Swindlers among the 37,000 businesses certified worldwide can double their money by misrepresenting food grown conventionally with chemicals banned for organics. But the USDA has only one compliance officer for every $9 billion in sales. The fine for each violation is capped at $11,000.
Failures found in the USDA’s certification extend to corn and other bulk products, as The Washington Post reported in May regarding a shipload of conventional soybeans sold as organic for a $4 million windfall.
USDA investigators handling the Valle Verde pineapple case lacked law enforcement experience, according to their public profiles, and the compliance unit lagged at times hundreds of cases behind.
NerdWallet also reviewed USDA records in another Costa Rican case, one in which the agency USDA did not prosecute an exporter who confessed to mislabeling 400,000 pineapples as organic — a racket he’s accused recently of repeating.
USDA officials refused, throughout three months of interview requests, to speak with NerdWallet.
Primus executives did not respond to repeated requests for comment. The company, which sold in 2015 and changed its name to Primus AuditingOps, approved sanitary conditions four years before at a U.S. cantaloupe plant that killed 33 people in a listeria outbreak.
Customs records show that since 2015, Valle Verde’s “USDA organic” shipments to the United States have grossed more than $6 million—a $3 million markup from conventional fruit. The company’s Costa Verde-brand pineapples, which its managers insist are organic, continue reaching Safeway, Ralphs and other U.S. chains.
Competing U.S. importers are aghast.
“Why would you rob a bank, when the USDA looks the other way?” asks Stuart Follen, owner of SL Follen Co., which imports organic pineapples. “Just go into the produce business and mislabel stuff.”
Pineapple Boss Runs Ranch
Northern Costa Rica’s pineapple king is Luis Alberto del Carmen Barrantes Quesada. The 48-year-old has built an organic fruit venture at extraordinary speed.
Barrantes heads Del Valle Verde Corp., a longtime conventional grower with subsidiaries that export fresh and frozen pineapples. He prizes his Disney-style spread with a rodeo ring, show horses and 20 bulls.
Concern for the environment prompted Barrantes to begin growing organics in 2013, he says. Valle Verde was able to plant them immediately on fields that had never been chemically treated, he says. The company jump-started the business by buying organics from local USDA-certified farms and exporting them.
But nearby organic farmers, including some who supplied Valle Verde, tell other stories.
Jose “Pepe” Castro Otarola told the Costa Rican investigator that after his USDA-certified farm sold organic pineapples to Valle Verde, a company worker had him sign duplicate invoices that could be used to exaggerate export quantities.
Castro watched Valle Verde workers dump a truckload of his organics into a rinse that had just been used for conventional fruit, he said in an interview on Costa Rica’s Flecha TV news.
Werner Lotz, another local grower, sold organic fruit to Valle Verde in amounts that the company inflated, the investigator wrote. To produce that much fruit, he calculated, Lotz’s farm would have had to have been nine times its 5-hectare size.
Valle Verde’s former farming manager provided an even more troubling view.
Nestor Andres Ramirez Acuna, who managed the company’s farming operations through 2012, says it had no plans then for organics, a conversion requiring lengthy preparation to buy natural fertilizers, train workers, segregate conventional crops and overhaul farming methods.
“We used pesticides in the fields where they grow these organic pineapples,” said Ramirez, who convinced the investigator that the land should not have been certified.
Barrantes denies the farmers’ allegations.
Investigator Starts Digging
While farmers say they saw irregularities on the ground, officials in Washington D.C. and Costa Rican officials flagged the country’s pineapple surplus.
In March 2016, a top official at Costa Rica’s agriculture ministry assigned Jose Miguel Jimenez Mendez, an agrochemist and certified inspector, to investigate.
“I discovered that pineapple being exported was not organic,” said Jimenez, as he alleged in two meticulously documented reports.
He wrote that he found chaos in the ministry file documenting the transition of fields from conventional to organic. The USDA normally requires farmers to wait three years to plant in a field that once grew conventional crops, allowing chemicals to dissipate.
The ministry had allowed some land to convert in weeks instead of years, Jiménez wrote. Valle Verde’s files showed plots changed sizes and locations, he wrote.
Fields lacked required vegetation barriers between organic and conventional crops, he wrote. Soil analyses and land-use records were missing. Pages had been mysteriously added to the record, he wrote.
Jimenez checked with suppliers of plastic sheets, which organic growers often use for weed control. He found that Valle Verde hadn’t bought enough plastic for its acreage.
“There are so many irregularities that it’s just unbelievable,” Jimenez said.
He also found that numbers didn’t balance at the Valle Verde subsidiary that shipped frozen pineapple chunks to U.S. grocery chains.
Jimenez examined records of 47 Valle Verde shipments exported to the United States and sold for $2.3 million during a one-year period. He concluded that shipping containers held an illegal mix of conventional and organic fruit.
Jimenez’s boss, Francisco Dall’Anese Alvarez, a reformer with a family history of fighting government corruption, had chosen Jimenez to investigate because he feared other officials were too cozy with Valle Verde.
Dall’Anese, director of the ministry’s Phytosanitary Service, acted on the findings in May 2016, suspending organic certification of Valle Verde’s processing plant, which sliced and froze pineapples for export.
Another USDA-accredited certifier, Germany’s Kiwa BCS Oko-Garantie GmbH, followed the ministry’s lead and also suspended the plant.
But then the case turned sideways. Dall’Anese left the government because, he says, he refused to sign false documents unrelated to the Valle Verde case.
With Dall’Anese gone, an agriculture ministry panel reversed the suspension of Valle Verde’s organic status. Kiwa also lifted its suspension.
The panel dismissed Jimenez’s investigation as biased, irresponsible and arbitrary.
Jimenez said he “was never called in to explain different aspects of the report, or how I’d reached conclusions.”
Valle Verde’s farm subsidiary had its certification renewed by Primus’ Costa Rica branch in December 2016.
Soon after earning those certification fees for Primus, Humberto Gonzalez Guerrero, the certifier’s Costa Rica director, jumped to the same position at Kiwa, taking the Valle Verde farm account with him.
Gonzalez said Kiwa and Primus have certified Valle Verde correctly.
USDA Drops The Pineapple
The USDA received hundreds of pages of Jimenez’s investigative findings. But public records show that instead of directly investigating, the agency left the matter to Primus and Kiwa.
USDA compliance officer Karin French launched what could have developed into a full-fledged investigation of the certifiers and Valle Verde.
But like others at the agency, French lacked investigative or law enforcement experience, according to her LinkedIn entry. Nothing in the case file indicates that she traveled to Costa Rica.
On Aug. 3 of this year, the USDA issued a case closure memo signed by Betsy Rakola, the department’s new compliance and enforcement director. Rakola’s extensive LinkedIn entry also lists no investigative or enforcement skills.
Her memo did not address Jimenez’s findings. It did note that “several additional complainants, who appear to be competitors” of Valle Verde had voiced concerns of fraud.
“However, these complainants were unable to provide any verifiable evidence of fraudulent activity by the certifier,” she wrote.
The agency’s failure to directly investigate either the certifiers or Valle Verde doesn’t surprise Richard Mathews, who served in senior USDA National Organic Program positions for a decade, ending in 2009.
Mathews says that the agency’s backlogged team of five compliance officers routinely depends on certifiers to investigate.
Mathews, now director of the Western Organic Dairy Producers Alliance, blames former National Organic Program director Miles McEvoy for the disarray.
McEvoy retired in October, not long after the USDA Inspector General said the agency allows imports to be sold as organic despite the food having been fumigated at U.S. borders with prohibited pesticides.