I guarantee you, any time a
product can be passed off as something more expensive,
it will be. Egg prices are very dynamic. They move up and down every
single day. An orange that's grown
conventionally and an orange that's grown organically. I think they're going to
have the same vitamins in them. Organic food is not
healthier or safer for you. Fraud happens more with more
expensive foods. Cheaper oil is added to the
more expensive oil, and the label still reads 100%
extra virgin olive oil. So you think this is olive
oil, right? Wrong. Well, maybe some of it is. But this is actually a
classic example of food fraud. The extra virgin olive oils
are being switched out with cheap ones and fraudulent
to sell something labeled as something else. Why is this fish being
mislabeled? Your parmesan cheese
products do not contain any parmesan cheese. There was no one brand that
stood out as completely safe. Wow, so we can't eat
anything. I guarantee you, any time a
product can be passed off as something more expensive,
it will be. It's that simple. Counterfeits, dilution,
substitution and mislabeling. Food fraud not
only harms consumers wallets, it puts their
health and safety at risk. We might not know the
overall impact of food fraud because so much of what
fraudsters do is hidden from us and has been for
centuries. Some estimates say food
fraud affects at least 1% of the global food industry at
a cost as high as $40 billion a year, according
to the Food and Drug Administration. Grocery Manufacturers of
America estimated that 10% of the commercially
available food in the United States is adulterated. That's 1 in 10. It means if you're not on
that eight item or less checkout line, you've got
something in your cart when you leave the supermarket
that's probably bogus. Here's how and why fake food
sits secretly in our kitchen cabinets. According to the FDA, food
fraud is considered economically motivated
adulteration or EMA. It's a monetary impact to
the consumer and to the food manufacturers. But it's
also a potential public safety, public health
impact. It robs us of nutrients and
can kill people and has done. Larry Olmstead researched
food fraud for years and published his book, Real
Food Fake Food, in 2016. As I worked on this book, my
definition of fake food became any time what you
buy is not what you think you're buying; doesn't
really matter whether it's legal or illegal. It's where you're being
tricked. You're buying something
that's not what you think it is. The worst offenders can
include seafood, meat, dairy, honey, alcohol,
spices. The fraud happens more with
more expensive foods. Totally makes sense, right? There's a higher margin. Take your extra virgin olive
oil as an example. Fraud usually occurs here
when a cheaper oil is added to the more expensive oil
and the label still reads 100% extra virgin olive
oil. That's food fraud. Olive oil has been
adulterated for thousands of years because it is of high
value and it is sought out. They might flavor it with
beta carotene and maybe color it with a little
chlorophyl to make it a little more green. And so
then you've got a lower quality, cheaper oil. So both of these olive oils
I got at the grocery store and both of them are the
store brand, but one cost way more than the other. This one had a label of
100% Mediterranean blend of extra virgin olive oil. So the olives were sourced
from a bunch of different European countries and it
said it was packed in Italy and there was no expiration
date. And when I purchased this
one, this one was a 100% California extra virgin
olive oil. First pressed, cold,
pressed, unfiltered, no artificial colors,
preservatives or flavors. And this one had an
expiration date. It said that these olives
were harvested in October/November 2022 and
that it would be good on your shelf until August
2024. And it was much more
expensive, roughly twice as much as this olive oil. And this one had way more
information about where this olive oil came from. Now let's look at the spice
market as another one that's vulnerable to fraud. Think of an expensive spice
like saffron. This tiny amount cost me
$20 at the store. Saffron can be bulked up
with some other material, like plant stems and sold
as the same, according to the FDA. Popular spices like basil
and chili powder from a range of different brands. Anything that's kind of
colored orange, brown and ground up can be passed off
as turmeric. It's the ultimate bait and
switch. And then there's fish. The FDA says seafood fraud
can occur when a less expensive species of fish
is substituted for a more expensive species. After all, it's kind of
hard to know what fish you're buying, right? If you're experienced chef
or fishmonger, you can look at like a red snapper
fillet and tell whether it's red snapper, but 99% of
consumers can't. Most of the fish we eat is
white fish. Every fillet looks pretty
much the same, which is why there's so much
substitution. The FDA is mandated by law to inspect
2% of the imported seafood, which is, I think, a very,
