The labels said ‘organic.’ But these massive imports
of corn and soybeans weren’t.
Workers at Laiwu Manhing Vegetables Fruits in China’s Shandong province prepare to pack and ship ginger last June. The crop, though grown organically, doesn't meet U.S. organic standards, because of pesticide residue left after washing. It’s not sold as organic in the United States or Europe, the company said. (Jorge Ribas/The Washington Post)
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.
By that time,
about 21 million pounds of the 36 million-pound shipment had already
reached farms and mills. The customers who have purchased the soybeans said
they were unaware there may have been a problem until a Post reporter called.
An entrance at the port of Stockton in California. (Noah Berger for The Washington Post)
Gauging the
extent of fraud in imported organics is difficult because there is little
incentive for organic companies to advertise their suspicions about suppliers.
To test USDA
claims that organic imports are rigorously monitored, The Post examined
pesticide residue testing conducted on organic products in China.
China is the
leading source of organic tea and ginger in the United States, and its food
exports have drawn repeated scrutiny.
“In China,
farmers have trouble following their own laws,” said Chenglin Liu, a professor
at St. Mary’s University School of Law in San Antonio. “ So how can Americans
expect Chinese farmers will follow U.S. organic rules?”
As in the
United States, farmers in China seeking the “USDA Organic” label hire an
inspection agency to certify that they meet the organic rules.
Using
public-records laws, The Post obtained the results of pesticide residue tests
conducted on farms with USDA organic certification in China. Although pesticide
tests are not mandatory, inspection agencies are required to take samples from
5 percent of their clients, and The Post requested the results from the
three most active inspection agencies overseeing Chinese farms.
Workers for the Laiwu Manhing Vegetables Fruits Corp. in China’s Shandong province clean and cut ginger root last June. (Jorge Ribas/The Washington Post)
The pesticide
results showed very high levels of pesticide residue on some “organic” Chinese
products. They also showed that the pesticide residue tests are applied
unevenly.
One of the
largest inspection agencies, a German company known as Ceres, appears to do
rigorous testing.
Ceres conducts
most of its tests on plant leaves, rather than on fruits, a method that can be
more likely to detect pesticide use.
Their results
from China, as a Ceres official said, were “quite shocking.”
Of 232 samples
that Ceres tested from the Chinese organic farms, 37 percent showed more
than traces of pesticide residue.
“This is the
reality we are battling with in China,” said Albrecht Benzing of Ceres.
Some of the
problem arises from pesticides from neighboring farms drifting over, experts
said, and some is contamination from China’s polluted soil and water.
For example, in
Shandong province, the Laiwu Manhing Vegetables Fruits Corp. harvests ginger
that has been grown organically. But the water available for washing the ginger
is so polluted that it leaves pesticide residue.
“After the
ginger is washed, the water leaves behind pesticide residues too high to be
considered organic” in the United States, said Li Hongtao, a sales manager at
the company. He said the ginger is sold as organic in some countries but not
the United States or Europe.
The pesticide
residue results that were obtained by The Post also indicate that enforcement
of “USDA Organic” rules for pesticides are uneven and possibly arbitrary, with
results depending on the inspection agency.
Workers wash ginger grown organically by the Laiwu Manhing Vegetables Fruits Corp. in Shandong province. (Jorge Ribas/The Washington Post)
While Ceres
found remarkably high levels of pesticide residue, others reported extremely
low levels.
For example,
Ecocert, a French inspection agency, reported pesticide residue on about
1 percent of 360 samples from China in 2015 — a level of cleanliness
remarkable for any country, let alone China and its well-documented pollution.
This wide range
of pesticide use detected by organic inspectors in China — nearly
40 percent at one company and 1 percent in another — suggests a variety
of methods and standards at work. Ecocert said their results may be low because
they chose samples from a large number of farms. Different firms may also use
different thresholds for what constitutes a positive result. The next year,
Ecocert said, its testing criteria changed slightly, and the percentage of
samples with pesticide levels rose to 8 percent.
Critics say the
disparity in results shows that certifying agencies can make any farm look
organic.
“The certifying
agencies can choose who and when they test,” said Mischa Popoff, a former USDA
organic inspector turned critic. “That’s why the results they can get are
completely arbitrary.”
Each of the
questionable organic shipments of corn and soybeans examined by The Post passed
through Turkey, a country whose organic exports have provoked criticism from
international authorities.
In 2013, for
example, a report by the Research Institute of Organic Agriculture found that
half of European importers and Turkish handlers had detected pesticide residue
on organic products from Turkey.
