Compliance 360: Italy’s ‘Agromafia’ and exports

   If you think food imports from China are the only ones in the United States adulterated by scam artists to make a buck, guess again.

   Over the years, there have been numerous safety violations in Chinese food products, including baby melamine-tainted infant formula, cadmium-laced rice, tainted dog food, vinegar contaminated with anti-freeze and bean sprouts treated with a banned plant hormone to make them more attractive to consumers. Many food safety problems have been isolated to the Chinese domestic market, but products often make their way to the United States and other markets.

   Taking shortcuts in food sanitation, or using cheap fillers to dupe consumers into paying more for brand-name products, however, is a global concern for regulators and public health officials. Recently, the CBS News magazine “60 Minutes” aired a feature story on the mafia’s alleged influence over the food industry in Italy and how the criminal organization uses its control of farmers and distributors to sell phony olive oil, wine, cheese and other products, many of which are exported to the United States.

   According to the report, a large focus of the criminal enterprise, dubbed the “Agromafia,” is on extra virgin olive oil, which can sell for upwards of $50 per gallon. By diluting the extra virgin olive oil with sunflower or canola oil the mafia can produce oil for just $7 per gallon, vastly increasing its profit margin.

   In November, Italian authorities seized 7,000 tons of counterfeit olive oil, much it headed to the United States and rebranded as more expensive Italian extra virgin olive oil.

   The report said the mafia also uses detergent to make cheap cheese appear white like mozzarella and deodorizes rotten seafood with citric acid. Italian wines are also watered down with cheap grades of wine and sold at premium prices.

   Up to three quarters of the extra virgin olive oil exported to the United States from Italy has been adulterated, according to one estimate.

   U.S. Customs and Border Protection officials said they are aware of fraudulent olive oil imports. The fraud is not only an economic drain on legitimate producers, who lose sales, and consumers, who don’t get what they pay for, but also poses health risks. Unlabeled products or chemicals introduced into food can cause allergic reactions or other harmful effects to unsuspecting consumers.

   The report once again raises serious questions about the integrity of the U.S. food supply chain and how much supermarkets and retailers know about their suppliers and various sources of the foods.

Virginia-Cuba port agreement

   The Virginia Port Authority in January signed a cooperation agreement with the recently opened Port of Mariel in Cuba.

   The memorandum of understanding was inked during a trade mission led by Virginia Gov. Terry McAuliffe, who has worked diligently to enhance relations with Cuba since taking office in January 2014. The delegation included representatives from Smithfield Foods, Perdue Agribusiness, T. Parker Host (a ship agency), Mountain Lumber Co, and Virginia Natural Beef.

   The trip was focused on driving up Cuban imports of Virginia agricultural products, which officials have said could lead to good relationships that open doors for trade in other sectors.

   Cuban officials want Mariel, located on the western outskirts of Havana, to become a transshipment hub for ocean carriers that can operate a hub-and-spoke operation to feed North and South America’s east coast with smaller vessels.

   Thomas Capozzi, VPA’s chief sales officer, told Reuters the goal is for the Port of Virginia to become the preferred gateway for Cuban companies engaged in import or export activity.

   U.S. firms are allowed under a 2000 law to sell agricultural commodities to Cuba because food is considered humanitarian assistance. Exports peaked at about $750 million, but fell to about $350 million in 2014. The value of shipments to Cuba dropped about 18 percent in 2014, according to government data.

   President Obama has moved to normalize relations with Cuba and relax part of the comprehensive trade embargo on the communist nation, but full trade between the two countries will require Congress to lift a 50-year embargo.

   McAuliffe has tasked Virginia agencies to explore new commercial opportunities with Cuba in preparation for the embargo to be fully lifted.

   Here’s the truth, though: The cooperation agreement isn’t likely to lead to any increased trade anytime soon. That will only happen if Congress decides to lift the embargo.

   Look at the deal as McAuliffe’s attempt to put another small finger on the scale in favor of lifting the embargo. It sends a message that Virginia and Cuba are ready for business. The political winds are gradually shifting and more Americans seem in favor of normalizing relations with Cuba, including more and more Cuban Americans.

   In October, nine Republican and Democratic governors, including McAuliffe, wrote a letter to leaders in Congress calling for an end to the remaining trade and travel restrictions.