very low bar. In fact, the U.S. imports as much as 85% of
its fish. But federal fisheries
enforcement is serious business. Agents from NOAA
and U.S. Customs tear open a
container filled with frozen fish from Thailand. They're looking for fraud. First, it's important to
understand the matrix that food fraud lives in. There's intentional and
unintentional types of food risk. Unintentional risks
include food safety and quality, like accidental
foodborne illnesses. CDC estimates about 50
million people a year contract a foodborne
illness. Only 20%, 1 in 5 of those
can be identified. So there's 40 million
people a year getting sick from something they ate
that we don't know what it is. And a good guess would
be that fraud has something to do with that. Then there's intentional. That's where food fraud is
alongside food defense. The difference is fraud is
motivated by economic gain, and defense is motivated by
harm. If you have a ton of coffee
and you can turn that into 1.2 tons by adding some
cheap filler to it, you've just increased your profits
by 20%. And a lot of these products
pass through a lot of hands. They go from small growers
to big trucks to tankers to boats to processing plants. It's not necessarily like
this big company that's selling you coffee, that's
ripping you off. It can happen in a lot of
ways along the way. Even the FDA says it can't
estimate how often this fraud happens or its
economic impact. Over the last ten years,
the most common fraud committed is lying about an
animal's origin and dilution or substitution, both
ranking at 16% of incidents recorded. Dilution and
substitution are exactly what they sound like,
perhaps somewhere along the supply chain, the real
expensive process of refining something like
fresh olives is ignored. Maybe a little canola oil
is added instead. Then there's the removal of
value when an ingredient or a part of a food is
intentionally left out, taken out or substituted
altogether. And that substitute can be
a non-food substance. That's the 14% of the
recorded food fraud incidents using non-food
substances. The pandemic has given us a
chance to focus on supply chains and forced us to. For example, during the
pandemic, labeling fraud really spiked in 2021 to
21% of the types of fraud that were committed and
recorded. You know, if we knew all
about it, why hasn't it been solved? The key was we
weren't focusing on prevention. Food fraud
prevention, if we do it right, is boring. We're the fire marshal,
checking exits and smoke alarms, not catching the
bad guys. The U.S. has laws in place
to ensure food safety. That's part of what the FDA
does today. Basically, all food fraud,
all product fraud is illegal under one law or another
somehow. Before the FDA existed,
manufacturers could add basically whatever they
wanted into the food. Think of Upton Sinclair's
The Jungle. That book was published in
1906. That same year, food safety
regulation began with the Meat Inspection Act and the
Pure Food and Drugs Act, which outlawed adulterated
and misbranded food items. This ultimately led to the
creation of the FDA. Since then, laws have hit
the books to further food safety protocols like the
Food Safety Modernization Act signed into law in
2011. And then horsemeat hit. The fraud was on a grand
scale. Horsemeat was blended into
beef in the U.K., across Europe. And sold to unsuspecting
supermarkets for a period of eight months in 2012. And that was a great wake up
call. Some companies purposely
mislead on labels. Prosecuting the fraudsters
committing the crime can be tricky. After all, they're
purposely trying to avoid that detection. But
criminals are caught, like in 2016. The product labeled market
pantry 100% Parmesan contained cheaper Swiss and
cheddar cheese and an organic filler called
cellulose, which can be derived from wood pulp. Castle Cheese was caught
adding wood pulp and cheddar to its grated parmesan that
they sold as 100% Parmesan cheese. The FDA does allow fillers
like cellulose in cheese, but it can only make up 4%
of the total ingredients. The president of the company
got a $5,000 fine, 200 hours of community service and
three years of probation. For its part, the Food and
Drug Administration says its job is to make sure food
doesn't hurt you, not to police the labels. Fraud is tough for the
consumer in terms of food because it's difficult. They don't have a lab in
their kitchen. The Food Fraud Prevention
Think Tank has a five question survey consumers
can use when shopping for food. One: What type of
product is it? Be aware of products that
you put on you, in you, or plug in the wall. Two: Quality. Can you recognize the
difference between the products? If you can't
easily tell the difference, that makes you more
vulnerable to fraud. If I drink scotch, I
couldn't tell if it's a difference between a $50
bottle and a $5,000 bottle. So I know I could be
deceived at that point. Three: Supplier. Do you know the retailer or
the supplier, and do you trust them? So when you turn that box of
