customs designation and fraudulent country of origin certificates. Fraudulent documents served as the handmaiden to this illegal activity. A 2-tiered market resulted, engineered by international networks. From such unscrupulous collusion, fortunes are made and honest members of an industry suffer. Arrogance and audacity create a sense of impunity for those involved that spreads to wider domains, bringing increasingly devastating consequences. Let me quote a few excerpts from a New York Times article dated Oct. 27, 2009:
“It began when . . . customs officials examined shipping records for dozens of giant tanker trucks that outlined an odd triangular journey… The trucks, each carrying 22
tons… swung through eight nations…
Some 200 shipments roared along this route over a three-year-period, investigators say, earning millions in refunds …investigators raided the company’s offices… initiating an investigation …they raided about 35 sites . . .”we are investigating a complex, extensive and difficult case of economic … fraud …so that exporters can avoid customs fees.”
“There’s a whole world of commercial fraud, which goes under the radar for most people,” said James Byrne, a law professor at the George Mason University School of
Law in Virginia … It is a parallel universe that mimics the real world of commerce and finance.”
The article describes factories blending product, mislabeling it and adulterating it.
Is the product honey? Is the country America? No. It is sugar that is transshipped outside Europe so that it will qualify for export rebates from the EU. The need to bring the enforcement of law more effectively into international trade is becoming increasingly more imperative. The American honey industry has been plagued by an enormous amount of commercial fraud during recent years. This fraud persists to this day and it takes on the forms of undervaluation of imports, improper customs classification and transshipment. For example, one southeast Asian country is exporting honey to America in quantities that are approximately 15 times greater than the production quantities which their national government has officially reported. Another country is exporting huge amounts even though official documents from that country indicate they produce only 30% of what they consume. According to economists in the U.S. embassy of a third country, there is no production of honey available for export, even though millions of pounds of honey are imported into the U.S. from that country. The surge of honey imports from another country has been enormous, even though during the antidumping investigation that country, used as the surrogate country for the calculation of antidumping duties for China, had no appreciable commercial exports not only to America but also to the world. That 4th country has considered its own antidumping suits against the cheap Chinese honey that has flooded the country.
Furthermore, several of these countries are tropical and subtropical countries. Despite this fact, there is a predominance of exports of white honey, and in one case, 100% of the exports are white honey. This aberration occurs despite the fact that the general rule is that the closer to the equator a given country is, the darker its honey, and the further away, the lighter.
Additionally, laboratory tests that have been conducted at American universities and laboratories, as well as European laboratories, have reported such phenomena as:
1. Significant amounts of Chinese rapeseed pollen
2. Ultrafiltration, clearly designed to remove pollen that could facilitate country of origin analysis
3. Contamination by illegal residues
4. Massive adulteration from sweeteners that are believed to be rice syrup.
If we were to look at the last 1 or 2 decades and graph one line with Chinese honey imports into the U.S. and a second line with imports from countries that have no history of significant exports of honey, we could observe the first line to decline sharply and the second line to rise rapidly, filling in the gap created by the decline. This is not a case of astrological accident. It is widely held to be the result of widespread collusion to evade antidumping duties.
As has been widely reported in the press, there have been indictments, complaints and arrests in Chicago, Seattle and Los Angeles. The arrests that occurred in the summer of 2009 have resulted in confessions of involvement in elaborate schemes to transship honey through third countries by 2 Chinese nationals. Despite these successful actions, more has to be done or the American honey industry will quickly enter the intensive care unit.
There are 3 possibilities:
1. The circumventers will continue to gain increasing market share and dominance through unfairly priced honey, driving honest honey producers and packers out of
business;
2. All honey packers will be compelled to buy circumvented honey in order to survive;
3. The U.S. government will put a timely end to the circumvention that has mushroomed in recent years.
If the latter occurs, it would not only help the American honey industry, but it will also serve as a model for other industries which are plagued by circumvention of antidumping orders and other types of commercial fraud.
Let me give an update on international market conditions. The 2009 U.S. honey crop, as a consequence of adverse weather, was approximately 150 million pounds, plus or minus 5%. The Canadian honey crop was approximately 70 million pounds, but experienced a significant increase in canola honey due to the cool weather that greatly extended the canola bloom. The Argentine crop was about 110 million pounds, largely due to a severe drought. A significant shortage of white honey has emerged. Aside from the allegedly circumvented “white honey” from tropical regions, the price of white honey has greatly firmed and will likely remain firm through the second and third quarters of this year. Both Brazil and Vietnam have provided a significant and necessary amount of light amber honey, so essential to the industrial honey market. Total 2009 imports of honey declined relative to 2008, according to initial indications. This decline could be influenced by honey being imported through customs categories other than “honey” and the persistence of the “Packer’s Blend” loophole which may also play a role in the reduction of total reported imports.
Regarding crop prospects for 2010, Brazil is a country with significant potential to increase its production of honey. Brazil has a huge diversity of botanical forms of life.
Because of the vastness of its virgin areas, it is the world’s largest source of authenticated organic honey. 80% of their honey crop is light amber and amber honey. They are developing new sources of honey that could include both coffee and cashewnut. After excessive rains in mid spring, the rainfall in the northeast of Brazil has been very favorable to production. There were many Brazilian exporters at Apimondia in Provence, France. The Brazilians are attracted to the high prices that the European market can pay due to the fact that the Euro is 45% stronger than the U.S. dollar. Since its inception, the Euro has doubled relative to the U.S. dollar. Increasing numbers of Brazilian exporters are authorized to sell to the European market.
