Natural Foods Merchandiser
The China Challenge: Are overseas organic foods up to U.S. standards?

The China Challenge: Are overseas organic foods up to U.S. standards?

Customer unease limits sales of organic products sourced from China, but could this change in the future?

Jessica Perrill buys USDA Organic products for good reasons. The working mom wants to protect her 2-year-old from “bad hormones and chemicals.” Plus, she knows she’s using her food dollars to keep genetically modified organisms off her family’s plates. Perrill doesn’t do much research on her own, so she trusts her Denver-based natural products retailer to stock high-quality organic foods—and appreciates this retailer even more when these products are sold at affordable prices.

But what if this trusted retailer were to recommend organic offerings produced in China?

“I hate to say it, but I would be skeptical,” Perrill says. Given the terrifying and hyper-publicized food scares that have emerged from China during the past 10 years, it’s not surprising that Perrill tends to associate Chinese products with words like melamine and lead.

“No one can blame anyone for being wary,” says Jessica Poingt, senior international trade manager at the Washington, D.C.-based Organic Trade Association. However, the reality is that China-sourced organic products are here to stay and expected to occupy an even greater share of retail space in the future.

As Poingt notes, American hunger for product diversity and all-season, organically grown produce is outpacing domestic supply. This is helping to create a huge global market for organic products—one that was worth $59 billion in 2010 and is expected to grow at a healthy pace, according to the Organic Monitor and Research Institute of Organic Agriculture. With that kind of money on the table, it’s no surprise that organic is primed to become a mega-business for opportunistic economies such as China’s.

But that leaves Perrill and many natural products retailers wondering: Are China-sourced organic products really organic? And, perhaps more importantly, are they safe?

The $3.7 billion question

China is a relative newcomer to the world of certified organic. The country didn’t adopt its own organic production, manufacturing and distribution standards until 2005. And although its organic exports continue to grow at a pace of 30 percent annually, they account for a small fraction of China’s total agricultural exports to the United States, which amounted to $94 billion in the first quarter of 2012 and 17 percent of total U.S. imports, according to the USDA.

But China’s organic production won’t be fledgling forever. After a spate of high-profile food-safety scares, such as the 2008 melamine-tainted-baby-formula incident that sickened 300,000 children, China’s domestic demand for chemical-free foods has been on the rise. In fact, the country’s growing domestic plea for cleaner products could propel China to become one of the world’s largest organic markets, according to a 2010 USDA Foreign Agricultural Service report. China is already second only to Australia in acres dedicated to organic practices, and organic acreage could total 1.5 percent of the country’s agricultural production if growth stays strong.

With demand mounting domestically and internationally, China is poised to become an organic powerhouse. Dominated by unprocessed tea, rice, soybeans and vegetables, the country’s organic exports could reach $3.7 billion by 2015—up from just $350 million in 2006, according to the USDA report.

However, it’s nearly impossible to measure just how many organic products currently make it to U.S. shores.  “Until recently, when an organic apple crossed our border, it was recorded as ‘apple’ and not as ‘organic apple,’” Poingt says. That started to change in 2011, when the U.S. began assigning harmonized tax codes to select organic imports and exports. The OTA hopes to have definitive data on organic trade’s value within the next few years.

Is that China-grown apple really organic?

As long as they’re USDA certified, Chinese organic products are as legitimate as those from any other country, organic industry leaders say.

The United States and China do not recognize each other’s organic certification standards. Therefore, all products imported to the U.S. from China must be certified to National Organic Program standards by a USDA-accredited organization before they can be labeled and marketed as organic, says Bob Anderson, senior trade advisor to the OTA and a former organic farmer who served as chairman of the inaugural National Organic Standards Board. Once certified, an imported product must include the country of origin, the name or seal of the certifying organization and the USDA Organic seal on its label. In addition, the USDA stipulates annual reauthorization. These requirements aren’t unique to products from China, Anderson says. New Zealand, Mexico and Japan, for example, all trade with the United States, but none have mutual recognition agreements with the U.S. government.

The red tape hinders trade, but the upside is additional oversight—and that means consumers need not be any more concerned about the safety of organic products imported from China than those coming from anyplace else, according the OTA.

“The real benefit of organic is that for a product to exist on retail shelves, it has to have been vetted multiple times,” Poingt says. “It might have been produced here or on the other side of the planet, but it has been certified to our standards.” As of the last USDA assessment in 2010, 649 NOP-certified organic operations functioned in China.

“I personally have more concerns about organics being sold in China than those being exported,” says Jeff Crowther, executive director of U.S.-China Health Products Association, a Beijing-based organization that provides market information to natural products manufacturers exporting to China. “Exported [organic] products have to go through extra testing, and companies must apply for export licenses to ship overseas. These extra steps obviously don’t exist in the domestic market.”

Crowther says U.S.-China HPA has started to cover the organic sector in response to member concern. He worries that China is simply too large to police effectively and that audits may not be frequent or thorough enough to ensure compliance with the 2005 standards.

His unease is legitimate: Various media reports within China have exposed cases in which domestic products were fraudulently labeled as organic. Chinese retailers, meanwhile, have been busted for intentionally mislabeling conventional produce so they could charge organic-premium prices. Even worse, within China, pesticide residues have been found on some products marked organic. “There are two immoral acts we are dealing with here,” Crowther says. “First is fraud and second is outright danger.” He explains that by falsely claiming a product is organic, companies profit but don’t necessarily hurt people. But companies that drown fields in pesticides to eradicate pests and reduce labor costs may be endangering consumers’ health.

U.S. retailers respond

Although most of the negative organic reports occur within China, the impact has trickled to U.S. retailers. In the United States, some grocery chains have stopped selling China-produced organic vegetables. Similarly, in 2010, Whole Foods Market famously removed dozens of China-sourced organic and conventional products from its shelves; the company said its decision was based on cost, not quality. That same year, the USDA stripped the Nebraska-based Organic Crop Improvement Association of its NOP accreditation after discovering that OCIA was relying on Chinese government officials—rather than impartial third-party certifiers—to inspect government-owned organic farms.

Despite the media firestorm, the USDA concluded in 2010 that China-based assessors were “competent, professional and committed to protecting organic integrity.” The OTA also contends that instances of fraud are few and far between—even in China.

“We’re trying to visit those countries once a year to see that certifiers are doing a good job,” Poingt says. “And that’s not just in China. As far as certification fraud, there are problems even in the States. People have gone to prison for it, which is a good thing because it shows there’s enforcement in place.”

Anderson agrees: “There’s broad oversight relative to China. In fact, Miles McEvoy [deputy administrator of the NOP] and another high-level official are going to China to perform an audit. The oversight is working.”

But the market speaks louder than regulation.

“Some retailers feel that their consumers aren’t ready to accept that the quality is the same, and it’s just easier for them to import from somewhere other than China,” Poingt says. “It probably has nothing to do with any particular scandal.”

Katy Neusteter is a Denver-based freelancer

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.