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OTA’s Organic Fraud Prevention Program Explained

The Organic Trade Association developed an Organic Fraud Prevention Program, which compliments certification programs and government technology. The idea is to establish an industry best practice based on vulnerability assessments for companies to protect themselves and their supply chain. Invited to talk at BIOFACH Congress 2019, I had the opportunity to present the program and explain its background and objectives in a session hosted by industry expert Gerald A. Hermann. This article is a transcript of my talk and includes a live audio recording as well as the presentation slides.

US Authorities Understand and Embrace Technology

I am following Jenny Tucker from the US National Organic Program and her look at what is happening in the United States. But I will disclose upfront, I think I am the non sort-of pure technology solutions that you are going to hear about today. So, I try to be brief to get to the exciting technology discussions, but I appreciate being able to participate in this.

Before I launch into my presentation I just want to provide information following Jenny’s great presentation. First of all, from the Trade Association’s perspective, we are really thankful to have leadership with the National Organic Program that understands and embraces technology. We think that that is incredibly important for the future of the global integrity of organic trade. So, we are pleased to have a partner committed to that in the United States.

In December, a new law was signed by the president in the United States called the Organic Farmer and Consumer Protection Act. It does a whole bunch of really great things related to compliance and oversight, but one of them is to provide 5 million dollars to the National Organic Program to specifically take the next step on their technology projects. So, there are some resources behind the work that Jenny is talking about and that means it can happen.

Tackling Organic Fraud with a New Mindset and New Tools

I think we are all aware of some high profile fraud issues that have brought this conversation front and center. I think we have gabbled in what role does technology play, what role does supply chain play, and I think everybody had to sort of sit up straight in the last two years and realize that there are real issues, that in many cases we are battling criminal syndicates. And that is not what the organic control system was built to do originally, and so we have to evolve and we have to challenge some of our cultural acceptances around one-up, one-down traceability. You accept a certificate, it faced value. I think we have all been faced with the limitations of what was something that was, I think, common agreement about in terms of principals of traceability.

So, we think new tools have to come to the table. One of the advantages of the program that I am going to talk about—in its role as a complementary approach to government technology and better compliance in reporting—is that a private sector initiative that is based on quality assurance and food fraud prevention does not require critical mass of participation in order for value to begin to accrue. Jenny talked about that in her data systems, and you will hear from the others, that we all have to change as an industry because there has to be enough data in those technology systems to capture enough of the market for the benefit to accrue in terms of compliance and integrity. We have added to the mix a private sector approach where you will add benefit as multiple actors participate, but the value really accrues on a business by business basis as they engage in the program and prevent fraud within their own supply chains.

A Food Fraud Prevention Model by Michigan State University

We are launching a program that is based on a food fraud prevention model, and it is all about buyer responsibility and how do buyers more in the system to take responsibility for the integrity of the products that they are trading in beyond recording that they have accepted a certificate. When we started on this work, we really took a step back and said: well, organic is not the only place in the food system where fraud is an issue and what can we learn from the body of work that is built to prevent food fraud in general.

There has been some really good work out of the food fraud think tank based at Michigan State University and we have adapted their principals to the work that we have done. The food fraud prevention system out of the think tank is based on vulnerability assessments and vulnerability control plans and training quality assurance departments to think like a criminal. And again, this goes back to we need to evolve in terms of how we are operating with certificates that are being presented to us. This is a key element of the whole program. This model of food fraud prevention has been adopted by the Global Food Safety Initiative (GFSI), so it is a proven emerging approach to quality systems and prevention of fraud.

What OTA’s Organic Fraud Prevention Program Is All About

I have talked about a lot of this, but I think what I will say is: we took this work, formed a task force of our membership—one of the largest task forces we ever had—and they worked on adapting this model to provide a guide of best practices that is specifically adapted to the organic system. The guide has been developed and tested. It is in pre-release mode right now and the final touches are being done in terms of flow charts and graphics so it serves as a manual for companies to build their own fraud prevention plans.

