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San Diego Union-Tribune: Complaint Filed Over Organic Label

October 19, 2007
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By Elena Gaona

A public-interest group filed a complaint with the federal government yesterday against Golden Gourmet Mushrooms, alleging that the San Marcos company sold conventionally grown mushrooms as organic, doctored organic-certification documents and misled consumers about where its mushrooms were grown.

Craig Anderson, president of Golden Gourmet, angrily dismissed the allegations.

“I want to sue somebody,” he said.

Anderson blamed the complaint on the highly competitive world of specialty mushrooms, which make up about 5 percent of the mushroom market but bring in more than $40 million in annual sales. Golden Gourmet is poised to be a powerhouse and that's why competitors are trying to bring his company down, he said.

“We are, in the specialty sector, a threat,” Anderson said. “We're kind of like the Costco/Wal-Mart of specialty mushrooms.”

In January, the company announced a partnership with Hokuto Corp., a specialty mushroom grower in Japan, to build a new facility in San Marcos. It should be operational by June.

According to the complaint, filed with the U.S. Department of Agriculture by the nonprofit Government Accountability Project, the two companies passed off varieties grown in Japan as domestic and sold some conventionally grown mushrooms as organic.

The complaint was filed with the USDA's National Organic Program, which regulates the companies that certify organic growers. Jacqueline Ostfeld, a food and drug specialist with the nonprofit group, said she got confirmation yesterday that the federal agency will investigate the allegations.

“Every violation of the standards reduces public confidence in the organic label,” Ostfeld said. “The fraud in this case is so willful and flagrant, it would be truly shocking if (the company) were permitted to continue selling products under an organic label.”

The 20-year-old company is in the middle of a $40 million to $50 million expansion, building a new 250,000-square-foot facility to replace its old building in San Marcos. When construction is finished, the company expects to grow about about 6 million pounds of mushrooms annually, up from its current production of about 1 million pounds, which is worth more than $4 million, Anderson said.

Golden Gourmet, located on Marilyn Lane in northeast San Marcos, is known for exotic varieties such as the brown and white beech mushrooms, the slim white enokis used in salads or as a garnish, thick and chewy king trumpet mushrooms, and the feathered maitakes, which have a musky taste.

The USDA put organic standards in place in 2002 to certify when products are produced without pesticides or genetic modification. The San Diego company that certified Golden Gourmet and Hokuto as organic is Quality Assurance International. It also was named in the complaint.

Anderson said his company was certified organic for its mushroom mycelium – the part of the mushroom fungus that grows under the soil – in October 2006. The mycelium products are used in the company's newest venture, nutritional mushroom powders, which can be used as supplements by humans or animals.

Ted Yamamoto of the Hokuto company, which has an office in San Marcos, said it was certified organic in January for its fresh mushrooms and is allowed to sell them under the Golden Gourmet label.

Although Golden Gourmet had been growing its own mushrooms and importing sporadically, Anderson said, the company began importing all its supply late last year. It is a temporary move, said Steve Farrar, the company's chief operating officer, until the new facility is up and running. Although Farrar and Anderson acknowledged that some of their customers – ranging from high-end restaurants to grocery stores – may not be aware that its mushrooms currently are imported, they said the company did nothing illegal.

Golden Gourmet did not begin distributing the Japanese-grown fresh mushrooms with an organic label until March, Anderson said, after Hokuto was certified. He said country-of-origin labeling detailed in a recent federal Farm Bill won't be required until at least next year.

The complaint alleges that Golden Gourmet not only misled consumers about the country of origin, violating U.S. Customs rules in place since 1930, but it also began mixing conventionally grown remnants of fresh Japanese mushrooms into their organic mushroom powders before Hokuto was certified.

Anderson denied all the allegations and said they will hurt his business.

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