USDA Announces New Rule to Fight Organic Fraud

Ervin Cohen & Jessup LLP

Ervin Cohen & Jessup LLP

On August 5, 2020, the Agricultural Marketing Service of the U.S. Department of Agriculture published a proposed rule designed to strengthen the agency’s oversight and enforcement of the production, handling, and sale of organic agricultural products.  Currently, organic products are eligible for a USDA seal, but there have been concerns of fraud due to the complexity of the organic produce supply chain.  For instance, in August 2019, the U.S. Attorney’s Office in Iowa announced that four individuals were sentenced for their role in a $120 million organic fraud scheme, in which grain was falsely sold as organic, misleading consumers.

According to the agency, the proposed changes in regulations are “intended to protect integrity in the organic supply chain and build consumer and industry trust in the USDA organic label by strengthening organic control systems, improving farm to market traceability, and providing robust enforcement of the USDA organic regulations.”

The market for organic agricultural products has grown dramatically, from $3.4 billion in 1997 to $55.1 billion in 2019.  As the industry has grown, there have also been increased incidents of organic fraud, which has resulted in some enforcement lawsuits and consumer complaints that food being marketed as organic does not meet the USDA criteria. Organic trade associations have formed fraud task forces to try to solve this problem, and the proposed rule marks an escalation of government involvement in consumer protection in the organic food space.

Some key components of the proposed rule include:

  • Requiring importers, brokers, and traders of organic products to be subject to USDA oversight
  • Mandating NOP Import Certificates for all organic products entering the United States
  • Labeling nonretail containers used to ship or store organic products
  • Mandating a set number of unannounced inspections of certified operations to be completed by accredited certifying agents
  • Standardizing certificates of organic operation as part of the USDA’s Organic Integrity Database
  • Establish training requirements and qualifications for inspectors and others working for a certifying agent
  • Expanding enforcement processes against entities who violate the OFPA

The proposed rule covers a wide variety of topics, including: applicability of the regulations and exemptions from organic certification; National Organic Program Import Certificates; recordkeeping and product traceability; certifying agent personnel qualifications and training; standardized certificates of organic operation; unannounced on-site inspections of certified operations; oversight of certification activities; foreign conformity assessment systems; certification of grower group operations; labeling of nonretail containers; annual update requirements for certified operations; compliance and appeals processes; and calculating organic content of multi-ingredient products.

Public comments to this rule will be accepted until October 5, 2020.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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