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What Transshipped Honey is Doing to the U.S. Honey Market and What You Can Do About It!
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As beekeepers, honey packers, and importers our challenges seem to grow faster than we can produce honey. The ever-evolving and complex schemes devised to enter honey into our market without paying the U.S. antidumping duty on Chinese honey imports is mind-boggling, to say the least. Our attempt in this article is to shed additional light on the subject, so we are better able to fight this very real threat to our future in the bee business.
1. U.S. import statistics highlight the honey laundering problem
Let’s start with what we know about imports. USDA Honey Market News data shows the U.S. imported less than 200,000 pound of honey from China in 2009, after being the largest U.S. honey supplier before imposition of the Chinese antidumping duty in December 2001.
Record levels of honey are now being imported into the United States from India, Vietnam, Thailand, Taiwan, Malaysia and Indonesia. These last three countries do not have commercial beekeeping industries, so these countries do not have the capacity to produce and export 35.5 million pounds of honey to the United States in 2008 or any year.
The average price of honey from Thailand, Taiwan, Malaysia, and Indonesia is about $0.75 per pound. Compare this price to the honey from the U.S., Canada, Argentina and Brazil and the reality that it costs about $1 per pound to produce honey normally. Also curious is the fact white honey is now being shipped to the United States from Vietnam, which is a country that does not produce white honey
Transshipment of Chinese-origin honey through other countries is not the only problem. Chinese shippers and others are also misdescribing honey as blended syrup, honey syrup, and malt sweetener to avoid paying the antidumping duty.
n both 2008 and 2009, at least 80 million pounds of Chinese-origin honey entered the United States each year without paying the anti-dumping duty. This means that uncollected duties totaled $200 million in lost revenues for the U.S. Treasury for this two-year period.
In 2008, 35% of all U.S. honey imports entered our market without payment of the antidumping duty. In 2009, circumvented honey imports grew to 44% of total imports.
2. The impact of transshipments on all honey segments
Increasingly sophisticated honey import schemes are creating drastically diverging market prices. There is now one price for legitimate honey and another rock bottom price (which is sometimes available at ½ the cost of legitimate honey) for transshipped honey. This trade makes it almost impossible for honey packers who refuse to purchase this transshipped product to compete against those who are engaged in this activity. Additionally, the unfair competition is detrimental to the legitimate honey importer segment of the honey industry.
Honey laundering undermines the credibility of the entire honey sector, since the image and reputation of honey as a safe and wholesome product is put into question. Such schemes mean there is greater risk of adulterated honey products being sold as pure honey in the U.S. food chain with increased potential of residues entering the U.S. food supply, since Chinese honey has been found to contain a variety of antibiotics.
The honey laundering trade undermines the image and reputation of honey among U.S. consumers. This illicit trade opens the honey industry to questions of commercial fraud, food safety and security. Clearly, consumers and food manufacturers are also being cheated as this practice spreads.
3. Department of Homeland Security and U.S. Attorney Offices are continuing to investigate and charge those who support and participate in illegal activities
Commercial fraud is a serious crime of interest to U.S. Attorney Offices across the U.S. Potential violations of Food and Drug laws on adulteration and misbranding carry stiff penalties on top of embarrassing indictments for those companies that are charged with such misdeeds. The Department of Homeland Security is continuing to investigate and U.S. Attorney’s are continuing to prosecute those who support illegal honey laundering activities.
n May of 2008, two Chicago executives of a German-based food company (i.e., Alfred L. Wolff) were arrested for allegedly conspiring to illegally import honey from China that was falsely identified as coming from other countries to avoid antidumping duties. According to the government complaint, the company imported honey into the U.S. valued at almost $30 million since 2005. U.S. Customs and Border Protection (CBP) agents tested samples of honey whose shipping documents indicated they were produced in Russia, and the lab results showed that some of the samples contained honey produced in China. The complaint noted that when Immigration and Customs Enforcement (ICE) agents searched the company’s Chicago office, they seized documents that showed the company had sold an adulterated shipment to an unidentified company in the U. S. at a discount rate.
Federal authorities have also pursued other schemes, including the activities of Chinese nationals and importers to defraud the United States with false paperwork used to hide Chinese-origin honey. On August 19, 2009, Boa Zhong Zhang (a citizen of China) pled guilty in U.S. District Court in Seattle, to “conspiracy to enter goods in the United States, and introduction of adulterated food into interstate commerce.” Mr. Zhang was a 20-year employee of a bee products company in China, who was arrested on May 6, 2009 in Los Angeles, while traveling in the U.S.
Chung Po Liu, an importer from Bellevue, Washington, was also arrested on May 6 and his trial is forthcoming. According to the complaint filed the case, LIU (through his two companies) is alleged to have purchased honey from China, and then had it shipped to other countries where it was re-labeled to make it appear it was a product of these other countries.
More recently, on October 29, 2009, the U.S. Attorney for Chicago announced that the “president of a honey manufacturer in China” (i.e., Yong Xiang Yan) pled guilty “to conspiring to illegally import Chinese honey.” Mr. Yan is now awaiting sentencing by the judge in U.S. District Court sometime this spring and faces a maximum financial penalty of $3.9 million and a few years in prison.
4. Support efforts to rid the honey industry of fraudulent imports
t is our duty to help our government officials ensure that imported honey in safe, legal and properly labeled as to country of origin. Your support of efforts to combat fraudulent Chinese honey import practices could make a difference in our on-going viability as beekeepers. The adverse affects of this trade on legitimate businesses who ethically source honey will not be stopped without the concerted involvement of us individually and collectively.
CBP and Food and Drug Administration (FDA) officials have occasionally intercepted containers of questionable honey, but we need these federal agencies to step up their efforts. In this regard, we ask that you write to your Senators and Representative in Congress about fraudulent honey imports and urge them to press FDA, CBP and ICE officials to enhance their focus on this issue.
To help combat this trade on a transactional basis, we encourage you to report suspicious activity (including the sale of imported honey at dramatically reduced prices) to ICE at 1-866-DHS-2-ICE or at firstname.lastname@example.org
CBP should also be contacted to report antidumping or misdescription of goods violations by going online and completing a three-step form at: https://apps.cbp.gov/eallegations/allegations.asp. To remain anonymous, you can simply ignore step one (which asks for your contact information) and provide information on the alleged violation in step 2 and the alleged violator in step 3.
To ensure the integrity of the honey sector, it is critical that you do not buy transshipped honey that is offered to you and report those who attempt to engage you in this activity to ICE and CBP. ICE and CBP agents continue to closely watch honey shipments, but any additional specific and timely information that you can provide them will aid their investigations and lead to further convictions.
On Behalf of the Honest Honey Initiative
McLeod, Watkinson & Miller
One Massachusetts Avenue, N.W.
Washington, DC 20001