspections should be had, but what they could reveal in the absence of meaningful requirements to which certified operations must comply.  We still don’t have substantive answers.
  • All brokers, traders, importers, and dealers in the supply chain must be certified and required to conduct complete audit tracebacks.  The regulations must also require certifiers to issue uniform, standardized transaction certificates that identify the farm where the grain was harvested. These are points that have been argued by Cornucopia and other industry observers for years and should no longer be up for debate.  Why is the USDA bypassing the NOSB to conduct their listening session?  They are running the clock out and jeopardizing the livelihoods of ethical domestic farmers.
  • And, currently, unannounced inspections are required, but their targets are determined by the certifiers themselves, who are compensated by the farms and processors they are scrutinizing. There’s no incentive to uncover malfeasance.
  • The regulations must require certifiers to issue uniform, standardized transaction certificates that identify the farm where the grain was harvested.  This should have been occurring years ago. Many industry participants, and consumers, assume this traceback has been taking place.
  • Forty-five minutes of organic stakeholders shooting from the hip on questions that were withheld prior to this session does not remotely compare to the thoughtful engagement between industry participants and the NOSB which has preceded rulemaking in the past.

The Cornucopia Institute, intent on both exposing fraud and negligent government oversight and on providing meaningful organic alternatives, will soon release buyer’s guides showcasing high-integrity brands of organic dairy products, eggs, and poultry exclusively sourcing feed grain from North American farms. A companion guide will help livestock producers and marketers who want to gain a competitive advantage find domestic feed sources.

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