Organic Fraud Pilot Launched By NCGA

AMY SUNG

Iowa City, Iowa — The National Cooperative Grocers Association here has partnered with Hanover Co-op Food Stores, PCC Natural Markets and Unified Grocers on a pilot program exploring the implementation of the organic industry's first systemwide, retailer-based organic fraud detection and prevention program.

NCGA contracted the International Organic Accreditation Service, Dickinson, N.D., to determine appropriate methods retailers can undertake to limit the incidence of fraudulently traded organic products and to increase the chances of early detection when it takes place within the retail supply chain.

“We obviously think it's very important. We believe very strongly in organics, and we want to ensure that the organic label continues to remain meaningful for consumers,” said Kelly Smith, director of marketing for the NCGA.

The project, which was conceived a little over a year ago, is still in its earliest stages, Smith said, and details of how the potential program will work — specifically, how it will work at the retail level — have yet to be finalized.

“The initial phase of our project includes such things as identifying the measures that might best prevent fraud, and determining what roles all of the various stakeholders in the supply chain would have. But we don't yet know when that phase will be complete, or when a field trial will occur,” Smith said.

Seattle-based PCC Natural Markets doesn't know exactly when the trial initiative will start, but it hopes the U.S. Department of Agriculture will take seriously the results and recommendations of the study, if any, and act upon them, said Diana Crane, spokeswoman for the chain of eight natural food co-ops.

“It's a study to assess where we are, and we're hoping that meanwhile, the Farm Bill will increase funding to support the National Organic Program adequately,” Crane said.

“Even though organics is the fastest-growing sector of the food industry, it's proportionately underfunded. For instance, about 3% of the total U.S. food retail market is organic, but the share of USDA research dollars for organic agriculture and marketing is only 0.6% annually. There are only nine people on staff, not enough for the job mandated by law.”

TOMORROW THE WORLD

IOAS will conduct testing measures with NCGA grocers and suppliers over the coming months. Based on the pilot's findings, NCGA and IOAS plan to develop a recommended retailer-based fraud prevention program, offering it not only to NCGA's members, but to all organic retailers nationwide and throughout the world, as early as mid-2008.

“What we're trying to do is implement a system that includes all levels of the supply chain, so retailers would have to work closely with our suppliers to encourage them to be in the system,” Smith said.

Retailers will collaborate in the study and provide, from a retailer standpoint, information on issues such as quality-control systems and current supply chain traceability, and will also participate in field trials once the system is developed, Smith said.

The pilot study will aim to identify the most suitable auditing criteria to detect fraud, the party or parties most suitable to implement these measures, and any additional needs to ensure optimum fraud protection within the retail sector.

It will also attempt to estimate the costs of implementing the system, and to determine which parties will likely incur these costs.

PCC contributed $10,000, along with three other parties, to fund the $40,000 study, Crane of PCC told SN.

“PCC primarily wanted to support the NCGA in its efforts, on behalf of other co-ops across the country,” Crane said. “Our support for this project is also consistent with how seriously we take the trust of our members-owners and our role as gatekeeper for the integrity of our products. Given that we operate in a global economy, we hope to learn more from this study about how organic standards around the world are integrated.”

Smith added that NCGA's intention is clearly not to replace any existing or future certification system.

“We're only trying to have that extra layer, really a voluntary measure, to ensure consumer confidence in the organic label,” Smith said.

“As consumer-owned co-ops, our first responsibility is to our consumers, and not necessarily the traditional bottom line, so we recognize that we have different value propositions — that we really value our shoppers' trust, and feel that it's important to voluntarily put added measures in place to make sure consumers are buying the goods that they think they're buying.”