At SupplySide West, organic-extracts supplier Orgenetics discussed how it is surviving—and thriving—following the significant regulatory change that shook the organic industry.
Companies that supply organic ingredients grown in India are adjusting to a major change in regulations that took effect this year after the USDA Agricultural Marketing Service’s (AMS) National Organic Program (NOP) ended a regulatory agreement with India. That agreement had previously allowed India regulators to accredit India-based certification agencies who were then permitted to inspect farms and companies in the country and grant NOP certification on behalf of USDA.
The agreement between AMS and India’s Agricultural and Processed Food Products Export Development Authority (APEDA) was established in 2006 and permitted APEDA to accredit certifiers who would certify farms and businesses in India to USDA’s NOP standards. AMS announced on January 11, 2021, that it was ending this agreement, citing USDA’s need for more direct oversight of NOP organic certification in India. AMS set a transition deadline of July 12, 2022, by which time any companies exporting products from India labeled as USDA Organic had to have their facilities and farms inspected and certified directly by a USDA-accredited certifier.
At November’s SupplySide West trade show, Nutritional Outlook spoke to Orgenetics (Brea, CA), a company that supplies certified-organic extracts from India, about how the company has transitioned to this new way of doing business. At the show, Orgenetics Senior Vice President of Business Development Saumil Maheshvari discussed the challenges his company encountered as it got its supply chain in India in line with the new USDA NOP certification requirement. “This new curveball that was tossed out by the USDA—we have to learn how to live with it and adapt to it. And I think we’re getting there,” he said.
Orgenetics became one of many companies in India that needed AMS certifiers to come to India to certify its facilities in order to continue bearing the USDA NOP logo. “It’s been some headaches here and there for a lot of Indian suppliers of organic extracts or organic products,” he related.
One of the biggest challenges was the fact that there was a shortage of USDA-accredited certifiers available to come out to inspect and certify farms in India. “[AMS] allowed an 18-month transition period between January 2021 and July 2022,” Maheshvari explained. “Although that might seem like a long time, the problem is that during this transition period, there were staff shortages” in certifier manpower. To make matters worse, he said, around this time the European Union also decided to stop recognizing any organic certifications issued by APEDA-accredited certifying bodies, which put an additional crunch on the number of USDA-accredited certifiers needed to certify organic farms in India for both U.S. and EU exporters.
“All of this happened in one go, which meant that even if we were getting NOP organic certifiers and inspectors to come out to inspect our farms and facilities in India, there became a backlog [of available certifiers],” Maheshvari explained.
Orgenetics is now over that hurdle, and Maheshvari said that other organic companies in India are also emerging from the rough spot. “It’s been messy,” he said. “But I think eventually next year [people will get used to it].” He likened the situation to the COVID-19 pandemic: “Initially, people didn’t know what it was. They didn’t know where to get tested. They didn’t know what to do, how to travel. Eventually, people got the rhythm of it.”
Foresight and Forging Ahead with Innovation
Maheshvari credits the Orgenetics team with getting the company through the transition. “I’m proud of our team,” he said. “While we were dealing with this, we obviously had help from consultants, and we had help from our team in India.”
But what also helped the company was the efforts it had made in years prior to diversify its global supply chain. “We were innovating and investing in new supply chains, looking at the forward picture,” Maheshvari explained. For instance, even before the COVID-19 pandemic happened, Orgenetics had been working to establish new botanical supply chains in New Zealand and California.
The company focused on introducing new ingredients to its clients from other areas around the world. For instance, the newest ingredient in its portfolio is an extract from rambutan tree fruit in Costa Rica.
In this sense, said Maheshvari, “Orgenetics has become a platform for innovation. We’re not just a traditional distributor. We are finding innovative plants species in which we can identify biomarkers and bioactives that may benefit the human or pet health industries. And then we look at manufacturing techniques or technologies to make sure we can standardize that ingredient and bring it in a safe and sound manner to the U.S.”
And in terms of expanding supply chains in the U.S., he said, “domestic supply chains also helped us out because we get to stay in within the umbrella of just USDA and FDA rather than dealing with international laws.” At SupplySide West, Orgenetics highlighted its partnership with American Aronia Accelerator (A3; Fargo, ND), which represents aronia berry producers in the U.S. and Canada. Together, the groups are focusing on expanding the presence of aronia in the sports nutrition market. Maheshvari also highlighted Orgenetics’ Orai-KP FD organic kakadu plum freeze-dried powder sourced from Western Australia.
The company’s recent experiences as an international exporter has led to some key realizations. “Unfortunately, the case we’re looking at, especially after COVID, is that the world is becoming deglobalized,” Maheshvari said. “So previously, where it was about globalization and expanding trade, it’s more fragmented today. Every country wants to do its own laws, maybe as a result of the border closures that happened during COVID. And so, for better or for worse, it’s more of a political or a philosophical debate, but at least for us, when we looked at the stability of domestic supply chains both from a regulatory and a supply chain standpoint and an availability standpoint, that was a huge advantage for us.”
It remains to be seen how deglobalization will change the organic-products market. For now, Maheshvari said, demand for organic products remains strong. “It keeps growing,” he said. “The last full-year figure showed robust growth again. With the pandemic, what you saw was people prioritizing their health and what they ingest. This year, I think we will have a challenge with high inflation to see how people prioritize their dollars. Whether they will still spend on organic or not remains to be seen, but I personally believe that there’s still going to be growth in the organic sector. Organic extracts definitely remain popular.”