cereal or a bottle of juice over and read the back,
there's a lot of information there that's required by
law that's helpful to the consumer. And then question four: Are
you buying this item online? The supply chain can be
shrouded in more mystery when shopping online. So how did you find out
about this website? Is it reputable? It depends on how you find
that supplier. And finally, five: Complain. Okay, It's not a question,
but the Food Fraud Prevention Think Tank says
if the retailer is legit, they will want to know. The manufacturers can be the
victims as well. The FDA also relies on
consumers' reports. Some recent decades,
fraudsters have gotten more sophisticated in the
techniques they use to fake the food products. And that means that our
detection methods and our test methods and standards
have to be better at detecting fraud. That's why the U.S. Pharmacopeial Convention
provides a framework for organizations to detect its
vulnerabilities. We have put fraud mitigation
guidance, so it is a supply chain risk management tool
to really take a look at which ones are the more
risky products suspected to be adulterated. Sometimes it feels like this
is not that big of a deal, but the more fraudsters are
able to achieve, the more we end up paying in the end,
as consumers. These cases rarely result in
criminal penalties. If you want to be like a
drug dealer and import heroin and you get
arrested, you know, on a large scale, you're going
to go to jail. But if you can make $80
million importing adulterated honey, and then
you're going to get a slap on the wrist and some
fines, why wouldn't you do food instead of drugs if
there's no basically criminal downside to it? So as long as we don't take
it seriously, why should the perpetrators take it
seriously? What we want is the food
industry just to be focused on making food and not have
to worry about looking over our shoulder, checking
different suppliers. And that's going to impact
more food being produced, better food, safer food,
less expensive food. There's plenty of things
for us to worry about in the world today. And food fraud should not
be one of those. For Cal-Maine Foods, the
nation's largest egg producer, 2022 was a bit of
an eggstravaganza. What came first, the chicken
or the egg? Well, the egg came first in
this story. Cal-Maine Foods, the egg
company, shares are soaring this year, up 64%. While you paid $4.30 on
average in December 2022 for a dozen eggs compared to
$1.80 in 2021, Cal-Maine reported a nearly 32%
increase in revenue in 2022 from 2021. I think it's a testament to
the fact that they haven't had any outbreaks, how good
they've been at biosecurity in their facilities. This
is a very experienced, very deep management team that's
been in this industry for a long time. Eggs are an about $10
billion industry with nearly 13% growth annually in
profit from 2017 to 2022. But it's also a volatile
one that's sensitive to market changes or
environmental factors. And of course, it's not one
without controversy. Each bird is given less
space than the dimensions of an iPad on which to live
her entire life. And so they have to eat,
sleep, defecate all in the same area, and they're
denied virtually everything that's natural to them. Everyone tries to make
money, but it's a low margin, it's a very low
margin industry. There are 373 million laying
hens around the United States as of January 2023. After hens lay eggs at a
farm, they get graded by the United States Department of
Agriculture and put into cartons sold to retailers
and then purchased by you, the consumer. The egg industry has been a
relatively low margin, low return business. Given that the producers
are responsible for growing the hens, keeping them fed,
they're exposed to things like corn and soybean
costs. And so that's created a
pretty volatile margin structure and had
relatively low margins over time. More than 9 billion eggs
were produced in the United States in December 2022. More than half of the eggs
produced are typically table eggs, white eggs produced
by battery chickens. About 8% are brown, 19%
produced by cage free chickens, about 6% by
organic free range, and nearly 14% are hatching
eggs. Cal-Maine Foods, the only
public egg producer, holds nearly 17% of market share. Like some of the other
larger companies, it operates farms, processing
plants, hatcheries, feed mills, warehouses, offices
and other properties around the country. The second
largest producer is Rose Acre Farms with about 7%. Then there's Versova
Holdings and Hillandale Farms with just more than
5% each and Michael Foods with 3.5%. Eggs are a vertically
integrated business, so the egg producers control from
the time the chick is hatched through the end of
when it can no longer lay eggs. They control that
whole process. Once an egg is laid within
2 to 3 days, it's on the shelf at your grocery
store. Cal-Maine Foods,
headquartered in Ridgeland, Mississippi, was founded in
1957. It has one operating
segment, which is the production, grading,
