US Organic Fraud Protection Program Launched

IOWA CITY, Iowa – In a move designed to stop fraud in organics, the powerful National Cooperative Grocers Association (NCGA) announced the creation of the organic industry's first system-wide, retailer-based organic fraud detection and prevention program.

The Iowa-based group is partnering with Hanover Co-op Food Stores, PCC Natural Markets and Unified Grocers on a pilot program. They're exploring how to implement a fraud protection plan.

"The organic market has grown, and so has the temptation for organic fraud," said Robynn Shrader, chief executive officer for the NCGA. "This may be the result of legitimate suppliers struggling to satisfy the needs of their customers or of other parties becoming aware of the opportunity for fraudulent financial gain. Our program will not change how organic products are certified. Rather, we're seeking to add a very critical safety checkpoint in the supply chain that will empower retailers and provide peace of mind for organic customers. Safety measures our pilot program will explore can include elements such as unannounced visits to suppliers and residue testing on sample organic products," said Ken Commins, executive director of IOAS' U.S. offices. "The idea is that such a program would be strong and effective without creating bureaucracy or incurring significant costs."

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The National Cooperative Grocers Association (NCGA), founded in 1999, is a business services cooperative for consumer-owned food co-ops located throughout the United States. NCGA is owned by 110 food co-ops operating more than 130 stores in 32 states with combined annual sales of over $920 million.  As part of this initiative, NCGA has contracted with the International Organic Accreditation Service (IOAS) to determine appropriate methods retailers could undertake to limit the incidence of fraudulently traded organic products and to increase the chances of early detection when it takes place within the retail supply chain.

IOAS is a nonprofit organization, based in the U.S. with offices worldwide, which undertakes accreditation of organic certification bodies throughout the world. It is a recognized expert in the field of conformity assessment in the organic sector.

Also participating and organizing in the pilot study are NCGA members PCC Natural Markets, a Seattle-based chain of eight natural food co-ops, and Hanover Co-op Food Stores, which operates two co-ops in Hanover, NH. Unified Grocers is a multiple retail-owned grocery cooperative providing food and services to independent grocers in the Western U.S.

IOAS will conduct testing measures with NCGA grocers and suppliers over the coming months. Based on the pilot's findings, NCGA and IOAS plan to develop a recommended retailer-based fraud prevention program, offering it to not only NCGA's members but all organic retailers nationwide and throughout the world as early as mid-2008.

To achieve these goals, the pilot study will aim to:

• Identify the most suitable auditing criteria to detect fraud
• Identify the party or parties most suitable to implement these measures
• Establish the nature of a system to oversee and ensure implementation at all levels
• Establish the costs of implementation and determine which parties incur the costs
• Determine how the program might allow for all retailers to participate
• Identify any additional needs to ensure optimum fraud protection within the retail sector

"Food co-ops have been leaders in the organic industry for decades; through education as well as providing shoppers with great-tasting organic food," said Shrader. "We value our consumer-owner's trust and will voluntarily put added measures in place to be sure we are providing the goods they believe they are buying."

The National Cooperative Grocers Association (NCGA), founded in 1999, is a business services cooperative for consumer-owned food co-ops located throughout the United States. NCGA is owned by 110 food co-ops operating more than 130 stores in 32 states with combined annual sales of over $920 million. NCGA helps unify natural food co-ops in order to optimize operational and marketing resources, strengthen purchasing power, and ultimately offer more value to natural food co-op shoppers everywhere. For a map of co-op member locations, visit www.ncga.coop/member-stores.