The Indian organic cotton industry is in danger as doubts are cast whether the cotton sold as ‘organic’ in India is actually ‘organic’. Though APEDA has implemented National Program for Organic Products (NPOP) and has created its own traceability service called Tracenet, it falls short of ensuring that the natural fibre is 100 per cent organic. However, DNA tagging and tracing with the help of forensic traceability technology can act as a saviour.

On January 11, 2021, a small announcement1 took place in the United States, with significant ramifications for the entire Indian organic cotton industry. The US Department of Agriculture (USDA) said that it was ending its organic recognition agreement with India’s Agricultural and Processed Food Products Export Development Authority (APEDA) under which APEDA was allowed to certify farms and businesses in India as meeting the USDA’s requirements for organic products.

This meant that going forward, certification by APEDA would no longer be enough for Indian farmers, traders, and companies to show that they complied with the US organic standards. Instead, they would now have to be certified by the USDA itself, making the process more cumbersome and time-consuming.

To some, this would prima facie appear to be a minor setback. But, in truth, it could be devastating for the rapidly growing Indian organic cotton industry, and indeed the wider textile and apparel industry in India that employs over 50 million people. In February 2022, the ministry of textiles reported that organic cotton production in India in 2020-21 was over 800,000 metric tons. Further, according to the US Organic Trade Association (OTA), India accounts for almost half of all global organic cotton production.

Why is this industry now in danger and what does the USDA decision have to do with it? Simple, because if no one can trust that Indian organic cotton is actually organic, why would anyone ethical buy it.

The industry also cannot rely on a defence that these problems are minor and not indicative of the sector as a whole. In April 2022, the New York Times published an article that quoted one expert as estimating that 50-80 per cent of all organic cotton in India was fake. However, even if such large estimates are overstated, what is incontrovertible is that there are now serious questions of credibility over any Indian organic cotton claims. Indeed, these developments present an existential crisis for the Indian organic cotton industry.

However, questions over Indian organic claims are not new. Back in 2009, APEDA had found a whole village in Khargone in Madhya Pradesh selling GMO cotton (Bt Cotton) certified as organic. At that time, APEDA said that it was rolling out a new traceability system and had suspended several certification bodies, but the problem has persisted. Earlier on October 30, 2020, the Global Organic Textiles Standard (GOTS), one of the leading standards for organic textiles, said that it had detected 20,000 tons of fraudulent organic cotton in India.

Passing off fake organic cotton as genuine also endangers business relationships with trading partners, particularly as supply chains are spread across so many countries. In 2021, reportedly fifteen textile mills in Bangladesh found that they had purchased more than 16,000 tons of fake organic cotton from India. This would have led to losses for them as their buyers would have refused to pay for cotton yarn and fabric made from conventional cotton, leaving the mills holding the inventory. The Bangladesh Textile Mills Association (BTMA) finally raised the issue with the ministry of textiles and the Gujarat Cotton Corporation, which then had to step in to find a solution. Suffice to say that this entire episode would not have been healthy for the growing relationship between the Indian organic cotton industry and the Bangladeshi textile industry.

Indeed, doubts over credibility of organic claims are not just restricted to the organic cotton sector. In 2021, the European Union found that consignments of thousands of tons of organic sesame seeds from India were contaminated with ethylene oxide, a known carcinogenic substance. There were signs that the shipments were contaminated even earlier, but no action had been taken by APEDA or agencies tasked by it to inspect the shipments.

That embarrassment culminated in the EU decertifying2 five Indian agencies—that certified organic products grown in India to EU organic certification standards—on January 1, 2022. The EU went ahead despite major appeals by the Indian organic sector to it not to do so, dealing a major blow to the credibility of the Indian organic certification system.

It would be wrong to say that APEDA has not taken any action, however. Once problems had been detected with the EU shipments, APEDA penalised3 four of the certification agencies that had wrongly certified the EU shipments and barred them from registering any new operators, and also suspended the accreditation of the fifth. In January 2022, it took action against another agency over infractions in certifying organic cotton. Most recently in July, it terminated the accreditation of two more agencies and suspended the accreditation of a third for a period of six months.

Nevertheless, such actions remain piecemeal and will do nothing to address the systemic rot that has been allowed to grow and fester in the country’s organic certification architecture. There are fundamental problems with how certification of organic products is done in India, and any solution to this existential crisis must necessarily address those fundamental gaps.

Understanding The Problem

What is the cause of the current crisis in certifying organic products in India? The answer goes to the very heart of the matter: what is organic and how do we as consumers know that any product we buy to use or eat is organic.

