The labels said ‘organic.’ But these massive imports of corn and soybeans weren’t.
By Peter Whoriskey
May 12 2017
A shipment of 36 million pounds of soybeans sailed late last year from Ukraine to Turkey to California. Along the way, it underwent a remarkable transformation.
The cargo began as ordinary soybeans, according to documents obtained by The Washington Post. Like ordinary soybeans, they were fumigated with a pesticide. They were priced like ordinary soybeans, too.
But by the time the 600-foot cargo ship carrying them to Stockton, Calif., arrived in December, the soybeans had been labeled “organic,” according to receipts, invoices and other shipping records. That switch — the addition of the “USDA Organic” designation — boosted their value by approximately $4 million, creating a windfall for at least one company in the supply chain.
After being contacted by The Post, the broker for the soybeans, Annapolis-based Global Natural, emailed a statement saying it may have been “provided with false certification documents” regarding some grain shipments from Eastern Europe. About 21 million pounds of the soybeans have already been distributed to customers.
The multimillion-dollar metamorphosis of the soybeans, as well as two other similar grain shipments in the past year examined by The Post, demonstrate weaknesses in the way that the United States ensures that what is sold as “USDA Organic” is really organic.
The three shipments, each involving millions of pounds of “organic” corn or soybeans, were large enough to constitute a meaningful proportion of the U.S. supply of those commodities. All three were presented as organic, despite evidence to the contrary. And all three hailed from Turkey, now one of the largest exporters of organic products to the United States, according to Foreign Agricultural Service statistics.
Agriculture Department officials said that they are investigating fraudulent organic grain shipments. But the agency declined to identify any of the firms or shipments involved.
“We are continuing the investigation based on the evidence received,” it said in a statement.
The imported corn and soybean shipments examined by The Post were largely destined to become animal feed and enter the supply chain for some of the largest organic food industries. Organic eggs, organic milk, organic chicken and organic beef are supposed to come from animals that consume organic feed, an added expense for farmers that contributes to the higher consumer prices on those items.
While most food sold as “USDA Organic” is grown in the United States, at least half of some organic commodities — corn, soybeans and coffee — come from overseas, from as many as 100 countries.
USDA officials say that their system for guarding against fraud is robust.
Under USDA rules, a company importing an organic product must verify that it has come from a supplier that has a “USDA Organic” certificate. It must keep receipts and invoices. But it need not trace the product back to the farm. Some importers, aware of the possibility of fraud, request extra documentation. But others do not.
Regardless of where organics come from, critics say, the system suffers from multiple weaknesses in enforcement: Farmers hire their own inspection companies; most inspections are announced days or weeks in advance and lack the element of surprise; and testing for pesticides is the exception rather than the rule.
These vulnerabilities are magnified with imported products, which often involve more middlemen, each of whom could profit by relabeling conventional goods as “organic.” The temptation could be substantial, too: Products with a “USDA Organic” label routinely sell for twice the price of their conventional counterparts.
In recent years, even as the amount of organic corn and soybeans imported to the United States has more than tripled, the USDA has not issued any major sanctions for the import of fraudulent grain, U.S. farmers said.
“The U.S. market is the easiest for potentially fraudulent organic products to penetrate because the chances of getting caught here are not very high,” said John Bobbe, executive director of the Organic Farmers’ Agency for Relationship Marketing, or OFARM, a farmer cooperative. In Europe and Canada, he said, import rules for organics are much stricter.
Moreover, even when the USDA has responded to complaints of questionable imports, action has come too late to prevent the products from reaching consumers.