packaging, marketing and distribution of shell eggs. Integrated operations
include hatching chicks, growing and maintaining
flocks of pullets, layers and breeders, manufacturing
feed and producing, processing, packaging and
distributing shell eggs. As of May 2022, the company
had more than 42 million layers or hens that lay
eggs and 11.5 million pullets and breeders. Egg prices are very dynamic. They move up and down every
single day. While Cal-Maine is probably
the best operator in its space and certainly has a
great management team, it's been a difficult stock
because it's just, it's so volatile and so cyclical. A volatile stock is driven
by several factors company performance being 1. In 2022, Cal-Maine revenue
was at its highest since 2016. After a steep drop in
2017, among other factors as a result of the avian flu
outbreak in 2015, revenue increased in 2018 before
beginning a steady decline through the height of the
pandemic. Between 2021 and 2022, revenue increased
from $1.3 to $1.8 billion, a 40% increase. Their market takers, right. They will take what the
market is dictating. This is Angel Rubio, a
senior analyst at Urner Barry, a market research
firm specializing in the wholesale food industry. Prices went up because of
what happened with avian influenza. So if your farm
wasn't affected by avian influenza, you're probably
going to do very well because the market is
dictating higher prices overall. Cal-Maine said in its annual
report that as of July 2022, no bird flu had been
detected at any of its facilities as a result of
the latest outbreak. Surging egg prices helped
drive Cal-maine stock up almost 50% in 2022, even as
the S&P 500 fell 19%. There's a massive wave of
bird flu that's taking over farms and wildlife centers
across the country. Millions and millions of
infected birds destroyed so far. 2022 was specifically an
outlier year. Probably this was the
highest price on record at the wholesale level and at
the consumer level as well. More than 58 million birds
have died since the beginning of 2022 as a
result of the deadliest outbreak of avian flu in
U.S. history. The flu is lethal
and kills 90% to 100% of chickens, often within 48
hours. As of January 2023, the
number of laying hens in the US is down 5% from the same
time in 2021, while the U.S . also faced an outbreak in
2015, this time it's different. In 2015 you had the outbreak
for a couple of months, but the outbreaks began after
Easter. You didn't have corn prices
at above $5. You didn't have the war in
Ukraine, you didn't have inflationary pressures. The economy was expanding. In 2022, it's still
expanding, but there were the prospects of a
potential recession. Components are very
different in 2022, in addition to the fact that
we have multiple outbreaks throughout the year. So it
hasn't even been a seasonal recovery overall. The U.S. has lost around 43
million egg laying hens, about ten or more percent
of the population due to the disease itself or
de-population since the outbreak began in February
2022. It's very significant when
for every 1% of egg layers lost, prices would move
about 6% to 7%, in some cases even 8%. But on average, it's about
6%. This time, for every 1%
layer that we lost, prices went up about 15%. So that's significant when
we're talking about supply shocks between 2022 and
2015. New regulations have gone
into effect, too. In 2016, Massachusetts
voted Question 3, also known as an act to prevent
cruelty to farm animals, into law. The strongest
farm animal protection law in the U.S. at the time. It made it illegal for
Massachusetts hens to be confined in such a way that
prevents the animal from lying down, standing up,
fully extending its limbs or turning around freely. The majority of hens on
industrial egg farms, they're confined to these
cages called battery cages. If you look at a sheet of
paper, they have less space than that on which to live
their entire life. In 2018, California voters
approved a similar law to the one in Massachusetts,
Proposition 12, the Farm Animal Confinement
Initiative. It requires that covered animals, including
egg laying hens, be housed in confinement systems that
comply with specific minimum standards for freedom of
movement, cage free design and minimum floor space. Both Question 3 and
Proposition 12 went into effect in January 2022. Those are the only two
states that require this, but there are moves by many
other states to eventually get to that. The Humane Society of the
United States led the campaigns to ban the use of
cages in 11 states. In Ohio, not all cages, but
battery cages. Eight of those states also
banned the sale of eggs from cage facilities. They have to get it from
farms that are cage free, which is driving the price
up. So it's a disruption
overall in the market and that's causing disruption
in prices, but not necessarily on
availability. But if you look at the
prices to the consumer, for instance, for cage free and
conventional eggs, that are spread between them, it's
the smallest it has been because they just need
