We might file this under the humorous “Is nothing sacred?” file, however, it is fraud – pure and simple – and represents millions of dollars taken from unsuspecting processors and consumers. While we may be more used to fraud from major corporations or financial institutions, this is every bit as deceptive. Corn Soy and Rotten Ethics
Nebraska Organic Fraud
Recently three Nebraska farmers, a father and son (good work, dad) and a friend, who worked with them in the operation, pled guilty to knowingly marketing corn and soybeans as organic crops when they were grown under inorganic conditions. The scheme is in the multi-millions of dollars.
The farmers had company in this fraud. They allegedly planned the fraud with a processor based in Iowa to trick customers nationwide who were purchasing these grains under the guise that they were organic.
The U.S. Department of Agriculture’s (USDA) has astringent, “National Organic Program.” Under the program, organic crops cannot be grown with the use of fertilizers, herbicides, inorganic pesticides, sewage sludge, and other substances. The techniques for successfully growing organic crops require more inspection and attention than with non-organic crops, including careful placement of the fields to avoid sprays or GMO crops. Therefore, organic crops are generally more expensive in the market.
For a period of eight years, 2010 to 2017, the farmers sold the corn and soybeans to the Iowa company. There was no deception here in terms of the chain of possession. The Iowa company knew that the Nebraska farm was intentionally selling them non-organic grain from fields where pesticides and other chemicals had been applied. Even if organic grains are mixed with non-organic grains, the whole lot is then presumed to be non-organic.
Additional charges may be coming to the Iowa-based processor and re-seller who stood to make significant profits by upselling the grains. There is, at this point, no telling how many “organic products” presumably sold to millions of consumers in processed foods, were affected by this scam. In this case, the Iowa-based company appears to have sold the majority of the grains to producers of meat and dairy products such as organic milk and cheese.
Is USDA Too Lenient?
Many people who work in the natural products industry have long felt that the USDA has been far too lenient with farms and processors. Mark Kastel, director of the Cornucopia Institute, an organic industry overseeing group has been quite critical:
“These large-scale problems have an impact on the entire market and the reputation of the organic label. It’s really very fortuitous that the prosecution is taking place. We want these cases to act as a really strong deterrent. They are not the rule. They are the exception. Now that this is almost a $50 billion industry, it’s so lucrative. Fraud opportunities exist.”
During the period of the fraud, the defendants were paid nearly $3 million each for the mislabeled grain. The government is seeking about $11 million in damages and is charging the three farmers with wire fraud. They could be facing sentences as high as 20 years in federal prison. The charges against the Iowa firm have yet to be determined. It could be much higher.
A Fraud Like Any Other
In this scheme, the opportunity to ultimately scam the public was easy to conceal. All it took was the product, falsified organic documentation, and a party who was willing to sell it under their own deception. The farmer grew both organic and nonorganic grain. Perhaps, at the beginning (and this is just surmising on my part), they all realized if they used 90 percent organic and 10 percent nonorganic, that no one could see the difference. This is true. Over time, a slippery slope was established until it could be any mixture or all nonorganic sold as the real thing.
“Need” is rather easy to see here. Doing “less work” in producing this grain and yet selling it as organic at a higher upcharge, means a lot more money. Wherever the money went has not been brought to light but to farm operations working under tight margins, the extra money must have seemed to be a godsend.
In this fraud, the rationalization for such actions was largely based on cynicism, that consumers who favored organic products were fools and easily deceived. In fact, they are not fools, only trusting that farmers and distributors would do the right thing under the auspices of goverment oversight. Corn Soy and Rotten Ethics lead to unethical marketing.