Costa Rican farmer Jose “Pepe” Castro Otarola is certified to grow organic pineapples under the U.S. Department of Agriculture seal. Castro says that managers of a fruit processing company exaggerated quantities they bought from him to make their U.S.-bound shipments appear organic, an accusation the processor denies.
Pital, Costa Rica—Plenty of people knew that the numbers didn’t add up in pineapple fields here that stretch like green carpets beneath brooding volcanoes.
They knew it in Washington, D.C., where the head of the U.S. Department of Agriculture’s National Organic Program saw Costa Rica was shipping more organic pineapples than it was certified to grow.
They knew it in Pital, hub of the world’s biggest pineapple exporter.
Costa Rica’s surplus indicated that someone was mislabeling fruit produced less expensively with chemicals forbidden for organic products—thereby cheating U.S. consumers, who pay high premiums when trusting the USDA organic seal.
A Costa Rican government investigator assembled 1,500 pages of evidence. He found that PrimusLabs, a USDA-accredited certifier, improperly approved Costa Rica’s Del Valle Verde Corp. as a grower of organic pineapples.
In Pital, neighboring organic farmers felt vindicated. They believed they had further examples of how the pineapple company had gamed the USDA. U.S. importers, hurt by competition they considered unfair, expected strong action by regulators.
But they got nothing of the kind. Instead, a NerdWallet investigation found, the USDA punted — kicking a gaping hole in the credibility of its organics seal.
The USDA closed the case last summer without addressing the extensive Costa Rican investigation.
Not only did the USDA allow farming company Valle Verde to choose and pay Primus for organic certification—a conflict of interest enabled by federal rules—but the agency trusted the accused certifier to declare the grower innocent.
“It’s a horrible story,” said Alexis Baden-Mayer, political director of the Organic Consumers Association. “This information was handed to the National Organic Program on a silver platter, and they still don’t take the enforcement actions that are permitted under the law.”
If the USDA won’t act when presented with stark evidence of fraud, critics ask, how can consumers rely on the agency to police any of the annual $43 billion in U.S. organically certified food?
The answer is that the system can’t be trusted, NerdWallet found.
USDA Appoints Certification Gatekeepers
The National Organic Program, a USDA division with a $9 million budget, sets standards for labeling and accredits the agency’s 80 certifiers worldwide. Many certifiers have solid records. Growers, processors and handlers they approve sell legitimately organic food under the USDA seal.
But the system is ripe for abuse.
The USDA allows growers and processors to choose their own certifiers from its accredited list. The certifiers then get paid by those producers, even getting percentage of sales, a financial incentive that creates a conflict of interest.
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.
NerdWallet bought 12 Costa Verde-brand fresh pineapples in Oregon and California, and a bag of Valle Verde frozen chunks in Texas, for testing by a USDA-compliant lab. The tests detected no prohibited chemicals.
Pineapple farmers say the results don’t prove the absence of chemicals because they are hard to detect if applied at the start of the growing period, when their effect would be greatest.
Agricultural engineer Jean-Marc Caminade, pineapple sales manager for global fruit conglomerate Compagnie Fruitiere Paris, says he began buying organic-labeled pineapple from Valle Verde in 2015.
But he says that he stopped buying after the company repeatedly failed to supply government inspection forms to prove each shipment was organic.
Blood, Sweat And Organics
Caminade recently visited what he considers an authentic organic farm, Valle del Tarso, which sits northwest of Pital. Here, farmhands live and breathe organics.
Production manager Isaac Bustos Boza stresses prevention, taking extraordinary measures to safeguard his MD2s, organic versions of the Gold Extra Sweet variety of pineapple revered worldwide.
“Once you have a disease, it’s explosive. There’s no way you’re going to control it in 70,000 plants,” says Bustos, an agronomist.
Instead of applying a chemical to kill worms, Valle del Tarso uses a natural product from the Australian neem tree. The farm makes natural insecticides from chili pepper and tea. It ferments organic fertilizers from pineapple waste.
The farm is the kind of enterprise that Mark Kastel, co-founder of the nonprofit watchdog Cornucopia Institute, cites when urging skeptics not to write off all organics as bogus.
“If you just paint this as being a corrupt system,” Kastel said, “you’re throwing literally thousands of families under the bus.”
Bogus exports are undercutting the legitimate industry so much that Compania Frutera La Paz, a big Pital-area fruit processor, decided in November to cut its losses by selling frozen organic pineapples as conventional.
La Paz managers say the company took a $100,000 hit.
Police Close In
In recent weeks, Costa Rican television reporters have converged on pineapple fields, questioning more farmers about Valle Verde.
Amid the publicity, owner Barrantes may be ready to walk away. An agriculture ministry official says the company is withdrawing some farms from organic status.
A ministry official inspecting a neighboring farm recently reported a telltale odor he suspected was from an organics-prohibited pesticide applied to a Valle Verde organic field. The ministry is investigating.
On Dec. 5, the ministry disclosed that Costa Rica’s national police had seized documents concerning the agency’s decision to lift Valle Verde’s suspension as an organic processor. A week later, company competitors challenged that reversal in a lawsuit that accuses officials of ignoring evidence and railroading Jimenez, the inspector.
After two turbulent years, the Valle Verde pineapple saga is undergoing a plot twist. But the word around Pital is that more growers are lining up to play the organic game.
And Pital isn’t the only place that stinks.
NerdWallet investigative reporter Alex Richards contributed to this article.
Photo of Jose “Pepe” Castro Otarola by Richard Read.
The article The Dirt on ‘Organic’ Food: You May Be Paying for Fakes originally appeared on NerdWallet.