By Lynn Clarkson, Chairman of Clarkson Grain
Note to Readers – Lynn Clarkson sent the following message, or one very similar to it, to a number of individuals in the Trump Administration, or influential with key players in the Administration. He agreed to share his message with the broader community. So, please enjoy and share the first Hygeia Analytics guest blog. CMB
Message from Lynn Clarkson —
I thought you might be interested in this issue and capable of doing something about it. Let me know if you wish more information.
As of today, the US is importing more than 14 million bushels per year of organic soybeans – 70% of the organic soybeans used in our country.
We are importing more than 23 million bushels per year of organic corn, with imports approaching 50% of US use and growing dramatically. These imports come primarily from Turkey, Ukraine, Romania, India and Argentina – countries that rate high for corruption.
Such imports are now arriving not in containers, but in bulk ships carrying million-plus bushels. There is essentially no TEST that can be performed to verify that these countries are shipping grains/oilseeds that meet US requirements for certified organic products.
Organic is a “process” system that relies significantly on the integrity of producers, handlers, inspectors and certifiers. I am extraordinarily suspicious, and concerned that there may be significant fraud being committed in this flow. Miles McEvoy, the head of the USDA National Organic Program, recently stated that he had a team of investigators ready to go to Turkey, but their trip was cancelled after the Turkish government instituted marshal law.
Certifiers/inspectors from the EU responsible for handling much of the organic verification in the Ukraine are publically indicating that they no longer send representatives into Ukraine due to the continuing civil war.
My perception is that we offer an open invitation to fraud, an open opportunity for bad folks to double their money without serious risk of penalty. Inspectors aren’t really looking. Even if they were, they too are subject to corruption.
Assume that the US becomes aware of fraud by a producer, certifier, inspector and/or handler in the Ukraine. We can only yank the offender’s organic certificate after “due process” and ask his home country to pursue a penalty. Such fraud is outside US jurisdiction and probably immune to penalty. Meanwhile the offender can come back into business under a different corporate name and continues to play the system.
There are several big challenges in this. First, awareness or suspicion of fraud can erode the integrity of the US organic seal with consumers. That could destroy a significant, value-added market that good people have worked long and hard to build. It threatens a US market segment worth almost $50 billion per year.
Second, this flow of foreign grain is significantly reducing market prices for US farmers who are capable, or could become capable of, meeting the demand with domestically produced crops. It would take an additional 280,000 acres of US-grown organic corn to replace the 23 million bushels now coming into the country.
Third, the leading certifier in Turkey was decertified by both the EU and Canada – but not yet by the US. Why not?
The balance of payments for the US organic sector is now negative and getting worse. To give you a sense of the scope of this questionable supply line, I have attached a Power Point that I recently delivered at a conference in Kansas City.
The relevant pages are 5 through 12. Do we erect a trade barrier, add an import tax, use technology and enhanced inspections in an effort to minimize fraud? Should countries that score low on national integrity be treated differently than countries that score high? What about turbo-charging the FSMA rules on buyers verifying that their suppliers meet US standards?
I don’t have a simple answer. There must be something that can be done to address this problem, both in terms of the integrity of the organic label on imported grain, and to grow the domestic supply. What steps might the Trump Administration take to improve the situation?
How can the US organic community and US grain growers and traders help develop constructive interventions? Surely we can treat “integrity supplies” differently that just commodity supplies?
Thanks for your attention.
Lynn Clarkson
Chairman, Clarkson Grain