those eggs and those states that mandate those
requirements are pulling the cage free eggs into those
markets, which is causing those prices to move up. To give time for producers
to modify their operations. These laws are expected to
go into effect in the next few years. The industry needs to
convert a lot of its existing capacity from
caged eggs to cage free eggs. And that's expensive
and requires a lot of time and effort. In fiscal 2021, Cal-Maine
announced its board of directors approved several
new capital projects estimated to cost more than
$100 million to expand the company's cage free egg
production capabilities. Cal-Maine said it plans to
fund these projects through available cash on hand
investments and operating cash flow. They are converting their
facilities to cage free because they know there are
companies that want to buy them and they know that
consumers want them as well. A 2022 poll shows that 80%
of all likely voters in the U.S. at least somewhat
support Proposition 12. Retailers have committed to
only selling cage free eggs as well, including Walmart,
which has said it will do so by 2025. The industry has an estimate
that, to convert from conventional to cage free,
it's roughly $45 a bird and that number is even stale
relative to kind of what's happened with costs in the
past few years. So call it closer to $50 or
$55 per bird. So, you know, on a base of
325 million hens, you're converting a big
percentage. You know, you're talking from an industry
perspective, like billions of dollars. Meanwhile, in California, a
state where Proposition 12 went into effect in 2022,
the wholesale price increase from 2020 is only $0.08 per
dozen. High feed prices have also
significantly affected margins as layers mostly
eat corn. Prices were already high
from the end of 2020. Once the war in Ukraine
hit, it exacerbated this problem by not letting
prices correct downward as we produce corn here in the
U.S. Because remember, these egg
laying facilities are in the corn belt because that's
where corn is. And it's a massive
ingredient for feed and it's a massive cost of
production of the overall industry. Oil prices,
energy prices will be impacted by that. You have
to be running the barns and they're energy intensive as
well. Macroeconomic indicators in
the case of of inflation, the same way. To put it simply, the
industry is volatile. Prices react to what's
happening in the world. The avian flu, inflation,
regulation changes, the war in Ukraine, tensions
between the U.S. and China, the coronavirus
pandemic, supply chain issues and the cost of
feed, labor, fuel and packaging all impact the
price of your egg sandwich and who's making the most
money off of your morning treat. In a statement to CNBC,
Cal-Maine Foods said, "Throughout our history,
we've worked to build a business model that can
deal effectively with the industry's inherent
volatility...We strive to create a 'Culture of
Sustainability' while creating value for
customers, shareholders, team members and
communities." In the next few years, the industry is
expected to experience 1.2% revenue growth due to
steady upticks in egg prices, per capita egg
consumption and demand from chicken egg production. Economic or environmental
factors could change the outlook. And there's, of
course, the question of how demand will shift based on
changes in regulations. To the extent that there are
now a bunch of conventional white eggs that are kind of
floating around the market, do those flood into other
states that aren't allowing conventional eggs and kind
of depress the pricing? I think it's something we
don't know yet at this point, but it's definitely
a risk that we're watching very closely. And with the avian flu
wiping out more than 58 million birds, everyone is
affected from the producer all the way to the
consumer. I think about my local
grocery store. Knowing what I know about
the wholesale market, being at that $5.50 plus number
that it was in December, they took egg prices up
some, but they didn't take it up to that full amount. So the grocers were actually
losing money on eggs. They're playing some catch
up on that now. But I think on the reverse,
they're going to try and restore those margins, at
least for a little bit on the way back down. So they won't take the
pricing down as as quickly as it went up. It's been an eggventful
couple of years, but experts aren't worried about the
industry's future. We have been in transition,
so we don't know what's going to be on the on the
other side. But it's it's not terrible. Right? It's going to be,
we're going to be just fine. The organic food industry is
a booming business. Certified organic products
typically have a higher price point and may even be
smaller in size or different in taste. But what exactly
does organic mean? Regulations vary from
country to country, but according to the USDA,
organic by itself isn't necessarily a health claim. It just means the food was
produced using organic methods. These methods
include a list of federal standards addressing things
