New USDA Organic Rules Put Wine Importers in a Bind

Government incompetence strikes again, turning the wine industry upside down with red tape and confusion.

It is hard to truly do justice to the recent organic food explosion. What was once a small subset of the overall food and beverage market is now close to a $200 billion industry—and expected to grow to over $500 billion by 2032. In just the decade from 2011 to 2021, U.S. organic food sales grew by an annual average of 8 percent, while the amount of acreage planted in organic crops increased by just under 80 percent. In that same timeframe, certified organic operations increased by more than 90 percent.

Unfortunately—and, given human nature, perhaps inevitably—there have also been cases of organic fraud, where non-organic products were inauthentically passed off as organic. According to the United States Department of Agriculture (USDA), the problem of organic fraud is on the rise, with particular issues in organic imports originating from the Black Sea region and countries like India. The agency jumped into the fray by adopting new regulations in 2023—dubbed the "Strengthening Organic Enforcement" (SOE) rule—which went into effect in March of this year. Importers of organic products were given an "unofficial grace period" through this September to comply with the rule. Now that the grace period has passed, the consequences are setting in.

Among other features, the SOE rule expands the number of stakeholders in the supply chain that must be certified organic. In addition to continuing to require certification for organic food producers and farms, the rule mandates that every business that handles an organic product on its journey from farm to store must also now be certified organic. The new rule was largely supported by the organic food industry under the rationale that it would increase the integrity of the supply chain, but its main impact so far has been throwing the global wine industry into crisis.

Under the rule, any organic wine that is imported into the U.S. must not just be grown at an organic vineyard and bottled at an organic winery, but now the importer must also be certified organic. If you're confused—or even sardonically bemused—about how, for instance, a company operating a ship that's transgressing the Atlantic Ocean while loaded down with wine could be deemed "organic," the answer appears to be: more compliance headaches. According to a wine importer interviewed by the drinks site VinePair, an organic certification will not only require more administrative paperwork now, but also will include an initial certification inspection as well as the possibility of "random audits of the importer's space to enforce compliance without prior warning."

When VinePair itself reached out to USDA to ask for clarification on the certification process and related costs, the agency responded by sending a document on organic certification from 2012. Much of the confusion around how, exactly, the new rule will apply to wine importers stems from the fact that USDA also decided to not even provide direct notice to importers who would potentially be impacted by the rule—instead, many wine importers "found out about it with a couple of panicked emails" from winery partners or via logistics companies they worked with.

For its part, USDA appears to be as unprepared as the wine importers. The agency estimated that between 4,000 and 5,000 companies would need new certification under the rule, but according to Wine-Searcher, less than 2,000 handling operations for organic food had been certified as of last week. But don't let the USDA's self-inflicted ineptitude lull you into hopes of more bureaucratic grace: an agency spokesperson reiterated to Wine-Searcher that "[f]ailure to comply with the USDA organic regulations can result in significant monetary penalties."

The result is that many organic wines will either need to be pulled from store shelves lest they run afoul of the new rule, or they will have to drop the organic label from their packaging—even if they are legitimately produced by a USDA-certified organic winery that uses grapes from a USDA-certified vineyard.

Preventing fraud is an understandable goal, but ironically the USDA's involvement in organic regulation has actually led to a watering down of organic standards—to the benefit of Big Ag, naturally—and the best bet may well be returning organic certification to state and local governments or even private certification entities. In the meantime, if the USDA is going to continue its involvement in organic regulation, the least it could do is stop threatening crackdowns and fines that are the sole result of its own incompetence.