Part of the problem stems from the fact that there is no global consensus definition of what is organic. In general, organic crops are those that meet two broad criteria: no usage of GMO seeds and no chemical-based fertilisers, pesticides, and herbicides. Similarly, organic livestock must be reared without GMO feed, artificial growth hormones, etc. In addition, organic products must be produced in a manner that conserves natural resources and biodiversity. But there is still no uniformly accepted definition that brings all these aspects together.

Consequently, stakeholders, mostly governments and multi-stakeholder initiatives, have come up with their own definitions of what qualifies as organic and have propagated those definitions by promoting various standards and labels for farmers and manufacturers to follow. The United States was one of the early entrants, with the Organic Foods Production Act of 1990, requiring USDA to develop national standards for organic products, which culminated in the National Organic Program (NOP). Only those products that qualify under the NOP standard are allowed to use the USDA organic seal in their labelling.

Similar to the United States, the EU also began its organic journey in 1991, paving the way for the development of national organic standards across the bloc. Multiple regulations have been passed since then; in 2010, the EU also launched an organic logo, compulsory for most products, and must be displayed according to a set of rules.

In May 2001, India implemented its own National Program for Organic Products (NPOP) administered by APEDA under the ministry of commerce. APEDA is responsible for accrediting certification bodies (CBs), essentially inspection and auditing agencies, to ensure farmers and manufacturers meet the production, processing, handling, and labelling requirements specified under the NPOP standard and issue certificates on its behalf.

The NPOP standard has been revised seven times since 2001, most recently in November 2014. Under the NPOP, APEDA also governs usage of the India organic logo. According to APEDA, the logo is used for a wide variety of products, mainly food but also cotton; in FY21, India exported more than $1 billion of organic food to countries across the world including the United States, EU, UK, Canada, Korea, Israel, Ecuador, Vietnam, and Australia.

Apart from governments, several multi-stakeholder initiatives have come up with their own standards. Foremost in this space is the International Federation of Organic Agriculture Movements (IFOAM), founded in France in 1972 during an international congress of agricultural industry groups, primarily from the United States and Europe. IFOAM is now a global organisation with more than 800 members in 120 countries comprising farmers’ organisations, trade associations, processors, handlers, retailers, consumer groups, and civil society organisations.

IFOAM runs its Organic Guarantee System, launched in 2010, which claims to promote a “one common vision of what organic is,” regardless of how individual standards differ. While IFOAM has its own “off-the-shelf” certification standard, it has also created a Family of Standards, which contains all standards officially endorsed by it. To foster compliance, IFOAM also publishes accreditation requirements for agencies certifying organic production and processing.

These are also sector-specific organic standards. For example, one of the most commonly followed standards for organic cotton is GOTS, set up in 2002 through a collaboration of four organic associations. GOTS was officially launched in 2006 with the goal of creating a harmonized organic textile standard that would be globally recognised. Another popular organic cotton standard is the Organic Cotton Standard (OCS) that is owned and coperated by Textile Exchange.

Importantly, most of these standards revolve around prescribing and verifying the process by which organic products are made, not specifically on the nature of the product. This is a very important distinction. The focus is on ‘how’ to make organic, rather than ‘what’ is organic. The assumption here is that anything made using a controlled and verifiable ‘organic’ process will itself be ‘organic’.

This is because there is no currently accepted method to test whether a product is truly ‘organic’, partly because there is no uniformly accepted definition of what it is truly organic, and partly because of gaps in testing technology. Most organic food testing laboratories today are only able to test for residues of pesticides, herbicides and other contaminants and impurities, or if GMO seeds have been used. However, there is no uniformly accepted test to check if an organic product has been made using natural or synthetic fertilisers.

On the other hand, agricultural practices and processes can be seen, verified, measured, and evaluated. Consequently, stakeholders have based their organic standards qualifications on basically ensuring process integrity and supply chain traceability. The assumption is that if a truly organic process has been used and can be traced, the final product will be truly organic.

As ensuring constant onsite monitoring and verification is difficult, process integrity is checked through annual audits and verification of paper trails (such as production records). Farms and companies are audited to check if their production, processing and handling practices are compliant with the organic standard in question. Farms and companies are also required to document each stage of production as per a prescribed set of rules so that a full traceability ‘chain-of-custody’ from farm to final consumer for each product can be demonstrated.

Who does these audits? Third party inspection agencies, or CBs in the case of India. Each standard ‘owner’, be it USDA, APEDA or even GOTS, accredits inspection agencies and CBs to inspect and audit farmers and companies to check if they qualify under their standards. The CB does the audit and inspection; if the concerned company is found to be compliant, the CB is empowered by the standard owner to issue a certificate of compliance on behalf of the latter. This is exactly how APEDA manages the NPOP certification process.

