Industry Pushes FTA With Japan, Measures to Combat Organic Import Fraud to Senate Agriculture Committee
Industry representatives urged members of the Senate Agriculture Committee on July 13 to work toward a free trade agreement with Japan to safeguard market access for specialty crops, and to limit foreign organic grain exit points to two departure ports per country to combat fraud. After the EU and Japan reached a free trade agreement in principle (see 1707060023), the U.S. can’t afford to sacrifice its No. 1 potato export market in Japan to growing European competition, Eric Halverson, CEO of Grand Forks, North Dakota-based Black Gold Farms, said (here) during a committee hearing on global and local market considerations for the 2018 Farm Bill. While the U.S. sells more than $325 million in potatoes to Japan annually, the EU filled a void left by the U.S. exit from the Trans-Pacific Partnership when it signed the FTA with Japan, said Halverson, who testified on behalf of the National Potato Council and United Fresh Produce Association.
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Another major agricultural trade concern facing the committee is the recently reported influx in organic import fraud (see 1706260060). In his opening statement (here), committee Chairman Pat Roberts, R-Kan., said that, after his constituents raised concerns about fraudulent organic imports a year ago, his office pushed the Agriculture Department to address the matter. “It is clear that if it takes this long to get action, something needs to change,” he said. Kenneth Dallmier, CEO of Cerro Gordo, Illinois-based Clarkson Grain Company, recommended (here) that the U.S. restrict allowed exit ports for organic grain to two per country, as the USDA National Organic Program (NOP) staffs fewer than 10 employees responsible for enforcement, he said. The committee should direct NOP enforcement staff to conduct final shipment audits in regions of high fraud risk, and to deny non-compliant grain shipments before they are loaded onto a U.S.-bound vessel, he said. “Likewise, when a shipment of organic grain is received at a US port that is not originated from an approved and staffed embarkation port, it is automatically suspect and should not be allowed for import unless and until adequate documentation is provided,” Dallmier said in written testimony. USDA didn't immediately comment.
Dallmier further called for an “electronic clearing house” to collect data on projected yields and track shipping volumes for each organic certificate outside of U.S. jurisdiction, notifying certifiers and NOP inspectors when volume thresholds have been reached. He also characterized NOP mandates as too relaxed, noting that the program directs monitoring of the import process while “it limits penalties to the revocation of the USDA Organic certificate. Such an environment of 3x revenue with little risk entices fraudulent activity in the best of circumstances.” USDA-NOP should outline short-term port assignments for its enforcement staff, which would hold staff accountable to U.S. law yet “prevent longstanding relationships and patronage,” Dallmier said. Furthermore, end-users of fraudulent grain should face product recall liability when the product doesn’t meet label requirements, he said.
While Dallmier said there’s room to ratchet up enforcement to ensure organic import compliance, Halverson urged caution in renegotiating NAFTA, noting the current deal has been “extremely beneficial” to the U.S. potato industry, whose exports to Mexico have grown 1,000 percent since 1993 sales of $21 million. He noted that Mexican traders have started to turn their attention toward South American potato suppliers because of President Donald Trump’s desire to renegotiate the agreement. The situation could result in U.S. organic exports losing “name-brand recognition” in Mexico, Dallmier said. “The potato industry is taking great interest in the NAFTA renegotiation and urging the Administration not to allow any backsliding on either tariff or non-tariff barriers,” he said. “In addressing concerns about the agreement from other sectors, these ongoing benefits for agriculture should not be eroded.”
In concluding the hearing, Roberts mentioned that Trump and Cabinet members about 10 days ago communicated in a meeting that the U.S. is “not in the business of terminating NAFTA.” Roberts said that administration inclination (see 1704260049) has shifted to a greater focus on renegotiation and improvement.