Last week, The Washington Post reported that 36 million pounds of imported nonorganic soybeans suddenly obtained “organic” labels for domestic sale after entering California. This could happen because soybeans, like other foods, are imported via complex global supply chains, involving many different specialist businesses between the farmer and the final customer.
Regulating these supply chains to ensure, for example, that “organic” foods deserve their labels is hard. Here are five reasons why.
1) The U.S. government doesn’t enforce its standards for organic foods.
The key regulator for organic foods in the United States, under the Organic Foods Production Act of 1990, is the Department of Agriculture. The USDA is in charge of regulating organic food, both when it is produced in the United States and when it is imported. It’s illegal to sell imported foods as organic in the United States unless the product meets USDA standards.
However, the USDA doesn’t actually administer the standards for imported foods. Instead, the certification — checking that the food meets U.S. standards — is done by USDA-recognized foreign regulators or USDA-authorized third-party organizations. This means the USDA outsources its authority to its equivalent agencies in other countries, as well as third-party certifiers.
2) Not all countries have U.S.-recognized regulators.
The number of USDA-recognized international regulators has been growing since 2009. However, it is still relatively small. Currently, the USDA allows imported foods to be sold as organic if they have passed muster with national regulators in Canada, the European Union, Japan, South Korea and Switzerland. But the United States does not recognize the national regulators of Ukraine and Turkey, the two countries of origin that handled the recent shipment of falsely labeled soybeans. This means that exporters from these countries had to turn to a different system.
3) That’s why third-party certifiers are necessary.
USDA’s Certifier Lookup page lists 82 authorized third-party organizations. Although most of these USDA-accredited certifying agents are domestic, 33 are foreign agents. Also, although some of them are purely private, others are public. For instance, the Organic Food Development and Certification of China in Nanjing is a Chinese government entity.
These USDA-accredited third-party certifying agents can also issue certification documents, acting as de facto gatekeepers of organic food imports to the United States from other countries. Therefore, if these imported soybeans from Ukraine and Turkey were sold as organic in the United States, presumably the shipments were certified by USDA-authorized third-party organizations.
4) But certification remains challenging in a complex global economy.
In theory, this should all work very well. In practice, ensuring that imports labeled “organic” are actually organic is very hard, because global supply chains are complex and nontransparent. A number of suppliers or organizations may sell the product before they reach the final customer.
This creates ample opportunity for things to go wrong. For instance, the USDA may not have any good way to know whether its accredited certifying agents have issued false certification documents to unqualified foreign suppliers. Middleman organizations can use real certification documents for products that are not actually organic.
Indeed, as The Post reported, the broker of the fake organic soybeans claimed that it might have been “provided with false certification documents.’’ However, it’s impossible to know what went wrong about this particular line of organic food import until the USDA completes its investigation.
5) The problem stretches beyond the USDA.
This is not the USDA’s fault — it is one regulatory agency with limited resources, trying to deal with a multitude of suppliers. Some of these suppliers, in all likelihood, are operating unethically.
Regardless of the hurdles, my research suggests that the prospect of the USDA enhancing its regulatory oversight of organic integrity in global supply chains is attainable. In response to a similar globalization challenge to food safety, for example, the Food and Drug Administration has increased transparency and accountability in global supply chains. More substantively, the FDA has conducted more inspections of food facilities in other countries, developed more innovative enforcement tools, and educated more foreign regulators and relevant stakeholders about U.S. requirements.
People may wonder whether increasing regulatory oversight is an implicit form of trade protectionism. But, in fact, more U.S. food regulation results in more food trade, not less. As my research shows, greater oversight of foreign food facilities boosts trade in food from foreign countries to the United States by leveraging the U.S. government’s reputation to reassure customers. If these lessons extend to the USDA, too, we might expect that more regulatory oversight would make it easier for genuine organic producers abroad to sell their food to American customers.
Jason Kuo is a postdoctoral fellow at the Mortara Center for International Studies at Georgetown University. He gratefully acknowledges financial support from a Carnegie Corp. “Bridging the Gap” grant. Follow him on Twitter @mjasonkuo.