Recent coverage of a lawsuit filed by an Oregon hazelnut farmer against the USDA for certification of producer groups has headlined "Vast Fraud," "Illegal Imports," and "Shadow Certifications," but these stories misalign disputes over organic policy and international trade manipulation with allegations of fraud. Blurring policy distinctions with fraud allegations disregards the repercussions for farmers, consumers and businesses who comply with the strict organic standards every day. To grasp the full picture, let's delve into producer groups, the lawsuit and hazelnut trade with Turkey.
Understanding producer groups
To understand the context of producer groups, it's crucial to recognize the disparities between the farming landscape in the US and abroad. The average US farm spans 446 acres, while over 70% of world farmers cultivate less than one hectare (2.5 acres). You would need to combine 180 international smallholders to equal the land area of one average US farmer. In the United States, over 50% of farms are considered small, with less than $10,000 in annual sales and an average size of 81 acres -- that’s 32 times larger than the majority of smallholders worldwide. If a US farm making $10,000 a year were divided into 32 farms, the annual income for each would be a mere $313.
Annual sales of $313 are insufficient to access international markets. The Land Institute’s Land Inequity Initiative notes that smallholdings of less than two hectares are generally excluded from global food chains. The financial barrier to individual organic certification further restricts smallholders from entering global food chains that value environmental practices. Examining risk per each individual farm operator would equate the risk scale of a one-acre farm to that of a farm operator with 100, 1,000 or even 100,000 acres. The drastically different risk profile for very small growers justifies a certification process tailored to their site-specific conditions. This approach ensures adequate oversight and verification of practices while addressing the unique challenges faced by smaller farms. Here lies the value of producer group certification—it provides assurance that a producer adheres to organic standards and practices by balancing additional restrictions with group inspections. While certification is a risk-based model for oversight, its real value lies in the verified practices, not the certificate. With individual organic certifications being financially prohibitive, group certification is a practical solution for smallholders.
The need for producer groups
Organic farming, rooted in principles that bring value back to the land, offers a more profitable approach that naturally resonates with smaller farmers committed to these strict standards. This commitment supports sustainable livelihoods and plays a crucial role in the cultivation of various crops that ultimately reach grocery shelves.
Crops like cocoa, coffee, vanilla, coconuts, sugarcane, spices, and numerous tropical fruits are predominantly grown by smallholders. Producer groups ensure that consumers can reach for these common products on their grocery shelves Many products are formulated with these smallholder commodities and other ingredients grown domestically by American farmer, such as matching domestically produced organic diary with small holder grown organic chocolate.
Several businesses and influencers actively champion products sourced from smallholder producer groups. Nutiva, for instance, openly promotes its investment in organic coconut producer groups in the Philippines that are organized and certified under the management of a major agribusiness that aggregates and processes coconuts harvested by smallholders for export. Similarly, Living Maxwell, a blog by influencer Max Goldberg, highlights the benefits of Dr. Bronner’s soaps, which sources organic palm from over 500 producers, aggregated, processed, and exported through its agribusiness, Serendipalm. The positive environmental, community and economic impact of organic producer group projects have been highlighted by Frontier Co-op, and by The Organic Center’s Spice, Herb, and Tea’s Report.
In essence, producer groups serve as a bridge for smaller farmers to access international markets. Their collective certification not only ensures adherence to rigorous organic standards but also facilitates the sharing of resources and utilization of centralized processing facilities. The commitment to these principles is not only championed by businesses but also influencers and organizations, showcasing the widespread recognition of the importance of producer groups in sustaining organic practices and fostering fair trade.
Producer group certification
Following a model pioneered by the International Federation of Organic Agriculture Movements (IFOAM) in the 1980s, the concept of group certification was adopted. It has since been used by certification standards covering everything from food safety to environmental and social concerns. Some of the many organizations that have adopted group certification are the 4C Association (4C), Fairtrade Labelling Organizations (FLO, Fair Trade), Forest Stewardship Council (FSC), GlobalGAP, EU Organic Standards, Social Accountability International (SAI), Sustainable Forestry Initiative (SFI), Rainforest Alliance (RA) and UTZ Certified.
Under these various certifications, producer groups, consisting of individual farmers with similar practices, can be certified as a single entity. This group certification approach is crucial for smallholders historically excluded from global supply chains, it allows smallholders to overcome operational restrictions promoting shared resources, centralized processing, and inspections.
How producer groups are certified under USDA Organic
Understanding the intricacies of producer group certification under USDA Organic involves navigating the legal and regulatory landscape set by the Organic Food Product Act of 1990 (OFPA), which defines "organic" in the U.S. OFPA requires the USDA to “establish an organic certification program for producers and handlers of agricultural products that have been produced using organic methods.” The regulation defines a “Producer” as “a person who engages in the business of growing or producing food or feed,” and a “Person” as “an individual, group of individuals, corporation, association, organization, cooperative, or other entity,” making it is clear that the organic certification program should be applicable to those groups.
Producer groups are operational entities comprised of individual farmers sharing similar production practices and marketing channels. Instead of each member pursuing independent certification, the entire group obtains certification as a single entity. Under the Strengthening Organic Enforcement (SOE) rule, producer groups must meet specific eligibility criteria to qualify for group certification. The key lies in the group's strong centralized Internal Control System (ICS), ensuring compliance through internal inspections and sanctions. Certifiers evaluate the group's ICS, conduct on-site inspections of group operations, and directly inspect a sample of individual members. A robust ICS oversees and ensures compliance with organic regulations, conducting internal inspections, maintaining traceability records, and performing various activities related to review, monitoring, surveillance, training, inspection, auditing, and sanctions.