like soil fertility, pest and weed control and animal
grazing practices. But most people aren't
actually aware of what it takes for a product to
receive the USDA organic seal. In 2014, brand
consultancy BFG surveyed 300 shoppers, 70% purchased
organic food, and only 20% could define organic. Despite a lack of
knowledge, demand for organic food is at a record
high among consumers, and it's only going up. U.S. organic sales surged
in 2020, jumping by 12.4% to $61.9 billion. With consumers being more
health conscious than ever, they're willing to pay more
for what they perceive as better, even if they're not
quite sure that it is. In 2018, organic food and
beverage items cost an average 24 cents more than
conventional food. Some shoppers are doubtful
of US organic food claims. Several investigations over
the years uncovering organic label fraud have
exacerbated consumer suspicion. The USDA's
National Organic Program, or NOP, has been stepping up
on investigations and enforcement, suspending or
revoking 370 operations in the U.S. in 2020 alone. But some say it's not
enough. On the fraud issue. They have not been the ones
that have been in the forefront. They're supposed
to be preventing fraud by the enforcement of the
rules. And time and time again,
the horse is long out of the barn before the National
Organic Program is even aware that there's a
problem. Despite efforts to reduce
fraud amid rising demand, many consumers still
question: Are organic foods safer? Are they more
nutritious? And are they worth the
price? Organic farming was first
introduced as a concept called humus farming in the
early 20th century in order to address soil erosion and
depletion. These practices included
composting, rotating crops and applying animal manure. During World War II, food
shortages accelerated agricultural advances by
improving mechanization, fertilization and
pesticides. Synthetic fertilizers were
affordably produced and machineries were quickly
replacing manual labor. The term "organic" was
coined in 1940 by Lord Northbourne in his book,
Look to the Land, where he talked about taking a
natural and ecological approach to farming. He drew inspiration from
Sir Albert Howard, whose decades of research led him
to the concept that using waste material was vital
for soil health. The Industrial Revolution
helped the farmer far more with a better plow and with
a tractor and an engine instead of a horse drawn. And then we moved to how do
we package and salvage and save this stuff for
longer, post-World War II? And oh, look at these
chemicals. They work to decimate a jungle. What could a small amount
of that do on a field, you know, that kind of thing.
So, and we saw how great these chemicals were. But then we realized
somewhere along the line, probably in the '60s, I'm
assuming, and into the '70s, that, hey, maybe we're
doing detriment to ourselves. By the 1970s, environmental
concerns increased and consumers began to demand
more sustainable produce. In response, Congress
passed the Organic Foods Production Act in 1990 to
develop a national standard for organic food and fiber
production. The final rules were
written and implemented in fall 2002. This regulation defines
organic agriculture as an ecological production
management system that promotes and enhances
biodiversity, biological cycles and soil biological
activity. Organic isn't a health
claim. It's simply a labeling term
that indicates the food has been grown following the
federal guidelines of the FDA. According to the USDA,
organic farming entails the use of manures, crop
rotations, biological control and emphasis on bio
diversity, the use of rotational grazing, a
reduction and elimination of synthetic pesticides and
fertilizers, and a focus on renewable resources. As for livestock and
poultry, the standards require that animals have
access to the outdoors year-round, fed 100%
organic feed and not administered antibiotics or
hormones. Consumers looking to shop
organic may look for the USDA seal of approval. So let's talk about the
different labeling categories. You can have a
100% organic product. So, for example, that
organic apple that you take off the shelf and eat, it's
100% organic. You can also have products
that are 95% or more organic composition, and a product
needs to have more than 95% in order to carry that USDA
seal. And so you might be talking
about, for example, a granola bar that has
different kinds of ingredients in it. If more than 95% of those
ingredients are organic, it can use the organic seal. There's also a made with
organic category. So, for example, macaroni
and cheese, maybe that the cheese or the macaroni or
some other component of a product is organic, but the
rest of the product is not. Multi-ingredient products
with less than 70% certified organic content cannot use
the organic seal or use the word organic on the front
of the food package. However, they can list
certified organic ingredients in the
ingredient list and the percentage of organic
ingredients. Consumer demand for organic
