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International organic trade was subject of round table discussion

International organic trade was subject of round table discussion

ORGANIC VALLEY’S Jim Wedeberg joined Wiscon-sin Department of Agricul-ture, Trade and Consumer Protection Secretary Shei-la Harsdorf at a meeting about international organic trade hosted with repre...

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POSTED June 27, 2018 1:28 p.m.

MADISON - It was an enlightening experience for many of those at an Organic Valley sponsored-event held in the state capitol last week with representatives of European Union and others explaining organic agriculture’s place in international trade.

From the most experienced with organic international trade to those with only a nodding acquaintance with the subject, there was something for everyone to learn. Almost all left the two-hour presentation having learned something that they didn’t previously know.

What is the number one organic vegetable in sales grown in the U.S.? Carrots—it turns out that 23 percent of all carrots grown are grown organically, according to Monique Marez, Director of International Trade for the Organic Trade Association.

The 75 to 100 people in the fourth floor meeting represented many facets of the organic industry, as it is sometimes called. There were organic retailers, wholesalers, importers and exporters, growers and processors, academics and a few members of the media.

The meeting was kicked off with a welcoming address from the recently appointed Wisconsin Department of Agriculture Secretary, Sheila Harsdorf. The veteran legislator took over at DATCAP (Department of Agriculture, Trade and Consumer Protection) in November following her appointment by the Governor after serving 16 years in the state senate and eight years previously in the state assembly.

At more than one point in her speech, Harsdorf emphasized a point she was making was true not only for exporting the products of organic agriculture, but it was also true of agriculture in general.

“I was a dairy farmer before I ran for office,” Harsdorf said. “Agriculture has always been a big part of my life.”

“Agriculture is a big industry in Wisconsin making up more than $88 billion in economic activity and dairy is half of that,” the state ag secretary explained. “Trade is critical to Wisconsin agriculture.”

Anyone who follows U.S. agriculture even a little realizes the sector is facing some serious head wind at the moment and Harsdorf was quick to acknowledge the current tough situation for many involved in agriculture.

The secretary explained low prices created by over supply were plaguing most ag markets, including dairy—the big one in Wisconsin and for Organic Valley.

Harsdorf is concerned a trade war and tariffs on certain imported products would further exacerbate a difficult situation.

How important is organic dairy sold in the state? Harsdorf noted 55 percent of the organic milk sold in the U.S. is produced in Wisconsin. The ag secretary was also quick to point out the state is major producer of a variety of other organic food including beef, hogs, broilers, and yes organic cranberries, among other things.

In discussing the ramifications of lifting a dried cranberry tariff, Harsdorf made the department’s position on trade very clear.

“We want fair trade,” Harsdorf said. “We want free trade. It’s important we have access to those markets—frankly whether it’s organic or not.”

The secretary acknowledged the distinct possibility of tariffs being imposed on imports like steel and aluminum among other things. She noted that although there was pressure to forgo a trade war there was already pushback from the G-7 countries.

Harsdorf questioned whether organic food would escape retaliatory tariffs on exports.

The secretary explained that a national association of agriculture secretaries had unanimously taken the position that there was a need for trade agreements and concern for the tariffs going on imports.

“Other countries know how to hit us hard,” Harsdorf said. She explained countries that are looking to retaliate for imposed tariffs on their imports would place tariffs on U.S. ag exports.

The secretary said that a study of the situation indicated Wisconsin might be the second hardest hit of all of the states. She noted Canada and Mexico are the major trading partners and half of all Wisconsin exports go to those two countries.

Harsdorf also put the implications of a trade war into perspective of the current agricultural situation of Wisconsin and the United States. She explained that oversupply and low demand in the ag sector had led to an extended period of low prices.

“Agriculture can’t take much more of this right now,” the secretary said. She said the department would continue to look at trying to expand markets with trade missions and other efforts.

Dan Mosgaller, the International Pool Development Coordinator for Organic Valley, gave a frank assessment of his co-op’s level of international trade with the EU.

“We don’t export a significant amount to the EU,” Mosgaller said. “Organic Valley sells more of its products in the Mideast, Asia and the Caribbean. The purpose of Organic Valley being here today is to provide one real life example.”

Mosgaller explained that although there wasn’t a lot of direct trade with the EU, Organic Valley was working with co-ops in the EU. He said the LaFarge-based cooperative was cooperating with the EU co-ops instead of directly competing because organic consumption is constantly growing

Organic Valley has done some supply balancing with an Australian beef co-op and OMSCo (Organic Milk Supply Cooperative) a dairy co-op in England, according to Mosgaller.

