UNITED STATES DEPARTMENT OF AGRICULTURE 

AGRICULTURAL MARKETING SERVICE 

BEFORE THE ADMINISTRATOR 

) 

Inre: ) 

Kegsafrut S.A. ) Administrator's Decision 

Machala, El Oro, Ecuador ) APL-048-19 

) 

This Decision responds to an appeal (APL-048-19) of a Notice ofNoncompliance and 

Proposed Suspension ofNational Organic Program certification issued to Kegsafiut S.A. 

(Kegsafrut) ofMachala, El Oro, Ecuador, by Quality Certification Services (QCS). The 

operation has been deemed not in compliance with the Organic Foods Production Act of 1990 

(Act) 1 and the U.S. Department ofAgriculture (USDA) organic regulations.2 

BACKGROUND 

The Act authorizes the Secretary to accredit agents to certify crop, livestock, wild crop, 

and/or handling operations to the USDA organic regulations (7 C.F.R. Part 205). Certifying 

agents also initiate compliance actions to enforce program requirements, as described in section 

205.662, Noncompliance procedure for certified operations. Persons subject to the Act who 

believe they are adversely affected by a noncompliance decision of a certifying agent may appeal 

such decision to the USDA Agricultural Marketing Service (AMS) pursuant to § 205.680 

1 7 u.s.c. 6501-6522 2 7 C.F.R. Part 205 

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Adverse Action Appeals Process - General, and§ 205.681, Appeals ofthe USDA organic 

regulations. 

FINDINGS OF FACT 

1. On March 15, 2019, QCS issued a Notice ofNoncompliance and Proposed Suspension. 

2. On April 12,2019,KegsafrutfiledanAppealtoNOP. 

DISCUSSION 

The USDA organic regulations at 7 C.F.R. 205.102, Use ofthe term, "organic," state that, 

"Any agricultural product that is sold, labeled, or represented as "l 00 percent organic," 

"organic," or "made with organic (specific ingredients or food group(s))" must be: (a) Produced 

in accordance with the requirements specified in §205.101 or §§205.202 through 205.207 or 

§§205.236 through 205.240 and all other applicable requirements of part 205; and (b) Handled in 

accordance with the requirements specified in §205.101 or §§205.270 through 205.272 and all 

other applicable requirements ofthis part 205." 

The organic regulations at §205. I 03, Recordkeeping by ce1iified operations, state that, 

"(a) A certified operation must maintain records concerning the production, harvesting, and 

handling of agricultural products that are or that are intended to be sold, labeled, or represented 

as "100 percent organic," "organic," or "made with organic (specified ingredients or food 

group(s)); (b) Such records must: (1) Be adapted to the particular business that the certified 

operation is conducting; (2) Fully disclose all activities and transactions of the ce1iified operation 

in sufficient detail as to be readily understood and audited; ...(4) Be sufficient to demonstrate 

compliance with the Act and the regulations in this paii." 

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The organic regulations at §205.105, Allowed and prohibited substances, methods, and 

ingredients in organic production and handling, state that, "To be sold or labeled as "100 percent 

organic," "organic," or "made with organic (specified ingredients or food group(s))," the product 

must be produced and handled without the use of: (a) Synthetic substances and ingredients, 

except as provided in §205.601 or §205.603; (b) Nonsynthetic substances prohibited in §205.602 

or §205.604... " 

The organic regulations at §205.201, Organic production and handling system plan, state 

that, "(a) The producer or handler of a production or handling operation, except as exempt or 

excluded under §205.101, intending to sell, label, or represent agricultural products as "100 

percent organic," "organic," or "made with organic (specified ingredients or food group(s))" 

must develop an organic production or handling system plan that is agreed to by the producer or 

handler and an accredited certifying agent. An organic system plan must meet the requirements 

set forth in this section for organic production or handling. An organic production or handling 

system plan must include: (1) A description ofpractices and procedures to be performed and 

maintained, including the frequency with which they will be perfo1med; (2) A list of each 

substance to be used as a production or handling input, indicating its composition, source, 

location( s) where it will be used, and documentation of commercial availability, as applicable; 

