International Organic Scandal: Major Canadian Grain Exporter’s Certification Suspended Organic Industry Watchdog Says "System Working as Designed"

After two years of speculation by U.S. and Canadian organic farmers, facing below-cost competition eroding sustainable pricing, and even forcing some out of business, an announcement last week, by the Canadian government authority overseeing organics, has finally offered an explanation.

Jirah Milling and Sales, based in Quebec, Canada, has had their organic certification suspended by the Canadian Food Inspection Agency (CFIA). The company, annually selling thousands of metric tonnes of organic feed soybeans and grains in U.S. markets, had been under scrutiny for some time. Organic soybean growers, and other crop producers, on both sides of the border had been questioning how Jirah could apparently sell organic beans significantly below what they knew to be the cost of production.

"We have been aware of problems with imported soybeans for years and have been actively investigating this operation for many months," said Mark Kastel, Senior Farm Policy Analyst at The Cornucopia Institute. "It was obvious, from collaborating with U.S organic grain producers, and their cooperative leaders, that something was wrong," Kastel added.

Michael Saumur, the National Manager of the Canadian Organic Office at CFIA, said that they had received two formal complaints about Jirah's operations. Jirah then received "multiple assessments," he said. The assessments revealed what Saumur would only term as "deviations" from the company's organic plan. Jirah, Saumur explained, was "given ample opportunity to correct" the deviations. Unable to do so, Saumur said "it was deemed applicable to issue a suspension."

While Saumur expressed the need to maintain confidentiality about further details, one complaint concerning Jirah, filed in November 2010, alleges blending of cheaper conventional grains with organic and then the sale of the adulterated product as certified organic feed.

"Since we have spent years investigating cheap Chinese soybean imports, dominating the West Coast market, we initially thought that Jirah was transshipping beans from China and ‘sanitizing’ them with a Canadian label," said Kastel of The Cornucopia Institute, a farmer-based organic industry watchdog. "It now appears that any improprieties were homegrown on Canadian soil."

Cornucopia said it is "highly concerned" by reports from Canadian truckers that Jirah is said to be continuing to ship organic grain into the US and has been observed unloading containers of imported soybeans. The Institute has reached out to operations selling organic grain and feed asking that they contact Cornucopia, confidentially, if they have dealt with Jirah in the past.

Michael Saumur, the Canadian regulator added, "We hope potential buyers will be careful."

Jack Erisman, an organic crop producer in Pana, Ill., reported that "Even with growing demand from organic egg and dairy producers, over the past two years, I have had soybeans that I could not sell in the marketplace."

Cornucopia's investigation also brought the group in contact with Canadian farmers familiar with Jirah's activities. "The Canadian farmers' allegations, reported to us, were that Jirah was buying a nominal quantity of legitimate organic soybeans but the vast majority of their beans were coming from conventional IP [identity preserved], GMO-free growers," Kastel said. "These Canadian growers are the real heroes; they brought this apparent fraud to the attention of Canadian regulators and Cornucopia and tirelessly pushed for action," observed Kastel.

Cornucopia said it was a grave disservice to all the ethical Canadian farmers to have their reputations besmirched by the action of one greedy marketer. "With the exception of this bad aberration, Canadian farmers can be trusted just as much as U.S producers,” said Kastel.

The CFIA's suspension of Jirah's organic certification took effect on July 25. Ten days after the announcement, the USDA and its National Organic Program alerted the U.S. market to the suspension, noting that this operation could no longer "sell, label or represent their products as organic" due to non-compliance with organic regulations. Canada and the U.S. have a formal equivalency agreement covering organic food and agriculture.

"This is an excellent example of the system working as it was designed," said Will Fantle, Research Director at the Wisconsin-based Cornucopia Institute. "Our only serious disappointment is that it took so long for Canadian officials to act and over a week for the USDA to publicly warn participants in the organic industry not to purchase suspect products from the suspended Canadian source."

Jirah's most recent in a series of "serial" organic certifiers had been Letis, based in Argentina. Independent third-party accredited operations like Letis are charged with acting as the overseers of organic integrity. "It's very unusual for United States or Canadian farmers or organic handlers to contract with foreign certifiers, who typically work in their country of origin," said Fantle. Letis was ordered by Canadian regulators to pull its organic certification of Jirah.