OMSCo helped supply organic milk in 2014 when Organic Valley struggled to keep up with exploding demand. More recently, in 2015 and 2016, OMSCo helped to move OV’s oversupply of organic milk in Europe. However, there’s a relationship between OV and the other co-ops that goes beyond marketing.

“What’s really important is the educational opportunities of these relationships,” Mosgaller said.

Monique Marez, the Director of International Trade for the Organic Trade Association, told the group that OTA represents 9,500 businesses, located in all 50 states and 23 other countries.

One of the major focuses for OTA is improving international trade, Marez noted.

Marez emphasized the growth of certified organic food since 1990. Sales have gone from $1 million in 1990 to $8.6 billion in 2002 to almost $50 billion in 2016.

In a recent survey, 60 percent of organic producers and businesses indicated that they were planning on adding new full-time employees. Currently, about 5.5 percent of all food consumed in the U.S. is organic.

Globally, there were $90 billion of organic sales in 2016.

There are currently certified organic producers in 178 countries.

The key to creating more international organic trade is creating organic equivalency standards through administrative trade agreements, according to Marez. Essentially if the standards of one country are very close to the standards of another, those countries can grant an organic equivalency for the standards.

This has occurred between the USDA’s NOP (National Organic Program) and the EU.

While the U.S. is currently experiencing a trade deficit in organic production, Marez explains this is due in large part to the robust domestic market.

U.S. Organic Exports are greatest to Canada and the second largest amount goes to Mexico. From there, it’s: 3. Taiwan, 4. South Korea, 5. Japan, 6. Hong Kong, 7. United Arab Republic, 8. Guatemala, 9. China, and 10. United Kingdom.

OTA says organic coffee and coffee products are the largest U.S. organic imports. However, organic soybeans are a very big part of the U.S. imports and make up a bigger amount of sales when compared to just green coffee beans.

Nicolas Verlet is the Director of Organic for the European Union’s Department of Agriculture. He began by thanking everyone for the warm welcome he and his EU Colleagues received in Wisconsin.

“Being here helped us get a concrete view of what is going on in the real world,” Verlet said.

The EU ag official said that in EU countries there were 12 million hectares in agricultural production and about 6.7 percent was in organic production.

Verlet reviewed many of the EU goals for organic production, which seemed to mirror organic concerns in the U.S.

The EU is trying to get group certification for small producers and making other attempts at reducing certification cost.

The EU is working on more detailed rules concerning livestock including space requirements for confinement and hopes to have those rules completed by 2021. Like the U.S. there is concern among EU producers about pesticide contamination from drift from conventional producers.

Verlet clarified the situation of equivalency in certification between the EU and U.S.

“Equivalency is not an internal trade agreement,” Verlet explained. “It’s an understanding between the EU Commission and the USDA. It’s an administrative arrangement that will expire in 2025. The hope is to transform this to a full-fledged international trade agreement with the U.S.”

Questions for the officials started with Harry Bennett, from the Central Plains Organic Grain Producers Co-op.

Bennett expressed concern that in the upcoming U.S. Farm Bill a senate version changing the Organic Standards Board to include more large industry representatives would lead to a softening of those standards. He noted there is already a problem with the public perception of humane treatment of livestock.

Softening standards to allow more pesticide residue and GMO traces in grain will enable more production by increasing the ability to put the product on the market that was formerly not allowed.

“Integrity of the label is important to selling the product,” Bennett said. “To the consumer you could make this just another name like natural. We need to stem this move to undermine what we have built.”

Verlet assured this was a concern shared in the EU as well. However, he noted like the U.S. there is a wide range of opinion on what should be acceptable as organic.

Verlet said a recent survey showed why the EU consumers bought organic products. In order of importance the consumers cited no pesticide use, no GMOs, enhancing biodiversity and the increased quality of the product.

Another member of the audience identified himself as the Executive Director of O Farm. He questioned the ability of a Turkish ship to try and bring organic grain into the U.S. that did not meet the standards. He noted Turkey and others flooded the market with questionable product such as this and drove down the organic corn price from $12/bushel to $7/ bushel. He wondered why Turkey was not on the high-risk list for the EU.

“There is more concern now that it is a big international business and the Mafia is coming in,” Verlet said in response.

The EU official said that placing countries on the high-risk list raised concerns of fairness to organic producers of the country, when some of the irregularities have more to do with traders.

Verlet believes sharing of information between countries about unscrupulous attempts at faking the authenticity of the organic products might help to end the situation. The EU official also feels it is time to involve police and customs official to inspect shipments and exercise law enforcement powers.

There were a host of other questions from producers and others involved with organic agriculture. Lots of conversations concluded in small groups as the event ended in, you guessed it, a delectable organic lunch.

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