WASHINGTON — The labels said the bags contained organically grown beans and barley. But that's not what was inside, according to Minnesota officials.
The Minnesota Attorney General's Office says that for more than a year, Glacial Ridge Foods Company, mislabeled ordinary produce to cash in on the higher prices fetched by organic foods. Partly based on his confession to investigators, the president of the Minnesota-based wholesale firm was charged last month with defrauding consumers in six states and Canada of up to $700,000.
The case underscores the economic reality that increasing numbers of health-conscious consumers are willing to pay premiums for foods produced via environment-friendly methods that shun synthetic fertilizers and pesticides. It is also the kind of swindle that sweeping new regulations - now being drafted by the federal government - are designed to prevent.
The regulations, expected to be unveiled this spring, will set for the first time national standards for organic foods. The industry has seen explosive growth, with sales of organic food jumping from $631 million in 1989 to $3 billion this year. The rules will apply not only to raw and processed foods, but also to seeds, livestock feed, and even fiber and tobacco.
"It's a very ambitious undertaking," says Brian Baker of California Certified Organic Farmers, an organization that ensures produce meets the state's organic food standards. "It's one of the first times that the US Department of Agriculture has ever had to deal with rule-making on such a broad level."
The standards are unique for another reason. At a time when both the Republicans and the Democrats are bad-mouthing big government, the idea of Washington regulating organic food has come from the industry itself.
One reason for seeking federal oversight, say industry officials, is to better protect consumers from fraud. But more important, they say, the industry wants to be governed by a single set of standards.
Until now, regulation of organic food has been handled at the state level, and the results have been somewhat chaotic. Just 20 states have established standards, some of which vary widely. Furthermore, only 11 of those states have agencies that enforce their standards. Most states rely on the industry to police itself through private certification organizations.
The new federal standards are intended to bring order and confidence to the certification process. They will decree what synthetic and natural substances can be used in producing and processing organic foods. They will require growers to develop crop-management plans that promote soil fertility.
Adherence to the standards will be determined by existing state agencies and private certification organizations. Approved products will be awarded USDA certificates similar to those now given to meat. Producers who do not adhere to the standards will be barred from labeling goods as organic and violators will be liable to fines and other penalties.
"Organic has a significant meaning and we want to make sure that that is clear to the consumer," explains Mark Retzloff, co-founder of an organic dairy farm in Boulder, Colo., and president of the Organic Trade Association, a leading proponent of federal regulation. "In an industry where integrity and production claims are critical for marketing, this is important."
National standards are also considered necessary for philosophical reasons. Many organic-farming advocates fear that major corporations now coming into the increasingly lucrative organic food market might try to cut costs by circumventing long-established organic farming methods.
"The concern is that as you get companies that are further away from the tradition of organic, they are going to get away from integrity," says Mary Mulry, a Boulder-based food scientist and industry consultant. Organic farming emphasizes renewing soil fertility through crop rotation and manuring.
But it's not clear what impact the new standards will have on organic food prices. Experts say they hope prices will drop in the long term because the increased consumer confidence created by federal certification will promote competition and spur production. But in the short term, prices could rise because the expected boost in demand will outstrip current supplies.