Organic Broadcaster

Organic imports hurt U.S. organic grain producers

By John Bobbe, OFARM

At a Lake Michigan port, the Nakagawa unloads its shipment or organic-labeled corn from Turkey. Photo by OFARM.

At a Lake Michigan port, the Nakagawa unloads its shipment or organic-labeled corn from Turkey.
Photo by OFARM.

During the third week in May, the Nakagawa docked on Lake Michigan in Indiana with a cargo of 450,000 bushels of “organic” corn from a Turkish port. Additional ships docked on the East Coast with similar grain cargos, pouring up to 1.2 million bushels of corn into the U.S. organic market. This amounts to the equivalent of 336 rail cars of organic grain.

Record import volumes of soybeans and corn for the past 18 months have had a devastating effect on U.S. organic grain farmers. A high Dollar Value Index, much less expensive shipping costs for ocean-going cargo, and the willingness of U.S. feed and food manufacturers to source the cheapest ingredients regardless of origin, have created a price structure we haven’t seen since 2009-2010.

Romania and Turkey are the top two exporters of organic corn to the U.S. In the first six months of 2016 compared to the same time period in 2015, corn exported to the U.S. from Romania declined by about 50 percent from $28.4 million to $13.9 million. However, the exports from Turkey to the U.S. went from $11.7 million to $68.6 million, a six-fold increase. (Source: USDA Economic Research Service)

Organic soybean import data tells a similar story. In the first six months of 2016, the dollar value of soybeans imported from Turkey has been 36 times greater than a similar period for 2015 ($1.4 million vs. $51.4 million). India is the number one exporter, Ukraine comes in second, followed by Turkey at number six.

The volume of imports has impacted the entire organic grain market. Food-grade wheat, corn and soybean markets have dropped as much as $6 a bushel (50 percent) from where they were 18 months ago. Feed-grade grains have fared no better, with prices falling similar amounts for the major grains and $2-$3 on small grains. Low corn and soybean prices have also stifled a once-bustling small grain feed business, causing large backlogs of oats.

NFOrganics grain marketer Tim Boortz notes that imported grains have been a part of the overall bushels used in the production of U.S. organic products for some time now, but there has been a sharp rise in imports this year. Boortz thinks corn has been most affected, with the imports causing slow movement and unacceptable (low) prices. At the end of August, tens of thousands of bushels of grain were unsold. U.S. corn inventory remains in bins across the Midwest.

Organic corn was $12 a bushel 18 months ago. Now it’s $7.50-$8 with some offers to buy as low as $6—that’s a 33-50 percent drop in prices for U.S. producers. This price scenario is not going to grow the domestic industry when cost of production is $10-$10.50 per bushel.

This influx of imported grain is concerning not only for its economic impact, but also because of its questionable origin. In a recent report, the USDA’s Foreign Agricultural Service stated, “As organic production and consumption in Turkey grow, so, too, do the concerns about fraudulent organic products and lack of inspections. According to a Europol report, some Turkish companies have been involved in relabeling or repackaging products as organic and bringing the counterfeit products into the European Union, even though the products do not meet the organic standards. Reports from the Research Institute of Organic Agriculture (FiBL) in 2013, Eurofins Scientific in 2012, the Cornucopia Institute in 2013 and the French Ministry of the Economy in 2015 uncovered fraud or unapproved production methods in organic products from Turkey.

“There have also been instances where a few Turkish companies were found to have been using fraudulent organic certificates. Turkish news articles report that consumers may be misled by conventional products that are marketed as organic, mostly in open air bazaars or independent stores where a vendor could more easily sell a fake organic product. Although inspections and transparency in the Turkish organic food sector are improving, the integrity of organic farming, production, shipping and marketing is not always guaranteed. Consumers are advised to look for organic labels and be cautious of unpackaged products marketed as organic.” (January 26, 2016; “GAIN Report # TR601, Turkish Organic Market Overview” by USDA’s Global Agriculture Information Network)

Turkey and Ukraine have exported significant amounts of corn and soybeans to the U.S. Both countries are dealing with massive civil unrest. It raises the question of how organic on-farm inspections and integrity can be maintained in those circumstances.

The European Union and Canada were so concerned about the integrity of organic imports from these countries that, in late May (EU) and early June (Canada), they cancelled the accreditation of ETKO, the agency that certifies organic production in Turkey and the Ukraine. As a result, traders from Turkey and the Ukraine had to scramble to find markets, such as the U.S, where there is less risk of rejection. That shift to non-EU destinations would explain the drastic swings in exports to the U.S. in comparable
year-to-year data. There is an apparent perception that the U.S. is an easy target to dump “organic” grain.

The U.S. organic market has seen growth in annual sales consistently above 10 percent. (Source: Organic Trade Association) The USDA’s Economic Research Service (ERS) data shows that 40 percent of organic corn and up to 70 percent of organic soybeans are imported. Will continued growth of the U.S. organic market be at the expense of U.S. organic producers, which further stifles domestic growth in organic acres?

U.S. organic grain farmers produce the highest quality organic grains. Producers are subject to rigid certification standards and an audit trail back to the fields where the grain was grown on their farm. It is what the organic label has come to mean to consumers. To ensure organic integrity, all organic imports and producers in other countries should meet the same
standards that U.S. producers proudly meet.

What Farmers Can Do

1. Ask potential buyers if they are importing grain.
2. If they are, explain that these imports are lowering domestic prices to unprofitable levels for you.
3. Call your Senator and Representative to ask them to inquire what USDA’s NOP is doing about potential fraud in organic imports. Why is the U.S. viewed as an easy destination to ship “organic” grain?

John Bobbe is the executive director of the Organic Farmers’ Agency for Relationship Marketing (OFARM), and author of Marketing Organic Grain, A Farmers Guide, available at mosesorganic.net.

From the September | October 2016 Issue

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