Is "USDA Organic" a seal of deceit? The pitfalls of USDA certified organics produced in the United States, China and beyond.

• Author: Liu, Chenglin
• Position: US Department of Agriculture

American consumers' appetite for organic foods (organics) has dramatically increased since Congress passed the Organic Foods Production Act (OFPA) in 1990. Because the domestic organic food industry has been unable to meet the growing demand for these products, U.S. groceries have increasingly relied on imported organics. Studies show that 40% of organic foods consumed in the United States are imported from over 100 foreign countries.

To regulate organic food production, the United States Department of Agriculture (USDA) accredits certifying agents, which in turn certify organic farms and handlers according to U.S. organic standards. Certifying agents can be state agencies or private enterprises, including foreign entities. In 2007, USDA-accredited agents certified 27,000 organic producers worldwide. This certification allows approved foreign products to bear the "USDA Organic" seal and freely enter the U.S. market.

This article evaluates the trustworthiness of the USDA organic certification process. By using China as an example, the article offers a comparative assessment of the quality and safety of both domestically produced and Chinese produced organics in the U.S. market. In addition, the article discusses the USDA's failure to keep pace with the supervision of certifying agents, especially in China and other foreign countries. The article concludes that the current regulatory framework is not only inadequate to the task of regulating domestic organics, but also incapable of ensuring the integrity of imported organics. Thus, the "USDA Organic" seal misleads consumers.

1. INTRODUCTION II. THE U.S. REGULATORY FRAMEWORK FOR ORGANICS A. Development B. Overview of the Organic Foods Production Act of 1990 1. Defining "Organic" 2. The National List 3. The National Organic Program (NOP) 4. Accreditation and Certification 5. Organic Products and Labeling 6. Penalties C. Challenges for Enforcing the OFPA and the NOP Regulations 1. Harvey v. Veneman and the 2005 OFPA Amendments 2. Massachusetts Independent Certification, Inc. v. Johanns 3. Residue Testing 4. Lack of Oversight and Organic Fraud III. IMPORTATION OF USDA CERTIFIED ORGANICS FROM CHINA AND BEYOND A. Importation of Organics 1. Three Ways for Foreign Products to be Sold as Organics in the U.S. Market 2. Certifying Agents in China 3. Suspension of OCIA in China B. China's Regulatory Framework for Organics 1. The Development of China's Regulatory Framework for Organics 2. Food Safety Law in China 3. Melamine Resurfaced in 2010 C. Challenges of Implementing Organic Standards in China 1. Land Tenure and Farmers' Incentive 2. Excessive Use of Synthetic Pesticides and Fertilizers 3. Water and Soil Pollution 4. Organic Fraud and Counterfeiting D. Beyond China IV. CONCLUSION: INFORMATION ASYMMETRY AND THE USDA's SIGNALING EFFECT I. INTRODUCTION

   American consumers' appetite for organics has dramatically increased since Congress passed the Organic Foods Production Act (OFPA) in 1990. (1) In 2008, organic food sales reached $21.1 billion in the U.S market, which is more than five times greater than the sales figures from 1997. (2) The U.S. domestic organic food industry, however, has fallen far short of meeting the increasing demand for organic food. (3) As a result, U.S. groceries have increasingly relied on organic production from foreign countries. As much as 40% of organic foods consumed in the United States (4) are imported from over 100 countries. (5) In 2008, an ABC News report revealed that Whole Foods, the undisputed leader in organic foods known for promoting its products as "locally grown," sold organic products produced in China, including spinach, sugar snap peas, asparagus spears, pine nuts, and creamy peanut butter. (6) The Cornucopia Institute estimated that in 2009 up to 50% of organic soybeans consumed in the United States were produced in China. (7) Facing a shortage of U.S. grown soybeans, leading soy-based food manufacturers, such as Dean Foods, have switched their sources to imports from China. (8)

   The U.S. regulatory scheme on organics is based on the OFPA, (9) which delegates to the U.S. Department of Agriculture (USDA) the task of regulating organic production, handling, and labeling. (10) In 2002, the USDA promulgated the National Organic Program (NOP) to enforce the OFPA. (11) According to the OFPA, the USDA itself does not conduct field reviews and inspections. Rather, it accredits certifying agents to certify and monitor organic farms and handlers pursuant to the organic standards defined in the OFPA and NOP. (12) Certifying agents can be state agricultural departments or private entities, including foreign entities. (13) In 2007, USDA-accredited agents certified 27,000 organic producers and handlers worldwide, 11,000 of which were outside of the U.S. (14) This method of certification means that USDA certified products from foreign countries are entitled to bear the USDA Organic Seal and circulate freely in the U.S. market.