products is rising quickly, showing double digit growth
over the past decade in the U.S. as of February 2021,
organic products in the U.S . can be found in nearly
20,000 natural food stores and nearly 75% of
conventional grocery stores. And organic sales
account for 4% of total U.S . food sales. The booming organic market
in the U.S. can be attributed to a few
things, namely the declining price gap between organic
and conventional products. In 2018, organic food and
beverage items cost an average of 24 cents more
than conventional food. That was down from 27 cents
in 2014, a nearly 2% drop. Organic produce seems to be
getting cheaper for a number of reasons. For one, a
rising dependency on fossil resources is causing the
price of conventional foods to increase, while
government subsidies keep the prices artificially low
. And more private label
retailers are getting in on organic foods, creating a
downward pressure in the industry to reduce prices. There are tons of reasons
why organic food is more expensive in the first
place, but it all boils down to the fact that it costs
more to produce. It takes more money and
labor to adhere to the USDA's strict standards
regarding production, handling, labeling and
storing. Not to mention, demand beats
out supply. Farmers are just not that
interested in the organic standard. They see higher
land costs, higher labor costs, and so not too many
make the switch and that restricts the supply of
organic. And that's why the price is
so high. Over the past decade,
shoppers have become increasingly more mindful
of their health, and Covid-19 has accelerated
those trends. According to a 2020 survey,
54% of all consumers cared more about the
healthfulness of their food and beverage choices in
2020 than they did in 2010. Some health conscious
consumers gravitate toward organic over conventional
products due to concerns about highly processed
foods, artificial ingredients and the effects
of pesticides, hormones and antibiotics. According to a
study by Pew Research, 76% of adults surveyed bought
organic foods for their health value, followed by
environmental concerns at 33% and convenience at 22%. But there is conflicting
data about whether or not organic foods are healthier
or safer. Take, for instance,
pesticide residue. The consumption of
pesticide contaminated food is a major source of human
pesticide exposure. And according to a 2017
review in environmental health, our current levels
of exposure to pesticides can lead to adverse effects
on children's cognitive development in adults. Exposure to pesticides may
also lead to the development of Parkinson's disease,
fertility issues and cognitive decline. It also mentioned that
antibiotics used in conventional animal
production is a key driver of antibiotic resistance in
society. The average conventional
apple in the United States today contains about four
different pesticide residues. And science is
not at the stage where we can say with certainty what
daily exposures to four or five pesticides from food
is doing to our children. But there is a broad
consensus that it's probably not doing anything helpful. However, there is some data
that says otherwise. Organic does not mean that
the produce is grown without any pesticides. A few naturally occurring
pesticides are approved by the USDA. Research in 2005
at the University of California suggests that
the negative public perception of pesticides is
overblown and that the pesticide residue in both
organic and conventional crops are too low to have
any adverse effects on health. Maybe conventional food has
a very low exposure for pesticide residue and it's
not a problem. But maybe organic food has
an exposure level that's even lower. So it's not a
problem either. I conclude that both are
safe and you should be making your your food
choice on on the basis of something more substantial. While there's a lot of
discrepancy about whether organic is safer and
healthier long term, many agree that organic food
isn't better in terms of nutritional value. The Environmental Health
Review concluded that there was no significant
difference in nutrition between organic and
conventional crops. An orange that's grown
conventionally and an orange that's grown organically, I
think they're going to have the same vitamins in them,
I really do. I've been an orange grower
all my life and we haven't changed much from when dad
did it. Organic food is not
healthier or safer for you. What is organically grown
or conventionally grown, it's going to have the same
nutrient content. Now there are situations
where you may find an organic orange. They may
have 10 million more milligrams of, say, vitamin
C in it, theoretically. It means absolutely nothing
to you as far as your health goes because of the
conventional orange, let's say, has 95mg of vitamin C
in it. And let's say an
organically-grown orange may have 110mg or 105mg of
vitamin C. Well your body doesn't need
either one of them. It only needs about 35mg of
it. You don't need it anyway.
