How will USDA’s organic-regulation changes affect the food and nutraceutical industries?

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The United States Department of Agriculture’s Strengthening Organic Enforcement (SOE) rule took effect in January 2023. This new rule strengthens the oversight and enforcement of organic food and organic products, with a variety of new obligations for suppliers and brands.

The crackdown is necessary in the face of today’s supply landscape, the agency states. “Organic supply chains have become increasingly complex, reducing transparency in the market and leading to documented cases of organic fraud,” the agency advises.¹

According to USDA, the SOE rule will strengthen oversight of organic producers, reduce fraud, and improve USDA’s enforcement mechanisms.¹ The SOE rule applies to organic inspectors, producers, processors, USDA-accredited certifying agents, and brokers, traders, exporters, and importers who lack organic certification. Here’s what you need to know about how the SOE rule could affect you.

SOE Closes Supply Chain Loopholes

One of the most significant changes the new rule creates will affect organic supply chains. Liz Figueredo, quality and regulatory lead at Quality Assurance International (San Diego, CA), says that first and foremost, the new SOE rule closes supply chain loopholes in previous regulations. The new rule requires organic certification for all parts of the supply chain, including handlers and suppliers who were previously exempt.

“This means that certifiers can no longer depend on documentation from uncertified handlers, which was often lacking, to verify the organic status of products,” Figueredo says. “The rule also includes fraud-reduction techniques, such as requiring an Import Certificate for any organic ingredients or products imported into the United States, which provides the total volume or weight of the imported products.”

The SOE rule also creates a new section called Organic Food Fraud Prevention, designed to address supply chain vulnerability and to create new mitigation measures. Figueredo says the rule clarifies how calculations must be done, specifying that added water and salt at formulation must be removed or excluded, while water and salt in an ingredient used in a certified product cannot be excluded.

SOE Protects the Integrity of the Organic Label

Figueredo says the SOE rule was implemented to address concerns around the integrity of the USDA Organic certification label. First and foremost, the rule was created to target fraud and contamination in the supply chain.

“Previously, many parts of the supply chain, including brokers, traders, transporters, and storage facilities, were exempt from certification,” Figueredo explains. “This meant that certifiers had to rely on documentation from uncertified handlers to verify the organic status of products, which could be lacking or fraudulent.”

The new SOE rule requires all parts of the supply chain to be certified, which closes gaps where fraud or contamination could occur. The rule also improves the accuracy of organic labeling, providing consumers with more confidence in the organic label.

“Most parts of the supply chain will need certification,” Figueredo notes. “If we find that clients continue using uncertified entities that are no longer exempt, they will receive noncompliances and will have to quickly find new suppliers, which is not always easy to do.”

Businesses Have a Grace Period to Comply

The new rule has already taken effect, but existing businesses have until March 19, 2024, to bring their operations into compliance with SOE. Figueredo says that during the implementation period, operators should evaluate their procedures and communicate with their supply chains to ensure all elements of the supply chain comply with all of the SOE requirements by March 19, 2024.

“To become compliant with the new rule, businesses first need to read the full rule available at the National Organic Program, which includes a basic impact plan with first steps for affected organizations,” Figueredo says. “QAI also offers a free, interactive online course with more information about the certification process.”

While there is a grace period for existing companies, Figueredo notes that companies must still act quickly to ensure they are in compliance by the deadline. The new rule has ramifications across all parts of the supply chain, with new recordkeeping requirements and demands for certification.

“If you are currently certified, it is imperative that you assess your supply chain and identify any uncertified handlers involved in the manufacture and distribution of your product,” Figueredo says. “These uncertified handlers have less than one year to obtain certification. In addition, currently certified operations will need to update their organic system plan to include a fraud-prevention plan and possibly update the information contained on non-retail labels.”

Furthermore, the Applicability and Exemptions from Certification requirements have changed; nearly all entities now require certification. QAI offers an interactive online decision tree tool that can help businesses determine if they require organic certification under the new SOE rule.

SOE Provides a Level Playing Field

The SOE rule may create challenges during implementation, but it creates a critical opportunity for companies in the food space because it levels the playing field for all organic producers and handlers. Figueredo says the new SOE rule ensures that all companies in the organic sector are held to the same standards and that there is no unfair advantage for those who skirt the rules.

“Closing gaps in the current organic regulations, and making consistent certification practices to prevent fraud, will increase consumer trust in organic products,” Figueredo says. “Enhancing the transparency and traceability of organic products strengthens the integrity of the organic label.”

Reference

1. USDA Agricultural Marketing Service. Strengthening Organic Enforcement (SOE) Final Rule. https://www.ams.usda.gov/sites/default/files/media/SOE-FR-Fact-Sheet.pdf