Anti-fraud systems in organic, here’s how to protect the sector from crime and scoundrels. Interview with Paolo Carnemolla, president of Federbio

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The fraud shield in bio is open. The appetite of crime seems destined to remain unsatisfied. At least when the shady deals focus on organic farming grains. In fact, the Federbio database is active on these raw materials-the main target of fraudsters. A tool that has already defused new attempts to corrupt the clean agriculture sector.

We discuss this with Paolo Carnemolla, president of Federbio, the national organization representing the sector. With whom we also address other crucial issues, from price trends in organic to the resistance of traditional agricultural organizations.

An anti-fraud database on organic farming products has been operating at full capacity since January 1, 2017. How does it work?

FIP, Federbio Integrity Platform, (www.Fip.bio) has been active since 2016 but as of January 1, 2017, it is mandatory for Federbio member certifiers. 8 of the 14 authorized, but accounting for 90 percent of the controls on organic Made in Italy. The database records any information on feed, grain and grains. And in November it will also be operational for olive oil.

On operation, in brief, certification bodies enter documents related to certifications, areas, crops and productions into the database. The platform cross-references this information with transaction records. Verifying the information in the transport documents: buyer, quantity, type.

With each transaction entered into the database, the system ascertains the appropriateness of the data. It thus instantly emerges whether the farmer sold goods he could not sell because he does not produce them, or does not have that quantity, or has expired certification documents. In that case, the alert is triggered. Both sellers and buyers and certifiers are informed. Whom they activate and go to see what has happened.

An effective procedure that only late intervention can thwart. Who controls the controllers?

Intervention times are also recorded in the database. This allows Accredia and the Ministry of Agriculture to monitor the good performance of the supervisory body.

Since the activation of this platform, have you discovered fraud?

There is daily work. The alert is also triggered if the document is out of date. In the beginning we recorded large numbers, with 30-40% alert. But these were mostly cases of data misalignment or documentation deficiencies. Some certifiers still resist, do not comply with the procedures, and trigger the alert. Not those associated with Federbio.

In addition to these “false positives” caused by certifiers, have you recorded real fraud?

There have been some cases. For inconsistencies in quantities sold and also in situations of unregistered crops. There have been those who, due to rain or frost, have changed crop types without updating the one registered in the database.

In other cases, however, we caught those who did not know of the platform’s existence and attempted to sell noncompliant products. The operator in a few days was suspended. Before the product was put on the market, because with this system, action is taken at the stage of purchase from the farmer. The database is for preventing not for managing fraud, as we have done so far.

Eurispes’ Agromafie report estimates the turnover from counterfeiting in agribusiness at nearly 29 million euros, an increase of 30 percent in 2015. The new database on organic, however, only cross-references grain data. Is this not too little to foil new frauds?

Agribusiness is a very attractive sector for crime. Criminal penalties are mild, as the crime of fraud is often punished with a fine only. Therefore, if you want to launder money, it is easier to act in this area than in others. But the most at-risk phase is the commodities phase. Large quantities of product are moved, especially in imports. And the margins border on double the value of the raw material purchased abroad. These are 3,000-ton ships. On a product worth 500 euros per ton, it means making millions of euros.

Fraud on raw materials is more profitable than fraud on the finished product, and the latter in turn is subject to more controls, including by companies down the supply chain. In fact, the frauds we uncovered and had to deal with in recent years were all on raw materials.

Organic wine continues to gain share. Is there a strengthened system of controls?

Wine is not among the products at risk. Until recently it was denied that organic wine could exist. Now it is growing, thanks to serious wineries that take a serious approach to it. It is a virtuous sector of conversion to organic. Then there is the distinction to be made between quality wine and social winery wine, or bulk. And here some problems have been. With cases of watering down, mostly. It happens with foreign companies that buy tanks of Italian wine and then bottle abroad. The origin is Italian. But it is not known

Who added the water.

However, the FIP database cannot detect any cases of false bio. The newly released report By the Fraud Inspectorate of the Ministry of Agriculture showed an idyllic sector. Not a single organic sample with pesticide residues. But this is a control on about 150 samples. In reality, who controls?

Pesticide residues are a different issue altogether. Fraud Inspectorate controls are random. Instead, certification bodies operate on the basis of special protocols. They are required to audit at least 10 percent of companies each year, but they do 20 percent. Our controls are targeted, we certainly go where we know there is a suspicion or even a risk of accidental contamination, such as on mixed farms, with conventional and organic crops. The most appropriate time of year is chosen.

Specifically on fruit and vegetables, a table operates that provides control plans, targeted interventions in case of territorial crises, and a phytopathological alert system. Informing agencies and farms about weather conditions and the consequences on crops allows for easy risk analysis. There is no tracking, but targeted joint actions.

In addition to the big fraudsters, we have to deal with small, everyday frauds. The risk also lurks in organic markets. How to protect yourself?

All that would be needed there would be the discerning eye of the consumer. It is highly unlikely that a banquet would have every fruit and vegetable imaginable. It cannot have that variety unless it is a large farm, which certainly does not go to markets. It cannot have apples and oranges, one typical product from the North and another from the South. If he sells few products, it is already an indication of seriousness; it means he sells what he produces. But it must also exhibit certification. If it does not, the consumer should ask to see the certificate of conformity and identification document (checking its validity date) that also states what types of products it grows. This shows whether the operator is certified and can have apples or citrus.

