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A Green Godzilla?

Here’s something I wasn’t expecting, though I probably should have–WalMart is starting to stock organic foods. Good? Bad? Well, you can bet your bottom dollar it’ll be good for WalMart, and it is nice if a wider swath of the population can have access to organic foods, and yet… boy are there going to be lots of problems for a lot of people, farmers first of all. (Of course, this sort of ignores that there are many ways to expand access to organic foods that don’t include the refrigerator aisles of mega corporations.)

Wal-Mart’s Organic Offensive
Not everyone is pleased by the giant retailer’s push into natural foods, starting with some very anxious U.S. farmers

by Pallavi Gogoi
MARCH 29, 2006

Richard DeWilde has a long history with organic farming. His grandfather, Nick Hoogshagen, adopted the organic approach five decades ago on his farm in South Dakota, well before it became popular with consumers and fueled the popularity of retailers like Whole Foods Market (WFMI ).

Now, DeWilde, 57, is a working farmer himself, carrying on the family tradition of avoiding pesticides and other chemicals that can contaminate food in favor of a more natural approach. He’s co-owner of Harmony Valley Farm, which grows Swiss chard, parsnips, turnips, and kale on 100 acres in the southwestern corner of Wisconsin….

…So you might think that DeWilde would be overjoyed at the news that Wal-Mart (WMT) has finally come around to his grandfather’s philosophy. The juggernaut retailer said recently that it plans to double its offerings of organic products, including produce, dairy, and dry goods.

But DeWilde isn’t thrilled. Instead, he’s dismayed at the prospect of Wal-Mart becoming a player in the organic market. He fears that the company will use its market strength to drive down prices and hurt U.S. farmers. “Wal-Mart has the reputation of beating up on its suppliers,” says DeWilde. “I certainly don’t see ‘selling at a lower price’ as an opportunity.”

CHINESE FOOD. He’s hardly the only one. Many farmers who have benefited from the strong demand and healthy margins for organic goods are fretting that the market’s newfound success also brings with it newfound risks. As large companies enter the market, from Kraft (KFT ) and Dean Foods (DF ) to Wal-Mart, farmers worry that the corporatization of organic foods could have negative consequences.

Large corporations have taken sizeable steps into the organic market, even if it isn’t always obvious from the brands on store shelves. Silk, the best-selling branded soy milk, is a product from Dean Foods, the $10 billion behemoth that sells the most milk in the country. Cascadian Farms, which makes organic cereal, frozen fruits, and other products, is a brand of cereal giant General Mills (GIS ). And Kraft owns Boca Burgers.

The farmers’ concerns go beyond simply pushing down prices. DeWilde and others fear that companies like Wal-Mart could try to lower the standards for what is classified as organic food and begin to import more supplies from China and other overseas markets. “Wal-Mart already sources a majority of its products from China, because it’s so cheap to produce anything there. Why not foods?” asks Ronnie Cummins, director of the Organic Consumers Assn., a nonprofit organization that promotes natural and organic food.

SHIFTING STANDARDS. The worries that the corporatization of organics could lead to more imports aren’t unfounded. Cummins estimates that already 10% of organic foods like meat and citrus are imported into the U.S. Silk soy milk, for instance, is made from organic soybeans that are bought in China and Brazil, where prices tend to be substantially lower than in the U. S. Cascadian Farms buys its organic fruits and vegetables from China and Mexico, among other countries (see BW Online, 3/27/06, “Imports From China Aren’t Pricier — Yet”).

And large companies have tried to use their muscle in Washington to their advantage. Last fall, the Organic Trade Assn., which represents corporations like Kraft, Dole, and Dean Foods, lobbied to attach a rider to the 2006 Agricultural Appropriations Bill that would weaken the nation’s organic food standards by allowing certain synthetic food substances in the preparation, processing, and packaging of organic foods. That sparked outrage from organic activists. Nevertheless, the bill passed into law in November, and the new standards will go into effect later this year…. [cont’d]


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