- Proposed new federal standards seeks to prevent organic fraud by requiring more players in the supply chain to obtain organic certification, requiring import certificates for products produced abroad, making unannounced inspections more frequent, increasing inspector qualifications, adding more data reporting requirements and strengthening prevention.
- These proposed standards were published in the Federal Register on Wednesday, and are open for public comment through Oct. 5.
- Current standards were first published in 2000, at a time when organic supply chains were much shorter and less complex, the text in the Federal Register said. "The growth and complexity of the modern organic industry has exposed the limitations of the current organic regulations, revealing gaps in oversight and enforcement that the original regulations do not address," it reads.
Two decades ago, the organic industry was small. Consumers had to really look to find organic products, with many purchases in the segment happening at natural food stores and farmers markets.
Nowadays, organic is a huge business that is mainstream across the U.S. In 2019, organic food sales were worth $50.1 billion, posting 4.6% growth above the year before, according to the Organic Trade Association. As today's consumers are hoping to ward off coronavirus, many are looking for functional foods that will supercharge their immune systems. OTA Executive Director and President Lauren Batcha said in a release that means more are seeking organic food.
"The commitment to the Organic label has always resided at the intersection of health and safety, and we expect that commitment to strengthen as we all get through these unsettled times,” she said.
In order for that commitment to be strong, consumers need to be able to trust the organic seal. Media reports several years ago exposed flaws in the system, in which paperwork on conventional imported commodities was switched to improperly brand them as more lucrative organic ones. Last year, the Cornucopia Institute examined the process used by organic inspectors and said it "can be lackluster."
Soon after the media reports exposing the flaws in the system, the OTA launched its own task force to crack down on fraud. OTA's voluntary Organic Fraud Prevention Solutions program has several companies participating, including Ardent Mills, Clif Bar, Ingredion, Pilgrim's Pride and J.M. Smucker.
On the government side, nothing was done to strengthen the program until Wednesday's proposed regulations. In September 2017, an audit from the USDA's Office of Inspector General found the department's Agricultural Marketing Service, which oversees the National Organic Program, needed to tighten its standards for imports of organic crops. Also in 2017, legislation was introduced in the House of Representatives to modernize USDA's tracking capabilities so that certifications would be upgraded and the government would be able to better trace imports. The bill died in committee.
The proposed new regulations take these different reports and programs into consideration to try to close loopholes. The OTA was quick to endorse the regulations, especially because the Organic Fraud Prevention Solutions program was called out in the Federal Register as an effective way to fight fraud.
"Protecting the integrity of organic requires the efforts of all organic stakeholders, both public and private," Batcha said in a written statement.
While the OTA is behind these efforts, the regulations could be expensive for companies that are along the supply chain. Most of them will not only have to get certified, but they will also need to invest in reporting capabilities. According to the economic impact analysis of the regulations, the proposed total cost would be about $7.3 million a year for certifying agents, certified operators and handlers. The financial benefit would be upwards of $84 million annually, the analysis says.
The regulations drastically expand who must receive a certification to handle and move organic goods, but they carve out exceptions for most grocery retailers. This is key to the regulations' success. With organic food sold at nearly three out of four conventional grocery stores in the U.S., according to USDA, it could be seen as an overreach to require certification for employees that fill displays and stock shelves.