   How does the USDA regulate domestically produced organics? How can the USDA rigorously enforce the same standards on both foreign organic certifying agencies and producers in over one hundred countries? What are the obstacles the USDA faces in regulating both domestic and foreign organic products consumed in the U.S. market? Using China as an example, this article offers a comparative assessment of the quality and safety of both domestically produced and Chinese produced organics in the U.S. market.

   Part II of the article examines the development of the U.S. regulatory framework for organics and the challenges facing the USDA in enforcing U.S. organic standards on imported foods. Part III explores the Chinese laws and regulations for food safety and organic production, and China's serious challenges in regulating organic food, including fraud, corruption, conflicts of interest, environmental degradation, and lack of incentives for long term agricultural investment. Part IV discusses the signaling function of the USDA accreditation and certification system from a theoretical perspective. The OFPA was designed to establish a national standard and prevent consumer confusion. Apparently, the law did not anticipate the deep impact that globalization would have on organic trade in the United States just two decades later. While the USDA has significantly expanded its presence by accrediting foreign certifying agents throughout the world, it has failed to keep up with the supervision of those agents. The article concludes that the current regulatory framework is not only inadequate to the task of regulating domestic organics, but also incapable of ensuring the integrity of imported organics. Thus, the "USDA Organic" seal on imported organics misleads consumers.

2. THE U.S. REGULATORY FRAMEWORK FOR ORGANICS

   1. Development

      Jerome Rodale is widely credited for pioneering the organic movement in the United States. (15) Influenced by Sir Albert Howard and Ehrenfied Pfeiffer, Rodale firmly believed that organic farming would produce healthier foods while preserving soil fertility. (16) He vividly "likened chemical fertilizers to whipping a horse, speeding up growth but hastening tiredness." (17) In 1942, Rodale published the Organic Farming Magazine, which provided a platform for spreading his belief in organic food and distaste of chemically induced agriculture. (18) Even though Rodale's ideas were met with skepticism, resistance, and even ridicule, (19) organic farming gradually gained momentum through his persistent efforts. Around the same time, the U.S. government began to evaluate the ruinous consequences of modern farming in its influential report entitled "Soils and Men." (20)

      In the early 1970s, Rodale's followers began to market products labeled as "organic." (21) Organics soon became popular with consumers who were concerned with the use of agrochemicals. Due to a lack of regulation, however, some farmers allegedly mislabeled their conventionally grown products as organics to deceive consumers. (22) In response, Oregon enacted the first organic certification law in 1973. (23) By 1990, twenty-two states had passed laws on organic standards and certification requirements. (24) State laws helped to create an orderly organic market within each individual state, but differences in these state laws provided no uniformity for a national organic market. The discrepancies not only hampered interstate commerce but also caused enormous consumer confusion. (25) For example, to market organic milk, laws in New Hampshire and Texas required dairy cows to be fed exclusively with organic feed, while Kansas and other states had less stringent requirements. (27) The divergent standards forced organic farmers to create different labels and adjust farm operations for sales in different markets. (27) In addition, conflicting standards made it difficult for American farmers to export organics to other countries. (28) As a result, organic farmers, certification agents, and organic trade associations called for Congress to establish a national organic certification program. (29) Against this background, Congress enacted the Organic Foods Production Act of 1990 (OFPA). (30) Since then, the OFPA has served three purposes: "(1) to establish national standards for organically produced products; (2) to assure consumers that organically produced products meet a consistent national standard; and (3) to facilitate interstate commerce of organically produced products." (31)

   2. Overview of the Organic Foods Production Act of 1990

      1. Defining "Organic"

         The OFPA takes a production-based approach to its regulation of the organic industry. (32) Under this approach, the OFPA sets forth certain methods that organic farmers and handlers must either follow or avoid. That is, instead of focusing on the end results of production, the Act emphasizes adherence to standard production and handling processes. However, the Senate report detailing the...