The idea is to establish an industry best practice up the game in terms of what companies know what to do to protect themselves and to protect their supply chain. It is based on continuous improvement. It is based on quality assurance and supplier verification. It is not certification, it is not a compliance avenue. It complements the certification work of the government bodies and CBs. It is not intended to do their job. It is intended to complement those systems. It is not a label, it is a quality assurance B2B indicator.

4 Basic Steps to Organic Fraud Prevention

There are four basic steps to the process in the guide. The first is to conduct a vulnerability assessment, to gather an interdisciplinary team within an organization to identify gaps and weaknesses in the supply chain. This is an important part. We piloted this program and one of the biggest learnings from the groups was: just interacting, getting together, purchasing with organic compliance, with quality assurance as a whole in companies to address this thing, was sometimes a new thing with even rather large, complex companies. So, key to this is assembling your team and conducting your(1) vulnerability assessment, designing and implementing (2) internal mitigation measures, and then ensuring that you are (3) monitoring and working against those measures.

Then the program (4) integrates the fraud prevention plan into the operator’s organic systems plan. It is attached to the organic systems plan. So, then it feeds into the overall compliance. The CBs, the inspectors, when they come out to the operation, are inspecting to see if you are following the plan you have put in place. That is the whole purpose of the organic systems plan—that the operators do what they say that they are doing. So, the inspection component of this is about: are you following the plan that you said you would follow?

As we put together the program, there is a lot of work to train up the industry in terms of participating in the program. So, there is a whole training component, there is the enrollment, the vulnerability assessment, and the confirmation by the ACA or the CB, as you would call it here. And again it is not a certification or verification program; it is an internal quality program tying to the organic systems plan.

Successful Pilot Phase

We piloted in June to September of last year with 13 companies at different places in the supply chain. So, we had producer level, ingredient handler, we had importers, we had exporters, a variety of commodities that tested the system within their companies and we worked with collaborated partners in the United States to help develop the program including the National Organic Program, the Canada Organic Trade Association, NSF International, and the Accredited Certifiers Association (ACA).

Even in the pilot program, companies who prided themselves on their organic integrity found vulnerabilities that they did not know they had when they did the assessment. All of the 13 companies immediately initiated corrective measures in terms of their own internal oversights.

A part of this program, which I am particularly pleased about, is when you sign onto it you also sign into a code of conduct around integrity and the guide includes an extensive chapter on what you do when you suspect fraud. You are obligated as an enrolled participant in this program to report fraud when you suspect it. If you reject a load, you need to tell somebody. You do not get to reject the load and purchase someplace else; you have to notify the CB, you have to notify the authority, and there are templates in there on how to file effective complaints. We think this is an important muscle that the industry needs to begin to flex a little bit more. It is not enough to protect yourself, you have to protect the rest of the supply chain.

How Will This Impact the Supply Chain?

I have talked about that. Favorably, we think this immediately bolsters internal control systems. Again, one company can do it and they can improve their fraud prevention. And then value accrues when people come in, but it does not require critical mass. We think it is something people can do now. The technology solutions are fantastic for the future. They have to happen, but they take time to implement.

The Enrollment Process

The enrollment process is open in terms of pre-enrollment. The trainings will begin late spring and summer. For Trade Association members, training is free; the rest of it is really modest. We are really trying to get people tuned up on this and integrated into the system. We have been working in the United States with our certification bodies to help everybody culturally adjust to the idea that they are going to have this fraud prevention plans coming into their organic systems plans and they need to pay attention to that.

Here is just a schematic that shows you: the dark green boxes are when the company is interacting with us in terms of enrollment and training. The light green parts are their internal work as a company to assemble their teams. The red is when they are interacting with their CB as well. And then, if you complete the program, you will be registered as a trading company in organic or farm level producing company—farmers can engage in the program as well—that has a fraud prevention plan active on site and logged with their certifier. That is the whole chest of what we are doing.

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