(3) A description ofthe monitoring practices and procedures to be performed and maintained, 

including the frequency with which they will be performed, to verify that the plan is effectively 

implemented; (4) A description ofthe recordkeeping system implemented to comply with the 

requirements established in §205.103; (5) A description ofthe management practices and 

physical baniers established to prevent commingling of organic and nonorganic products on a 

split operation and to prevent contact of organic production and handling operations and 

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r· 

products with prohibited substances; and (6) Additional information deemed necessary by the 

certifying agent to evaluate compliance with the regulations." 

QCS proposed a suspension ofKegsafrut's organic certification, which would prohibit 

the sale, labeling, or representation ofits products as organic. QCS issued a Notice of 

Noncompliance and Proposed Suspension for Kegsafrut's grower group after the December 19, 

2018 inspection revealed numerous noncompliances. QCS states there is no evidence that 

Kegsafrut's internal control system is operational; no annual reports ofvisits to producer 

members ofthe grower group; and no information or documentation on packing, harvesting, or 

post-harvest handling and sales made by the group members/farms. Further, Kegsafrut has no 

. process for approving new producer member fanns; no waste monitoring plan; and no plan to 

implement corrective actions or documentation to support closure of prior noncompliance 

findings. QCS also was tmable to determine the origin ofsome fi.11it or conduct a traceb~ck; and 

unknown inputs were seen on the fields ofmember farms, as well as empty sacks from 

Ammonium Nitrate, a prohibited substance. 

In its Appeal, Kegsafrut didn't address the noncompliance allegations s pecifically, but 

attributes the lack ofinfo1mation, as delineated by QCS, to some ofits Producer Agreements 

having the wrong signatures. Kegsafrut then submitted Producer Agreements for each of its 8 

grower group members, aJl signed June 9, 2018. 

Kegsafiut is an organic grower group operation initially certified for crops, specifically 

bananas, on November 17, 2014. QCS identified several noncompliances regarding Kegsafiut's 

lack of oversight ofits 8 grower group members. l11ese 8 members and their farms are identified 

in Kegsafrnt's Organic System Plan/Organic Grower Group Plan (OGGP) as: I) _ 

_ with the-and-farms; 2) 

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(.,, ... ,r . 

( i 

with the farm; 3) with the farm; 4) 

-iththe and farms; 5) 

with the -farm; 6) 'th the 

-and farms; 7) ith the -fatm; and 8)

However, Kegsafrut didn't respond to the specifically-identified noncompliances. 

Rather, Kegsafrut's response was the submission ofthe Producer Agreements for each ofthe 8 

members, signed June 9, 2018. The producer members confitm by their signatures that their 

banana farms are organically managed and agree to comply with NOP organic regulations and all 

provisions set forth by Kegsafrnt. Additionally, they agree to use only permitted inputs and 

'handmade organic fertilizers, i.e. earthworm humus; avoid contamination ofwater sources; and 

not use any herbicides, chemico.1-synthetic fertilizers, or any input of chemical or synthetic 

origin. The members also agree to maintain updated documentation including field/crop 

registrations, input records and the purchase documents therefor, invoices and sales 

documentation, and harvest records. However, an agreement to abide by these tenns is not 

substantiation that the te1ms have been met. 

Despite these agreements, QCS's December 19, 2018 inspection, which occmTed 6 

months after the Producer Agreements were signed, revealed that Kegsafmt didn't properly 

oversee the member producer's compliance with the NOP regulations and the promises set fmih 

in the Producer Agreements have not been upheld. Kegsafrut hasn't maintained annual reports 

ofvisits to member producer farms or inspection repo1ts for all members, and the information 

presented doesn't include the date ofthe visit or the signature ofKegsafrut's inspector, the 

producer, or the management of Kegsafrut. Additionally, there is no information or last 

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inspection report ofmembers 

-fann. There is no documentation or info1mation supporting the sales oforganic 

bananas made by each member producer. There are also no records or infomrntion on packing, 

harvesting, post-harvest handling, and sales made by member farms. 