The answer must be given at the banquet. Then, at home you can also run a check in Accredia’s website (databio.it). And if the data update date is old you need to call the certifier, looking for it in the list given on the left side of the home page.

Instead, we find only packaged organic fruits and vegetables at the supermarket. Why?

We are criticized because organic fruits and vegetables in the large-scale retail trade or stores are always packaged, with nets or containers, wasting packaging. But if this happens there is a reason. Outside of direct sale from the farmer to the consumer, bulk product cannot be sold if the point of sale is not certified. Either stores adapt, as the chains specializing in organic products do, or they have to pack.

And why don’t they certify themselves?

Some already are, but for others the real obstacle is organizational. A curious ministry circular requires certification if a distribution chain uses the term “organic” or “organic” associated with the brand. With the paradox that “Esselunga bio” found itself obliged to certify and Coop-which, moreover, was already certified-could have done without, because its “Live Green” line lacks the word “bio.” The rules are complicated, so many distributors prefer to continue using some packaging without complicating bureaucratic burdens.

The cost of the anti-fraud service is borne by the operators. Will it end up translating into higher organic prices, which are already high?

The cost of the database is a few cents per ton of product. It cannot justify any price increases. On organic prices, on the other hand, the question is varied. In general they are higher than conventional, with considerable variations that in some cases are justified.


In animal husbandry it is normal and fair that organic can cost as much as twice as much, compared to conventional that perhaps comes from South America (see the meat scandal uncovered in Brazil,

ed.)

It is an extremely different farming system from conventional. An organic chicken requires 4 square meters of outdoor space. It is fed organic feed, strictly non-GMO, and has three times the life cycle of conventional. These range from the minimum dictated by the regulations of 80-90 days to a maximum of 120-180 days, depending on the species. Whilea conventional one in 30-35 days is ready.

And the standards will be very difficult to match….

Paradoxically, in school canteens, the weights are calibrated to the size of the battery chicken. They want it white, with small, equal thighs. And organic chicken, which has a larger thigh and darker meat and ‘tastes like chicken,’ is often rejected.

On eggs there is the opposite problem: sometimes we get calls complaining that the yolk of organic is lighter. Of course, there are no dyes added to conventional feeds.

The GDO standard for fruit and vegetables is also an issue. It results in increased costs. They want it as the conventional one. And we are often forced to surrender crops “not conforming” to that standard to the food processing industry. Which pays less.

Animal husbandry aside, what about prices in other sectors?

On other goods–such as pasta and tomato puree–the price of organic may be even lower than that of the premium brand, which faces advertising costs that organic has little need of. On such products, a price 10 to 20 percent higher than the shelf average is consistent with lower yields, smaller supply chain size, and reduced economies of scale. Organic does not have 20 percent of the market. It is at 2, 5 and has to spread the costs over those volumes.

Then there is the intermediate price range of fruit and vegetables, fresh, where a 20-30% difference is plausible. Of course, a lot depends on seasonal trends. There are years when it is very hard to have good product, yields are lower, fruits are less close to the expected standard, and there is more waste. But there are years when organic fruit and vegetable prices are not far from conventional. With the differences inherent in the yield of various crops: table grapes are one thing, apples are another. This year in the North was good, while in the South there were problems with snow. Now, however, the North is dealing with drought, which is creating severe difficulties, while the South is doing better.

So organic prices are in the normal range. Does no one speculate?

Speculating would be short sighted. One of the reasons for the increase in organic consumption is that prices are falling steadily. And that will be the trend, with the increasing spread in large-scale retail and discount stores. The problem is that we still have fixed costs (logistics, personnel, certification, waste, yields) that affect too much. Consumption is growing a lot – up 20 percent in 2016 – but still accounts for just over 3 percent of food consumption in Italy. Making 100 food sales in modern distribution, 3 percent are organic. And costs affect that. It is no coincidence that organic is cheaper in the large-scale retail sector, which makes economies of scale, while specialty stores are less efficient. Looking forward, it is certain that as organic volume increases, prices will fall.

With ever-increasing demand, Italian organic does not yet assume a significant size. Why?

Even if we doubled the land under organic cultivation, the product would not be enough. The problem is the traditional agricultural organizations, which are afraid of losing power. It means acquiring everything they don’t have: certification, specific skills. So they discourage their associates, or otherwise are not proactive in pushing organic.

Coldiretti only promotes the logic of zero km. Without distinguishing between those who are better or better. Organic has to be only that which is zero km.

Confagricoltura has a federation of organic producers, but it remains in the middle of the road as it lobbies more for GMOs than for organic. CIA, on the other hand, has been a member of Federbio forever. And in the last 2-3 years he has created Anabio, his organic producers’ association. If we continue like this, we will always be forced to import from abroad to meet demand.

Marta Strinati

Professional journalist since January 1995, he has worked for newspapers (Il Messaggero, Paese Sera, La Stampa) and periodicals (NumeroUno, Il Salvagente). She is the author of journalistic surveys on food, she has published the book "Reading labels to know what we eat".