Organic farmers worried about possible fraudulent grain imports

Minnesota organic farmers and marketers are raising concerns that some imported organic corn and soybeans may be conventional grain that has been fraudulently mislabeled as organic to fetch premium prices.

Nearly three-fourths of the organic corn imported to the U.S. last year — and almost half of the soybeans — came from Turkey, which has had some of its organic shipments banned by the European Union and Canada, but not by the United States.

The flood of organic corn and soybeans, driven by U.S. consumer demand, has caused a huge drop in prices for farmers during the past 18 months.

"It's certainly been significant," said Tom Nuessmeier, who with his brother works his 200-acre certified organic farm near Le Sueur in southern Minnesota. "It has everyone wondering."

Nuessmeier said that prices for organic corn have dropped by nearly 40 percent in the past couple of years, and organic soybeans that brought $20 to $22 per bushel now are lucky to fetch $13. For a farmer raising 10,000 bushels of corn, that could mean $30,000 to $50,000 less in annual income, and more for soybeans.

The question on Nuessmeier's mind is whether foreign countries, especially Turkey or nearby countries such as Ukraine and Romania that may ship through Turkey, are intentionally mislabeling conventional grain as organic to make huge profits. There's no proof of such fraud, but U.S. Department of Agriculture officials have heard the complaints and are investigating.

The issue was much discussed last weekend in La Crosse, Wis., at the nation's largest organic conference, held each year by the Midwest Organic and Sustainable Education Service.

The U.S. needs to import organic corn and soybeans because not enough is grown domestically to satisfy consumer demand. A report last month by CoBank, a national cooperative bank based near Denver, found that domestic organic grain production is falling well short of demand, and that manufacturers have worked with brokers to import organic corn and soybeans from countries with less developed agricultural sectors.

Organic products are produced without genetically engineered seeds, synthetic pesticides and certain fertilizers, and certified organic farmers in the U.S. must follow a long list of practices that are checked regularly through independent inspections and audits. One of the biggest drivers for organic corn and soybeans is the poultry and dairy industries, where the grain is used for feed to produce organic milk, eggs and chicken.

Tyson Foods Inc., Pilgrim's Pride Corp., Wal-Mart, General Mills and other U.S. food companies are seeking to make and market more products with organic ingredients or grown without antibiotics.

"What we want to know is [whether anyone is] checking on the grain that's being imported, and whether the paperwork is similar to what's required of U.S. organic farmers, which trace that grain back to the very field it was produced on," said Tim Boortz, an organic grain marketer for NForganics, part of the National Farmers Organization.

Turkey has come under suspicion both because of its civil unrest, and because its shipments of organic corn to the U.S. more than tripled between 2015 and 2016, according to USDA data, and its exports of organic soybeans to the U.S. jumped nearly 800 percent.

For John Bobbe, executive director of the Organic Farmers' Agency for Relationship Marketing, a Minnesota-based organic farming cooperative, the magnitude of the increases is highly unusual. While U.S. consumer demand and a strong U.S. dollar certainly played a role in encouraging more imports, Bobbe said that doesn't fully explain the sudden flood of Turkish grain.

Earlier this year, the European Union and Canada decided to stop accepting shipments from one of Turkey's largest organic certifying companies, he said, after an international oversight group suspended its accreditation. There are several dozen accredited organic certifiers around the world, and the U.S. and other countries audit and inspect them to ensure organic integrity.

In a letter to USDA authorities, Bobbe said that as organic exports grow, the potential for fraudulent products to enter the U.S. increases due to lack of inspection in complicated supply chains, and "breaks in the chain of record keeping, organic certification and verification that the USDA organic seal is built upon."

"We're not questioning the need for imports," said Bobbe, whose organization is an umbrella group for six U.S. organic grain and livestock marketing cooperatives. "What we are questioning is whether those producers and handlers are being required to meet the same standards as our U.S. producers, and that's where we think there could be fraud mixed in with this."

Glen Borgerding, a certified crop analyst who works mainly with organic farmers for Ag Resource Consulting Inc. in Albany near St. Cloud, puts it more bluntly: "One of the concerns is they're taking any corn they can produce and slapping an organic certificate on it," he said.

The USDA Foreign Agricultural Service warned of that possibility in a report about the Turkish organic market in early 2016. It cited a Europol report that some Turkish companies had relabeled or repackaged products as organic and brought counterfeit products into the European Union. And it mentioned reports from European and U.S. groups since 2012 that have also uncovered fraud or unapproved production methods in organic products shipped from Turkey.

"Although inspections and transparency in the Turkish organic food sector are improving, the integrity of organic farming, production, shipping and marketing is not always guaranteed," the report concluded.

USDA officials have said that proper control measures are in place to ensure that American standards are being met when foreign organic grain is imported. However, they are investigating complaints filed by Bobbe and others, and have said that they will be watching organic shipments from Turkey and other countries more closely.

Closer scrutiny is imperative, Bobbe said, because consumers need to have confidence that organic products have integrity, no matter where they come from.

"All it's going to take is one shipment of fraudulent corn to blow up into big headlines and shake consumer confidence in the organic label," he said.

For Nuessmeier, it could also spell trouble if he and other organic farmers can no longer earn prices high enough to compensate for the extra work and record keeping that organic farming requires.

"The whole organic market is something that has allowed small diverse family farms such as ours to remain viable and competitive," he said. "If the strong market and prices begin to disappear, it will certainly have an impact."

Tom Meersman • 612-673-7388