An owner of an organic bakery in Winnipeg says he’s disappointed a bakery in British Columbia was not prosecuted for selling organic bread that was not actually made with organic flour.

“It's kind of sad to hear someone cheating on the system in that way,” said Lyle Barkman of Tall Grass Prairie Bread Company in Winnipeg, which has been in business for 23 years.

“We’ve always felt that if you're going to say it, you've got to walk the walk after that. I know times are tough, but to me there isn't an excuse for that."

Details of an extensive investigation by the Canadian Food Inspection Agency (CFIA) are laid out in 200 pages of documents obtained by CBC News under the federal Access to Information Act.

The documents state that Mediterranean Bakery in Burnaby, B.C., falsely labelled breads as organic for three years when it did not use organic flour.

CFIA officials never told consumers they had been buying mislabelled bread.

The discovery was made during a routine visit to the B.C. bakery, when an inspector noticed a large delivery of non-organic flour.

Mediterranean Bakery owner Dung (Don) Nguyen was found in non-compliance and ordered to remove labels saying the bread was "organic."

The inspector wrote that "all the organic claims on his packaging was false" and there was "no bags of organic flour in the bakery."

Charge was proposed

Among the documents obtained by CBC News was a full prosecution brief prepared with a proposed charge under section 5.1 of the Food and Drugs Act.

Investigators wrote that Nguyen was "untruthful throughout this investigation, admitted he has not used organic flour in his bread products for at least three years."

Lyle Barkman, Tall Grass Prairie bakery

Lyle Barkman of Tall Grass Prairie Bread Company in Winnipeg says the CFIA should have done more in the case of the B.C. bakery. (CBC)

According to the prosecution brief, Nguyen signed a statement admitting he hadn’t used organic flour between July 2006 to September 2009 due to the high cost of organic flour.

In emails obtained by CBC News, five managers approved the proposed charge, but top officials at the CFIA decided not to prosecute.

In a statement, Elena Koutsavakis of the CFIA said the agency chose not to prosecute Nguyen because "in this case, the regulated party was ordered to cover the word 'organic' on all of their products and was given a Notice of Non-Compliance.

"The regulated party agreed to comply with regulatory requirements. A subsequent inspection in October 2009 found the bakery to be in compliance with regulatory requirements," Koutsavakis added.

In a statement, Don Nguyen told CBC News, “We have complied to all regulations of the CFIA since 2009 … we do use organic flour.”

Nguyen said he is grateful for CFIA inspectors who worked with him to bring his bakery into compliance.

But at the Tall Grass bakery in Winnipeg, Barkman said the CFIA should have done more.

“If there are rules, we need to stick to them. From that perspective, I would support the government in following the organic legislation to the letter. I think it needs to be,” he said.

Independent inspector baffled

Stuart McMillan, the Winnipeg-based vice-chair of the International Organic Inspectors Association, is also baffled by the CFIA’s handling of the case.

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"I think that is a sad aspect that tells business operators that they can flaunt the organic rules and it doesn’t matter,” he told CBC News.

As an independent inspector, it’s McMillan’s job to help ensure organic producers are following Canada’s regulations.

Barkman said the B.C. case might shake consumer confidence in organic products.

He said he goes to great lengths to get organic ingredients for his bakery.

“It means sourcing back to the farm gate, finding certified producers, trusting those producers, picking it up, bringing it in, following the CFIA guidelines,” Barkman explained, underlining the importance he sees in organic products.

“I have felt for a long time, we have felt for a long time that a continuous pouring into the Earth of chemicals is just not sustainable in the long haul,” he said.

“We realize that organic costs more, and we're trying to walk that path between balancing what the Earth needs with what we can afford to do."

With files from the CBC's Joanne Levasseur, Holly Moore and Gosia Sawicka