Pursuant to its Internal Control System Regulations, Kegsa:frut is required to periodically 

visit each ofthe group fam1s to conduct visual monitoring, and to make a written report once a 

year verifying each farms' compliance with the organic standards. The Kegsafrut inspector is to 

review production and post-harvest records, fertilization records, and verify all crops. Pmsuant 

to the OGGP, Kegsafrut is to ensure that all operations/member fa1ms are compliant with the 

regulations; that each member is visited at least once per year to verify adherence to the OGGP; 

that members use only inputs approved in the OGGP; and that Kegsafrut has procedures for 

adverse actions to address noncompliant group members. The OGGP also requires Kegsafrut to 

ensure that adequate harvest and post-harvest records are maintained by the member fa1ms. The 

Grower Group Inspection Checklist Report requires inspectors to "verify the functioning ofthe 

Internal Control System in accordance with the organic system plan and National Organic 

standards. The Kegasfrut inspector must visit each 'production unit' to verify ... the 

jmplementation ofthe organic system plan and the Internal Control System ..." The inspection 

report must include the member,s name, inspector's name, date ofinspection, and member's 

representatives. As discussed above, Kegsafrut has failed to comply with these various oversight 

requirements. 

QCS's December 19, 2018 inspection also found that Kegsafrut doesn't have any 

procedure for the approval ofnew member producers; no waste monitoring plan; and no 

procedures for implementing conective actions or maintaining documentation supporting the 

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closure offindings from prior inspections. Kegsafrut must have a procedure enabling it to 

properly and adequately vet prospective new group members, to include the submission and 

review ofapplications by prospective members, inspection ofthe prospective members' fai·m(s), 

review of all relevant documentation, confirmation ofthe inputs used by member, and 

confirmation that adequate documentation is maintained to allow for successful traceback audits. 

Kegsafrut must also be able to efficiently and effectively resolve and document the resolution of 

noncompliances by itself and its members, including follow up inspections ofmembers' fa.nns. 

During the inspection, QCS states that it also couldn't determine the origin ofthe bananas 

from the grower group sold in week #36 of2018. The September 10, 2018 invoice ofKegsafmt 

to doesn't identify the source ofthe bananas. Kegsafrut sells the fruit ofits 8 

member growers exclusively to- though-purchases fruit for exportation 

from numerous producc1·s. Further, although the Packing List references the -.rann of 

one of Kegsafrut's grower group members, there is no 

documentation oftraceability to substantiate this farm is the somce ofthe bananas. QCS 

submitted several sales~related documents, including a-·eceipt for fruit from producer 

and the -farmin week 36. 

Lastly, QCS states it found unlmown and/or prohibited substances at 3 member's farms. 

QCS states there were empty sacks labeled Ammonium Nitrate at the fa1m of 

- · This is a prohibited substance and no explanation was provided as to why the 

empty sacks were there. QCS states it also found white crystals in the fields of member -

and white and red crystals, along with green fettilizer in the fields of 

member QCS submitted a laboratory report ofDecember 27, 2018 as 

documentation ofthe findings. However, the laboratory report doesn't identify the source ofthe 

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sample to which the repo1t applies, what was sampled and tested, and doesn't clearly state the 

results, what substances were found, and the levels found. NOP asked QCS to provide lab 

reports for samples taken at the member fa1ms cited by QCS - -

and and to explain the results. QCS replied that 

the lab report applies to a mix ofsamples taken from all 3 cited farms but didn't explain the 

results. Kegsafrut holds an organic cettificate for a grower group of 8 members, including the 3 

cited member fanns, and a finding ofprohibited substances on any ofthe farms would affect 

Kegsafh1t's certification and hence, all 8 member farms. However, QCS needs to be able to 

definitively state the lab results and the specific prohibited substance(s) found on any member 

fann for this to serve as definitive evidence supporting a suspension. Therefore, despite the field 

observations. QCS has failed to substantiate a finding ofprohibited substances on Kegsafrut's 

member farms. 

