Costa Rican produce association accuses pineapple exporter of organic fraud
Update: Since this article was published, we have been notified that it was only the organic certification of one of the Grupo Valle Verde companies that was suspended. Humberto Gonzalez has also clarified the nature of the CNNAO and has denied allegations made against him. The story below has been amended accordingly.
Members of Costa Rica's pineapple industry have been at odds with each other in a long-running dispute over alleged organic fraud, with representatives of a produce association accusing an exporter of deliberately mislabeling its products.
The National Chamber of Organic Agriculture (Canagro) claims San Carlos-based Congelados y Jugos del Valle Verde S. A. has sold frozen pineapple labeled as organic in the U.S. when it is actually conventional.
An investigation of Grupo Valle Verde - consisting of Congelados y Jugos del Valle Verde, Del Valle Verde Corp, and LyL Proyecto MMV - by Costa Rica's State Phytosanitary Service (SFE) found irregularities at the company and led to a suspension of Congelados’ organic operator's certificate in June 2016. The restriction was lifted in December.
However, Canagro representatives claim there were "serious inconsistencies" in the resolution that lifted the suspension, and allege the Ministry of Agriculture and Livestock (MAG) is currently opening a fresh investigation into the companies.
They also allege the companies' actions damage the international reputation of Costa Rica's entire organic produce industry and must be denounced.
A representative of Congelados y Jugos del Valle Verde S. A. and its affiliates has denied any wrongdoing and alleges the complaints against the group are motivated by economic interests.
Going back a step
Speaking to Fresh Fruit Portal, Canagro vice president Olman Briceño said the dispute arose after a Costa Rican delegation met with representatives of the U.S. National Organic Program (NOP) in October 2015, amid proposals to amend the list of allowed substances.
He said Costa Rican organic growers then decided to establish Canagro to have an organization representing the sector’s interests. In total, its members covered 95% of the country’s pineapple production, according to the entity’s executive director Oscar Salas Porras.
Documents from Costa Rica’s National Registry show the inscription process for the pineapple association was made in March 2016.
Four months later in July 2016, Ronald Segura, the owner of Del Valle Verde’s parent company Costa de Oro, submitted paperwork to the Registry to establish a private company with a similar name – Centro de Acopio Nal de Agricultores Organicos Canagro.
Segura told us he had committed no wrongdoing as the association Canagro was not legally established until 2017.
However, Briceño and Salas assert the process to establish a national association takes months whereas it can be a matter of days for a private enterprise.
While forming the organization, Briceño and Salas claim they realized there were "unexpected" volumes of organic pineapples from Costa Rica in the international market, alleging they could be traced back to Grupo Valle Verde.
"Costa Rica’s a very small country, so everybody knows each other. The farmers started looking at the unexpected volumes coming out of Costa Rica and started asking 'Where is all this coming from?' So we followed the tracks," said Briceño, who is also the business development manager at tropical fruit exporter La Paz.
He also claims the companies in question had never been involved in organic production before they started selling organic products suspiciously quickly.
"Everybody knew" Grupo Valle Verde had always been a producer of conventional pineapple, he alleges. But "suddenly" some 100 hectares had been certified.
"From where? Nobody knows," he says.
"Everything like this was duly documented by the Ministry of Agriculture."
Initial investigation and suspension
A complaint lodged by Canagro led to an investigation of the Grupo Valle Verde by the SFE, led by the organization's then-executive director Francisco Dall'Anese. It is worth noting documents from Costa Rica's Supreme Court mention unsuccessful efforts made by another Del Valle Verde executive, Luis Barrantes, to block the investigation.
In the April report, which was seen by Fresh Fruit Portal, the author highlights numerous issues regarding the way the organic certification was granted and how farms were managed.
On a side note, Segura sent us a copy of a November 2016 letter addressed to MAG signed by heads of another organic organization the National Commission for Organic Agricultural Activity (CNNAO), complaining that Briceño had allegedly been attending high-level meetings as part of the organization despite not being a member.
Briceño, however, denies this, and claims that Humberto Gonzalez, one of the signatories on that letter, has been involved with auditor Primus Labs and was allegedly involved in Grupo Valle Verde’s certification process.
González has since contacted us denying any wrongdoing or involvement in the case.
Grupo Valle Verde general manager Andrés Di Palma denies the SFE report is accurate, saying the organic farmland had been certified by the SFE's Accreditation and Registry of Organic Agriculture (ARAO).
"This gentleman, Francisco Dall'Anese, who I have tremendous respect for, submitted a report...and provides evidence for something he has no knowledge about," he said, adding the decision to suspend the organic certification "had no basis" and "was never objective".
In a letter from Segura's lawyers to the United States Department of Agriculture (USDA), they criticize the "apparent attempt by competitors of Costa de Oro, aided by certain Costa Rican government officials, to sabotage the business relations and organic certifications" of their client and the Valle Verde companies.
They add that "while the efforts of these conspirators initially resulted in the suspension", a "detailed investigation" by MAG concluded the initial report that led to the restriction was "not supported by evidence".
Di Palma also claims the volumes of organic pineapple sold by the companies in late 2015 originated almost entirely from production land the company had recently purchased, and on which crops had not been previously grown.
In addition, he claims the amount of organic pineapple sold on the international market during that period was a handful of containers a month - "nothing extreme".
"A lot of what was harvested, practically everything that was harvested at the beginning, was from these virgin lands. In fact the transitional lands weren't under production until this year - they weren't producing in 2015," he said.
Di Palma admits a container of frozen pineapple was shipped to the U.S. market while the suspension was in place from June to December last year, but claims only sales to the domestic and European markets were prohibited under Costa Rican law and the restriction did not apply to the U.S.
He also claims he was never officially informed of the report's findings and was not given the required 90 days to remedy any issues before receiving a suspension.
Canagro representatives disagree the companies were still legally able to sell organic pineapple in the U.S., and allege the number of containers exported during that period was far higher.
A resolution from MAG later lifted the suspension in December 2016 - controversially for many - but Salas and Briceño claim there were serious errors leading to that decision.
"Having evaluated [the documents behind the resolution], we have arrived at the conclusion that there are serious inconsistencies and nullities in these documents, which is why the Association is now taking necessary measures to institute the corresponding legal processes, with the effect of declaring these nullities and also securing the administrative, civil and penal liabilities of the case," Salas said in a statement.
He added Canagro heads had met with Minister of Agriculture Luis Felipe Arauz Cavallini and Vice Minister of Agriculture Ivannia Quesada Villalobos on Jan. 5, 2017. In this meeting, he says he was informed the SFE had conducted a "very deep, detailed and well-documented initial investigation into the apparent irregularities in the organic operation of the companies of Grupo Valle Verde."
"What we were told by the Minister and Vice Minister is that as a result of that preliminary investigation a new investigative administration procedure against these companies will be opened (or could already be open)," he said.
Di Palma claims he is unaware of any such investigation.
At the time of writing, the minister had not replied to request for comment.
A matter of competition?
Di Palma also alleges the initial complaint was made to the SFE by Canagro members in an effort to further their own economic and business interests.
"Canagro is made up of members who are our competition," he said, questioning why Grupo Valle Verde was allegedly never invited to join.
"It seems that this is more to do with private interest than for the good of organic agriculture in the country."
Briceño, however, strongly denies that accusation, saying "it's just not fair for legitimate organic farmers and obviously for our customers outside of the country."
"We are happy to share what’s being done and how there are situations that have been handled by certifiers that are not aligned with the essence and principles of organic agriculture," he said.
"If we don’t address these concerns of our stakeholders in the United States, our whole organic agriculture program would be jeopardized," he said.