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Major Organic Fertilizer Fraud

For up to seven years, California Liquid Fertilizer sold what seemed to be an organic farmer's dream, brewed from fish and chicken feathers.

The company's fertilizer was effective, inexpensive and approved by organic regulators. By 2006, it held as much as a third of the market in California.

But a state investigation caught the Salinas-area company spiking its product with ammonium sulfate, a synthetic fertilizer banned from organic farms.

As a result, some of California's 2006 harvest of organic fruits, nuts and vegetables - including crops from giants like Earthbound Farm - wasn't really organic.

According to documents obtained by The Bee through a Public Records Act request, California Department of Food and Agriculture officials were notified of the problem in June 2004 but didn't complete their investigation and order the company to remove its product from the organic market until January 2007.

State officials knew some of California's largest organic farms had been using the fertilizer, the documents show, but they kept their findings confidential until nearly a year and a half after it was removed from the market. No farms lost their organic certification.

The nonprofit California Certified Organic Farmers, which certifies about 80 percent of the state's organic acreage, decided not to penalize farms that had used the product on the grounds that farmers did not know they were using an unapproved chemical.

The state could have Advertisement pursued harsher penalties against California Liquid Fertilizer, including violation of the California's organic product law, which carries fines of up to $5,000, said Agriculture Department spokesman Steve Lyle. It also could have referred the case to the attorney general's office for civil action as an unfair business practice.

"We did not pursue those courses of action because our priority was to remove the product from the market," Lyle said. "More process would have delayed that." The investigation took as long as it did, he said, because the case was complex.

The trouble has continued. In November 2007, the distributor of another organic liquid fertilizer, representing about 5 percent of the market, pulled its product in the middle of another state investigation. Rumors in the industry point to another major disclosure as soon as this month.

Not a safety risk

Synthetic fertilizers don't present food safety risks, but the organic movement has always opposed them because they take a great deal of energy to produce, decrease natural soil fertility and can pollute water.

Above all, the California Liquid Fertilizer case shows how much the organic regulatory system depends on trust.

Organic farming started with small operations that rejected modern agriculture's huge, chemical-dependent fields in favor of diversified plots fertilized with old-fashioned compost, manure and cover crops. Today, organic farms still do without synthetic fertilizers and pesticides. But much else is radically different.

Sales of organic products have soared from $5 billion nationwide a decade ago to $24 billion today, according to the Organic Trade Association. California accounts for nearly 60 percent of the U.S. harvest of organic produce.

The biggest organic operations cultivate thousands of acres and sell to mainstream buyers like grocery chains.

With farms under pressure to cut costs and deliver big harvests, demand has grown for a new class of potent liquid fertilizers that help crops thrive.

"Organic agriculture is becoming very dependent on these amendments," said Thaddeus Barsotti, who runs Capay Organic farm in Yolo County. "If you don't use them, and your competitor is using them, you're going to suffer."

Good for cool-weather crops

Liquid fertilizers work particularly well for cool weather crops like strawberries and salad greens, and market leaders Earthbound and Driscoll's became big customers for California Liquid Fertilizer, according to executives from those companies.

But liquid fertilizers are used on farms producing virtually every variety of organic fruit, nut and vegetable. On his mid-sized farm, Barsotti likes to give his bok choy, cabbage and pepper crops a nitrogen boost early in the growing season, though he said he never used California Liquid Fertilizer's products.

The state learned of the problems at California Liquid Fertilizer from a whistleblower. In a June 18, 2004, complaint, the former employee alleged that for five years ammonium sulfate had been used in the company's liquid fertilizer.

A year later, according to state records, state Department of Food and Agriculture inspector Pierre Labossiere took the first sample of Biolizer XN, the company's leading product, from Tanimura & Antle Inc., an Earthbound Farm partner in Salinas.

Laboratory analysis supported the allegations, and in July 2005, Labossiere asked California Liquid Fertilizer to explain why, the records show. He never got an answer, and during multiple follow-up visits to the firm's factory near Gonzales was told that the fish and feathers used to make the product were unavailable for sampling.

Over the next year, Labossiere followed up, finding indications of ammonium sulfate in six more samples at farms and fertilizer dealers around the state. In February 2006, he twice intercepted tank cars of ammonium sulfate in a Salinas railyard. Receipts showed the liquid had been shipped to California Liquid Fertilizer from a plant in Decatur, Ill.

California Liquid Fertilizer's then-president, Peter Townsley, did not respond to repeated phone calls from The Bee or to a written request for comment...
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