How the Administrative State Serves Clients and Hurts Citizens: The Case of the Non-Organic, Organic Food

The late economist and Nobel Laureate Milton Friedman used to say that only in government, when a program or project fails dismally, the instinctive response is to make it bigger. This is especially the case in a modern Administrative State like the one we have in America today where a program alleged to serve the well-being of the public is most often proven to serve, in a big way, the interests of a large client of that administrative state.

We’re seeing Friedman’s observation validated yet again in the congressional response to an exposé of the pervasive dishonesty in the organic agriculture industry.

Following a scathing report by the U.S. Department of Agriculture’s inspector general that details fraud, mismanagement, and negligence throughout the global organic agriculture/food supply chain, Congress wants to throw yet more money at the problem.

Last month, Reps. John Faso (R-New York) and Michelle Lujan Grisham (D-New Mexico) introduced the “Organic Farmer and Consumer Protection Act.” It would nearly triple the budget of the USDA’s National Organic Program, which oversees the country’s organic standards and commerce. Faso said in a news release that the legislation will “provide for a modernization of organic import documentation, new technology advancements and stricter enforcement of organic products entering the US.”

The organic industry is cheering Faso’s bill; the Organic Trade Association says it “would make significant strides to improve the oversight of global organic trade, create a level playing field for American organic farmers, and establish a better system to ensure the integrity of organic.” Integrity of organic? Rubbish; it would only create a bigger fig-leaf.

When the organic designation was established in 2000, then-Secretary of Agriculture Dan Glickman emphasized its fundamental meaninglessness: “Let me be clear about one thing, the organic label is a marketing tool. It is not a statement about food safety. Nor is ‘organic’ a value judgment about nutrition or quality.” The Faso-Grisham legislation is yet another special interest bonanza designed to further subsidize domestic organic farmers and enrich the bottom line of already hugely-profitable organic businesses.

Republicans in Congress and the Trump administration should oppose the legislation and, beyond that, demand explanations of the multiple violations revealed in the recent USDA inspector general’s report. After a year-long investigation, the Inspector General found serious breaches in the international organic market that may result in “reduced U.S. consumer confidence in the integrity of organic products imported into the United States.” Federal authorities failed to verify whether imports were organic, did not perform mandatory on-site visits of exporting countries and ignored requirements to resolve the different organic standards among exporters. Moreover, imported agricultural products, whether organic or conventional, are sometimes fumigated at U.S. ports of entry to prevent alien pests from entering the United States. USDA investigators found pesticides that are prohibited under organic protocols were being sprayed on organic shipments.

At every point in the supply chain, National Organic Program officials have been negligent, allowing the participants in this booming sector to mislead consumers into believing organic food is healthier, safer and more eco-friendly than non-organic food—none of which would be true even if there were strict adherence to organic standards.

The misrepresentation and chicanery in the supply chain aren’t new, and the feds have long been aware of that. For example, USDA reported in 2012 that 43 percent of the 571 samples of “organic” produce tested were in violation of the government’s organic regulations, and that “the findings suggest that some of the samples in violation were mislabeled conventional products, while others were organic products that hadn’t been adequately protected from prohibited pesticides.”

How does the organic industry get away with such a systematic hoax? A 2014 investigation by the Wall Street Journal of USDA inspection records from 2005 on found that 38 of the 81 certifying agents—entities accredited by USDA to inspect and certify organic farms and suppliers—“failed on at least one occasion to uphold basic Agriculture Department standards.” More specifically, “40% of these 81 certifiers have been flagged by the USDA for conducting incomplete inspections; 16% of certifiers failed to cite organic farms’ potential use of banned pesticides and antibiotics; and 5% failed to prevent potential commingling of organic and nonorganic products.”

Thus, organic consumers are paying a premium to buy organic foods, both domestic and imported, that aren’t organic at all. This is a scam of major proportions and would be receiving non-stop media coverage if it were occurring in any other food sector. (Imagine if such widespread and systematic fraud was uncovered in the fast-food or soft-drink industry.)

Meanwhile, the OTA and various astroturf “consumer” groups have diverted time and resources to defaming the tools of their competition—genetic engineering and state-of-the-art agricultural chemicals (which are not permitted in organic agriculture), in particular—rather than ensuring the integrity of their own sector.

Academics Review, a science-oriented nonprofit organization of academic experts, performed a review of hundreds of published research reports about consumers’ views of organic products generated between 1988 and 2014. Their analysis found that “consumers have spent hundreds of billion dollars purchasing premium-priced organic food products based on false or misleading perceptions about comparative product food safety, nutrition and health attributes,” and that this is due to “a widespread organic and natural products industry pattern of research-informed and intentionally deceptive marketing and paid advocacy.”

The bottom line is that organic agriculture is an unscientific, heavily subsidized, fraud-riddled marketing gimmick that misleads and rips off consumers. That is important because free markets don’t function efficiently when consumers are misinformed.

The old saying that you get what you pay for doesn’t apply when you buy overpriced organic products. That is what Congress should investigate instead of obligating millions more in tax dollars to line the pockets of the farmers and purveyors of organic products, real or fraudulent.

Despite the alarming findings, there has been little accountability for the fraud and mismanagement identified by USDA and media investigators. The National Organic Program, which is in the untenable, and arguably unethical, position of both regulating and promoting the organic industry, has only revoked the licenses of 11 organic vendors worldwide and collected a paltry $140,000 in fines during the past year. Miles McEvoy, the head of the NOP under President Obama, resigned just days before the USDA/Inspector General report was released, which is likely no coincidence.

The Senate Agriculture committee is investigating some of these issues, and during a hearing in July on global organic trade, Chairman Pat Roberts (R-Kansas) observed: “It seems that uncertainty and dysfunction have overtaken the National Organic Standards Board and the regulations related to the National Organic Program.” The co-opted and incompetent NOP, which currently gets $160 million a year in appropriated funds, should be zeroed out.

The agriculture committee is expected to address some of these issues in next year’s Farm Bill. And while they’re at it, they should refer the organic industry’s pervasive fraudulent activities to the Bureau of Consumer Protection at the Federal Trade Commission for investigation and prosecution.


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About Henry I. Miller

Henry Miller is a Senior Fellow at the Pacific Research Institute. He was the founding director of the FDA's Office of Biotechnology.