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USDA tightens organic rules amid cases of fraud like a $46 million plan claimed by Minnesota farmers


WASHINGTON—James Wolf has grown corn, soybeans, and wheat on a family farm in Cottonwood County for decades, doing what many farmers in Minnesota do—applying for certification to sell their crops organic, which would cost a lot more per bushel.

From 2014, when it was certified, to 2021, Wolf earned $46 million selling products it promotes as organic grains to buyers in Pennsylvania and elsewhere. The money allowed Wolf, 65, to buy a “winter house” and two Chevy Corvette convertibles in Arizona. But the FBI says there are no crops Wolf sells organically.

The Minnesota farmer was charged last year by the U.S. Attorney General’s Office in Minnesota of involvement in an increasingly common farming crime — organic fraud — that could lead to jail time and millions of dollars in reimbursement. Wolf pleaded not guilty.

On Thursday, another farmer accused of conspiring with Wolf, 45-year-old Adam Clifford Olson, returned to St. Paul and is expected to plead not guilty.

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The booming organic product market is worth at least $63 billion a year. Rising demand for organic grains has driven their prices with synthetic fertilizers, pesticides and herbicides, as well as doubling or even tripling the cost of conventionally grown grains. But for grain buyers, it is difficult if not impossible to distinguish organic grain from non-organic grain, making fraud difficult to detect and prosecute.

And it’s hard for some to resist the temptation to sell crops at a much higher price.

“There are incentives to cheat,” said Kate Mendenhall, an Iowa farmer and executive director of the Organic Farmers Association.

This led to the publication of the USDA’s National Organic Program. final rules Aiming to curb organic food crimes this month. The USDA said tighter regulations may have prevented much of the fraud Wolf is accused of.

“This rule includes more robust traceability and verification practices that will help detect and stop this type of fraud earlier, prevent further sales of fraudulent products, and reduce the impact of fraud,” the USDA said.

Wolf’s is a high-profile organic fraud prosecution involving the FBI, the US Attorney General’s Office in Minnesota, and the US Department of Agriculture. But it’s not the biggest example of this type of agricultural crime.

In 2021, South Dakota grain broker Kent Duane Anderson was accused of buying conventionally grown grain and fraudulently selling it organic at a huge profit, with revenues of approximately $71 million, according to court documents.

Using the proceeds of his scam to finance a luxury lifestyle in Florida, Anderson pleaded guilty.

“I Anderson purchased thousands of tons of small grain and seed products from non-organic suppliers and then resold these products at marked prices to wholesale distributors, brokers, and other buyers, misleadingly showing that the products were organic,” he said. scammed.”

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Meanwhile, Missouri grain broker Randy Constant was prosecuted for involvement in an even bigger fraud. Like Wolf, Constant sold bushels of conventionally grown grains and incorrectly labeled it organic. Grain Constant sold between 2010 and 2017 It is used as feed for cattle and chickens to produce high-priced meat and eggs marketed as organic.

Prosecutors said Constant used the proceeds from his scam to make more than 20 trips to Las Vegas, where he stayed in luxury hotels, hired escorts and gambled. HE IS He died by suicide in 2019 after serving 11 years in prison.

Frauds damage the credibility and integrity of the largely trusted organic food industry and harm consumers and legitimate organic farmers whose credibility is at stake.

“There are a lot of farmers who work really hard to produce good organic food,” Mendenhall said.

The organic introduction of non-organic grains and other foodstuffs has also lowered prices for these farmers, he said.

USDA steps up anti-fraud efforts

Along with the temptation to make much more money for conventionally grown crops, there is also the opportunity to cheat as a result of the burgeoning and complex organic food industry.

The USDA describes the rapid growth of this industry as “It has attracted many businesses to the USDA organic label and increased the complexity of global organic supply chains.” At the same time, the organic food industry has overwhelmed its watchdogs.


“The complexity makes the surveillance and enforcement of organic supply chains difficult because organic products are trusted products, which means their organic qualities or ‘integrity’ cannot be easily verified by consumers or businesses purchasing organic products for use or resale.” He said when the USDA released the new rules last week. “The elements needed to guarantee organic integrity – transparent supply chains, trusted interactions between businesses, and mechanisms to verify product legitimacy – are more difficult to achieve in the increasingly complex modern organic industry.”

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The USDA has accredited dozens of organizations that issue organic certifications. It includes for-profit companies, non-profit organizations, and government-run institutions.

Mendenhall of the Organic Farmers Association said it usually takes three or four years to switch from conventional farming to organic farming. Once this is complete, an inspector from a certification body usually visits the farm, inspects the fields and inspects invoices and receipts. However, some controls are more rigorous than others.

Wolf and Olson certificates The Organic Crop Improvement Association is a certification company headquartered in Lincoln, Nebraska.

The association revoked Wolf’s organic certification on June 2, 2020. Prosecutors allege that Wolf continues to sell conventionally grown grains organically using the Olson certificate, which was revoked on August 9, 2021, a little over a year later. It did not return requests for comment, but eventually reported the discrepancies to the USDA, possibly to the Wolf and Olson farms, and then the USDA contacted federal law enforcement officials.

The USDA’s new organic regulations tighten certifications for grain imports sold as organic, and certifiers they conduct unannounced audits on at least 5% of the operations they document annually.

Record keeping for organic farmers and certifiers has also been strengthened, and there is a new requirement for certifiers to develop fraud prevention plans and conduct “chain” audits of operations deemed “high risk” for fraud.

The Strengthening Organic Practice rule is the largest update to organic regulations in the past 30 years. The new regulations will come into effect on March 20 and those affected will have one year to comply with the changes.

In its public comments on the new regulations, the Organic Farmers Association said it was “a long overdue first step towards the strong implementation we need to preserve the integrity of the organic label and the viability of organic farms that rely on consumer trust in that label.” ”

Still, the association said there is “more work to be done to prevent fraud in the organic sector.”

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After Wolf was accused of fraud last year, the FBI confiscated the farmer’s Corvette, a long list of farm equipment, and more than $3 million in cash held in various accounts.

Still awaiting trial, Wolf wanted to continue farming. Last year, a request for the temporary return of farm equipment to harvest crops was denied by the FBI, but the appeal was upheld by a U.S. District Court judge.

“The court system allowed him to farm until a decision was made on the case. It’s fair for them to do that,” said Paul Engh, Wolf’s attorney.

Engh also said he wasn’t surprised by the severe federal prosecution of Wolf and Olson.

“This is a big case for them,” he said.