Organic industry kicks off efforts to deter fraud

Stakeholders launch pilot project to help protect integrity of organic industry covering entire supply chain.

May 24, 2018

5 Min Read
Organic industry kicks off efforts to deter fraud
The farm, owned by Nick Maravell, produces Black Angus beef, chicken, turkey, eggs, hay, soybeans, corn, alfalfa, orchard grass, rye; and other crops. The cattle are100% grass-fed receiving certified organic pasture, certified organic hay (in winter), water and mineral salts mixed with sea kelp. The cattle are not fed hormones, antibiotics or animal products. Poultry feed from grain is ground from organic grain. The poultry also graze on organic pastures. The farm has conducted on-farm research with federal, state and non-profit agencies to refine organic practices.USDA Photo by Lance Cheung

The global organic market has been on a steady rise for more than two decades and has never been bigger. It is now a nearly $90 billion global market, with the U.S. organic market alone accounting for close to $50 billion. Organic imports into the U.S. in 2017 totaled around $2.1 billion, up nearly 25% from the previous year. In the past year, however, investigations have revealed imported products that were fraudulently labeled as organic and gaps in the complex organic supply chain. 

The Organic Trade Assn. (OTA) on Thursday announced the kick-off of a groundbreaking pilot project by the organic industry to prevent and detect fraud in the global organic system.

The far-reaching, three-month pilot project was initiated by OTA's Global Organic Supply Chain Integrity (GOSCI) Task Force. This group of 48 members of the trade group was formed last year to develop a fraud prevention program designed specifically for the organic industry in which organic companies will be able to enroll voluntarily. As the first step toward this program, the task force created a comprehensive “best practices” guide to facilitate the industry-wide implementation of systems and measures to preserve the integrity of organic both inside and outside the U.S.

“Organic now operates in a global market. Fraud is one of the biggest threats to that market, and it cannot be tolerated in the organic system,” OTA chief executive officer and executive director Laura Batcha said in announcing the initiative at the association’s Annual Policy Conference in Washington, D.C.

Participating in the pilot project are 11 members of the GOSCI Task Force that represent the entire organic supply chain from farm to retailer as well as a diverse range of products, services and commodities, including fresh produce, grain, spices, dairy, eggs, meat, beverages, packaged and prepared foods, importers and consulting services. Pilot project participants include:

  • Clarkson Grain Co. Inc. (handler/processor of feed grains and oilseeds).

  • Egg Innovations LLC  (producer/handler of eggs and livestock feed).

  • Global Organics Ltd. (handler/importer).

  • Grain Millers Inc. (handler/processor of grains).

  • I Was Thinking (importer/handler/co-packer of grains, seeds, legumes and sweeteners).

  • MOM’s Organic Market (retailer).

  • Organically Grown Co. (distributor of produce).

  • Organic Valley CROPP Cooperative (producer/handler of livestock, dairy and meat).

  • Pipeline Foods LLC (handler/supply chain solutions for feed grains and oilseeds).

  • J.M. Smucker Co. (processor, multi-ingredient).

  • True Organic Products Inc. (manufacturer of fertilizer).

The pilot will run from June to September. It is designed to be an intensive-focused exercise in which participants will “test drive” the fraud prevention and detection strategies developed by the GOSCI Task Force in their specific businesses. Participants will concentrate on one product or ingredient or a specific location to run through the pilot program. During the pilot, the participants will seek comments from other stakeholders in their unique supply chain, then share feedback on their experiences and give recommendations on how to improve and strengthen the suggested strategies.

Collaborating partners in the project are the U.S. Department of Agriculture’s National Organic Program, the Accredited Certifiers Assn. and NSF International. The collaborating partners will review and provide feedback on the recommendations put forth by the task force as well as provide support on implementation and adoption efforts, as agreed upon with pilot participants.

“We’ve worked for a year to develop a fraud prevention program for organic, and now we need to have companies put our recommendations to the test in their everyday business activities to find the elements that have to be further developed,” said Gwendolyn Wyard, vice president of regulatory and technical affairs for OTA and staff coordinator for the GOSCI Task Force. “This pilot project is key to advancing the adoption of an industry-wide, systemic approach to preserving organic integrity from the farm to the plate and to ensuring the honesty of global control systems.”

The fraud prevention plan, which was presented to the National Organic Standards Board in draft form at the board’s 2018 spring meeting, provides organic businesses with a risk-based approach for developing and implementing a written strategic plan to assure the authenticity of organic products. The plan focuses on identifying and assessing specific weaknesses or vulnerabilities in their business that pose the most risk of fraud, identifying and taking measures to reduce those vulnerabilities to deter fraud, establishing a monitoring program to ensure the fraud prevention measures are in place and developing  a complaint system to be used when fraud is suspected or detected.

The recommended practices are intended to establish an industry standard for businesses to create continuously improving internal programs and processes for achieving organic integrity throughout their associated supply chains.

“If we want to grow as an industry, we, as an industry, are going to need to challenge our policy-makers to become better. It is then equally as important that we, as an industry, challenge ourselves to become better,” Sam Riser, manager of organic procurement for Grain Millers, said. "We believe this pilot program is a great format for Grain Millers Inc. to look at our organic procedures from a different point of view."

“The success of organic relies on consumer trust of the Organic seal,” Batcha said. “It is critical that every link in the organic chain has systems and measures in place to provide the organic food that people can trust. We want our fraud prevention plan to become the industry standard for achieving integrity across complex organic supply chains, but before we get to that point, certain steps have to happen. This pilot project is a key step, followed by industry training and a roll-out with enrollment by the industry into this proactive and beneficial program.”

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