It's like driving down the road and you have a full
tank of gas and you see a gas station and you say,
Well, I'm going to pull in to get more gas. Well,
there's no point in it because your gas tank is
full. Some studies conclude that
there simply isn't enough strong evidence. Many people ask me, is
organic food more nutritious than conventional food? Obviously, that's a complex
question, and it varies between, say, animal
products like meat, milk and eggs and fruits and
vegetables or grains. But in general, for all
plant-based foods, organic food has between 20% and
25% higher levels of what's called antioxidants. Now, on the animal side of
agriculture, which is, you know, roughly half the
calories that the typical American consumes in a day,
the biggest differences with organic farming are in the
fatty acid profile in meat and eggs and milk and dairy
products. And these differences are
significant. At the height of the
pandemic, organic grains like rice and pasta were
flying off the shelves, mainly due to their long
shelf life. Harvesting and selling
organic grains is a big business. It demands a
higher price because it costs more to produce. To earn the national
organic seal, the plants cannot have been
genetically modified and they must be grown without
the help of unauthorized fertilizers, weedkillers or
pesticides. But who's verifying this? There are about 75
third-party agencies certified by the USDA to
inspect over 16,000 organic farms in the U.S. These private inspectors
perform annual audits that include questioning,
reviewing documents and examining records. But rarely does it mean
actually testing the soil or produce. Certifying agents
are only required to test 5% of their total operations
per year. This process largely relies
on the honor system. An unethical seller can pass
off cheaper conventional grown grain for the more
expensive organic kind and make a huge profit. And some are doing just
that. In 2017, a Washington Post
investigation revealed that non-organic soy and corn
labeled as organic was flooding the U.S. About 36 million pounds of
conventional soybeans imported from Ukraine and
Turkey were originally priced like regular
soybeans. But by the time they
reached California, they had been labeled as organic,
boosting their value by $4 million. 61 year old Randy
Constance was sentenced to ten years in prison in 2019
for the largest organic fraud case in U.S. history. However, there is a
broad consensus that imported produce is more
likely to be fraudulent than domestic grown crops. The organic fraud in grain
started because of the high demand for especially eggs
and meat and the fact that domestic production could
not keep up with the demand, they started
looking overseas and the first place that they went
that had open holes was Ukraine. And the Black Sea
region has continually been a problematic area because
of lax oversight. The rapid growth of the
organic food market, higher potential for fraud and
increased funding, has allowed the NLP to
significantly increase its enforcement staff over the
past year. In February 2020, the NLP
launched an online complaint portal to make it easier
for consumers to file complaints. There were 676
operations in 45 countries in 2020 that were suspended
or revoked, which is lower than the 722 suspended or
revoked operations in 2019. John Bobbe, former
executive director of OFARM, says they could be doing
more. If the USDA or NLP comes
across a fraudulent shipment, they have no
authority to stop it. They were given a clean
slate with money to draft new rules with stronger
enforcement. They were given the
authority. So what did they do? They spent the money on
the low fruit, the easy stuff, upgrading their
organic integrity database. We have caught bad guys both
domestically in the United States and overseas. So as an example, recently
we worked closely with Customs and Border
Protection, which is the federal agency that
protects imports to block incoming shipment of
cooking oil, of oil that was shipped by a suspended
operation. And so that's an example of
how we have blocked fraud coming into the United
States. And there have been some
very public stories of organic fraud where people
in the United States have paid fines or gone to jail
by defrauding the American public. Again, our job is
to make sure organic is a choice that can be trusted
by consumers across the country. Despite a lack of
significant data, experts say the organic food
industry is here to stay. The overall consensus from
farmers and experts is to put less focus on the USDA
organic seal and instead eat more fruits and veggies
from your local farmer. The problem isn't the food
in the marketplace. It's the fact that not
enough Americans purchase fresh fruits and
vegetables. As I've said, we only consume one tenth the
fresh fruits and vegetables that we should be consuming
for dietary health. Do I think everybody should
purchase organic over conventional? I think
everybody should eat fruit and vegetables from their
backyard, meaning the farm that's closest to you.
Support your local farmers, eat as much as you can
locally, and then enjoy what you want globally.