In conclusion, although QCS's allegation ofthe use of prohibited substances was not 

fully substantiated, documentation does substantiate that Kegsafrut and its grower group 

members have been unable to comply with the organic regulations and the specific terms ofthe 

Producer Agreements between Kegsafrut and the members. Further, Kegsafrnt hasn't complied 

with its own lnternal Control System Regulations, which require Kegsafrut to periodically visit 

each ofthe group fa1ms to conduct visual monitoring, and to make a written report once a year 

verifying each farms' compliance with the organic standards, as well as review production and 

post-harvest records, fe1tilization records, and verify all crops. Kegsafrut also hasn't complied 

with its OGGP, which requires Kegsafrut to ensure that all operations/member farms are 

compliant with the regulations; that each member is visited at least once per year to verify 

adherence to the OGGP; and that Kegsafrut and the members maintain various records, as listed 

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above. Kegsafrut's failure to conduct yearly inspections of each ofits 8 member growers and 

complete and maintain inspection rep01ts on each member constitutes a systemic breakdown of 

Kegsafrut's internal controls. Inspections of its member growers is Kegsafrut's way to 

determine overall compliance with the organic regulations and ensure the integrity ofthe organic 

program and Kegsafmt's claim that the bananas ofits grower group are organically produced. 

Kegsafrut' s failure to conduct all required inspections and maintain inspection reports also 

threatens its ability to identify noncompliances by its grower members and ensure that all 

necessary corrective actions are taken. 

Further, Kegsafrut's OGGP is also deficient because it doesn't have any procedure for the 

approval of new member producers; no waste monitoring plan; and no procedures for 

implementing corrective actions or maintaining documentation supporting the closure of findings 

from prior inspections. Therefore, even if inspections were conducted and reports maintained, 

Kegsafrut has not established a procedure for addressing noncompliances. While the cited 

recordkeeping noncompliance regarding the origin offruit in week 36 hasn't been established, it 

is crucial for Kegsafrut to conduct the inspections ofits grower members and ensure that all 

appropriate records are being maintained. Kegsafmt's OGGP also must have a procedure 

enabling it to properly and adequately vet prospective new group members, to include the 

submission and review of applications by prospective members, inspection ofthe prospective 

members' fmm( s ), review of all relevant documentation, confirmation ofthe inputs used by 

member, and confirmation that adequate documentation is maintained to allow for successful 

traceback audits. 

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CONCLUSION 

The USDA organic regulations assure consumers that products with the USDA organic 

seal meet consistent, unifmm standards. Key to these standards is that products with the USDA 

organic seal are produced and handled in accordance with the organic regulations. However, 

Kegafrut violated the organic regulations at 7 C.F.R. §205.102; 7 C.F.R. §205.103; 7 C.F.R. 

§205.105; and 7 C.F.R. §205.201. These noncompliances do not allow for continued 

certification. QCS 's issuance of a combined Notice ofNoncompliance and Proposed Suspension 

was justified because the scope of the noncompliances indicates there has been a noncorrectable, 

systemic failure ofKegsafrut's overall organic system. 

DECISION 

The appeal is denied and Kegafrut's organic certification is to be suspended. Attached to 

this formal Administrator's Decision denying Kegsafrut' s appeal is a Request for Hearing form. 

Kegsafrut has thirty (30) days to request an administrative hearing before an Administrative Law 

Judge. 

If Kegsafrut waives the hearing, the Agricultural Marketing Service will direct QCS to 

issue a Notice of Suspension. At any time after suspension, Kegsafrut may, " ... submit a request 

to the Secretary for reinstatement of its certification. The request must be accompanied by 

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evidence demonstrating correction of each noncompliance and corrective actions taken to 

comply with and remain in compliance with the Act and the regulations in this part." Kegsafrut 

may work with any certifier to complete a request for reinstatement. 

Done at Washington, D.C., on this z,7A 

day of /J'"'t>c.,...\er-. , 2019. 

Bruce Summers 

Administrator 

Agricultural Marketing Service 

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