Here is where the problem arises: ensuring full process integrity and traceability requires constant onsite verification of both production and logistics, which is nigh on impossible for most organisations, including the government. No single organisation has the resources to deploy inspectors on a daily basis at every company producing organic products. There are hundreds of organisations in India claiming to sell organic products and it is impossible to fully monitor all these organisations on all days of the year when production or other operations are taking place.

Further, the inspection and certification mechanism itself is opaque and subject to fraud. The way the system works is that each transaction – or exchange of organic material – must be accompanied by a transaction certificate (TC). CBs and inspection agencies are responsible for issuing TCs, which prove that the concerned product was produced, processed or handled in a manner that meets the organic standard. Using the TCs, any stakeholder should ideally be able to track the product back through the supply chain to the originating farm.

The main challenge, particularly in India, is that it is quite easy to manipulate or fake TCs. As there is no continuous onsite monitoring, the consumer has only the TC to rely on. In recent years, there have been increasing reports of TCs being issued for non-existent farmer groups to pass off conventionally grown cotton as organic cotton; some fake TCs even used genuine APEDA templates. Further, TCs can also be manipulated to overstate the amount of organic cotton when conventional cotton is mixed with organic cotton.

Some CBs were found not to even have the resources to perform a single inspection of a company or a farm. In 2021, a surprise APEDA evaluation found that one CB had even certified GMO cotton as organic. In other cases, the original farmer groups had sold the cotton as conventional, but traders and other players had conspired with the CBs to pass off conventional cotton as organic.

Why does this take place? Economics. Organic cotton is sold at a premium to conventional cotton. This creates a major financial incentive for all stakeholders – farmer groups, processors, manufacturers, and CBs – to manipulate the system to show more organic cotton, even if it is conventionally produced.

Compounding the problem is the current APEDA system to punish violators, which is largely toothless. Apart from banning an agency outright, APEDA can fine it for a maximum of ₹5 lakhs, which is a drop in the ocean compared to the millions that can be made from fake organic cotton. Fraudulent CBs have no fear of the fine, and if they are banned, there is nothing to stop them reconstituting themselves under a different name.

Therefore, in summary, the assumption that existing organic certification systems rely on, that ensuring process integrity and traceability in production, processing and handling guarantees that the final product is organic, is incomplete and flawed. Firstly, it is very difficult, if not impossible, to guarantee complete process integrity and traceability because no agency has the resources for full, constant onsite monitoring of all production sites. Second, inspection agencies and CBs are themselves susceptible to fraud and corruption, putting a question mark on whatever monitoring and verification is taking place. And as long as organic products such as cotton enjoy a price premium in the market, there will remain a financial incentive to engage in fraud and corruption.

This is also why any traceability or verification system that relies on traditional, paper-based inspections and audits (requiring human discretion) will face such implementation and bad incentive challenges. It is also why blockchain cannot solve this issue – if the underlying TC itself is fraudulent, the information it represents on the block has no value. Blockchain managers cannot physically visit farms or factories to verify that the organic standard has been met.

APEDA has created its own traceability service, called Tracenet, which suffers from the same issue. Tracenet is an online service offered by APEDA to facilitate process certification. It essentially helps store TCs and other quality assurance data but has no way of ensuring that the data on the system itself is accurate. In fact, Tracenet even has a disclaimer stating neither it nor APEDA is liable for any “improper or wrong” information entered into the system by a user.

What is the solution?

The ideal solution is to be able to independently ensure both process and product integrity. Traditional, paper-based traceability and verification systems need to be backed up by something more – ideally by testing the product itself. We cannot just rely on static certification processes where system integrity is based on human integrity. In markets where there are financial incentives for fraud, as is the case of organic cotton, such systems are bound to fail sooner rather than later.

Fortunately, technology is now evolving that may be able to plug some of these gaps. For example, forensic traceability technology, which requires physical verification of a unique property of a product or a substance. This property is usually embedded into the product itself and can be used to test it at different stages throughout the supply chain to ensure it is authentic. The unique property may be intrinsic to the material or may be added externally.

There are two broad types of forensic traceability technologies. The first is isotopic profiling and trace element analysis, using mass spectrometry, which relies on the isotopic distribution of common elements (such as oxygen, carbon, nitrogen, hydrogen) in organic products. As the isotopic profiles of these elements vary naturally throughout the environment and from one product or location to another, any product’s intrinsic isotopic profile can provide insights into where it came from. Of course, one needs a reference database of existing isotopic profiles of a product by location to compare with, otherwise this system will not work.

The second technology type does not focus on intrinsic characteristics such as the isotopic profile but adds an external marker to the product as a unique identifier. These unique tracers or markers can be made in a variety of ways, but the most commonly used ones are made from DNA. DNA markers are usually added to the product at or close to the place of origin and can only be removed by physically destroying the product.