The owner of Jirah Milling and Sales, Andrew Eastwood, told the editor of Sustainable Food News that the suspension would have a "tremendous impact" on the company. He noted that Jirah's customers "are certainly looking at other options right now." Eastwood indicated that his company will try to remedy the situation with CFIA.

CFIA's Saumur said that Jirah has thirty days to seek a review of their organic suspension. CFIA, administering the relatively new Canadian organic program, has yet to develop a formal mechanism for fines or additional penalties for Canadian organic regulatory violations.

Cornucopia said that none of the Canadian farmers that they had directly worked with on this investigation were willing to speak on the record due to fear of recrimination or violence. "We had one incident, related to the investigation, reported to us concerning the vandalism of an automobile to the tune of many thousands of dollars," said Kastel.

"Buyers should know," said Merle Kramer of Saline, Mich., Marketing Director at the Midwest Organic Farmers Cooperative, "that when we are in a $24.00 organic soybean market and they get four bids for around $24.00 and one bid for $19.75, it should be obvious that those are not organic soybeans. Unfortunately, for some the main concern is to get cheap organic grains and a piece of paper that says it is organic."

Marvin Manges, a certified organic farmer from Yale, Ill., said, "I have been raising organic crops for 25 years (21 years certified) and there has always been a strong market for what we and other farmers produce. In the last few years we have faced unfair competition from questionable imports from China and Canada. It's good to see that regulators are finally taking our challenges seriously."

In assessing the current regulatory crackdown, Jack Erisman, the other longtime Illinois organic grower, affirmed, "The organic marketplace is only fair when we are all playing by the same rules."

In addition to the USDA's announcement, The Cornucopia Institute is offering a stern warning to U.S. buyers to avoid products represented as organic by Jirah, which has removed all information referencing organics from their website.

"We have received reports that they have continued to attempt to sell, since their suspension, using the certification documents of individual farmers from whom they are buying soybeans and other commodities," said The Cornucopia Institute's Kastel "This would not be legal as any handler, storage facility, miller or roaster of soybeans would itself have to carry valid certification."

According to Canadian officials, unlike the laws governing organics in the United States, their certification/accreditation program, still in its infancy, has no provision for more serious penalties, other than suspension or cancellation of a company's right to do business. In the US certified entities found to be violating the law can be subject to fines of up to $10,000 per incident.

"We are also disappointed that the Canadian provincial and federal regulatory officials are not being more forthright with the public," commented Kastel. "In the past the USDA has released the details in terms of complaints, investigations and the facts found. Although we understand the allegations we do not even know for certain what violations led to the rare move to strip on organic processor/handler of their certification. This information should be public so that this incident can act as a deterrent."

The Cornucopia Institute has also had conversations with farmers on both sides of the U.S.-Canadian border, to assist them in preparing a class-action lawsuit seeking civil damages for any marketplace injury that reputable organic producers have incurred. "We encourage farmers who have been competitively injured to contact us regarding potential future litigation," said Will Fantle, Cornucopia's Research Director.

The Institute is also asking for help from industry stakeholders in identifying Jirah’s U.S. customers. "We'd like to speak to additional companies that have done business with Jirah and we hope they will assist us in this ongoing investigation," said Fantle. Stakeholders can contact Cornucopia through its website, www.cornucopia.org.

The Cornucopia Institute has learned that Jirah might also be in the process of changing its ownership structure. "We continue to caution buyers of organic commodities against purchasing at prices that seem too good to be true, Kastel added. "It is incumbent upon responsible participants in this industry to do their own due diligence and not strictly rely on paper [certification documents] as the be-all, end-all for protecting the integrity of the products they are marketing."

The Cornucopia Institute is dedicated to the fight for economic justice for the family-scale farming community. Through research, advocacy and economic development our goal is to empower farmers both politically and through marketplace initiatives. The Organic Integrity Project acts as a corporate watchdog assuring that no compromises to the credibility of organic farming methods and the food it produces are made in the pursuit of profit. We will actively resist regulatory rollbacks and the weakening of organic standards to protect and maintain consumer confidence in the organic food label.