By Contributor on May 30, 2014

by Wenonah Hauter

One of the most frequent questions I get about the food system is what to make of the fact that Walmart sells organic food.

Is it good news or bad?

Is it a sign of progress or the end of organic?

On April 10, a press release from Walmart added fuel to the debate. Not only is Walmart promising to sell more organic products than ever before, but the company says it will sell them cheaply.

There will be folks who spin this announcement as good news, claiming any increase in the volume of organic food sales, no matter where or at what price, is a good thing. But unfortunately, it's not that simple.

Walmart's business model is based on practices that increase the corporate consolidation of the food system, take money away from farmers, workers, and food processors, and drive agriculture to get more industrialized. The organic sector is already facing these pressures, and more exposure to the Walmart way of doing business could only make things worse.

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No single company has more impact on food in this country than Walmart. It opened its first supercenter to sell food in 1988, and it took just twelve years to become the largest food retailer in the United States. One out of every three dollars spent on groceries in this country goes to Walmart.

With Walmart's huge market share also comes huge power, which has ripple effects throughout the economy. The company continually puts pressure on its suppliers to cut costs. And with Walmart as their biggest customer, food companies have little choice but to comply.

More than just size and market share have enabled Walmart to exercise such considerable control over suppliers. Walmart's success is the result of several very specific ways in which it does business. None of these bodes well for the organic sector.

The incredibly uneven power dynamic between Walmart and its suppliers puts the retailer in an excellent position to make demands, which it doesn't hesitate to do.

The pressure to cut costs has pushed companies like Levi's, Huffy, Rubbermaid, and RCA to close up manufacturing facilities in the United States and move them overseas. It has also pushed food producers such as Vlasic into bankruptcy as they try to meet Walmart's demands on pricing.

Walmart also demands volume. It sells an incredible amount of each food product, much more demand than a small- or medium-size producer could ever hope to meet on its own.

For a company obsessed with increasing efficiencies in its supply chain, it makes considerably more sense for the retailer to get products from a few large companies rather than many small suppliers.

And smaller producers, unlike the bigger players, are probably less able to afford Walmart's requirements for specific distribution technology and tougher contract terms.

So don't expect to see small, independent companies supplying organic foods to Walmart.

The Walmart announcement about selling more organic food wasn't about bringing more organic products in general to Walmart shelves. It was about a specific deal with one company: Wild Oats.

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This announcement was just the latest installment in a series of food-focused PR moves aimed at more affluent, urban consumers. The company has a problem: Many cities haven't let them build new stores. But to keep increasing sales, and to satisfy shareholders, Walmart can no longer rely on its existing suburban and rural markets; it needs to open new stores and sees potential for billions of dollars in new sales in urban areas.

So for several years now, Walmart has been waging an urban offensive, trying to convince cities to let it move in, and it's exploiting the food issue to seal the deal.

From promises to sell more "local" food (as defined by the company itself based on calculations that let sales in produce-rich Florida, California, and Texas do most of the heavy lifting) to standing with First Lady Michelle Obama and pledging to fix the problem of "food deserts" in inner cities, Walmart has spent the last several years telling urban consumers it is here to fix our food problems.

But previous experience with organic food at Walmart offers reasons for caution. When Walmart (and lots of other big retailers and food processors) talk about organic, it is different from what many consumers expect.

Earlier forays into organic at Walmart meant big food companies making organic versions of the processed foods that are already on store shelves.

Walmart's priority when it comes to organic products is finding the cheaper product, rather than meeting any principles of organic agriculture. And just like the rest of their food offerings, Walmart's continued expansion into organics will favor those large suppliers that use industrialized methods to produce their products as cheaply as possible, potentially pushing out of business smaller-scale, organic producers who could not otherwise meet Walmart's demands on price or volume.

Walmart's press release about its new organic plan crows about "removing the price premium associated with organic groceries." But it's worth a look at what that organic premium pays for.

As Ed Maltby, executive director of the Northeast Organic Dairy Producers Alliance, puts it, "U.S. organic farmers need a premium price for their products because they have higher costs of growing quality food with production practices that benefit the environment. Walmart exercising its purchasing power to drive down organic prices will mean lower prices for organic farm families, especially those that operate small- to mid-size farms that are the backbone of rural America. Those lower prices will force U.S. farms out of business while encouraging imports of organic food from countries that cannot guarantee the integrity of organic standards."

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The organic industry was built by people who were committed to building a different food system. But the more success they found, the more big food companies became interested.

Now, the structure of the organic industry has begun to mimic the rest of the food system, as some of the biggest conventional food companies have rushed in to capture the organic premium by gobbling up organic food companies.

A third of the largest food-processing companies purchased organic brands between 1997 and 2007, and half introduced organic versions of their conventional food brands. Over the past decade, every link in the organic food chain, from purchasing to processing to distribution to retail, has been dominated by a small number of huge corporations.

