SOE Organic Fraud Prevention – What Every Business Needs To Know

As the United States Department of Agriculture (USDA) Strengthening Organic Enforcement (SOE) final rule’s implementation deadline of March 19, 2024, quickly approaches, companies are making sure their organic operations are compliant with the new requirements. Grounded in the need to prevent fraud along the organic supply chain, the SOE final rule will help bolster consumer trust in the USDA National Organic Program (NOP) Organic Seal. That being said, ongoing consumer trust in the USDA Organic Seal depends greatly on organic operators doing their best to identify, eradicate, and prevent fraud from happening at every step along the supply chain.

To do so, the mandatory drafting and coordinating of an organic system plan (OSP) — which must also include an Organic Fraud Prevention Plan (OFPP) — stand to be the most significant changes coming from the SOE. In its Organic Fraud Prevention Guide, the Organic Trade Association (OTA) writes, “Recent activities and USDA investigations have revealed products fraudulently labeled as organic and gaps in the complex organic supply chain, specifically as it relates to organic imports. Compromised supply chains due to fraud can erode consumer trust in the integrity of the organic brand. Strong action is needed to improve the effectiveness of controls throughout the organic product supply chain,” (see page 2 of OTA’s Organic Fraud Prevention Guide).

This increased focus on fraud prevention will significantly impact how the entire organic sector and associated supply chains function. Below SCS walks through the major components and rationale behind the specifications of the new OFPP requirements and helps get your company started with relevant resources.

How is organic product fraud defined?

The OTA defines organic product fraud as an “intentional, misleading or deceptive action carried out for illicit financial gain.” Examples can include “adulteration, substitution, falsified records and the deliberate mislabeling of goods, as well as false statements made on applications, organic system plans, and during inspections,” explains OTA. Among other SOE considerations, an organic operator will be expected not only to be aware of opportunities of fraud along the organic supply chain both before and after its individual organization’s involvement, but also to develop a system to document and prevent these instances of fraud through their OSP’s organic fraud prevention plan.

Therefore, it’s essential for each company to know and understand its products and any associated risks. Such risks might include relevant transaction points along the supply chain, the geographic history of each product, the economic status of each supplier or service provider, and the general history of the product and all suppliers, shippers, brokers, and distributors. Knowing this information for all suppliers will be critical as will understanding the precise verification measures and any possible gaps along the way.

How does the OSP work under the SOE final rule?

An OSP — and specifically the mandatory OFPP component — mobilize several important features of the SOE final rule. One of the functions of the OSP is to describe the monitoring practices and procedures used to verify that suppliers within a certified organic operation’s supply chain are appropriately certified to the activities, scope, and complexity of the operation, and confirms the status of agricultural products received by the operations. The OFPP functions to detect and prevent fraud along an operation’s entire organic supply chain.

It’s important to note that the operation itself is responsible for crafting and implementing its own OFPP as part of its larger OSP.

What if my company doesn’t have an OFPP?

An organic system plan and accompanying organic fraud prevention plan are mandatory under the new SOE rule. With the March 19 deadline approaching for all organic operations to be compliant, companies will want to take immediate action to meet these new requirements.

SCS has developed a form that organizations may use as an Organic Fraud Prevention Plan. Once completed, the form can be submitted along with any relevant addenda or attachments to function as a comparable OFPP.

Supply Chain & Critical Control Points (CCP)

Any organic operation will want to begin their OFPP by diagramming its supply chain and identifying critical control points (CCP) for each significantly different organic supplier along the way. A CCP refers to a specific stage in a process or supply chain where control measures are necessary to prevent, eliminate, or reduce risk while ensuring the integrity of a product or supply chain is maintained.

Organizations with existing flowcharts, diagrams, maps, or other means of illustrating their supply chain and these CCPs can include such documentation as an addendum to their OFPP, making adaptations as necessary to specifically identify CCPs for organic fraud.

Operations diagramming their supply chain for the first time should identify all incoming ingredients, products, and services representing the operation’s entire supply chain. This information may include specific ingredient groups, certification status of each entity within the supply chain, the location of each supplier, details of transportation and storage events, as well as all other handling activities. Above all, an operation must identify and highlight the CCP throughout their supply chain.

Vulnerability Assessment

Another essential component of an operation’s organic fraud prevention plan is the vulnerability assessment. Recognized as a systemic evaluation that identifies and analyzes weakness or susceptibilities within an organic system, the vulnerability assessment allows operations to bring forward their knowledge of potential risks and weak spots throughout their supply chain. The assessment helps an operation to understand these risks and clarify any relevant events or transactions that could compromise the organic integrity of its products. Importantly, the vulnerability assessment also allows an operation to develop viable strategies to prevent and mitigate risk of fraud for each CCP identified during their supply chain evaluation and diagramming exercise. The vulnerability assessment must include an explanation of the operation’s process to perform a vulnerability assessment, including actions taken and factors considered.

Components of the vulnerability assessment can be further divided into two distinct categories:

• Product Assessment and Supply Chain Factors
• Internal Company Vulnerability Factors

The vulnerability assessment should consider where the pressure, opportunity, and rationale for fraud exist, both outside and within the organization. For example, when a supplier or an employee has a reason for committing fraud, the opportunity to do so without being caught, and can justify their behavior, the likelihood of fraud increases.

Additional Information to Include in an OFPP

Operations developing their OFPP will also need to include an explanation of their supply chain verification program, an explanation of their training and reporting protocols, and a clear representation of how the OFPP is being measured, monitored, and continually improved.

Where do I go to learn more about SOE?

SCS recommends starting with the full text of the final rule, the National Organic Program’s website, the Organic Trade Association’s (OTA) SOE Fact Sheet, and the Agricultural Marketing Service’s (AMS) SOE Fact Sheet. Also helpful is the USDA’s side-by-side comparison of the original organic regulation language and the new SOE. Organizations with questions or concerns about the implementation deadline of March 19, 2024, or about certification to the USDA Organic standard, should reach out directly to SCS Global Services as soon as possible.

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For more information, please contact: 
Ned Halaby 
Director of Sales – Product Claims 
+1-510-993-0235