More Controls Needed to Prevent Organic Import Fraud, Says USDA OIG
The US Department of Agriculture needs to strengthen its controls over the approval and oversight of agreements for the import of organic products into the US, according to a recent audit report issued by the Office of the Inspector General at USDA. The audit report also concluded that the process for determining equivalency of organic standards lacked transparency.
The National Organic Program is housed within the Agricultural Marketing Service at USDA, and is responsible for developing national standards for organic products. Other countries are permitted to ship organic products to the US under three circumstances: (i) By NOP-accredited certifying agents who determined that a farm or handling operation is certified organic; (ii) Under an equivalency agreement in which the organic standards in a country are determined to be at least equivalent to NOP standards; or (iii) Under a recognition agreement for countries that do not have organic standards or whose standards are not equivalent to NOP standards.
The objective of the OIG report was to assess AMS’ controls over the approval and oversight of NOP’s international trade arrangements and agreements for the import of organic products. The OIG also reviewed the process used in determining equivalency and whether the organic products complied with NOP standards.
OIG Findings and Recommendations
The USDA OIG outlined four important findings its review.
1. The equivalency determination process for organic standards was not fully transparent.
While NOP maintained supporting documentation of the process undertaken to resolve differences between USDA organic standards and those from other countries, it did not have a procedure to document and disclose the results of that process to the public. OIG recommended that AMS develop and implement a procedure to document and disclose the final resolution of all foreign country organic standards prior to issuance of equivalency determination letters.
2. Import documents were not verified at US ports of entry.
AMS was not able to provide assurances that required documents were reviewed at US ports of entry to verify that products labeled as organic were from certified organic farms. OIG acknowledged that AMS does have the regulatory authority to establish and implement controls at US ports of entry, but indicated that the agency could have worked with other agencies to verify the authenticity of organic import certificates. To address this, OIG recommended that AMS execute a Memorandum of Understanding with Customs and Border Protection to obtain assistance in reviewing NOP import certificates.
3. Controls to prevent fumigated organic products from being labeled organic are inadequate.
OIG explained that imported agricultural products, whether organic or conventional, are sometimes fumigated at US ports of entry to prevent pests from entering the US. They found that AMS has not been established and implemented to identify, track, and ensure that treated organic products are not represented as organic. OIG recommended that AMS work with USDA’s Animal and Plant Health Inspection Service, through MOUs and other measures, to ensure that APHIS notify NOP officials when imported products are fumigated at US ports of entry.
4. Timely onsite audits were not conducted.
The audit report found that NOP officials did not conduct a timely audit for one of the five countries with an equivalency arrangement and for all three countries with recognition agreements. OIG blamed the lack of requirements for how often these onsite audits should be performed by AMS. As a result, OIG recommended that AMS develop and implement performance measurements regarding the timeliness of onsite reviews for countries that maintain a recognition agreement or equivalency arrangement with AMS. OIG also recommended that NOP conduct onsite audits every two years.
Outlook and Analysis
This OIG audit report appears to be a response to a series of media investigations earlier this year on the integrity of imported organic products. Organic foods now account for over $40 billion in total US food sales and, as Arent Fox wrote in May, increased scrutiny of the integrity of organic products represents a natural outgrowth of the larger scale of organic operations.
AMS concurred with all of OIG’s recommendations in the report. Next steps will include monitoring how quickly AMS is able to implement and enforce the recommendations, and then determining the impact the changes will have on preventing fraudulent organic imports.
Arent Fox's Food & Agribusiness group will continue to monitor developments on organic integrity issues. If you have any questions, please contact Brian Ronholm, Jamie Ravitz, Georgia Ravitz, Karen Carr, or the Arent Fox attorney who regularly handles your matters.