Isotopic profiling allows the product to be tested in its original or input form, and nothing external (that can be seen as an impurity) needs to be added. Isotopic profiling can identify the geographic origin of a product. However, based on current technology, isotopic profiling needs to happen in a laboratory, which means the entire process is expensive. Further, the efficacy of isotopic profiling depends upon the strength of the reference database, and isotopic profiles from similar geographic regions may be similar.

On the other hand, DNA markers can be added to any product, such as organic cotton, at any site, and products can be tested for the marker using handheld devices anywhere in the supply chain. DNA markers have also been shown to survive complex manufacturing such as textile processing, which can affect the isotopic distribution of elements. Consequently, DNA markers can be used to back up full chain of custody documentation.

Hence, technologies like forensic traceability can adequately address the credibility challenges faced by the Indian organic cotton industry. TCs and other assurance documentation issued by CBs must be backed up with some forensic test of the product itself that can conclusively demonstrate that it is organic. While there is no uniform product test for organic today, forensic traceability technology can potentially fill this gap in the certification process.

What would a certification process look like?

The first key aspect is to ensure that the original farm is compliant with the NPOP standard. One way to streamline the farm verification process would be integrating farms’ organic information with the new Unique Land Parcel Identification Numbers (ULPIN) scheme. Indeed, APEDA is already debating4 whether to roll out an ‘Organic Aadhar’ for farmers, based upon the ULPIN and the farmer’s personal Aadhar. This would be crucial in identifying fake farmer groups.

Nevertheless, the Organic Aadhar will only be effective in accurately certifying farms. It will not address organic fraud that takes place later in the supply chain, i.e., traders and factories. While APEDA is thinking about integrating this Organic Aadhar into the Tracenet system, simply relying on TCs to address the rest of the supply chain will not be enough. Tracenet will need to be boosted by forensic authentication technology to be truly effective.

Once the farm has been certified using the Organic Aadhar, Tracenet can require every product from a certified farm to be tagged with an external unique marker, such as a DNA strand. For example, a DNA tag identifying all Indian organic cotton can be developed, analogous to APEDA’s India organic logo. APEDA can craft rules on exactly what type of cotton can be tagged and how to do so. Information on the tag can also be shown on the TC.

For an additional layer of verification, organic cotton from certified farms can also be tested to check if GMO seeds have been used. This can be done prior to tagging and the information from the GMO test can also be linked to the TC.

Once all Indian organic cotton from certified organic farms has been tagged with a DNA marker, all that needs to be done later in the supply chain to verify that the cotton (or cotton yarn or fabric) is authentic is to test the product for presence of the India organic DNA tag. If the tag is present, the cotton is organic under NPOP. If the tag is absent, fraud has taken place and further investigation is warranted.

Such a system inherently embeds traceability and verification in any organic cotton supply chain. The key factor that ensures authenticity of the organic cotton is the presence of the DNA tag – which can be used to track the product back through each stage of the supply chain to the original farm. This tag can be tested at any production site such as a yarn spinning mill or an apparel factory. It can even be tested when the product is in transit from one site to another.

Despite the fact that DNA tagging and tracing is not expensive, considerable investment will still be required in terms of infrastructure, information systems, and training of human resources. The Tracenet system already incorporates some of these utilities, but it will have to be significantly modified and upgraded to incorporate marker technology such as DNA tracking and tracing.

Consequently, while much of the burden to commercially adopt such a technology rests upon the private sector, it cannot do everything. Individual companies can perhaps pay for the cost of tagging and periodic verification, especially if such costs can be integrated into market mechanisms. However, there are other ‘shared’ costs, like building a database to share the DNA traceability information linked with the TC. Ideally, the government should take the lead on this. In addition, new rules, regulations and procedures governing the use and interpretation of the technology will also have to be devised, and this will also require the involvement of the government.

Most companies are still reluctant to adopt end-to-end supply chain traceability despite increasing demands by governments and lawmakers. The focus is particularly on multinationals (usually a retailer or brand), who are considered as having the most “leverage” in a supply chain, as well as both large and small companies present in high-risk industries such as textiles. Cost is the main reason, but some companies are also reluctant to remove the shield of “plausible deniability” – for example, without any traceability data, how can anyone prove there is an issue in the supply chain in the first place?

Most importantly, no company is likely to fully commit to full traceability and authentication of organic products if the government does not signal that this is a major priority. As mentioned earlier, the existing system allows certain players to continue to profit from the organic cotton premium without actually using the more expensive organic products. Compliant players will eventually refuse to purchase Indian organic cotton on the grounds that it cannot be authenticated. If unchecked, this presents an existential crisis for the Indian organic cotton industry.