Organic-grain complaint raises questions about major Argentine supplier

For years, American farmers' battle against fake organic-grain imports has centered on Eastern Europe. Now, an organic farm in South America is being scrutinized.

A lengthy complaint filed with the U.S. Department of Agriculture, and obtained by the Star Tribune, alleges fraud at an organic-grain company in Argentina that exports millions of bushels of organic corn and soybeans to the United States each year.

The complaint said that Rivara SA deliberately used prohibited fertilizers and herbicides to produce grain that it then passed off as organic to U.S. customers, including the largest U.S. producer of organic chickens.

The 115-page complaint against Rivara is painstakingly detailed, and raises concerns in a global supply chain — organic grain — that has been rife with problems as the market for organic poultry, eggs and milk in the United States has quickly outpaced the supply of domestic corn and soybeans to feed those animals.

Officials at the USDA's National Organic Program (NOP) would not confirm receipt of the complaint or say whether an investigation is underway. Matthew Haverstick, a lawyer at Kleinbard LLC in Philadelphia, told the Star Tribune he filed the complaint last December.

The president of Rivara SA, Fernando Rivara, said in an e-mail to the Star Tribune that the accusations are "false" and that his company has cooperated with the USDA's investigation.

Haverstick said it has been "a while" since he heard anything from the NOP. "I don't know what the status of the investigation is, but the last I heard it was ongoing," he said.

It has taken the NOP — a 40-person organization still coming to terms with the scope of the global organic supply chain — several months or even more than a year to formally conclude an investigation.

The complaint relies on recorded conversations with a key employee of Rivara, who indicates that the farm "knowingly sells products that do not meet the standards" for certification with the NOP.

It also said Rivara intentionally misled NOP regulators and consumers by claiming its products are organic even though they are "produced with prohibited substances and practices."

The complaint represents a new front in the efforts by farmers to spot grain they suspect is fraudulent. Turkish companies ship the vast majority of the organic grain imported by U.S. companies and, as a result, are most closely watched for signs of fraud. One Turkish company stopped importing grain after a Washington Post article in 2017 showed it was passing off conventional grain as organic and selling it in the U.S.

Another Turkish company called Tiryaki, the largest supplier of organic grain into the U.S., was certified by an agency, Control Union, that lost its accreditation from both the European Union and the United States in the span of 45 days this spring. Tiryaki continued to import grain and is still listed as "transitioning to a new certifier" by the USDA's Organic Integrity Database.

A farmer from Missouri pleaded guilty in federal court in Iowa to defrauding customers by selling them more than $140 million in fake organic grain over several years. That case is ongoing and none of the buyers have been identified.

The USDA said it is working hard to ensure that organic grain coming into the country is truly organic, but many in the industry are skeptical.

Dave Chapman, executive director of the Real Organic Project, an effort to come up with an alternative organic label, said masses of American consumers have been misled by organic products in grocery stores.

"They always promise that change is coming, and change never comes. The truth is the only way that they ever do act at all is when there's tremendous public pressure," Chapman said. "It behooves us to make a ruckus."

According to the Rivara complaint, associates of Haverstick's client met with a Rivara employee, Alejandro Sanchez Cabezudo, on three occasions last fall and recorded all three meetings.

Sanchez said in the recordings he was familiar with the inner workings of the company, and the transcripts of those conversations amount to a broad admission of organic fraud at Rivara.

The company knowingly used prohibited fertilizers and herbicides, Sanchez said, and these substances are untraceable in lab tests. The company swapped invoices of organic and nonorganic substances to cover its tracks, and mixed organic and non-GMO grains when it had a shortage of organic grain, Sanchez said.

Rivara's certifier, Organizacion lnternacional Agropecuaria, has not been an effective watchdog, according to the complaint. Sanchez said in the transcripts that inspectors from the certifier have an interest in turning a blind eye to the company's misconduct because they earn more by continually renewing their certificate, and that everything is "open for discussion."

The interviews, conducted in Spanish, are transcribed in the complaint in English. According to the complaint, Sanchez brought soil samples from an organic-certified field at the farm in Argentina to a meeting in London. When tested at a German lab, those samples tested positive for prohibited pesticides including glyphosate, which is the key ingredient in the herbicide Roundup, according to lab tests obtained by the Star Tribune.

Rivara has shipped about 6.1 million bushels of organic corn and 3.7 million bushels of organic soybeans to the U.S. in the last three years, according to U.S. Customs and Border Patrol data. A freighter called the Achilles Bulker was in the Chesapeake Bay last week preparing to unload a shipment of Rivara corn in Baltimore after unloading soybeans in North Carolina.

Rivara's biggest organic customer in the U.S. is Perdue Agribusiness, a Maryland-based subsidiary of Perdue Farms, which bills itself as the largest organic chicken farmer in the U.S. Presented with the details of the complaint, Perdue spokeswoman Andrea Staub said the company was aware of it and is working with the USDA in its investigation. "We do not believe this complaint has any merit," Staub said in an e-mail.

"We understand that the integrity of the organic supply chain is of the utmost importance to the organic consumer," she said. Perdue pre-qualifies its organic suppliers, routinely audits their facilities, observes their procedures and reviews their documentation, she said, and the company's testing protocols exceed the USDA's requirements.

Fernando Rivara, the president of Rivara SA, said the farm undergoes regular audits and unannounced visits from inspectors and has built a "transparent, certified organic supply chain and full traceability."

"We welcome prospective clients to personally inspect our fields and facilities before conducting any business with us," Rivara said. "We proudly operate our fourth-generation family company with integrity. You can understand our surprise to hear of the December 2018 complaint filed with the USDA."

adam.belz@startribune.com 612-673-4405 • Twitter: @adambelz