The United
States has seen large spikes in the amount of organic corn and soybeans
entering from Turkey, according to USDA statistics. Between 2014 and 2016, the
amount of organic corn arriving from Turkey rose from 15,000 metric tons to
more than 399,000 metric tons; the amount of organic soybeans coming from
Turkey rose from 14,000 metric tons to 165,000. (The three shipments examined
by The Post represent roughly 7 percent of annual organic corn imports and
4 percent of organic soybean imports.)
Such sudden
jumps in organic food production draw scrutiny because the organic transition
process is slow — it can take three years for conventional land to be converted
into organic farmland.
“Where did all
this big production come from? Where are these organic farmers?” Miles McEvoy,
chief of the USDA’s organic program, said to a group of U.S. organic farmers
earlier this year.
The rise of
imports has helped drop prices by more than 25 percent, hurting U.S.
organic farmers, many of them small operations.
“My neighbor,
small farm, lost $30,000 last year on 100 acres of organic corn,” said OFARM’s
Bobbe. “In fact, there’s so much coming in, we’re finding buyers who won’t take
any corn.”
To piece
together the three questionable shipments, The Post was given records of the
transactions by an industry expert who requested anonymity because they may
conflict with the mandates of his employer. The documents included company
invoices, shipping records and health certificates accompanying the shipments.
Warehouse operators, importers, exporters and Ukrainian officials verified key
documents and added details.
●The first of
the shipments arrived at the port of Wilmington in Delaware a year ago. It
consisted of 46 million pounds of “organic” corn.
The Romanian
company that provided the corn is not a certified organic company, and receipts
show that the corn was initially purchased at the conventional price, not the
organic one.
The shipper is
listed as Hakan Organics, a Dubai-based company with operations in Turkey.
Hakan Organics
is listed as an organic handler in good standing with the USDA.
The first
intended customer for the corn, Perdue Agribusiness, asked for additional
paperwork and then refused to accept the shipment, because “we could not
confirm all the proper documentation” that Perdue requires, a company spokesman
said.
The Post could
not determine who ended up purchasing the “organic” corn.
Since then,
Perdue has not received any shipments from Hakan Organics, a Perdue spokesman
said.
Hakan Organics
continued to ship agricultural products to the United States.
Hakan Bahceci,
the chief executive of Hakan, indicated by email that he would answer questions
but then did not respond further.
●The second
shipment, the soybeans from Ukraine and Turkey, arrived aboard the Four Diamond
at the port of Stockton in December 2016.
A set of health
certificates that accompanied the soybeans allowed The Post to trace the
soybeans from California back to Turkey and to their origin in Ukraine.
The health
certificates and associated receipts indicate that they were not really
organic. For one thing, the soybeans were fumigated with tablets of aluminum
phosphide, a pesticide prohibited under organic regulations; some of the
soybeans originated from ADM Ukraine, a company that does not produce or trade
organic soybeans and did not sell or label them as such, a company spokeswoman
said; and finally, the soybeans were originally priced at the level of
conventional soybeans.
Invoices and
other documents for those soybeans showed that they were originally priced at
about $360 per ton. By the time they reached the United States, the price
reached almost $600 per ton.
Global Natural,
the Annapolis-based firm that was marketing the soybeans in the United States,
said it has stopped selling “all potentially affected product.” Company
officials declined to answer further questions.
The importer of
the soybeans is Agropex International.
Ashley
Anderson, who is listed as the president of Agropex International, insisted
that the soybeans that arrived in Stockton are legitimately organic.
●The third
shipment involved 46 million pounds of “organic” corn that sailed from
Romania to Turkey and then to Baltimore, arriving in March.
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The Romanian
producers of the corn, a company called Belor, is not a certified organic
company and sold the corn at conventional prices, according to receipts. But by
the time the corn from Romania reached the United States, it was labeled
organic. Its price had risen 72 percent. As with the cargo aboard the Four
Diamond, the value of the shipment increased by millions.
Dennis Minnaard
of DFI Organics said his company had been set to buy some of the corn but
rejected the shipment because the broker did not “take away our doubts” about
its authenticity.
Yet that
“organic” corn continued to be marketed to other customers, according to
industry officials who spoke on the condition of anonymity because of the
private nature of the deals.
With “the
complex supply chain of organic grain,” McEvoy, the USDA official, told
concerned farmers at the Midwest Organic and Sustainable Education Service
conference earlier this year, “there are challenges.”
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