It’s no secret that US consumers have a seemingly insatiable appetite for organic food. What they might not realise is some of the product doesn’t always live up to its billing – and that’s driving regulators to tighten rules on incoming shipments.
While the US is the world’s largest corn and soybean producer, only a small portion is organic – grown without genetically-modified seed or synthetic fertiliser. With demand increasing from organic meat and dairy producers, much of the crops fed to cattle and chickens comes from overseas. But there’s no way to guarantee foreign shipments adhere to organic standards.
Take the case of a shipment of 16,250 metric tonnes of soybeans that arrived on US shores with an organic label from Turkey, the biggest US supplier. It turns out the Turkish merchant had secured the supplies from Ukraine, where they’d been fumigated with aluminium phospide, a substance not allowed under organic rules, according the US Department of Agriculture. The USDA on June 1 revoked the organic certificate of Beyaz Agro, the Turkish grain and oilseed handler that managed the shipment.
With US imports surging in recent years – organic corn purchases last year were up sevenfold from 2014 – a fractured supply chain means an increasing risk of fraudulently-labelled crops that sell for about twice as much as their conventional counterparts.
To combat the threat, certifiers are piling on new restrictions for organic corn and soybeans flowing into US ports. Last month, CCOF Certification Services, the nation’s largest, began requiring advance approval for imported grain cargoes. Other agencies are preparing similar rules.
“What we’re trying to do is contribute to the highest possible level of confidence for inbound shipments,” said Jake Lewin, the president of CCOF’s certification arm. “If there’s fraud in the system, this will weed it out.”
When announcing its new regulations, CCOF said it “lacks confidence” in the organic status of foreign grain and cited concerns with a rapid increase in volumes and potential for non-compliant organic practices. Supplies now must be traceable back to growers, with proof that no prohibited substances were used, according to a statement from the group. Oregon Tilth and Midwest Organic Services Association are working on establishing similar policies. Auditors for Quality Assurance International are “operating in a heightened state of alert,” the group said.
While the “vast majority of the product is certainly legitimate” there are “some problems that have been identified” with organic labelling, said Miles McEvoy, the deputy administrator for the USDA’s National Organic Program. The USDA recently identified three corn or soybean shipments that didn’t meet standards, which were caught before entering the US food supply.
“There’s a strong organic control system that operates worldwide,” McEvoy said. “There are some bad actors out there that we are identifying and getting out of the organic market.”
Risks of fraudulent supplies exist because the grain can go through many stops before its final destination: from farmers to storage facilities to grain handlers and export merchants, with that process sometimes taking place across multiple countries before ending up in the hands of American buyers.
In the case of the mislabelled soybeans that came from Turkey, the cargo was sent to California after staff incorrectly loaded a ship from depots where conventional soybeans were stored, instead of those holding organic supply, according to an email from Goksal Beyaz, Beyaz Agro’s owner. A logistics manager, certification manager and warehouse operator were interrogated and dismissed, he said.
“All my handling of documents was done without any fraudulent intention,” Beyaz said. “Let me express my deep regret and shame with respect to the fact that this occurred.”
Last year, the US imported 550,110 tonnes of organic corn, up 81% from the prior year, while organic soybean imports rose 19%. The crops are largely used as animal feed, and mislabelled supplies can filter through to grocery stores stocking organic chicken, pork or milk. 
US organic corn prices have slumped 37% in the past two years and soybeans are down 29%, USDA data show.
US imports of organic corn and soybeans in the first four months of 2017 were running slightly ahead of the same period last year, the latest government data show.
Organic Valley, the nation’s largest organic-farmer cooperative, said it encourages livestock farmers to grow their own feed or source from neighbouring growers and has established grain programmes in Oregon and Maine in an effort to boost supplies near the coast. As in any industry, though, it comes down to price, said George Siemon, chief executive officer of the La Farge, Wisconsin-based operation.
“We’re real clear that what we want is to have domestic,” Siemon said. “What’s happened now is imported feeds come in cheaper, and then that’s harmed our efforts.”
Delivered organic imported soybean prices averaged about $17.83 a bushel in April, according to Mercaris, a company that runs online auctions for products including organic grain. That compares with about $18.50 for domestic supply during the month. So far, the company hasn’t seen much impact on prices from the new shipment regulations, said founder Kellee James.
“If we start seeing imports fall compared to this month last year, then I would expect with the tightening of supply, it would cause a price increase,” James said. “We’ll be watching to see if it does or not.”