The role of currency valuations, as indicated in earlier market reports, are coming to play an increasing role in the valuations of commodities and the destination of those
commodities. Argentine, Uruguay and Chilean honey also find the European market increasingly attractive, despite the EU’s extraordinary stringent quality standards, due to the power of the Euro among international currencies. The situation in Canada is the opposite. The U.S. and Canadian dollars have recently attained relative parity, whereas a year ago the U.S. dollar was 25% stronger than the Canadian dollar. American packers could pay Canadian producers $1.50 Canadian (equivalent to US$1.20). This year that is not the case, resulting in more of the Canadian honey crop being consumed within Canada. The value of currencies is inexorably linked to the magnitudes of national debts and the magnitude of the money supplies. While recently there has been a relative strengthening of the U.S. dollar relative to the Euro, the projected persistence of the U.S. national debt is likely to keep the value of the U.S. dollar comparatively weak.
In Argentina, the early spring in 2009 (our autumn) witnessed a severe drought in many regions, including the north. Prices of soybeans rose and the early honey crop was delayed and short. However, during the past 4 weeks, there have been very ample regular rains in the important producing areas of La Pampas and southern Argentina. These regular rains have been interspersed with very sunny and windless weather. By the middle of this week, major exporters have indicated that the nectar flow is wonderful and the bees are producing lot of honey compared to the spring. It is now projected that their crop will reach at least 150 million pounds. If the prevailing excellent weather persists into the late summer, the crop could reach 175-180 million pounds. Currently they are producing clover, various forms of alfalfa and sunflower. Even though conditions are greatly improved, Argentina will not be able to produce the bumper crop of 240-250 million pounds which they obtained for several years. The limitation is due to the fact that the Argentine beef and dairy industries, which depended upon pasture lands and clover and alfalfa production, have been severely restricted by government action. Those pasture lands have been converted to soybean production. Argentine and Brazilian exporters, like many North American farmers, look to the vast populations in India and China for steady and strategic consuming markets of their agricultural products.
Vietnam’s 2009 crop has just begun. The conditions are much better than last year. There is production occurring for coffee, cashew and some rubber. The major producing season is March and April and the major floral source is rubber, which provides the base for Vietnam’s growing export of light amber honey. Vietnam, like South America, is increasingly looking to Europe. During Apimondia, the Vietnamese honey exporters sought to cultivate the European market. The Vietnamese beekeepers have suffered significant increase in the cost of sugar needed to winter their bees. The global shortage of sugar, coupled with India’s huge demand for sugar, dramatically increased the international price of sugar. The Vietnamese dong fell in value relative to the U.S. dollar during 2009. This has led to an increase in the cost of production in Vietnam. The Vietnamese are also more cognizant of the international market conditions than they were in the past. They have opened communications not only with consuming countries but with producing countries around the world.
The Vietnamese have taken very serious steps to prevent circumvention of Chinese honey through Vietnam. They have established systems of traceability and authorization of beekeepers and exporters, quality control systems, and have relationships with leading laboratories in Europe. They also sent a delegation to the University of California, Davis, in order to study and improve beekeeping practices. Efforts are being made to establish a data base of primary floral sources from different regions of Vietnam that will provide a basis to assist country of origin identification. The steps being taken in Vietnam may serve as a model for other countries.
Many people in the honey industry are curious whether any new honey producing countries will emerge with significant export volumes in the coming years. I believe that an increase in international consumption in various markets, including emerging market countries, will concurrently develop as beekeeping increases, especially in emerging markets. In fact, as living standards in the emerging markets increase, and the interest in varietals increases, as has happened in the wine, coffee and tea industries, there will be new opportunities for American honey to find attractive markets overseas.
People also wonder if China will resume direct exports to the U.S. market in the foreseeable future. My answer is yes. China is a huge producer of honey and possesses a tremendous diversity of floral sources that include premier honey such as Acacia, Chaste, Clover and Alfalfa. Furthermore, when China entered the WTO it was agreed that surrogate country analysis would end during the decade that commenced last week. The Chinese government also is opposed to corruption in international trade.
The industry as a whole longs for and needs a level playing field with a better integration of the interests of producers, packers and consumers. A significant improvement in the marketing of honey would greatly benefit everyone in the industry. Green products, of which honey is one, represent a significant trend. The growing emphasis upon varietals is a second factor, and the ability to link consumption of natural foods with health benefits is a third and perhaps the most promising. America has seen this occur with almonds, blueberries, tea, chocolates, wine, etc. It is honey’s turn. The Committee for the Promotion of Honey and Health has had preliminary discussions about the possibility for a second scientific symposium. The first such symposium occurred 2 years ago in Sacramento. Our experience in the tea and health movement indicates that a break of 3 or 4 years allows good science to beget more good science. Of course, the Committee
needs the support of the trade organizations, the producer’s associations and the National Honey Board or Boards. In September, 2007, there was an impromptu meeting of 8 leaders of the industry which laid the basis for the formation of the honey and health committee. I remember Jerry Brown, who was then hobbling on his crutches, saying to me “Ron, if we can really make this honey and health work, this will resolve the conflicts between producers and packers. The real question will be how can we produce enough honey in the world to satisfy the increased demand for consumption that will follow if and when we successfully link honey consumption with health and disease prevention?”
On the one hand, let us all work with our organizations, our congressional representatives, the justice departments, government officials and, if necessary, the
media, to put a timely end to the circumvention that has created a 2-tiered market that has plagued our industry. On the other hand, let us work together to use good science as a marketing tool to promote our sweet, green and healthful product and in the process revitalize our industry, with its deep roots in antiquity.
From the west to the east, the south to the north, and in the heartland, there is a greater unity to achieve both of these goals than at any time in recent decades.
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