Walmart is just the latest food giant to get in on the act.

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This growing corporate control of the organic industry has also threatened the integrity of the organic label and its credibility with consumers, as the large food processors have successfully lobbied to use more synthetic ingredients in organic processed foods.

As we continue to be bombarded with PR messages about Walmart's efforts to help people live better, it is time to look at the actual impact that the company's rise has had on our food system—and to reconsider whether this model has any place in trying to fix it.

Instead of sucking the money out of the organic supply chain, Walmart could make a real difference in the food system by changing its business model to invest in communities rather than draining money from them, and by paying its workers and suppliers fairly.

Then Walmart's PR about helping people live better might actually mean something.

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Comments

I get your point, and I agree that the farmers need to make money, but as someone with a rather modest income who knows a lot of people with a paltry income, and who has clients who live in food deserts, I can only view this as welcome news. It is important to remember many people are struggling financially. We have a very large and diverse population in this country with very few people who want earn a living by farming (and I can't say as I blame them, it's hard work!), so unfortunately some of these systems are born out of necessity. Also, regarding your point about synthetic ingredients, I noticed this when reading the label for Whole Foods store brand Almond Milk. I wrote to the company asking why an organic product had synthetic Vitamin E. As it turns out, most Vitamin E is from corn and soy, so finding a Vitamin E oil that wasn't from a GMO was not only prohibitively expensive, but darn near impossible. It is important also to remember there are people who have no idea what organic even means. A friend of mine who coordinates food rescues for Chicago area food banks had a hard time distributing organic foods because many of the people in her neighborhood were unfamiliar with them and reluctant to try them. I was at an Aldi store in a poorer neighborhood and one of the patrons who was perusing their display of organic products asked me what organic meant. Putting organic food into the mainstream stores of America at an affordable price will raise awareness about organics and with awareness comes more demand which will ultimately help the small producer and help the overall diet of our population. Yes, I'd love it if that happened without corporate fat cats making money, but we don't live in a perfect world.
When the news came out that Walmart would be selling more organic food, I rolled my eyes a bunch! I don't shop at Walmart and it doesn't have anything to do with their merchandise, it's much more than that. It's the crappy wages, crappy hours, no health care, employees of Walmart living with government assistance (food stamps) that they in turn give straight back to Walmart when they shop there. It's the corporate welfare Walmart gets, the horrible megastore construction, etc. They can't whitewash their evil corporation.
Those are all excellent reasons for avoiding Walmart. It is far more of a job destroyer than a job creator. And, it creates poverty for most at the price of wealth for a very few.

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By Wendell Berry

Manifesto: The Mad Farmer Liberation Front

Love the quick profit, the annual raise,
vacation with pay. Want more 
of everything ready made. Be afraid 
to know your neighbors and to die.
And you will have a window in your head.
Not even your future will be a mystery 
any more. Your mind will be punched in a card 
and shut away in a little drawer.
When they want you to buy something 
they will call you. When they want you
to die for profit they will let you know. 
So, friends, every day do something
that won’t compute. Love the Lord. 
Love the world. Work for nothing. 
Take all that you have and be poor.
Love someone who does not deserve it. 
Denounce the government and embrace 
the flag. Hope to live in that free 
republic for which it stands. 
Give your approval to all you cannot
understand. Praise ignorance, for what man 
has not encountered he has not destroyed.
Ask the questions that have no answers. 
Invest in the millennium. Plant sequoias.
Say that your main crop is the forest
that you did not plant,
that you will not live to harvest.


Say that the leaves are harvested 
when they have rotted into the mold.
Call that profit. Prophesy such returns.
Put your faith in the two inches of humus 
that will build under the trees
every thousand years.
Listen to carrion—put your ear
close, and hear the faint chattering
of the songs that are to come. 
Expect the end of the world. Laugh. 
Laughter is immeasurable. Be joyful
though you have considered all the facts. 
So long as women do not go cheap 
for power, please women more than men.
Ask yourself: Will this satisfy 
a woman satisfied to bear a child?
Will this disturb the sleep 
of a woman near to giving birth? 
Go with your love to the fields.
Lie easy in the shade. Rest your head 
in her lap. Swear allegiance 
to what is nighest your thoughts.
As soon as the generals and the politicos 
can predict the motions of your mind, 
lose it. Leave it as a sign 
to mark the false trail, the way 
you didn’t go. Be like the fox 
who makes more tracks than necessary, 
some in the wrong direction.
Practice resurrection.

Wendell Berry is a poet, farmer, and environmentalist in Kentucky. This poem, first published in 1973, is reprinted by permission of the author and appears in his “New Collected Poems” (Counterpoint).

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