While producer groups can be utilized by entities of any size, certain restrictions are imposed on producer group operations. These restrictions, such as sharing resources, utilizing centralized processing, distribution, and marketing facilities, submitting to inspections, and only selling products through the group are essential and onerous. These limitations aim to offset the challenge of inspecting numerous individual producer group members. If a producer were large enough to operate independently without utilizing a group, they would likely choose to do so to retain more control over operations and marketing strategies.
In essence, the regulatory framework for producer groups ensures that organic certification remains rigorous and meaningful, even for collective entities, while acknowledging the necessity of such groups for smaller holders to access organic markets.
Have producer groups been a secret?
Far from being hidden, producer groups are openly discussed by companies like Frontier and Nutiva, influencers, and organizations such as the USDA and National Organic Standards Board (NOSB). NOSB discussed them publicly in 2002,again in 2008 and published recommendations. The USDA issued a policy memo in 2011, a training in 2015, and took comments on the proposed additional rules on producer groups under SOE in 2020 and promoted the final rule and in its media fact sheet in 2023.
What about the allegations of fraud?
The lawsuit and various articles surrounding this issue have unfortunately blurred the lines between allegations of fraud and policy opposition against producer groups. It's crucial to emphasize that fraud is not merely a policy disagreement; it involves the deceptive representation, sale, or labeling of nonorganic agricultural products or ingredients.
The Organic Trade Association (OTA) has consistently taken a firm stance against fraud within the organic system. This commitment is evident in OTA's proactive measures, including lobbying to increase USDA authorities and oversight in the 2018 farm bill. Additionally, OTA has created a private sector best practice reference for due diligence and fraud prevention, underlining its dedication to maintaining the integrity of organic practices.
Fraud within the organic system, whether occurring domestically or internationally, has far-reaching consequences, harming the entire organic sector and eroding consumer trust in organic products. Mixing fraud allegations with policy disagreements tarnishes the hard work of organic growers and processors who diligently adhere to the stringent standards of organic farming on a daily basis.
Recognizing the severity of this issue, OTA and the organic community continuously advocate for actions that help detect and prevent organic fraud. This advocacy is evident in the wholehearted support for the USDA's new Strengthening Organic Enforcement (SOE) rule, which aims to bolster organic regulations and protect organic integrity throughout the global organic supply chain. OTA is actively collaborating with its members to ensure successful compliance with USDA's significant new rule. Ongoing monitoring of the global supply chain is a priority to prevent any instances of organic fraud. The commitment extends to advocating for responsive and continuously updated organic standards that align with the ever evolving and advancing organic sector.
While the USDA Organic label is the gold standard in agricultural systems, instances of fraud coming to public light underscore the system's transparency and rigorous regulation. All credible allegations of fraud should be vigorously investigated by the USDA and if found true be subject to decertification, financial penalties or jail time for the fraud committed. While fraud prevention is paramount to maintaining consumers trust it's crucial to emphasize that the vast majority of certified organic producers, both in the United States and abroad, adhere strictly to the organic standards. Transparent and factual reporting and coverage of fraud within the system are essential elements in maintaining the integrity of organic practices and fostering trust among consumers.
What about the hazelnut complaint?
Much like the imperative not to mix organic policy matters with fraud, care should be taken not to intertwine international trade concerns with organic policy considerations. The hazelnut trade has long been dominated by Turkey as the world's largest producer of hazelnuts. In 2003, the United States International Trade Commission (USITC) determined that Turkey had engaged in hazelnut dumping, and Turkey has intervened in its hazelnut market since then as well.
Recent trends reveal a challenging landscape marked by an excess hazelnut crop and soaring inflation, resulting in hazelnut crops from 2022 being exported from Turkey with uncharacteristically low prices. This trend is observable in both organic and conventional hazelnut markets, raising concerns about potential unfair competitive practices.
Given these circumstances, it becomes imperative to address this issue with the United States International Trade Commission, specifically in the context of hazelnut dumping. It is essential to draw a clear distinction between trade manipulation and unfair competitive practices in hazelnut markets and instances of organic fraud. These are separate issues with unique implications and should not be obfuscated. Trade practices, such as dumping, require targeted interventions through appropriate channels, emphasizing fair competition and adherence to international trade regulations.
What is OTA doing and what can our members do?
In the dynamic landscape of organic advocacy, the Organic Trade Association is not merely an observer; it is an active participant, working diligently to safeguard the integrity and growth of the organic sector. Currently, OTA is closely monitoring the ongoing lawsuit. As it progresses through the legal system, OTA is gearing up to step in wherever and whenever necessary.
The trade association is preparing to engage on multiple fronts, ensuring that its members, Congress and USDA are well-informed and have a deep understanding of the significance of the issues at hand. OTA recognizes the importance of fair competition in international trade and is steadfast in supporting its members in navigating the complexities of the global market. OTA members benefit not only from the information shared but also from the advocacy that actively champions the growing and protecting the organic marketplace from farm to shelf.